SENATE BILL No. 1003

 

 

May 31, 2016, Introduced by Senators WARREN, ANANICH, HOOD, BIEDA, HERTEL and KNEZEK and referred to the Committee on Commerce.

 

 

 

     A bill to amend 1936 (Ex Sess) PA 1, entitled

 

"Michigan employment security act,"

 

by amending section 15 (MCL 421.15), as amended by 2011 PA 269.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 15. (a) Contributions unpaid on the date on which they

 

are due and payable, as prescribed by the unemployment agency, and

 

unpaid restitution of benefit overpayments shall bear interest at

 

the rate of 1% per month, computed on a day-to-day basis for each

 

day the delinquency is unpaid, from and after that date until

 

payment plus accrued interest is received by the unemployment

 

agency. The interest on unpaid contributions, and on unpaid benefit

 

overpayments, exclusive of penalties, shall not exceed 50% of the

 

amount of contributions due at due date. or 50% of the amount of

 

restitution owing. Nothing in this act authorizes the assessment or

 


collection of interest on a penalty imposed under this act.

 

Interest and penalties collected pursuant to this section shall be

 

paid into the contingent fund. The unemployment agency may cancel

 

any interest and any penalty when it is shown that the failure to

 

pay on or before the last day on which the tax could have been paid

 

without interest and penalty was not the result of negligence,

 

intentional disregard of the rules of the unemployment agency, or

 

fraud.

 

     (b) The unemployment agency may make assessments against an

 

employer, claimant, employee of the unemployment agency, or third

 

party who fails to pay contributions, restitution of benefit

 

overpayments, reimbursement payments in lieu of contributions,

 

penalties, forfeitures, or interest as required by this act. The

 

unemployment agency shall immediately notify the employer,

 

claimant, employee of the unemployment agency, or third party of

 

the assessment in writing by first-class mail. An assessment by the

 

unemployment agency against a claimant, an employee of the

 

unemployment agency, or a third party under this subsection shall

 

be made only for penalties for violations of section 54(a) or (b)

 

or sections 54a to 54c. The assessment is a final determination

 

unless the employer, claimant, employee of the unemployment agency,

 

or third party files with the unemployment agency an application

 

for a redetermination of the assessment in accordance with section

 

32a. A review by the unemployment agency or an appeal to an

 

administrative law judge or the Michigan compensation appellate

 

commission on the assessment does not reopen a question concerning

 

an employer's liability for contributions or reimbursement payments


in lieu of contributions or a claimant's entitlement to benefits,

 

unless the claimant or employer was not a party to the proceeding

 

or decision where the basis for the assessment was determined. An

 

employer may pay an assessment under protest and file an action to

 

recover the amount paid as provided under subsection (d). Unless an

 

assessment is paid within 15 days after it becomes final the

 

unemployment agency may issue a warrant under its official seal for

 

the collection of the assessed amount. The unemployment agency

 

through its authorized employees, under a warrant issued, may place

 

a lien on any bank account of the claimant or employer and may levy

 

upon and sell the property of the employer that is used in

 

connection with the employer's business, or that is subject to a

 

notice to withhold, found within the state, for the payment of the

 

amount of the contributions including penalties, interests, and the

 

cost of executing the warrant. Property of the employer used in

 

connection with the employer's business is not exempt from levy

 

under the warrant. Wages subject to a notice to withhold are exempt

 

to the extent the wages are exempt from garnishment under the laws

 

of this state. The warrant shall be returned to the unemployment

 

agency together with the money collected under the warrant within

 

the time specified in the warrant which shall not be less than 20

 

or more than 90 days after the date of the warrant. The

 

unemployment agency shall proceed upon the warrant as prescribed by

 

law in respect to executions issued against property upon judgments

 

by a court of record. The state, through the unemployment agency or

 

some other officer or agent designated by it, may bid for and

 

purchase property sold under the provisions of this subsection. If


an employer, claimant, employee of the unemployment agency, or

 

third party, as applicable, is delinquent in the payment of a

 

contribution, reimbursement payment in lieu of contribution,

 

penalty, forfeiture, or interest provided for in this act, the

 

unemployment agency may give notice of the amount of the

 

delinquency served either personally or by mail, to a person or

 

legal entity, including the state and its subdivisions, that has in

 

its possession or under its control a credit or other intangible

 

property belonging to the employer, claimant, employee of the

 

unemployment agency, or third party, or who owes a debt to the

 

employer, claimant, employee of the unemployment agency, or third

 

party at the time of the receipt of the notice. A person or legal

 

