TRINET: CLOSING LOOPHOLES IN THE UI TRUST FUND
Problem: Client needed expedited legislative reform of employee leasing company (ELC) (also known as a professional employer organization or PEO) to improve the integrity of the New Jersey Unemployment Insurance (UI) trust fund.
Solution: February, 2013: AMG was hired by TRiNet, to develop a strategy to close various loopholes and strengthen the integrity of the UI Trust Fund to ensure that employers are paying into the UI trust fund based on their history and not avoiding their rate by transferring workers into different legal entities without the experience rating of the employer following.
AMG identified key sponsors in the Senate and the Assembly who were the chairs of the Labor Committees in each house where such legislation would be reviewed and approved. AMG worked with the sponsors to draft a measure that boosts UI integrity by allowing ELCs to report and pay UI contributions by either using the UI account and rate of each client or by using the aggregated account and rate of the ELC. The loophole was closed by also eliminating the ability of a client to enter into a relationship with an ELC and on terminating, be assigned the new employer rate.
After securing support from key statewide business groups, AMG rallied support for the measure with Legislative Leaders and members of the Senate and Assembly Labor Committees. The measure was introduced on December 5, 2013, approved in the Senate and Assembly Labor Committee, passed by both Houses and signed into law on January 17, 2014, less than 45 days after introduction. Following the law change, AMG worked with New Jersey Department of Labor Workforce Development officials to promulgate regulations with UI Trust Fund.
At a time when government deadlock can be more common than compromise, AMG navigated a very complex closing of a tax loophole that promoted integrity and leveled the playing field for one of the largest employee leasing companies in the US.