Untitled Texas Attorney General Opinion ( 1962 )

THEAYTORNEYGENERAL
OF XAS
April 6, 1962
Mr. Richard L. Coffman Opinion No, WW-1301
Administrator
Texas Employment Commission Re: Compensation experienke to be
TEC Building used under subsection 5(c,)(4)
Austin, Texas of Article 5221b, in the event
of an approved transfer of com-
pensation ex erience under sub-
section 5(c)i)
7) of said Article
with respect to acquisition on
a date subsequent to the October
1 computation date specified in
subsection 5(d) of said Article
Dear Mr. Coffman: under the stated facts.
Your request for an opinion presents the following
fact situation:
On December 31, 1960, a subject employer, hereinafter
called Employer A acquired the businesses and assets of two
other (subsidiaryI corporations, hereinafter called Employers B
and C, respectively',through a merger and liquidation effective
that date.
The 1961 benefit wage ratio ,of Employer A is 8.5$, based
upon compensation experience of this corporation, exclusively, for
the 36-month period ended September 30, 1960. ,(Three-yearbenefit
wages $3,0479317 divided by 3-year wages $36,21+8,580.)The bene-
fit wage r,atio,8.5$, modified by the State Experience Factor,
yields a tax rate of 1,6$ for 1961.
After Employer B and Employer C were merged into Em-
ployer A (the parent) on December 31, 1960, Joint Applications
for Transfer of Compensatiqn Experience from Employers B and C
to Employer A were promptly filed on or about January 30, 1961,
as contemplated by subsection 7(c)(7) of the Texas Unemployment
Compensation Act (Article 5221b-5(c),(7),V.C.S.).,Both of these
joint applications were approved by the Texas Employment Commission
on March 8, 1961, and the compensation experience of the two pre-
decessor corporations was transferred to the compensation exper-
ience account of the successor, Employer A, effective as of the
date of the merger and acquisition, December 31, 1960.
Employer B (now liquidated) had a benefit wage ratio of
4.4% based upon benefit wages totaling $338,&24 and taxable wages
totaling $7,730,987 for the 36-month period ended September 30, 1960.
Mr. Richard L. Coffman - Page 2 - (WW-1301)
Thus, this corporation would have a tax rate of 0.8% for 1961
if its operations and employment had continued after December
31, 1960.
Employer C (now liquidated) had a benefit wage ratio
of 1.8 based upon benefit wages totaling $2,173 and taxable
wages totaling $114,807 for the 36-month period ended September
30, 1960; Thus,,this corporation would have a tax rate of 0.4%
for 1961, if it had continued operations and employment beyond
December 31, 1960.
The compensation experience generated by the two pre-
decessor corporations during the three-year period preceding
October 1, 1960, was relatively more favorable than the compen-
sation experience generated by the successor Employer A during
the same period. All of the compensation experience of Employer
B and Employer C, including compensation experience for the fourth
calendar quarter of 1960, has been transferred to the experience
rating account of Employer A as of December 31, 1960, the effective
date of the acquisitionsby merger and liquidation.
While the benefit wage ratio of Employer A standing alone
is 8.5$, if the compensation experience of the predecessor corpor,a-
tions were to have been combined with the compensation experience
of Employer A, the 1961 tax rate computation for the combined
companies would have produced a benefit wage ratio of 7.7% based
upon total benefit wages of $3,3&7,914 and wages totaling $44,094,375
for the 36-month period preceding October 1, 1960. This compu-
tation, had it been made, would have yielded a 1961 tax rate of
1.4% based upon the combined compensation experience;
You have requested an opinion concerning ,whetherthe 1961
tax rate for the surviving parent corporation, Employer A, should
be computed on the basis of the aggregate compensation experience
of all three employers combined retroactively as of October 1, 1960.