entity so notified shall not transfer or dispose of the credit,

 

other intangible property, or debt without retaining an amount

 

sufficient to pay the amount specified in the notice unless the

 

unemployment agency consents to a transfer or disposition or 45

 

days have elapsed from the receipt of the notice. A person or legal

 

entity so notified shall advise the unemployment agency within 5

 

days after receipt of the notice of a credit, other intangible

 

property, or debt, which is in its possession, under its control,

 

or owed by it. A person or legal entity that is notified and that

 

transfers or disposes of credits or personal property in violation

 

of this section is liable to the unemployment agency for the value

 

of the property or the amount of the debts thus transferred or

 

paid, but not more than the amount specified in the notice. An

 

amount due a delinquent employer, claimant, employee of the

 

unemployment agency, or third party subject to a notice to withhold


shall be paid to the unemployment agency upon service upon the

 

debtor of a warrant issued under this section.

 

     (c) In addition to the mode of collection provided in

 

subsection (b), if, after due notice, an employer defaults in

 

payment of contributions or interest on the contributions, or a

 

claimant, employee of the unemployment agency, or third party

 

defaults in the payment of a penalty or interest on a penalty, the

 

unemployment agency may bring an action at law in a court of

 

competent jurisdiction to collect and recover the amount of a

 

contribution, and any interest on the contribution, or the penalty

 

or interest on the penalty, and in addition 10% of the amount of

 

contributions or penalties found to be due, as damages. An

 

employer, claimant, employee of the unemployment agency, or third

 

party adjudged in default shall pay costs of the action. An action

 

by the unemployment agency against a claimant, employee of the

 

unemployment agency, or third party under this subsection shall be

 

brought only to recover penalties and interest on those penalties

 

for violations of section 54(a) or (b) or sections 54a to 54c.

 

Civil actions brought under this section shall be heard by the

 

court at the earliest possible date. If a judgment is obtained

 

against an employer for contributions and an execution on that

 

judgment is returned unsatisfied, the employer may be enjoined from

 

operating and doing business in this state until the judgment is

 

satisfied. The circuit court of the county in which the judgment is

 

docketed or the circuit court for the county of Ingham may grant an

 

injunction upon the petition of the unemployment agency. A copy of

 

the petition for injunction and a notice of when and where the


court shall act on the petition shall be served on the employer at

 

least 21 days before the court may grant the injunction.

 

     (d) An employer or employing unit improperly charged or

 

assessed contributions provided for under this act, or a claimant,

 

employee of the unemployment agency, or third party improperly

 

assessed a penalty under this act and who paid the contributions or

 

penalty under protest within 30 days after the mailing of the

 

notice of determination of assessment, may recover the amount

 

improperly collected or paid, together with interest, in any proper

 

action against the unemployment agency. The circuit court of the

 

county in which the employer or employing unit or claimant,

 

employee of the unemployment agency, or third party resides, or, in

 

the case of an employer or employing unit, in which is located the

 

principal office or place of business of the employer or employing

 

unit, has original jurisdiction of an action to recover

 

contributions improperly paid or collected or a penalty improperly

 

assessed whether or not the charge or assessment has been reviewed

 

by the unemployment agency or heard or reviewed by an

 

administrative law judge or the Michigan compensation appellate

 

commission. The court has no jurisdiction of the action unless

 

written notice of claim is given to the unemployment agency at

 

least 30 days before the institution of the action. In an action to

 

recover contributions paid or collected or penalties assessed, the

 

court shall allow costs it considers proper. Either party to the

 

action has the same right of appeal as is now provided by law in

 

other civil actions. An action by a claimant, employee of the

 

unemployment agency, or third party against the unemployment agency


under this subsection shall be brought only to recover penalties

 

and interest on those penalties improperly assessed by the

 

unemployment agency under section 54(a) or (b) or sections 54a to

 

54c. If a final judgment is rendered in favor of the plaintiff in

 

an action to recover the amount of contributions illegally

 

collected or charged, the treasurer of the unemployment agency,

 

upon receipt of a certified copy of the final judgment, shall pay

 

the amount of contributions illegally collected or charged or

 

penalties assessed from the clearing account, and pay interest as

 

allowed by the court, in an amount not to exceed the actual

 

earnings of the contributions as found to have been illegally

 

collected or charged, from the contingent fund.

