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HB 307: "An Act relating to workers' compensation; and providing for an effective date."

00                             HOUSE BILL NO. 307                                                                          
01 "An Act relating to workers' compensation; and providing for an effective date."                                        
02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
03    * Section 1. AS 23.30.070(a) is amended to read:                                                                   
04            (a)  Within 10 days from the date the employer has knowledge of an injury or                                 
05       death or from the date the employer has knowledge of a disease or infection, alleged                              
06       by the employee or on behalf of the employee to have arisen out of and in the course                              
07       of the employment, the employer shall file with [SEND TO] the division a report                               
08       setting out                                                                                                       
09                 (1)  the name, address, and business of the employer;                                                   
10                 (2)  the name, address, and occupation of the employee;                                                 
11                 (3)  the cause and nature of the alleged injury or death;                                               
12                 (4)  the year, month, day, and hour when and the particular locality                                    
13       where the alleged injury or death occurred; and                                                                   
14                 (5)  the other information that the division may require.                                               
15    * Sec. 2. AS 23.30.070(b) is amended to read:                                                                      
01            (b)  Additional reports with respect to the injury and to the condition of the                               
02       employee shall be filed [SENT] by the employer with [TO] the division at the times                        
03       and in the manner that the director prescribes.                                                                   
04    * Sec. 3. AS 23.30.070(d) is amended to read:                                                                      
05            (d)  Filing of the report in a manner prescribed by the director with                                    
06       [MAILING OF THE REPORT AND A COPY TO] the division [IN A STAMPED                                                  
07       ENVELOPE], within the time prescribed in (a) or (b) of this section, is in compliance                         
08       with this section.                                                                                                
09    * Sec. 4. AS 23.30.070(f) is amended to read:                                                                      
10            (f)  An employer who fails or refuses to file [SEND] a report required of the                            
11       employer by this section or who fails or refuses to file [SEND] the report required by                        
12       (a) of this section within the time required shall, if so required by the board, pay the                          
13       employee or the legal representative of the employee or other person entitled to                                  
14       compensation by reason of the employee's injury or death an additional award equal to                             
15       20 percent of the amounts that were unpaid when due. The award shall be against                                   
16       either the employer or the insurance carrier, or both.                                                            
17    * Sec. 5. AS 23.30.075(b) is amended to read:                                                                      
18            (b)  If an employer fails to insure and keep insured employees subject to this                               
19       chapter or fails to obtain a certificate of self-insurance from the division, upon                                
20       conviction, the court shall impose a fine of $10,000 and may impose a sentence of                                 
21       imprisonment for not more than one year. If an employer is a corporation, limited                             
22       liability company, or limited liability partnership, all persons who, at the time of                          
23       the injury or death, had authority to insure the business entity [CORPORATION] or                             
24       apply for a certificate of self-insurance, and the persons [PERSON] actively in charge                        
25       of the business entity [OF THE CORPORATION] shall be subject to the penalties                                 
26       prescribed in this subsection and shall be personally, jointly, and severally liable                              
27       together with the business entity [CORPORATION] for the payment of all                                        
28       compensation or other benefits, including civil penalties and benefit guaranty fund                           
29       payments, for which the business entity [CORPORATION] is liable under this                                
30       chapter if the business entity [CORPORATION] at that time is not insured or                                   
31       qualified as a self-insurer.                                                                                      
01    * Sec. 6. AS 23.30.080(e) is amended to read:                                                                      
02            (e)  If a representative of the department investigates an employer's failure to                             
03       file the evidence of compliance required by AS 23.30.085 and, after investigation,                                
04       there is substantial evidence that the employer failed to insure or provide security as                           
05       required by AS 23.30.075, the representative shall inform the employer. The                                       
06       representative may request the director to issue a stop order prohibiting the use of                              
07       employee labor by the employer until the employer insures or provides security as                                 
