HRS § 383-62 - Rate of contributions; financing benefits paid to government employees and employees of nonprofit organizations

(a) Except as otherwise provided in this section, each employer shall pay contributions determined in accordance with sections 383-66 and 383-68. Notwithstanding any other provision of this part to the contrary, for the calendar years 1977 and 1978 each employer (except any employer making payments instead of contributions pursuant to subsection (b) or (d)) shall pay contributions equal to three and one-half per cent of wages paid by the employer during such calendar years. (b) In lieu of contributions required of employers under this chapter, the State and its political subdivisions and instrumentalities (hereinafter referred to as "governmental employers" or "governmental employer" as the case may be) shall pay in advance to the director of labor and industrial relations for the fund an amount equivalent to: (1) The amount of regular benefits plus one-half the amount of extended benefits payable in each calendar quarter beginning prior to January 1, 1979, to individuals based on wages paid by governmental employers; and (2) The amount of regular benefits plus the amount of extended benefits payable in each calendar quarter beginning after December 31, 1978, to individuals based on wages paid by governmental employers. The director shall notify each governmental employer of the amount of money required to be paid to the director. Such amounts shall be paid to the director prior to the commencement of the calendar quarter in which benefits are payable. If benefits paid an individual are based on wages paid by one or more governmental employers and one or more other employers, or on wages paid by two or more governmental employers, the amount payable by a governmental employer to the director for the fund shall be in accordance with the provisions of paragraphs (1) and (2) of subsection (e) of this section, governing the allocation of benefit costs among employers liable for payments in lieu of contributions and between such employers and employers liable for contributions. For the purposes of paragraphs (1) and (2) of subsection (e), governmental employers are employers liable for payments in lieu of contributions. The amount of payment required from governmental employers shall be ascertained by the department of labor and industrial relations and shall be paid from the general funds of such governmental employers upon approval by the comptroller of the State or the director of finance of the respective counties, except that to the extent that benefits are paid on the basis of wages paid by governmental employers from special administrative funds, the payment into the unemployment compensation fund shall be made from such special funds. (c) Notwithstanding the provisions of subsection (b) of this section to the contrary, any governmental employer which is or becomes subject to this chapter after December 31, 1977, may, in accordance with this subsection (c), elect to pay contributions pursuant to the provisions of this part (with the exception of the provisions in subsection (b) and subsections (d) through (g) of this section) applicable to other employers. For the purposes of this subsection (c) the term "governmental employer" shall apply to the State and to each county of this State, as separate and individual employers. (1) Any governmental employer which is subject to this chapter on January 1, 1978, may elect to become liable for contributions for a period of not less than two calendar years beginning with January 1, 1978; provided it files with the department a written notice of its election within the thirty-day period following such date. (2) Any governmental employer which becomes subject to this chapter after January 1, 1978, may elect to become liable for contributions for a period beginning with the date on which such subjectivity begins and continuing for not less than two calendar years thereafter by filing with the department a written notice of its election within the thirty-day period following the date on which such subjectivity begins. (3) Any governmental employer which has been making payments in lieu of contributions in accordance with subsection (b) of this section for a period subsequent to January 1, 1978, may elect to become liable for contributions for a period of not less than two calendar years beginning with January 1 of the year following the year in which the election is made by filing with the department a written notice of its election not later than thirty days prior to the beginning of any calendar year. (4) Any governmental employer which makes an election in accordance with paragraph (1), (2), or (3) of this subsection shall continue to be liable for contributions until it files with the department a written notice terminating its election not later than thirty days prior to the beginning of the calendar year for which such termination shall be effective. (5) The department may for good cause extend the period within which a notice of election or a notice of termination must be filed. (6) The department shall notify each governmental employer of any determination which it may make of the effective date of any election which such governmental employer makes and of any termination of such election. Such determination shall be conclusive upon such governmental employer unless, within fifteen days after the notification was mailed or delivered to it, such governmental employer files with the department an application for review and redetermination, setting forth the reasons therefor. The department shall promptly review and reconsider its determination and shall thereafter issue a redetermination in any case in which such application has been filed. Any such redetermination shall be conclusive upon the governmental employer unless, within fifteen days after the redetermination was mailed or otherwise delivered to it, the governmental employer files written notice of appeal with the department setting forth the reasons for the appeal. The appeal shall be heard by a referee in accordance with applicable provisions of sections 383-38 and 383-39, and the decision of the referee shall be subject to the provisions of section 383-41. (7) Should any governmental employer, having made payments in lieu of contributions in accordance with subsection (b) of this section, elect to pay contributions under this part, any amount of positive reserve balance remaining in the self-financing account of such employer after all liabilities against such account under subsection (b) of this section have been satisfied shall be refunded to such employer. (8) Any governmental employer which elects to become liable for contributions under this part shall pay contributions for the first year of such election at the rate