Bill Text: MI SB0534 | 2017-2018 | 99th Legislature | Introduced

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Bill Title: Employment security; sanctions; penalty for deficient contributions; increase. Amends sec. 15 of 1936 (Ex Sess) PA 1 (MCL 421.15).

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2017-09-07 - Referred To Committee On Government Operations [SB0534 Detail]

Download: Michigan-2017-SB0534-Introduced.html

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SENATE BILL No. 534

 

 

September 7, 2017, Introduced by Senators HERTEL, KNEZEK, HOPGOOD, ANANICH, GREGORY, CONYERS, BIEDA, JOHNSON, WARREN and YOUNG and referred to the Committee on Government Operations.

 

 

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

 

"Michigan employment security act,"

 

by amending section 15 (MCL 421.15), as amended by 2016 PA 228.

 

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 must 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 under this section

 

shall must 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 The unemployment

 

agency shall not make 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 unless the

 

assessment is for penalties a penalty for violations a violation of

 

section 54(a) or (b) or sections 54a to 54c. The An 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 If an assessment is not 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 ,

 

and under a warrant issued, may place a lien on any bank account of

 

the a claimant or employer and may levy upon and sell the property

 

of the an employer that is used in connection with the employer's

 

business, or that is subject to a notice to withhold, found within

 

the this 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 must be returned to the unemployment agency together

 

with the money collected under the warrant within the time

 

specified in the warrant, which shall must 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 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

 

this 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 that is 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 that is

 

notified shall advise the unemployment agency within 5 days after

 

receipt of the notice of a credit, other intangible property, or

 

debt, that 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 must 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 proper 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 a

 

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 The unemployment agency shall not bring an action

 

against a claimant, employee of the unemployment agency, or third

 

party under this subsection shall be brought only unless it is

 

brought to recover penalties and interest on those penalties for

 

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

 

court shall hear 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, a court may enjoin 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 County 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 will act

 

on the petition shall must 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 is located, 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 does not have jurisdiction of the

 

action unless written notice of the 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

 

provided by law in other civil actions. An action by a A claimant,

 

employee of the unemployment agency, or third party shall not bring

 

an action against the unemployment agency under this subsection

 

shall be unless it is 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 shall, 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 must 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 accept 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 must 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 are also entitled to

 

priority.

 

     (f) An injunction A court shall not issue an injunction to

 

stay proceedings for assessment or collection of contributions, or

 

interest or a 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

 

If a transferor or transferee who has, not less than 10 or more

 

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 the unemployment

 

agency shall provide the transferor or transferee 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 The form shall

provided by the unemployment agency must 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

 

the real estate broker or other agent exercised good faith in

 

compliance with the disclosure of information. The This 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 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 must 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 the result of fraud

 

with intent to avoid payment of contributions to the fund, then the

 

judgment rendered shall must include an amount equal to 50% 100% 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 or a discharge of a lien under

 

this section shall pay to the register of deeds a recording fee

 

that is equivalent to the fee for entering and recording a mortgage

 

as authorized under section 2567 of the revised judicature act of

 

1961, 1961 PA 236, MCL 600.2567.

 

     (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 must notify the claimant of both of the following: the

 

its intention to issue an administrative garnishment on the

 

claimant's employer and the amount determined to be due from the

 

claimant. The notice shall must 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 must 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 unemployment agency's garnishment shall must 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 after the date of the unemployment

 

agency's notice to withhold wages, notify the unemployment 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 unemployment 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 unemployment 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 agency and the amount of the prize

 

owing to the unemployment agency and shall remit that amount to the

 

unemployment agency.

 

     (p) If the unemployment agency does not record the discharge

 

of lien with the register of deeds and seek reimbursement for that

 

recording fee, the unemployment agency shall provide the discharge

 

of lien document and a notice of lien recording fee to the debtor,

 

who will is then be responsible for recording the discharge and

 

paying the applicable amounts required under section 2567 of the

 

revised judicature act of 1961, 1961 PA 236, MCL 600.2567. The

 

notice of lien recording fee shall must state the amount of the

 

recording fee the unemployment agency paid for recording the lien

 

that is the subject of the discharge and may include any other

 

relevant information.

 

     (q) In addition to any other remedy provided under this act,

 

the unemployment agency may seek to recover unemployment

 

compensation debt as provided by 26 USC 6402(f), 42 USC 503(m), or

 

other applicable federal law. The debtor is liable for any fee the

 

federal government imposes with respect to implementing the

 

deduction from a federal tax refund.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.