Contribution rates, how determined
HRS §383-66
in effect383-66. Contribution rates, how determined
(a) The department, for the nine-month period April 1, 1941, to December 31, 1941, and for each calendar year thereafter, except as otherwise provided in this part, shall classify employers in accordance with their actual experience in the payment of contributions and with respect to benefits charged against their accounts with a view to fixing the contribution rates to reflect this experience. The department shall determine the contribution rate of each employer in accordance with the following requirements:
(1) The standard rate of contributions payable by
each employer for any calendar year through 1984 shall be three per cent. For
calendar years 1985 and thereafter, the standard rate of contributions payable
by each employer shall be five and four-tenths per cent;
(2) No employer's rate for the calendar year 1942 and
for any calendar year thereafter shall be other than the maximum rate unless
and until the employer's account has been chargeable with benefits throughout
the thirty-six consecutive calendar month period ending on December 31 of the
preceding calendar year, except that, for the calendar year 1956 and for each
calendar year thereafter, an employer who has not been subject to the law for a
sufficient period to meet this requirement may qualify for a rate other than
the maximum rate if the employer's account has been chargeable throughout a
lesser period but in no event less than the twelve consecutive calendar month
period ending on December 31 of the preceding calendar year. For the calendar
years 1985 through 1991, the contribution rate for a new or newly covered
employer shall be the sum of the employer's basic contribution rate of three
and six-tenths per cent and the fund solvency contribution rate determined for
that year pursuant to section 383-68(a), until the employer's account has been
chargeable with benefits throughout the twelve consecutive calendar month
period ending on December 31 of the preceding calendar year; except that no
employer's contribution rate shall be greater than five and four-tenths per
cent and no employer with a negative reserve ratio shall have a contribution
rate less than the employer's basic contribution rate. For calendar years 1992
and thereafter, the contribution rate for a new or newly covered employer shall
be the contribution rate assigned to any employer with .0000 reserve ratio,
until the employer's account has been chargeable with benefits throughout the
twelve consecutive calendar month period ending on December 31 of the preceding
calendar year;
(3) Any amount credited to this State under section
903 of the Social Security Act of 1935, as amended, which has been appropriated
for expenses of administration, whether or not withdrawn from the trust fund,
shall be excluded from the fund for the purposes of this paragraph. Any
advance that may be made to this State under section 1201 of the Social
Security Act of 1935, whether or not withdrawn from this trust fund, shall be
excluded from the fund for the purposes of this paragraph. No employer's rate shall
be reduced in any amount that is not allowable as an additional credit, against
the tax levied by the Unemployment Tax Act pursuant to section 3302(b) of the
federal Internal Revenue Code of 1986, as amended, or pursuant to any other
federal statute, successor to section 3302(b), which provides for the
additional credit now provided for in section 3302(b);
(4) If, when any classification of employers is to be
made (which may be after the commencement of the period for which the
classification is to be made), the department finds that any employer has
failed to file any report required in connection therewith or has filed a
report that the department finds incorrect or insufficient, the department
shall notify the employer thereof by mail addressed to the employer's last
known address. Unless the employer files the report or a corrected or
sufficient report, as the case may be, within fifteen days after the mailing of
the notice, the maximum rate of contributions shall be payable by the employer
for the period for which the contribution rate is to be fixed. Effective
January 1, 1987, the director, for excusable failure, may redetermine the
assignment of the maximum contribution rate in accordance with this section,
provided the employer files all reports as required by the department and
submits a written request for redetermination before December 31 of the year for
which the contribution rate is to be fixed;
(5) For the purpose of sections 383-63 to 383-69, if
after December 31, 1939, any employing unit in any manner succeeds to or
acquires the organization, trade, or business, or substantially all the assets
thereof (whether or not the successor or acquiring unit was an "employing
unit", as that term is defined in section 383-1 before the acquisition),
or after December 31, 1988 and before December 31, 1992, acquires a clearly
identifiable and segregable portion of the organization, trade, or business of
another that at the time of the acquisition was an employer subject to this
chapter, and the successor continues or resumes the organization, trade, or
business and continues to employ all or nearly all of the predecessor's
employees, or the successor continues or resumes the clearly identifiable and
segregable portion of the organization, trade, or business and continues to
employ all or nearly all of the employees of the clearly identifiable and
segregable portion, an application may be made for transfer of the predecessor's
experience record. If the predecessor employer has submitted all information
and reports required by the department including amended quarterly wage reports
identifying the employees transferred or retained and executed and filed with
the department before December 31 of the calendar year following the calendar
