DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES  
UNEMPLOYMENT AGENCY  
SECURITY FOR REIMBURSEMENT FINANCING OF UNEMPLOYMENT  
INSURANCE COST  
(By authority conferred on the employment security commission by section 4 of Act  
No. 1 of the Public Acts of the Extra Session of 1936, as amended, being S421.4 of the  
Michigan Compiled Laws)  
R 421.601 Newly liable nonprofit employer  
payments; security.  
electing  
reimbursement  
Rule 1. (1) A newly liable nonprofit employer that elects, on and after December  
21, 1989, to make reimbursement payments pursuant to the provisions of section  
13a of Act No. 1 of the Public Acts of the Extra Session of 1936, as amended, being  
S421.13a of the Michigan Compiled Laws, shall provide the required security for the  
first-year security that is required pursuant to the provisions of section 13a(4) of Act  
No. 1 of the Public Acts of the Extra Session of 1936, as amended, being S421.13a(4)  
of the Michigan Compiled Laws, and for the 2 consecutive succeeding calendar years.  
Thereafter, the security shall be renewed for 2-year periods for as long as the  
nonprofit organization retains reimbursement status. A nonprofit employer that  
seeks to renew a security and thereby retain reimbursement status shall do so by  
November 30 of the year before the year for which the security is required.  
(2) The security shall be in the form of a surety bond, irrevocable letter of  
credit, or other banking device which is acceptable to the employment security  
commission and which provides for payment to the commission, on demand, of an  
amount equal to the security required to be posted. The required security may be  
posted by a third-party guarantor.  
(3) This rule shall not apply to a newly liable nonprofit employer that is expected to  
pay less than $100,000.00 or less in total wages per calendar year. However, a  
nonprofit employer that elects reimbursement status on or after December 21, 1989,  
shall be required to provide security when payment of gross wages in a calendar year  
reaches exceeds $100,000.00. It is the employer's duty to notify the commission,  
within 60 days, that its payroll has reached exceeds $100,000.00 per year. The  
security shall be posted within 30 days of notice of such requirement by the  
commission.  
(4) For newly liable employers, the amount of security that is required shall be  
4.0% of the employer's estimated total annual wage payments, as determined by the  
commission. Employers that have a previous payroll history shall be required to file  
a security that is equal to 4.0% of the total annual wage payments for the 12-month  
period ended June 30 of the year before the year the security is required or 4.0% of  
the estimated total annual wage payments, whichever is greater.  
History: 1992 AACS.  
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R 421.602 Nonprofit employer liable before December 21, 1989, electing  
reimbursement payments; security.  
Rule 2. (1) A nonprofit employer that was liable before December 21, 1989, and  
that elects the reimbursement method of financing on or after December 21, 1989,  
shall be required to post a security for the year of election and the succeeding year.  
Thereafter, the security shall be renewed for 2-year periods. A nonprofit employer  
that seeks to renew a security and thereby retain reimbursement status by posting  
a security shall do so by November 30 of the year before the year for which the  
security is renewed.  
(2) The security shall be in the form of a surety bond, irrevocable letter of  
credit, or other banking device which is acceptable to the commission and which  
provides for payment to the commission, on demand, of an amount equal to the security  
that is required to be posted. The required security may be posted by a third-party  
guarantor.  
(3) This rule shall not apply to a nonprofit employer that is expected to have less  
than $100,000.00 or less per calendar year in total wage payments, as determined by the  
commission. However, a nonprofit employer that elects reimbursement status on or  
after December 21, 1989, shall be required to provide security when the payment of  
gross wages in a calendar year reaches exceeds $100,000.00. It is the employer's  
duty to notify the commission, within 60 days, that its payroll has reached exceeds  
$100,000.00 per year. The security shall be posted within 30 days of notice of such  
requirement by the commission.  
(4) The amount of security that is required shall be 4.0% of the employer's  
estimated total annual wage payments, as determined by the commission. Employers  
that have a previous wage payment history shall be required to file a security that is  
equal to 4.0% of the gross wages paid for the 12-month period ended June 30 of the  
year before the year the security is required or 4.0% of the estimated total  
annual wages, whichever is greater.  
History: 1992 AACS.  
R 421.603 Effect of delinquent payment of reimbursement charges.  
Rule 3. (1) If a nonprofit employer, regardless of the size of payroll or the date of  
election to become reimbursing, that was exempted from a security requirement  
becomes delinquent in paying its reimbursement charges for any 2 consecutive  
calendar quarters, the commission shall, pursuant to the provisions of section 13d of  
Act No. 1 of the Public Acts of the Extra Session of 1936, as amended, being S421.13d  
of the Michigan Compiled Laws, require the employer to execute and file a surety  
bond, irrevocable letter of credit, or other banking device which is acceptable to the  
commission and which provides for payment to the commission, on demand, of an  
amount equal to the security that is required to be posted. This rule shall apply even if  
the reimbursement charges have been protested by the employer. The security  
requirement may be posted by a third-party guarantor.  
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(2) For the purpose of this rule, an employer shall be considered delinquent if  
a billed amount is not paid within 30 days of the due date of billing for benefit charges.  
If the billed amount due is for benefit charges that have been protested by an  
employer and are under appeal, the employer shall pay the benefit charges in a timely  
manner, under protest, to avoid the security requirement. If the employer has a  
delinquency that is more than the amount of the security required, the employer  
shall be required to pay the delinquency in full and post the security, even if the  
benefit charges have been protested and are under appeal, or the employer's status  
as a reimbursing employer shall be terminated for the next calendar year. The security  
shall be filed within 30 days of notice to the employer of the requirement to file a  
security and shall be posted for the remainder of any calendar year plus the 2  
subsequent calendar years.  
(3) The amount of security that is required shall be equal to 4.0% of the  
employer's total gross wage payments for the 12-month period ending on the most  
recent June 30 or 4.0% of the employer's anticipated gross wage payments for the  
current year, whichever is greater. If wage information is not available, the commission  
shall estimate the payroll based on the information available. The security, once  
filed, shall remain in effect for the remainder of the first year it is required plus the 2  
consecutive succeeding calendar years, at which time it will be subject to renewal for  
additional 2-year periods at the commission's discretion. If the required renewal  
security is not provided by November 30 of the year before the year for which it is  
required, the employer's reimbursement status shall be terminated.  
History: 1992 AACS.  
R 421.604 Effect of failure to comply with rules.  
Rule 4. Failure to comply with the security requirements of R 421.601 to R 421.603  
shall result in the denial of election of reimbursement  
status or shall result in  
termination, by the commission, of the employer's existing reimbursement status.  
History: 1992 AACS.  
R 421.605 Effect of reimbursement payment delinquency.  
Rule 5. If a reimbursing employer complies with the security requirement of R  
421.601 to R 421.603, but is delinquent in making reimbursement payments for 2  
consecutive quarters after the imposition of the security requirement, or if the  
delinquency is at any time more than the amount  
of security required, the  
commission shall terminate the employer's reimbursement status as of the  
beginning of the next calendar year. For the purpose of termination of reimbursing  
status, an employer shall be considered delinquent if a billed amount is not paid  
within 30 days of the due date of a charge or billing. If the billed amount due is for  
benefit charges that have been protested by an employer and are under appeal, the  
employer shall pay the benefit charges, under protest, to avoid termination as a  
reimbursing employer.  
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History: 1992 AACS.  
R 421.606 Implementation of rules.  
Rule 6. The director of the bureau of unemployment insurance of the  
employment security commission, or an individual designated by the director of  
the bureau of unemployment insurance, shall be responsible for implementing these  
rules.  
History: 1992 AACS.  
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