 

     (e) Except for liens and encumbrances recorded before the

 

filing of the notice provided for in this section, all

 

contributions, interest, and penalties payable under this act to

 

the unemployment agency from an employer, claimant, employee of the

 

unemployment agency, or third party that neglects to pay the same

 

when due are a first and prior lien upon all property and rights to

 

property, real and personal, belonging to the employer, claimant,

 

employee of the unemployment agency, or third party. The lien

 

continues until the liability for that amount or a judgment arising

 

out of the liability is satisfied or becomes unenforceable by

 

reason of lapse of time. The lien attaches to the property and

 

rights to property of the employer, claimant, employee of the

 

unemployment agency, or third party, whether real or personal, from

 

and after the required filing date of the report upon which the

 

specific tax is computed. Notice of the lien shall be recorded in


the office of the register of deeds of the county in which the

 

property subject to the lien is situated, and the register of deeds

 

shall receive the notice for recording. Notice of the lien may also

 

be filed with the secretary of state in accordance with the state

 

tax lien registration act, 1968 PA 203, MCL 211.681 to 211.687.

 

This subsection applies only to penalties and interest on those

 

penalties assessed by the unemployment agency against a claimant,

 

employee of the unemployment agency, or third party for violations

 

of section 54(a) or (b) or sections 54a to 54c.

 

     If there is a distribution of an employer's assets pursuant to

 

an order of a court under the laws of this state, including a

 

receivership, assignment for benefit of creditors, adjudicated

 

insolvency, composition, or similar proceedings, contributions then

 

or thereafter due shall be paid in full before all other claims

 

except for wages and compensation under the worker's disability

 

compensation act of 1969, 1969 PA 317, MCL 418.101 to 418.941. In

 

the distribution of estates of decedents, claims for funeral

 

expenses and expenses of last sickness shall also be are also

 

entitled to priority.

 

     (f) An injunction shall not issue to stay proceedings for

 

assessment or collection of contributions, or interest or penalty

 

on contributions, levied and required by this act.

 

     (g) A person or employing unit that acquires the organization,

 

trade, business, or 75% or more of the assets from an employing

 

unit, as a successor described in section 41(2), is liable for

 

contributions and interest due to the unemployment agency from the

 

transferor at the time of the acquisition in an amount not to


exceed the reasonable value of the organization, trade, business,

 

or assets acquired, less the amount of a secured interest in the

 

assets owned by the transferee that are entitled to priority. The

 

transferor or transferee who has, not less than 10 days before the

 

acquisition, requested from the unemployment agency in writing a

 

statement certifying the status of contribution liability of the

 

transferor shall be provided with that statement and the transferee

 

is not liable for any amount due from the transferor in excess of

 

the amount of liability computed as prescribed in this subsection

 

and certified by the unemployment agency. At least 2 calendar days

 

not including a Saturday, Sunday, or legal holiday before the

 

acceptance of an offer, the transferor, or the transferor's real

 

estate broker or other agent representing the transferor, shall

 

disclose to the transferee on a form provided by the unemployment

 

agency, the amounts of the transferor's outstanding unemployment

 

tax liability, unreported unemployment tax liability, and the tax

 

payments, tax rates, and cumulative benefit charges for the most

 

recent 5 years, a listing of all individuals currently employed by

 

the transferor, and a listing of all employees separated from

 

employment with the transferor in the most recent 12 months. This

 

form shall specify any other information the unemployment agency

 

determines is required for a transferee to estimate future

 

unemployment compensation costs based on the transferor's benefit

 

charge and unemployment tax reporting and payment experience.

 

Failure of the transferor, or the transferor's real estate broker

 

or other agent representing the transferor, to provide accurate

 

information required by this subsection is a misdemeanor punishable


by imprisonment for not more than 90 days, or a fine of not more

 

than $2,500.00, or both. In addition, the transferor, or the

 

transferor's real estate broker or other agent representing the

 

transferor, is liable to the transferee for any consequential

 

damages resulting from the failure to comply with this subsection.

 

However, the real estate broker or other agent is not liable for

 

consequential damages if he or she exercised good faith in

 

compliance with the disclosure of information. The remedy provided

 

the transferee is not exclusive, and does not reduce any other

 

right or remedy against any party provided for in this or any other

 

act. Nothing in this subsection decreases the liability of the

 

transferee as a successor in interest, or prevents the transfer of

 

a rating account balance as provided in this act. The foregoing

 

provisions remedies under this subsection are in addition to the

 

remedies the unemployment agency has against the transferor.