08       required by AS 23.30.075. The director may issue a stop order, without a hearing,                                 
09       based on the representative's investigation. The director shall dissolve a stop order                             
10       issued under this subsection upon receipt of substantial evidence that the employer is                            
11       insured or has provided security as required by AS 23.30.075(a). If an employer fails                             
12       to comply with a stop order issued under this subsection, the division may [PETITION                              
13       THE BOARD TO] assess a civil penalty [. THE BOARD MAY ASSESS A CIVIL                                              
14       PENALTY] of $1,000 a day. An employer who is assessed a penalty under this                                        
15       subsection may not obtain a public contract with the state or a political subdivision of                          
16       the state for the three years following violation of the stop order.                                              
17    * Sec. 7. AS 23.30.080(f) is amended to read:                                                                      
18            (f)  If an employer fails to insure or provide security as required by                                       
19       AS 23.30.075, the division may [PETITION THE BOARD TO] assess a civil penalty                                     
20       of up to a maximum of three times the workers' compensation premium the                                       
21       employer would have paid if the employer had insured [$1,000 FOR EACH                                         
22       EMPLOYEE FOR EACH DAY AN EMPLOYEE IS EMPLOYED WHILE THE                                                           
23       EMPLOYER FAILED TO INSURE] or provided [PROVIDE] the security required                                        
24       by AS 23.30.075. Notwithstanding AS 23.30.250(a), if an employer misclassifies                                
25       employees as provided in (j) of this section, the division may assess a civil penalty                         
26       of up to a maximum of three times the workers' compensation premium the                                       
27       employer would have paid if the employer had properly classified the employees.                               
28       The division shall base the amount of the civil penalty on the employer's payroll                             
29       and the assigned risk rates approved and published by the division of insurance                               
30       in effect at the time the employer was uninsured or underinsured because of                                   
31       misclassification of employees. When calculating the civil penalty for failure to                             
01       insure or for underinsuring, the division shall apply aggravating and mitigating                              
02       factors prescribed by regulation. An employer that willfully fails, under                                     
03       AS 23.05.090, to furnish to the department records required to be kept under                                  
04       AS 23.05.080 and by the Internal Revenue Service is subject to a penalty of                                   
05       $1,000 for each seven-day period of noncompliance. The division may (1) enter a                               
06       place of employment during regular hours of employment and, in cooperation                                    
07       with the employer, or someone designated by the employer, collect facts and                                   
08       statistics pertinent to the employment and classification of workers; and (2) for                             
09       the purpose of examination, have access to and copy from any book, account,                                   
10       record, payroll, paper, or document relating to the employment of workers. The                                
11       failure of an employer to file evidence of compliance as required by AS 23.30.085                                 
12       creates a rebuttable presumption that the employer failed to insure or provide security                           
13       as required by AS 23.30.075.                                                                                      
14    * Sec. 8. AS 23.30.080(g) is amended to read:                                                                      
15            (g)  If an employer fails to pay a civil penalty [ORDER ISSUED] under [(d),]                                 
16       (e) [,] or (f) of this section within 30 [SEVEN] days after the date of service of notice                 
17       on [THE ORDER UPON] the employer, the director may declare the employer in                                    
18       default. The director shall file a certified copy of the penalty order and declaration of                         
19       default with the clerk of the superior court. The court shall, upon the filing of the copy                        
20       of the order and declaration, enter judgment for the amount declared in default if it is                          
21       in accordance with law. Anytime after a declaration of default, the attorney general                              
22       shall, when requested to do so by the director, take appropriate action to ensure                                 
23       collection of the defaulted payment. Review of the judgment may be had as provided                                
24       under the Alaska Rules of Civil Procedure. Final proceedings to execute the judgment                              
25       may be had by writ of execution.                                                                                  
26    * Sec. 9. AS 23.30.080 is amended by adding new subsections to read:                                               
27            (h)  An employer may appeal a civil penalty assessed by the division under (e)                               
28       or (f) of this section by requesting a hearing under AS 23.30.110 within 30 days after                            
29       the date of service of notice of the civil penalty on the employer. If an employer who                            
30       is issued a civil penalty fails to request a hearing within the prescribed time, the right                        
31       to hearing is waived and the civil penalty is not subject to judicial review.                                     
