EXPERIENCE RATING CREDITS FOR UNEMPLOYMENT COMPENSATION
In computing surplus in the Unemployment Compensation fund for experience rating purposes, only credits currently available for application against contributions should be deducted.
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June 14, 1951
Honorable John H. Robertson, Commissioner
Employment Security Department
State of Washington
Olympia, Washington Cite as: AGO 51-53 No. 71
Dear Mr. Robertson:
Receipt is acknowledged of your letter of June 13, 1951, requesting our opinion as to what "credits previously established" shall be considered in computing surplus for experience rating purposes for the credit year beginning June 30, 1951, pursuant to section 108 (g) of chapter 35, Laws of 1945 as added by section 2, chapter 235, Laws of 1949, section 50.28.030 RCW; the circumstances being that credits were given for the credit year 1947-1948 and the credit year 1948-1949 but no subsequent credits have been given.
It is our conclusion that in computing surplus for the credit year beginning June 30, 1951, only credits now capable of being applied in payment of contributions should be subtracted from the amount of money in the Unemployment Compensation Fund.
Section 50.28.030 RCW [[RCW 50.28.030]]defines surplus as follows:
[[Orig. Op. Page 2]]
"'Surplus' means the lesser of (1) that amount by which the moneys in the unemployment compensation fund as of the effective date, after subtracting the amount of credits previously established under this title and outstanding as valid on such date, exceed four times the amount of contributions paid on the payrolls reported by all employers on or before the cut-off date for the preceding calendar year, or (2) an amount equal to forty per cent of the contributions so paid for the preceding calendar year. No portion of the surplus shall be credited to any employer unless the amount of the surplus is at least ten per cent of the amount of the contributions paid on the payrolls reported by all employers on or before the cut-off date for the preceding calendar year."
It will be noted that in determining surplus under the first alternative, an amount is subtracted from the total of money in the Unemployment Compensation Fund equal to the amount of credits previously established and outstanding asvalid on that date. Thus only currently valid credits need be considered. All of the credits now outstanding will be more than three years old when the new credit year begins.
Section 109 (g), chapter 35, Laws of 1945, as added by section 3, chapter 235, Laws of 1949, section 40.28.040 RCW [[RCW 50.28.040]], in paragraph (g) provides for the notification of each employer of the amount of credit to which he is entitled. The act then says:
"The amount shown on the notice may be applied only against contributions which are payable by him on wages paid in the credit year and reported not later than the date prescribed by the Commissioner for payment of contributions on wages paid in the last quarter of such credit year * * *."
Under this section credits are applicable only for the payment of contributions pertaining to the credit year. Consequently, any credits which are now outstanding were applicable to credit years more than three years old, namely, 1947-1948 and 1948-1949. These credits may be applied in payment of contributions now only in cases in which payment is still to be made for wages [[Orig. Op. Page 3]] accrued in the credit years mentioned. By section 107, chapter 35, Laws of 1945, as amended by section 21, chapter 215, Laws of 1947, sections 50.24.190 and 50.24.200 RCW, no action for the collection of contributions may be commenced after three years and the Commissioner is authorized to charge off such accounts when deemed uncollectible. It is our opinion that no cognizance need be taken of credits available against such charged off accounts. For accounts over three years old which may still be collected, as for example those involved in insolvency proceedings or other legal actions, credit may still be claimed if available. If any such accounts remain open, it is our opinion that credits which might be applied to them must be deducted when computing surplus.
In the case of accounts which have been paid, an employer, under section 103, chapter 35, Laws of 1945, section 50.24.150 RCW, may apply for an adjustment or refund of accounts erroneously collected within three years after date of payment. This limitation dates from payment rather than accrual. Thus there may be accounts pertaining to the credit years 1947-1948 and 1948-1949 as to which requests for adjustment by application of credits may still be made. Credits available for such accounts must be deducted in computing surplus. With the exceptions above noted, it is our opinion that no credits more than three years old need be considered in computing surplus for experience rating purposes.
Very truly yours,
LYLE L. IVERSEN
Assistant Attorney General