1.
Definitions. In this section:
a. "Business entity" means any form of
business organization, including proprietorships, partnerships, limited
partnerships, cooperatives, limited liability companies, and corporations.
b. "Constituent business" means a
business entity of which a surviving entity is composed.
c. "Surviving entity" means the business
entity resulting from a merger, exchange, or transfer of business assets from
one or more constituent businesses.
2.
Experience rating. The
surviving entity resulting from a merger, exchange, or transfer of business
assets will be assigned an experience rating derived from the combined premium,
payroll, and loss history of all the employer accounts involved in the merger,
exchange, or transfer. The employer accounts of the constituent businesses
shall merge, exchange, or transfer into the surviving entity. The organization
may change the experience rating of the surviving entity.
If the organization determines a business entity is a
continuation or extension of an already existing business entity and not a
surviving entity composed of one or more constituent businesses, and the
existing business entity is already experience-rated, the experience rate of
the existing business entity will transfer to its continuation or extension.
Future experience rates will be calculated using the combined premium, payroll
and loss history from the existing business entity and its continuations or
extensions.
3.
Compensation coverage.
a. The
organization may transfer compensation coverage of any constituent business to
the surviving entity. The organization may require the surviving entity to
provide information on the constituent businesses of which it is comprised and
its owners, officers, directors, partners, and managers. If the organization
determines a surviving entity is merely a continuation of the constituent
business or businesses, the organization may transfer the premium liability to
the surviving entity or decline coverage until the delinquency is resolved.
b. Factors the organization may
consider in determining if a surviving entity is a mere continuation of a
constituent business include:
(1) Whether
there is basic continuity of the constituent business in the surviving entity
as shown by retention of key personnel, assets, and general business
operations.
(2) Whether the
surviving entity continues to use the same business location or telephone
numbers.
(3) Whether employees
transferred from the constituent business to the surviving entity.
(4) Whether the surviving entity holds itself
out as the effective continuation of the constituent business.
c. The organization shall
calculate premium based on actual taxable payroll for the period of time
involved. The organization may prorate the payroll cap based on one-twelfth of
the statutory payroll cap per month per employee at the beginning of the period
of time involved.
Notes
N.D. Admin Code
92-01-02-13
Effective June 1, 1990;
amended effective January 1, 1992; April 1, 1997; May 1, 2002; July 1, 2004;
July 1, 2010.
General Authority: NDCC 65-02-08
Law Implemented: NDCC
65-04-01