 

     (h) If a part of a deficiency in payment of the employer's

 

contribution to the fund is due to negligence or intentional

 

disregard of unemployment agency rules, but without intention to

 

defraud, 5% of the total amount of the deficiency, in addition to

 

the deficiency and all other interest charges and penalties

 

provided herein, shall be assessed, collected, and paid in the same

 

manner as a deficiency. If a part of a deficiency is determined in

 

an action at law to be due to fraud with intent to avoid payment of

 

contributions to the fund, then the judgment rendered shall include

 

an amount equal to 50% of the total amount of the deficiency, in

 

addition to the deficiency and all other interest charges and

 

penalties provided herein.


     (i) If an employing unit fails to make a report as reasonably

 

required by the rules of the unemployment agency pursuant to this

 

act, the unemployment agency may estimate the liability of that

 

employing unit from information it obtains and, according to that

 

estimate, assess the employing unit for the contributions,

 

penalties, and interest due. The unemployment agency may act under

 

this subsection only after a default continues for 30 days and

 

after the unemployment agency has determined that the default of

 

the employing unit is willful.

 

     (j) An assessment or penalty with respect to contributions

 

unpaid is not effective for any period before the 3 calendar years

 

preceding the date of the assessment.

 

     (k) The rights respecting the collection of contributions and

 

the levy of interest and penalties and damages made available to

 

the unemployment agency by this section are additional to other

 

powers and rights vested in the unemployment agency under other

 

provisions of this act. The unemployment agency may exercise any of

 

the collection remedies under this act even though an application

 

for a redetermination or an appeal is pending final disposition.

 

     (l) A person recording a lien under this section shall pay a

 

fee of $2.00 for recording a lien and a fee of $2.00 for recording

 

a discharge of a lien.

 

     (m) In addition to the restitution recoupment methods in

 

section 62, the unemployment agency may obtain restitution due from

 

a claimant as a result of a benefit overpayment that has become

 

final by any of the following methods:

 

     (1) Levy of a bank account belonging to the claimant.


     (2) Entry into a wage assignment with the claimant.

 

     (3) Issuing an administrative garnishment of the wages of the

 

claimant.

 

     (n) To obtain an administrative garnishment, the unemployment

 

agency shall notify the claimant of both of the following: the

 

intention to issue an administrative garnishment on the claimant's

 

employer and the amount determined to be due from the claimant. The

 

notice shall include a demand for immediate payment of the amount

 

due, a statement that it is not subject to appeal, and a statement

 

that the claimant may, within 30 days of the issuance of the

 

notice, object to the garnishment by providing information to the

 

agency, with supporting documentation, that the claimant does not

 

owe the stated amount of restitution. Not less than 30 days after

 

issuing the notice to the claimant, the unemployment agency shall

 

notify the claimant's employer to withhold from earnings due or to

 

become due from the claimant the amount shown on the notice plus

 

accrued interest. The employer shall comply with the notice to

 

withhold and shall continue to withhold each pay period the amount

 

shown on the notice plus accrued interest until the garnishment

 

amount plus accrued interest has been satisfied and the notice is

 

released by the unemployment agency. The unemployment agency's

 

administrative garnishment has priority over any subsequent

 

garnishment or wage assignment. The amount subject to garnishment

 

for any pay period shall be decreased by any other irrevocable and

 

previously effective assignment of wages or other garnishment

 

action served on the employer before service of the agency's

 

garnishment notice. The amount of the agency's garnishment shall


not exceed 25% of the balance. In response to the administrative

 

garnishment, the employer shall do all of the following:

 

     (1) Within 10 calendar days of after the date of the agency's

 

notice to withhold wages, notify the agency of the amount of any

 

irrevocable and previously effective assignment of wages or

 

garnishment actions.

 

     (2) Within 10 days after the end of each pay period in which

 

wages are required to be withheld under the administrative

 

garnishment, remit to the agency the amount withheld pursuant to

 

the administrative garnishment.

 

     (3) Within 10 days after the date on which the claimant ceases

 

to be employed by the employer, notify the agency.

 

     (o) Before payment of a prize of $1,000.00 or more under the

 

McCauley-Traxler-Law-Bowman-McNeeley lottery act, 1972 PA 239, MCL

 

432.1 to 432.47, the bureau of state lottery shall determine

 

whether a lottery prize winner has a current liability for

 

restitution of unemployment benefits, penalty, or interest,

 

assessed by the unemployment insurance agency and the amount of the

 

prize owing to the unemployment insurance agency and shall remit

 

that amount to the unemployment insurance agency.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.

 

     Enacting section 2. This amendatory act does not take effect

 

unless all of the following bills of the 98th Legislature are

 

enacted into law:

 

     (a) Senate Bill No. 1002.                                  

 

         


     (b) Senate Bill No. 1000.                                  

 

           

 

     (c) Senate Bill No. 1001.