year in which the acquisition occurred on a form approved by the department a
waiver relinquishing the rights to all or the clearly identifiable and
segregable portion of the predecessor's prior experience record with respect to
its separate account, actual contribution payment, and benefit chargeability
experience, annual payrolls and other data for the purpose of obtaining a
reduced rate, and requesting the department to permit the experience record to
inure to the benefit of the successor employing unit upon request of the
successor employing unit, the experience record for rate computation purposes
of the predecessor shall thereupon be deemed the experience record of the
successor and the experience record shall be transferred by the department to
the successor employing unit and shall become the separate account of the
employing unit as of the date of the acquisition. Benefits chargeable to the
predecessor employer or successor employer in case of an acquisition of a
clearly identifiable and segregable portion of the organization, trade, or
business, after the date of acquisition on account of employment before the
date of the acquisition shall be charged to the separate account of the
successor employing unit. In case of an acquisition of a clearly identifiable
and segregable portion of the organization, trade, or business, the experience
record that inures to the benefit of the successor employer shall be determined
as follows:
(A) Wages, as used in section 383-61,
attributable to the clearly identifiable and segregable portion shall be for
the period beginning with the most recent three consecutive calendar years
immediately preceding the determination of rates under sections 383-63 to
383-69 and through the date of acquisition; and
(B) Reserve balance attributable to the
clearly identifiable and segregable portion shall be the amount determined by
dividing the wages, as used in section 383-61, of the clearly identifiable and
segregable portion in the three calendar years (or that lesser period as the
clearly identifiable and segregable portion may have been in operation)
immediately preceding the computation date of the rating period before which
the acquisition occurred by the total taxable payrolls of the predecessor for
the three-year period (or that lesser period as the clearly identifiable and
segregable portion may have been in operation) and multiplying the quotient by
the reserve balance of the predecessor employer calculated as of the
acquisition date;
provided that the waiver or waivers required
herein are filed with the department within sixty days after the date of
acquisition, the successor employing unit, unless already an employer subject
to this chapter, shall be subject from the date of acquisition to the rate of
contribution of the predecessor or of two or more predecessors if they have the
same contribution rate. If there are two or more predecessors having different
contribution rates, the successor shall be subject to the rate prescribed for new
or newly covered employers under paragraph (2) until the next determination of
rates under sections 383-63 to 383-69, at which time the experience records of
the predecessors and successor shall be combined and shall be deemed to be the
experience record of a single employing unit and the successor's rate shall
thereupon be determined upon the basis of the combined experience. If the
successor at the time of the transfer is an employer subject to this chapter,
the rate of contribution to which the successor is then subject shall remain
the same until the next determination of rates under sections 383-63 to 383-69,
at which time the experience records of the predecessor and successor shall be
combined and shall be deemed to be the experience record of a single employing
unit and the successor's rate shall thereupon be determined upon the basis of
the combined experience. For the purpose of determination of rates under
sections 383-63 to 383-69 of all successor employing units, waivers as required
herein, if not previously filed as hereinabove provided, shall be filed with
the department not later than March 1 of the year for which the rate is
determined; provided that no waiver shall be accepted by the department for
filing unless the employing unit executing the waiver has filed all reports and
paid all contributions required by this chapter;
(6) Whenever there is an amendment to this chapter
which, if immediately effective, would change an employer's rate of
contributions, the rate of the employer shall be changed in accordance with the
amendment and the new rate shall apply for the remainder of the calendar year
beginning with the calendar quarter immediately following the effective date of
the amendment providing for the change, unless otherwise provided by the
amendment;
(7) For the purposes of this section,
"contribution rate" shall mean the basic contribution rate as defined
in section 383-68 when applied to calendar year 1978 or any calendar year
thereafter; and
(8) For the purposes of this section, the terms
"employing unit", "employer", "predecessor", and
"successor" shall include both the singular and the plural of each
term. Nothing in this section shall prevent two or more successor employing
units, which each succeed to or acquire a clearly identifiable and segregable
portion of a predecessor employing unit, from gaining the benefit of the
clearly identifiable and segregable portion of the predecessor's experience
record;
provided that the terms of this section are complied
with, nothing herein shall bar a predecessor employer from waiving the rights
to all or the clearly identifiable and segregable portion of the predecessor's
prior experience record in favor of a successor employer where the successor
acquired a clearly identifiable and segregable portion of the predecessor's
organization, trade, or business after December 31, 1988 and before December
31, 1992.