01            (i)  The division or board may not suspend payment of civil penalties assessed                               
02       under this section. The division or board may accept a payment plan for payment of                                
03       civil penalties assessed under this section. Under the terms of the payment plan,                                 
04       interest shall accrue at the rate specified in AS 09.30.070(a).                                                   
05            (j)  An employer misclassifies an employee under this chapter if the employer                                
06                 (1)  falsifies or misrepresents employee job duties;                                                    
07                 (2)  misrepresents oneself or an employee as an independent contractor,                                 
08       as provided in (k) of this section;                                                                               
09                 (3)  conceals some or all compensation paid in currency, negotiable                                     
10       instruments, or in kind for work performed;                                                                       
11                 (4)  fails to report workers' compensation insurance policy information                                 
12       as required under AS 23.30.085 by listing the individual name of each business leasing                            
13       employees under an employee leasing contract;                                                                     
14                 (5)  adds individuals as partners in partnerships, limited liability                                    
15       members in limited liability companies, or directors or officers of corporations without                          
16       a minimum of 10 percent ownership interest documented with the Department of                                      
17       Commerce, Community, and Economic Development, without sharing in profits or                                      
18       losses, and without decision-making authority.                                                                    
19            (k)  An employer may only classify an employee as an independent contractor                                  
20       under this chapter if the independent contractor                                                                  
21                 (1)  maintains a properly licensed business, the success or profitability                               
22       of which does not depend exclusively or primarily on the individual or entity for                                 
23       whom or for which the services are being performed;                                                               
24                 (2)  has a federal employer identification number issued by the Internal                                
25       Revenue Service or who filed business or self-employment income tax returns with                                  
26       the Internal Revenue Service the previous tax year;                                                               
27                 (3)  has a contract to perform the services;                                                            
28                 (4)  maintains liability insurance or other insurance policies necessary                                
29       to protect the employees, financial interests, and customers of the business;                                     
30                 (5)  controls the methods, means, and progress of work;                                                 
31                 (6)  incurs most of the expenses for materials, tools, equipment, labor,                                
01       and other operational costs necessary for the business;                                                           
02                 (7)  is engaged in a trade, occupation, profession, or business to provide                              
03       services that are not an integral part of the day-to-day operations of the business to                            
04       which services are provided;                                                                                      
05                 (8)  has the opportunity for profit or loss based on the management of                                  
06       revenue and expenses associated with the services performed for the other individual                              
07       or entity;                                                                                                        
08                 (9)  does not work as a part of a team of individuals or entities on a                                  
09       singular task, such as painting a building or installing a roof, where the work                                   
10       performed by the individual cannot be clearly isolated from the work performed by                                 
11       other individuals or entities;                                                                                    
12                 (10)  hires, pays, and controls any employees or other workers required                                 
13       to perform the task for which the individual was hired; and                                                       
14                 (11)  maintains a business location separate from the location of the                                   
15       individual or entity for whom or for which the services are being performed.                                      