which applies to employers who become subject to this chapter during such year. (d) Benefits paid to employees of nonprofit organizations shall be financed in accordance with the provisions of this subsection. For the purpose of this subsection, a nonprofit organization is an organization (or groups of organizations) described in section 501(c)(3) of the United States Internal Revenue Code which is exempt from income tax under section 501(a) of such code. (1) Liability for contributions and election of reimbursement. Any nonprofit organization which is, or becomes, subject to this chapter on or after January 1, 1972, shall pay contributions under the provisions of this part (with the exception of the provisions in subsection (b) of this section) applicable to other employers unless it elects, in accordance with this paragraph, to pay to the director of labor and industrial relations for the fund an amount equal to the amount of regular benefits and of one-half of the extended benefits paid, that is attributable to service in the employ of such nonprofit organization, to individuals for weeks of unemployment which begin during the effective period of such election. (A) Any nonprofit organization which is, or becomes, subject to this chapter on January 1, 1972, may elect to become liable for payments in lieu of contributions for a period of not less than two calendar years beginning with January 1, 1972, provided it files with the department a written notice of its election within the thirty-day period immediately following such date, or within a like period immediately following the date of enactment of this subparagraph, whichever occurs later. (B) Any nonprofit organization which becomes subject to this chapter after January 1, 1972, may elect to become liable for payment in lieu of contributions for a period beginning with the date on which such subjectivity begins and continuing for not less than two calendar years thereafter by filing a written notice of its election with the department not later than thirty days immediately following the date of the determination of such subjectivity. (C) Any nonprofit organization which makes an election in accordance with subparagraph (A) or (B) of this paragraph will continue to be liable for payments in lieu of contributions until it files with the department a written notice terminating its election not later than thirty days prior to the beginning of the calendar year for which such termination shall be effective. (D) Any nonprofit organization which has been paying contributions under this chapter for a period subsequent to January 1, 1972, may change to a reimbursable basis by filing with the department not later than thirty days prior to the beginning of any calendar year a written notice of election to become liable for payments in lieu of contributions. Such election shall not be terminable by the organization for that and the next calendar year. (E) The department may for good cause extend the period within which a notice of election, or a notice of termination, must be filed and may permit an election to be retroactive but not any earlier than with respect to benefits paid after December 31, 1971. (F) The department, in accordance with such regulations as the director of labor and industrial relations may prescribe, shall notify each nonprofit organization of any determination which it may make of such organization's status as an employer and of the effective date of any election which such organization makes and of any termination of such election. Such determination shall be conclusive upon such organization unless, within fifteen days after the notice thereof was mailed to its last known address or otherwise delivered to it, such organization files with the department an application for review and redetermination, setting forth the reasons therefor. The department shall promptly review and reconsider its determination and shall thereafter issue a redetermination in any case in which such application has been filed. Any such redetermination shall be conclusive upon the organization unless, within fifteen days after the redetermination was mailed to its last known address or otherwise delivered to it, the organization files written notice of appeal with the department, setting forth the reasons for the appeal. The appeal shall be heard by a referee in accordance with applicable provisions of sections 383-38 and 383-39, and the decision of the referee shall be subject to the provisions of section 383-41. (2) Reimbursement payments. Payments in lieu of contributions shall be made in accordance with the provisions of subparagraph (A). (A) As determined by the director of labor and industrial relations, the department shall bill each nonprofit organization (or group of such organizations) which has elected to make payments in lieu of contributions for an amount equal to the full amount of regular benefits plus one-half of the amount of extended benefits paid during the week, or other prescribed period, that is attributable to service in the employ of such organization other than previously uncovered services as defined in section 383-22(b). (B) Payment of any bill rendered under subparagraph (A) shall be made not later than thirty days after such bill was mailed to the last known address of the nonprofit organization or was otherwise delivered to it, unless there has been an application for review and redetermination in accordance with subparagraph (D). (C) Payments made by any nonprofit organization under the provisions of this subsection shall not be deducted or deductible, in whole or in part, from the remuneration of individuals in the employ of the organization. (D) The amount due specified in any bill from the department shall be conclusive and binding upon a nonprofit organization unless, within fifteen days after the notice thereof was mailed to its last known address or otherwise delivered to it, such organization files with the department an application for review and redetermination, setting forth the reasons therefor. The department shall promptly review and reconsider the amount due specified in the bill and shall thereafter issue a redetermination in which such application has been filed. Any such redetermination shall be conclusive on the organization unless, within fifteen days after the redetermination was mailed to its last known address or otherwise delivered to it, the organization filed written notice of appeal with the department, setting forth the reasons for the appeal. The appeal shall be heard by a referee in accordance with applicable provisions of sections 383-38 and 383-39, and the decision of the referee shall be subject to the provisions of section 383-41. (3) Provision of security. Any nonprofit organization that elects to become liable for payments in lieu of contributions