20 CFR § 345.304 - New-employer contribution rates.
(a) An employer whose coverage under the RUIA becomes effective after December 31, 1989, is considered a “new employer” for the purposes of this part and will be assigned a contribution rate as computed under this section. The Board shall determine where an employer is a new employer and, if so, the effective date of its coverage under the RUIA and its rate of contribution with respect to compensation paid to employees on and after such effective date.
(b) Initial contribution rate. The rate of contribution with respect to compensation paid in calendar months before the end of the first full calendar year that the employer is subject to this section shall be the average contribution rate paid by all employers during the three calendar years preceding the calendar year before the calendar year in which the compensation is paid. The Board will compute the average contribution rate by dividing the aggregate contributions paid by all employers during those three calendar years by the aggregate compensation with respect to which such contributions were paid and by then multiplying the resulting ratio, as computed to four decimal points, by 100.
(c) Second contribution rate. The rate of contribution with respect to compensation paid in months in the second full calendar year shall be the smaller of the maximum contribution limit under the RUIA or the percentage rate computed as follows:
(d) Third contribution rate. The rate of contribution with respect to compensation paid in months in the third full calendar year shall be the smaller of the maximum contribution limit under the RUIA or the percentage rate computed as follows:
(e) Subsequent calendar years. The rate of contribution with respect to months after the third full calendar year shall be determined under § 345.303 of this part.
(f) Meaning of symbols. For the purpose of the formulas in paragraphs (c) and (d) of this section, “R” is the applicable contribution rate being computed; “A2” is the contribution rate that would have been determined under paragraph (b) of this section if the employer's second calendar year had been its first full calendar year; “A3” is the contribution rate that would have been determined under paragraph (b) of this section, if the employer's third calendar year had been such employer's first full calendar year; “B” is the contribution rate for the employer as determined under § 345.303 of this part for the employer's second full calendar year; and “C” is the contribution rate for the employer as determined under § 345.303 of this part for the employer's third full calendar year.
(g) Special rule for certain computations. For purposes of computing “B” and “C” in the formulas in this section, the percentage rate computed under § 345.303 shall not be reduced under Step 8 of that section; and any computations that, under § 345.303, are to be made on the basis of a 4-quarter or 12-quarter period ending on a given June 30 shall be made on the basis of a period commencing with the first day of the first calendar quarter that begins after the date on which the employer first began paying compensation subject to this part and ending on that June 30, and the amount so computed shall be increased to an amount that bears the same ratio to the amount so computed as four or twelve, as appropriate, bears to the number of calendar quarters in the period on which the computation was based.