16    * Sec. 10. AS 23.30.082(a) is amended to read:                                                                     
17            (a)  The workers' compensation benefits guaranty fund is established in the                                  
18       general fund to carry out the purposes of this section. The fund is composed of civil                             
19       penalty and interest payments made by employers under AS 23.30.080, civil penalty                         
20       payments made under AS 23.30.085, income earned on investment of the money in                                 
21       the fund, money deposited in the fund by the department, and appropriations to the                                
22       fund, if any. However, money appropriated to the fund does not lapse. Amounts in the                              
23       fund may be appropriated for claims against the fund, for expenses directly related to                            
24       fund operations and claims, and for legal expenses.                                                               
25    * Sec. 11. AS 23.30.085 is amended to read:                                                                        
26            Sec. 23.30.085. Duty of employer, insurer, or adjuster to file evidence of                               
27       compliance. (a) An employer, insurer, or adjuster that provides workers'                                    
28       compensation insurance to an [AN] employer subject to this chapter [, UNLESS                                  
29       EXEMPTED,] shall initially file evidence of compliance with the insurance provisions                              
30       of this chapter with the division, within 30 days, in the form prescribed by the                              
31       director. The employer, insurer, or adjuster shall also give evidence of compliance                           
01       within 30 [10] days after the termination of the employer's insurance by expiration or                        
02       cancellation. These requirements do not apply to an employer who has certification                                
03       from the board of the employer's financial ability to pay compensation directly without                           
04       insurance.                                                                                                        
05            (b)  If an employer, insurer, or adjuster fails, refuses, or neglects to comply                          
06       with the provision of this section, the employer, insurer, or adjuster shall be subject                       
07       to a civil penalty of $100 a day for each day the employer, insurer, or adjuster is                           
08       late. Total penalties under this subsection may not exceed $1,000 for each late                               
09       filing, and $10,000 for each insurer or adjuster a year for late filings under this                           
10       section. If, during the preceding year, the insurer or adjuster filed at least 90                             
11       percent of the reports required under AS 23.30.155(c) and (m) on time, the                                    
12       penalties for the insurer or adjuster shall be waived [THE PENALTIES                                          
13       PROVIDED IN AS 23.30.070 FOR FAILURE TO REPORT ACCIDENTS; BUT                                                     
14       NOTHING IN THIS SECTION MAY BE CONSTRUED TO AFFECT THE RIGHTS                                                     
15       CONFERRED UPON AN INJURED EMPLOYEE OR THE EMPLOYEE'S                                                              
16       BENEFICIARIES UNDER THIS CHAPTER].                                                                                
17    * Sec. 12. AS 23.30.165(a) is amended to read:                                                                     
18            (a)  If an [EACH] employee, a [AND] beneficiary, or the benefits guaranty                        
19       fund established under AS 23.30.082 is entitled to compensation or penalty                                
20       payments under the provisions of this chapter, the person or the fund has a lien for                      
21       the full amount of the compensation or penalty payments the person or the fund is                         
22       entitled to, including costs and disbursements of suit and attorney fees allowed, on                          
23       [UPON] all of the property in connection with the construction, preservation,                                     
24       maintenance, or operation of which the work of the employee was being performed at                                
25       the time of the injury or death. For example: in the case of an employee injured or                               
26       killed while engaged in mining or in work connected with mining, the lien extends to                              
27       the entire mine and all property used in connection with it; and in the case of an                                
28       employee injured or killed while engaged in fishing or in the packing, canning, or                                
29       salting of fish, or other branch of the fish industry, the lien extends to the entire                             
30       packing, fishing, salting, or canning plant or establishment and all property used in                             
31       connection with it; and this is the case with other businesses, industries, works,                                
01       occupations, and employments. The division has a lien for the benefit of the                                  
02       benefits guaranty fund for the full amount of civil penalties assessed against an                             
03       uninsured employer under AS 23.30.080 on all of the property in connection with                               
04       the construction, preservation, maintenance, or operation of the employer at the                              
05       time the employer was uninsured.                                                                              
06    * Sec. 13. AS 23.30.165(d) is amended to read:                                                                     
07            (d)  A person claiming a lien under this chapter shall, within one year after the                            
08       date of the injury from which the claim of compensation arises, record in the office of                           
09       the recorder of the recording district in which the property affected by the lien is                              
10       located a notice of lien signed and verified by the claimant, [OR] someone on behalf                          
11       of the claimant, and stating, in substance, the name of the person injured or killed out                          
12       of which injury or death the claim of compensation arises, the name of the employer                               
13       of the injured or deceased person at the time of the injury or death, a description of the                        
14       property affected or covered by the lien, and the name of the owner or reputed owner                              
15       of the property. The division claiming a lien under this chapter shall, within one                            
16       year after the date of a declaration of default under AS 23.30.080, record in the                             
17       office of the recorder of the recording district in which the property affected by                            
18       the lien is located a notice of lien signed and verified by the division, and stating,                        
19       in substance, the name of the employer that failed to pay a civil penalty or the                              
20       penalties under AS 23.30.080, a description of the property affected or covered                               
21       by the lien, and the name of the owner or reputed owner of the property.                                      