(b) Notwithstanding any other provision of
this chapter, the following shall apply regarding assignment of rates and
transfers of experience:
(1) If an employing unit transfers its organization,
trade, or business, or a portion thereof, to another employing unit and, at the
time of the transfer, there is substantially common ownership, management, or
control of the two employing units, both employing units shall file a
notification of the transfer with the department on a form approved by the
department within thirty days after the date of the transfer. The department
shall transfer the experience records attributable to the transferred organization,
trade, or business to the employing unit to whom the organization, trade, or
business is transferred. The rates of both employing units shall be
recalculated and made effective beginning with the calendar year immediately
following the date of the transfer of the organization, trade, or business;
(2) If a person is not an employing unit as defined
in section 383-1 at the time it acquires the organization, trade, or business
of another employing unit, both the person and the employing unit shall file a
notification of the acquisition with the department on a form approved by the
department within thirty days after the date of the acquisition. If the
department determines at the time of the acquisition or thereafter, based on
objective factors that may include:
(A) The cost of acquiring the organization,
trade, or business;
(B) Whether the person continued the activity
of the acquired organization, trade, or business;
(C) How long the organization, trade, or
business was continued; or
(D) Whether a substantial number of new
employees were hired for performance of duties unrelated to the organization,
trade, or business activity conducted prior to the acquisition, that the
acquisition was solely or primarily for the purpose of obtaining a lower rate
of contribution, the person shall not be assigned the lower rate and shall be
assigned the contribution rate for a new or newly covered employer pursuant to
subsection (a)(2) instead;
(3) An employing unit or person who is not an
employing unit shall be subject to penalties under paragraph (4) or (5) if the
employing unit or person who is not an employing unit:
(A) Knowingly violates or attempts to violate
this subsection or any other provision of this chapter related to determining
the assignment of a contribution rate;
(B) Makes any false statement or
representation or fails to disclose a material fact to the department in
connection with the transfer or acquisition of an organization, trade, or
business; or
(C) Knowingly advises another employing unit
or person in a way that results in a violation or attempted violation of this
subsection;
(4) If the person is an employing unit:
(A) The employing unit shall be subject to
the highest rate assignable under this chapter for the calendar year during
which the violation or attempted violation occurred and for the consecutive
three calendar years immediately following; or
(B) If the employing unit is already at the
highest rate or if the amount of increase in the employing unit's rate would be
less than two per cent for the calendar year during which the violation or
attempted violation occurred, a penalty equal to contributions of two per cent
of taxable wages shall be imposed for the calendar year during which the
violation or attempted violation occurred and the consecutive three calendar
years immediately following. Any penalty amount collected in excess of the
maximum contributions payable at the highest rate shall be deposited in the
special unemployment insurance administration fund in accordance with section
383-127;
(5) If the person is not an employing unit, the
person shall be subject to a penalty of not more than $5,000. The penalty
shall be deposited in the special unemployment insurance administration fund in
accordance with section 383-127;
(6) For purposes of this subsection, the following
definitions shall apply:
(A) "Knowingly" means having actual
knowledge of or acting with deliberate ignorance or reckless disregard for the
requirements or prohibition involved;
(B) "Violates or attempts to
violate" includes but is not limited to intent to evade,
misrepresentation, or wilful nondisclosure;
(C) "Person" shall have the same
meaning as defined in section 7701(a)(1) of the Internal Revenue Code of 1986,
as amended; and
(D) "Organization, trade, or
business" shall include the employer's workforce;
(7) In addition to the civil penalties imposed by
paragraphs (4) and (5), any violation of this section may be prosecuted under
sections 383-142 and 383-143. No existing civil or criminal remedy for any
wrongful action that is a violation of any statute or any rule of the
department or the ordinance of any county shall be excluded or impaired by this
section;
(8) The department shall establish procedures to
identify the transfer or acquisition of an employing unit for the purposes of
this section; and
(9) This section shall be interpreted and applied in
a manner to meet the minimum requirements contained in any guidance or
regulations issued by the United States Department of Labor.
[L 1939, c 219,
§7(c)(3); am L 1941, c 304, §1, pt of subs 21; am L 1943, c 160, §1, subs 7; RL
1945, §4251; am L 1951, c 195, §1(8); am L 1953, c 41, §1(7); am L 1955, c 18,
§1(2) and c 51, §1(1); RL 1955, §93-65; am L 1957, c 145, §1(d); am L Sp 1959 2d,
c 1, §27; am L 1961, c 4, §1; am L 1962, c 13, §2; am L 1964, c 55, §§6, 7, 8;
HRS §383-66; am L 1974, c 155, §1; am L 1978, c 235, §1; am L 1981, c 189, §1;
am L 1984, c 229, §2; gen ch 1985; am L 1986, c 162, §5; am L 1987, c 107, §2;
am L 1990, c 51, §1; am L 1991, c 68, §7; am L 2005, c 114, §1; am L 2009, c
32, §1; am L 2012, c 263, §1; am L 2025, c 214, §6]
Source: Hawaii State Legislature (capitol.hawaii.gov), via Internet Archive capturesURL: http://www.capitol.hawaii.gov/hrscurrent/Vol07_Ch0346-0398/HRS0383/HRS_0383-0066.htmFetched: 11/10/2026