Section 1127.5 Of Article 8. Assessments From California Unemployment Insurance Code >> Division 1. >> Part 1. >> Chapter 4. >> Article 8.
1127.5
. (a) If the director determines that an individual or entity
that is reporting employee wages pursuant to Section 1088 or other
applicable sections is not the correct employer of the employees
whose wages are reported, the director shall determine the correct
employer and, subject to this section, shall apply the provisions of
this code to the correct employer.
(b) Upon a determination made under subdivision (a), the director
shall give notice of the determination pursuant to Section 1206 to
both of the following:
(1) To the individual or entity reporting employee wages of the
determination that the individual or entity is not the correct
employer of the reported employees.
(2) To the individual or entity determined to be the correct
employer of those reported employees.
The notice shall contain a statement of the facts and
circumstances upon which the determination was based. An individual
or entity so noticed shall have the right to petition for review of
the determination within 30 days of the notice, as provided in
Section 1222.
(c) During the pendency of a petition for review pursuant to
subdivision (b), the individual or entity responsible for reporting
employee wages pursuant to Section 1088 or other applicable sections
shall be determined as follows:
(1) When an individual or entity that has reported employee wages
appeals a director's determination that it is not the correct
employer of the employees whose wages were reported, that individual
or entity shall continue to so report employee wages, provided the
employees in question are still on its payroll, until a decision on
its appeal is final, whether or not the individual or entity
determined to be the correct employer by the director appeals that
determination.
(2) When the individual or entity determined by the director to be
the correct employer appeals that determination, but the individual
or entity determined not to be the correct employer does not appeal
the director's determination, then the individual or entity
determined to be the correct employer by the director shall report
employee wages from the date it received notification pursuant to
subdivision (b), and, provided the employees in question are still on
its payroll, shall continue to do so at least until a decision on
its appeal is final.
(d) When a director's determination that an individual or entity
is the correct employer of employees whose wages have been reported
by another individual becomes final:
(1) The individual or entity so determined to be the correct
employer may be assessed for any underpayment of employer
contributions pursuant to Article 8 (commencing with Section 1126) of
Chapter 4 of Part 1 of Division 1. No assessment shall be issued for
any period prior to the effective date of this section based on
which individual or entity is the correct employer, unless the
correct employer committed fraud in violation of this part.
(2) The individual or entity which had reported employee wages
prior to the finality of the director's determination of the correct
employer of the employees whose wages were so reported may file a
claim for refund for any overpayment of employer contributions
pursuant to Section 1178. No claim for refund may be filed for any
period prior to the effective date of this section based on which
individual or entity is the correct employer unless the department
has issued an assessment based on fraud pursuant to paragraph (1).