22    * Sec. 14. AS 23.30.165 is amended by adding a new subsection to read:                                             
23            (f)  In this section, "fund" means the benefits guaranty fund established under                              
24       AS 23.30.082.                                                                                                     
25    * Sec. 15. AS 23.30.240 is amended to read:                                                                        
26            Sec. 23.30.240. Officers of corporations, municipal corporations, and                                      
27       nonprofit corporations and members of limited liability companies as employees.                                 
28       (a) Except as provided in (b) of this section, an executive officer                                           
29                 (1)  [AN EXECUTIVE OFFICER] elected or appointed and                                              
30       empowered in accordance with the charter and bylaws of a corporation or a member                              
31       of a limited liability company organized under AS 10.50 [, OTHER THAN AN                                      
01       OFFICIAL OF A MUNICIPAL CORPORATION OR A CHARITABLE,                                                              
02       RELIGIOUS, EDUCATIONAL, OR OTHER NONPROFIT CORPORATION,] is not                                               
03       an employee of the corporation or limited liability company under this chapter if the                     
04       executive officer or member owns at least 10 percent of the corporation or limited                            
05       liability company;                                                                                            
06                 (2)  [. HOWEVER, AN EXECUTIVE OFFICER OF A                                                          
07       CORPORATION MAY WAIVE COVERAGE UNDER THIS CHAPTER, SUBJECT                                                        
08       TO THE APPROVAL OF THE DIRECTOR, NOTWITHSTANDING                                                                  
09       AS 23.30.245(b). NOTWITHSTANDING ANY OTHER PROVISION OF THIS                                                      
10       CHAPTER, AN EXECUTIVE OFFICER] of a municipal corporation or of a                                                 
11       charitable, religious, educational, or other nonprofit corporation is not an employee of                      
12       the corporation [MAY BE BROUGHT WITHIN THE COVERAGE OF ITS                                                    
13       INSURANCE CONTRACT BY THE CORPORATION BY SPECIFICALLY                                                             
14       INCLUDING THE OFFICER IN THE CONTRACT OF INSURANCE. THE                                                           
15       ELECTION TO BRING AN EXECUTIVE OFFICER WITHIN THE COVERAGE                                                        
16       CONTINUES IN FORCE FOR THE PERIOD THE CONTRACT OF INSURANCE                                                       
17       IS IN EFFECT. DURING THAT PERIOD, AN EXECUTIVE OFFICER BROUGHT                                                    
18       WITHIN THE COVERAGE OF THE INSURANCE CONTRACT IS AN                                                               
19       EMPLOYEE OF THE CORPORATION] under this chapter.                                                                  
20            (b)  A corporation or [EXCEPT AS PROVIDED IN THIS SUBSECTION, A                                          
21       MEMBER OF A LIMITED LIABILITY COMPANY ORGANIZED UNDER                                                             
22       AS 10.50 IS NOT AN EMPLOYEE OF THE COMPANY UNDER THIS CHAPTER.                                                    
23       NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER, A]                                                           
24       limited liability company may bring an executive officer or [A] member [OF THE                                
25       COMPANY] within the coverage of the business entity's [COMPANY'S] insurance                                   
26       contract by specifically including the executive officer or member in the contract of                         
27       insurance. The election to bring the executive officer or member within the business                      
28       entity's [COMPANY'S] coverage continues in force for the period the contract of                               
29       insurance is in effect. During that period, an executive officer or [A] member brought                        
30       within the coverage of the insurance contract is an employee of the business entity                           
31       [COMPANY] under this chapter.                                                                                     
01    * Sec. 16. AS 23.30.250(a) is amended to read:                                                                     
02            (a)  A person who (1) knowingly makes a false or misleading statement,                                       
03       representation, or submission, or knowingly fails to report a material fact related to                        
04       a payment, coverage, or other benefit under this chapter; (2) knowingly assists,                              
05       abets, solicits, or conspires in making a false or misleading submission affecting the                            
06       payment, coverage, or other benefit under this chapter; (3) knowingly misclassifies                               
07       employees or engages in deceptive leasing practices for the purpose of evading full                               
08       payment of workers' compensation insurance premiums; or (4) employs or contracts                                  
09       with a person or firm to coerce or encourage an individual to file a fraudulent                                   