shall be required, within thirty days after the effective date of its election, to deposit with the department an amount of money as security. (A) The amount of the deposit required by this paragraph shall be equal to .2 per cent of the organization's total wages paid for employment during the calendar year immediately preceding the effective date of the election. If the nonprofit organization did not pay wages in each of the four calendar quarters of such calendar year, the amount of the deposit shall be as determined by the department. (B) Any deposit of money in accordance with this paragraph shall be retained by the department in an escrow account until liability under the election is terminated, at which time it shall be returned to the organization, less any deductions as hereinafter provided. The department may deduct from the money deposited under this paragraph by a nonprofit organization to the extent necessary to satisfy any due and unpaid payments in lieu of contributions. The department shall require the organization within thirty days following any deduction from a money deposit under the provisions of this subparagraph to deposit sufficient additional money to make whole the organization's deposit at the prior level. The department may, at any time, review the adequacy of the deposit made by any organization. If, as a result of such review, the department determines that an adjustment is necessary, it shall require the organization to make additional deposit within thirty days of written notice of its determination or shall return to the organization such portion of the deposit as it no longer considers necessary, whichever action is appropriate. Disposition of income from moneys held in escrow shall be governed by the applicable provisions of the state law. (C) If any nonprofit organization fails to make a deposit, or to increase or make whole the amount of a previously made deposit, as provided under this paragraph, the department may terminate such organization's election to make payments in lieu of contributions and such termination shall continue for not less than the four-consecutive-calendar-quarter period beginning with the quarter in which such termination becomes effective; provided that the department may extend for good cause the applicable deposit or adjustment period by not more than thirty days. (e) Each employer, other than government employers, that is liable for payments in lieu of contributions under this section shall pay to the director of labor and industrial relations for the fund the amount of regular benefits plus the amount of one-half of extended benefits paid that are attributable to service in the employ of such employer. If benefits paid to an individual are based on wages paid by more than one employer and one or more of such employers are liable for payments in lieu of contributions, the amount payable to the fund by each employer that is liable for such payments shall be determined in accordance with the provisions of paragraph (1) or paragraph (2). (1) Proportionate allocation when fewer than all base-period employers are liable for reimbursement. If benefits paid to an individual are based on wages paid by one or more employers that are liable for payments in lieu of contributions and on wages paid by one or more employers that are liable for contributions, the amount of benefits payable by each employer that is liable for payments in lieu of contributions shall be an amount which bears the same ratio to the total benefits paid to the individual as the total base-period wages paid to the individual by such employer bear to the total base-period wages paid to the individual by all of the individual's base-period employers. (2) Proportionate allocation when all base-period employers are liable for reimbursement. If benefits paid to an individual are based on wages paid by two or more employers that are liable for payments in lieu of contributions, the amount of benefits payable by each such employer shall be an amount which bears the same ratio to the total benefits paid to the individual as the total base-period wages paid to the individual by such employer bear to the total base-period wages paid to the individual by all of the individual's base-period employers. (f) Two or more employers, including governmental employers, that have become liable for payments in lieu of contributions, may file a joint application to the department of labor and industrial relations for the establishment of a group account for the purpose of sharing the cost of benefits paid that are attributable to service in the employ of such employers. Each such application shall identify and authorize a group representative to act as the group's agent for purposes of this subsection. Upon its approval of the application, the department shall establish a group account for such employers effective as of the beginning of the calendar quarter in which the department receives the application, and it shall notify the group's representative of the effective date of the account. Such account shall remain in effect for not less than two years and thereafter until terminated at the discretion of the department or upon application by the group. The director of labor and industrial relations shall prescribe such regulations as the director deems necessary with respect to applications for establishment, maintenance and termination of group accounts that are authorized by this paragraph, for addition of new members to, and withdrawal of active members from, such accounts, and for the determination of the amounts that are payable under this paragraph by members of the group and the time and manner of such payments. (g) When a nonprofit organization terminates its self-financing status and elects to pay contributions under this chapter, any remaining amount of positive reserve balance in its self-financing account will be transferred to its contributory reserve account. The department shall determine the contribution rate of such employer in accordance with provisions of section [383-66(a)(2)]. [L 1939, c 219, §7(b); am L 1941, c 304, §1, subs 20; RL 1945, §4247; am L 1953, c 41, §1(5); RL 1955, §93-61; am L 1959, c 222, §1(3); am L Sp 1959 2d, c 1, §27; am L 1964, c 55, §3; HRS ; am L 1971, c 187, §7; am L 1973, c 120, §2; am L 1976, c 157, §§4, 6; am L 1977, c 148, §6 and c 169, §1; am L 1980, c 232, §20; gen ch 1985; am L 1986, c 180, §1] Attorney General Opinions Subsection (b) is in itself an authorization for payment of benefits from the general funds of the governmental employers and moneys from said funds may be used for payment of benefits to legislative employees. Att. Gen Op. 61-63. Case Notes Taxpayer's delay in filing its self-financing application did not constitute good cause. 70 H. 72, 762 P.2d 796 (1988). Cited: 41 H. 508, 509 (1957).