Section 7(d) of the Texas Unemployment Compensation Act
(Art. 5221b-5(d), V.C.S.) expressly provides, "The computation
date for &J experience tax rates shall be aa of October 1 of the
year preceding the calendar year for which such rates are to be.;"
effective I, (Emphasis supplied.) "As of" means "as if it
were." Unitld'Siates v. Monroe-Van Helms Company 243 F.2d lo,&3
(C.C.A. ,5th 1957) Horwitz v, New York Life Insurince Companv
F.2d 295 (C.C.A. 4th 1935). Therefore, although the computation
is actually made sometime subsequent to October 1 as a matter of
administrative necessity, it must be performed as if it were
October 1 and can onlv take into consideration the f,actsituation
existing as of that date. Citv of Twin Falls v. Koehler, 63 Idaho
562, 123 P.2d 715 (19421,
Mr. Richard L, Coffman - Page 3 - (WW-1301)
The computation date forexperience tax rates was
changed to October 1 in an enactment declared to be "necessary
and indispensable to the proper and efficient administration
of the Texas Unemployment Compensation Act."~ Acts 1957, 55th
Leg*, p.,l359, ch, 460, Sec. 16.~ Previously, the computation
date was January 1, which created serious administrative problems~
since the tax rates became effective on the same date. Acts 1955,
p0 399 ch. 116 Sec. 5' Acts 1949, 51st Leg., p. 294
%thl$g*Aec. 5E*'Acts 1938 4th Leg 3rd C.S., p. 1993. When
the rat&s were cimputed as Af January-i, it was necessarily long
after January 1 (and after the rates were already in effect)
before the necessary information could be gathered, rates com-
puted and employers notified. Computation of experience tax
rates under the Texas Unemployment Compensation Act is not a
simple matter, since each tax rate must take into consideration
the amount of,benefit wages paid by emplogers and the amount of
benefits paid out to unemployed individuals on a state-wide basis
during a stated one-year period, as well as the individual employer's
wage and cornensation experience during a three-year period. See
Art. 5221b-5Ii
c), V.C.S. Obviously, it contributed a great deal
to the orderly and efficient administration of the Act for the
legislature to change the computation date to October I, allowing
the Texas Employment Commission ample time to compute experience
tax rates before they went into effect. The change made it pos-
sible for the Commission to schedule its work in a more efficient
manner and enabled employers to plan their business activities for
the coming year on the basis of fixed tax rates.
If experience tax rates were re-computed subsequent to
October 1 when business acquiditions occur during the last three
months of the year, the purpose of the legislature in providing
for "all" rates to be computed as of October 1 would to some
extent be frustrated. Records of the Texas Employment Commission
reveal that several hundred such acquisitions occur during the
last three months of each year. Since rates are now computed in
the weeks immediately after October 1, a great many rates would
have to be re-computed, and,in many cases, neither the employers
concerned nor the Texas Employment Commission would have the
benefit of knowing ,whatthe tax rates would be'before they went
into effect on January 1.
It should be noted that business acquisitions do not
always result in lower 'rates; in fact, the smaller businesses
being acquired frequently have less favorable compensation
experience than the parent company. Thus, in many instances
the successor employer does not have the same interest in
obtaining the benefit of the predecessor's compensation experience
at the earliest possible date as does Employer A in this case.
Mr. Richard L. Coffinen- Page 4 - ~(~-1301)
It was clearly the intention of the legislature to make
the computation date for all experience tax rates October 1, for
the plain words of the statute so state. A clear and unambiguous
law should be enforced as it reads. Franklin v. Pietzsch, 334
;?.;Ne214 (Civ. App., 1960, error ref. n.r.e.1,~Catelv v.
I) v 151 Tex. 5.88,254 ;:;;2d 98 (1952). As was stated in
State Do&d of Insurance v. q, 158 Tex. 612, 615, 315 S.W.2d
279 281 (19581 'When we abandon the plain meaning of words,
staiutory cons&action rests upon insecure and obscure foundations
a$ beet."
The question has been raised as to whether Section 7(d)
of the Texas Compensation Act is inconsistent with
Subsection 7 5221b-5, Subsection (c')(7)and (d), V.C.S.).
Section 7(c) reads in part as followsc
"If an employing unit acquire@ all or a part of
the organization, trade or business of an employer,
such acquiring successor employing unit and such pre-
decessor employer may jointly make written application
to the Commission for,that compensation experience of
such predecessor empl$yer which is attributable to
the organization, trade or business or the part thereof
acquired to be treated as compensation experience of
such successor employing unit. . . .