10       compensation claim is civilly liable to a person adversely affected by the conduct, is                            
11       guilty of theft by deception as defined in AS 11.46.180, and may be punished as                                   
12       provided by AS 11.46.120 - 11.46.150.                                                                             
13    * Sec. 17. AS 23.30.250(b) is amended to read:                                                                     
14            (b)  If the board, after a hearing, finds that a person has obtained compensation,                           
15       medical treatment, or another benefit provided under this chapter, or that a provider                             
16       has received a payment, by knowingly making a false or misleading statement or                                    
17       representation or knowingly failing to report a material fact [FOR THE PURPOSE                                
18       OF OBTAINING THAT BENEFIT], the board shall order that person to make full                                        
19       reimbursement of the cost of all benefits obtained. Upon entry of an order authorized                             
20       under this subsection, the board shall also order that person to pay all reasonable costs                         
21       and attorney fees incurred by the employer and the employer's carrier in obtaining an                             
22       order under this section and in defending any claim made for benefits under this                                  
23       chapter. If a person fails to comply with an order of the board requiring reimbursement                           
24       of compensation and payment of costs and attorney fees, the employer may declare the                              
25       person in default and proceed to collect any sum due as provided under                                            
26       AS 23.30.170(b) and (c).                                                                                          
27    * Sec. 18. AS 23.30.250 is amended by adding a new subsection to read:                                             
28            (d)  While receiving compensation provided under this chapter, an employee                                   
29       shall inform the employer or insurer of any employment, other than the work being                                 
30       performed for the employer, or receipt of other disability or unemployment benefits. If                           
31       an employee does not disclose other employment or receipt of other disability or                                  
01       unemployment benefits under this section and the employee knowingly receives                                      
02       compensation under this chapter that the employee is not entitled to because of the                               
03       employment or receipt of other disability or unemployment benefits, the employee has                              
04       failed to report a material fact related to a benefit under this chapter. In this subsection,                     
05       "employment" means any type of work, whether paid or unpaid.                                                      
06    * Sec. 19. AS 23.30.080(d) is repealed.                                                                            
07    * Sec. 20. The uncodified law of the State of Alaska is amended by adding a new section to                         
08 read:                                                                                                                   
09       TRANSITIONAL PROVISIONS. This Act applies to                                                                      
10            (1)  the failure of a person to insure or provide security under AS 23.30 on or                              
11 after the effective date of this Act;                                                                                   
12            (2)  the failure of a person to furnish records relating to a                                                
13                 (A)  violation under AS 23.30 occurring on or after the effective date of                               
14       this Act; or                                                                                                      
15                 (B)  penalty under AS 23.30 imposed on or after the effective date of                                   
16       this Act for a violation under AS 23.30 occurring on or after the effective date of this                          
17       Act;                                                                                                              
18            (3)  a penalty imposed under AS 23.30 on or after the effective date of this Act                             
19 for a violation under AS 23.30 occurring on or after the effective date of this Act; and                                
20            (4)  a penalty payment due under AS 23.30 on or after the effective date of this                             
21 Act for a violation under AS 23.30 occurring before, on, or after the effective date of this Act.                       
22    * Sec. 21. The uncodified law of the State of Alaska is amended by adding a new section to                         
23 read:                                                                                                                   
24       TRANSITION: REGULATIONS. The Department of Labor and Workforce                                                    
25 Development may adopt regulations to implement this Act. The regulations take effect under                              
26 AS 44.62 (Administrative Procedure Act), but not before the effective date of the law being                             
27 implemented.                                                                                                            
28    * Sec. 22. Section 21 of this Act takes effect immediately under AS 01.10.070(c).