Successor experience test

Definition

The two-sided rule deciding whether the seller's unemployment rate follows the business or cannot.

Why It Matters

Federal law makes this two rules pointing opposite ways and a buyer can land on either. Where both employers are under substantially common ownership, management or control at the time of transfer, the experience MUST follow the business. Where the acquirer was not otherwise an employer and the state finds it bought the business mainly to get a lower rate, the experience must NOT follow, whatever the parties agreed. One state's successor test adds that the buyer has to carry on the enterprise and assume the predecessor's contributions to inherit the record at all. Model the deal at the new-employer rate as well as the inherited one, because which applies is a state agency's finding and not a term anybody negotiates.