"If the application for transfer of experience
is approved and the successor employing unit was an
employer immediately prior to the acquisition, such
successor shall say contributions from the date of the
acauisition until the end of the calendar vear in
which the acauisition occurred at the rate a?anlicable
to the successor on the date of the acauisition. . . .I1
(Emphaais supplied.)
The above statute deals only with the tax rate of the
successor employer during the remainder of the calendar year
following an acquisition. It is silent as to the tax rate there-
after. Employer A contends that it can reasonably be inferred
that the legislature intended for a new tax rate based upon
the combined compensation experience of the employers to
become effective after the expiration of the year in which
the acquisition occurred because this portion of the statute
only provides for the old rates to remain effective until the
end of the year. However, this inference is countered by the
express provisions of Section 7(d) of the Act, which was enacted
subsequent to the portion of Section 7(c)(7) in question, quoted
above. Acts 1957, 55th Leg., p. 1355, ch. 460, Sec. 4; Acts 1949,
51st Leg., p. 293, ch. 148, Sec. 5D. It should be noted that
the statute provides for only one computation of experience tax
rates each year and expressly commands that the computation date
for all such rates "shall be as of October 1." Art. 522lb-5(d),
V.C.S.
Mr. Richard L. Coffinan-,Page 5 - .(WW-13~01)
Whenever possible, statutes and parts of statutes should
be construed so as to eliminate conflict between their various
provisions. ~If Section 7(c) (7)of the Texas Unemployment
Compensation Act were co&rued as requiring a re-computation of
experience tax rates to take into account business acquisitions
occurring during the last three months of the year it would be
in direct conflict with and re ugnant to Section 7[d) of the Act.
Furthermore, since Section 7(dP ,was amended to its present form
subsequent to the ena,ctmentof the salient portion of Section
7(c,)(7),if the two ssctions conflict it is Section 7(d) which
must prevail. 39 Tex. Jur. 139, Statutes,.Sec. 74.
The long-continued construction given these statutes
by the Texas Employment Commission is entitled to be given wei&ht
when consideration is being given to their proper meaning and
effect. Reed v. Triolett. Countv Judge. et al., 232 S.W.2d 169
(Civ. App.
.DDlila~:
:~2````d~r``!``~S``~i98;js``~;,C``~,,C````~ke``
(whenthe computatioi date ia; J%u&":)yand "un%r E",estatute
now in effect the Commission has consistently refused to re-oompute
experience tax rates to take into acoountbusineas acquisitions
occurring subsequent to the computation date.
Since the computation date for experience tazratea.was
changed to October 1 in 1957 many hundreds of rates have been
computed, and thousands of dollars in taxes have been collected on
the basis of such rates, in cases involving business acquisitions
occurring during the last calendar quarter of the year. If the
Commission's inter retation of the statute were found to be
erroneous at this fate date , all such rates would have to be
re-figured. Almost all of the rates would be changed. In many
cases additional taxes would have to be paid; in other cases taxes
would have to be refunded. These circumstances give added weight
to the view that thi~,Cqmmiaaion'ainterpretation of the statute
should not be overruled without compelling reasons.
Finally, the legislature has met in two regular sessions
and numerous called seaaions since the computation date for exper-
ience tax rates was changed to October 1, yet it has not disturbed
the Commiasion~s construction of the statute. Legislative sanction
of such construction may therefore be presumed. 39 Tex. Jur. 175,
Statutes, Sec. 92.
SUMMARY
An acquisition subsequent to the October 1
computation date specified in subsection 7(d)
of the Texas Unemployment Compensation Act
Mr. Richard L. Coffman - Page 6 - (WW-1301)
does not affect the experience tax rate
resulting from such computation.
Sincerely youm,
WILL WILSON
Attorney General of Texas
BY O+*
Ernea$ Fortenberry
Assistant
EF/fb
APPROVED: : :
OPINION COMMITTEE
Wr V. Geppert, Chairman
F. C. Jack Goodman
Thomas Burrua
Dudley McCalla
REVIEWED FOR,TBE ATTORNEY GENERAL
BY: HOUGHTON BROWNLEE, JR.