WAC 192-350-010   What is a predecessor-successor relationship?  (1) This section applies only to those individuals and organizations that meet the definition of an employer contained in RCW 50.04.080.

     (2) A predecessor-successor relationship exists when a transfer occurs and one business (successor) acquires all or part of another business (predecessor). It may arise from the transfer of operating assets, including but not limited to the transfer of one or more employees from a predecessor to a successor. It may also arise from an internal reorganization of affiliated companies. Whether or not a predecessor-successor relationship (including a "partial predecessor" or "partial successor" relationship) exists depends on the totality of the circumstances.

     (3) Predecessor. An employer may be a "predecessor," including a "full predecessor" or "partial predecessor," if, during any calendar year, it transfers any of the following to another individual or organization:

     (a) All or part of its operating assets as defined in subsection (5) of this section; or

     (b) A separate unit or branch of its trade or business.

     (4) Successor. A "successor" may be either a "full successor" or a "partial successor." An employer may be a "full successor" if, during any calendar year, it acquires substantially all of a predecessor employer's operating assets. It may be a "partial successor" if, during any calendar year, it acquires:

     (a) Part of a predecessor employer's operating assets; or

     (b) A separate unit or branch of a predecessor employer's trade or business.

     (5) Operating assets. "Operating assets" include the resources used in the normal course of business to produce operating income. They may include resources that are real or personal, and tangible or intangible. Examples include land, buildings, machinery, equipment, stock of goods, merchandise, fixtures, employees, or goodwill. "Goodwill" includes the value of a trade or business based on expected continued customer patronage due to its name, reputation, or any other factor.

     (6) Transfer of assets. Transfers from a predecessor to a successor employer may occur by sale, lease, gift, or any legal process, except those listed in subsection (9) of this section.

     (7) Simultaneous acquisition. For purposes of successor simultaneous acquisition, the term "simultaneous" means all transfers that resulted from acquiring or reorganizing the business, beginning when the acquisition started and ending when the primary unit is transferred.

     (8) Factors. Factors should be weighed instead of merely adding up the number of individual factors. No single factor is necessarily conclusive. Some of the factors which the department may consider as favoring establishment of a predecessor-successor (including a "full successor" or "partial successor") relationship are:

     (a) Whether the employers are in the same or a like business (e.g., providing similar or comparable goods or services or serving the same market);

     (b) Whether the asset(s) transferred constitute a substantial or key portion of similar assets for either the predecessor or successor;

     (c) Whether the assets were transferred directly and not through an independent third party;

     (d) Whether multiple types of assets (e.g., employees, real property, equipment, goodwill) transferred;

     (e) Whether a significant number or significant group of employees transferred between employers;

     (f) Whether the assets transferred at the same time or in a connected sequence, as opposed to several independent transfers;

     (g) Whether the business name of the first employer continued or was used in some way by the second employer;

     (h) Whether the second employer retained or attempted to retain customers of the first employer;

     (i) Whether there was relative continuity and not a significant lapse in time between the operations of the first and second employers;

     (j) Whether there was continuity of management between employers;

     (k) Whether the employers shared one or more of the same or related owners;

     (l) Whether documents, such as a contract or corporate minutes, show the sale or transfer of a business or a portion of a business; and

     (m) Whether other factors indicate that a predecessor-successor relationship exists.

     (9) Exceptions. A predecessor-successor relationship will not exist:

     (a) For the purposes of chapter 50.24 RCW (payment of taxes), when the property is acquired through court proceedings, including bankruptcies, to enforce a lien, security interest, judgment, or repossession under a security agreement unless the court specifies otherwise;

     (b) For the purposes of chapter 50.29 RCW (experience rating), when any four consecutive quarters, one of which includes the acquisition date, pass without reportable employment by the predecessor, successor, or a combination of both.

     (10) Burden of proof. The department has the burden to prove by a preponderance of the evidence that a business is the successor or partial successor to a predecessor business. However, if a business fails to respond to requests for information necessary to determine a predecessor-successor relationship, the department may meet its burden by applying RCW 50.12.080 to determine the necessary facts.



[Statutory Authority: RCW 50.12.010, 50.12.040. 10-23-064, § 192-350-010, filed 11/12/10, effective 12/13/10. Statutory Authority: RCW 50.12.010, 50.12.040, and 50.29.064. 07-23-131, § 192-350-010, filed 11/21/07, effective 1/1/08.]