Legislature(2007 - 2008)BELTZ 211
02/09/2008 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HJR25 | |
| SB120 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HJR 25 | TELECONFERENCED | |
| += | SB 120 | TELECONFERENCED | |
SB 120-UNEMPLOYMENT COMPENSATION BENEFITS
2:12:16 PM
CHAIR ELLIS announced SB 120 to be up for consideration. He
recapped that they had an entire year of stakeholders' hearings
before this session on this issue, and Governor Palin just
announced some stunningly good news for employers about the
rates over the next few years. It's a really good time to make a
modest increase in benefits, which was his goal. Last Saturday
the committee had a work session that resulted in a revised
committee substitute, CSSB 120(L&C), 25-LS0622\L. He asked Mr.
Owen to review it for the committee.
2:14:08 PM
DANA OWEN, staff to Senator Ellis, recalled that the previous CS
discussed in the Saturday work session was trying to balance
some equities. On one hand, the unemployment insurance benefits
had not been changed in 10 years, and the need to raise them was
widely recognized. However, employers regarded the unemployment
benefit structure as costing them more than it needed to.
Employer groups offered suggestions about how costs could be
brought down for them.
The CS they discussed on Saturday attempted to do that in two
ways. First, the CS shifted about $2-million of tax liability
from employers over to employees; an additional cost savings to
employers of approximately $5.4 million was found by denying
benefits to employees who had been fired for misconduct. During
and subsequent to that meeting, the committee heard vigorous
testimony from labor that denying that benefit would cause a
greater hardship and would give employers the incentive to abuse
the system by firing people for misconduct unjustly.
2:16:21 PM
They looked for other ways to retain the total of $7.4 million
tax benefit to employers. Two options were suggested; one was to
raise the minimum wage in the base period that it takes to
qualify for benefits. Version L deletes the provision denying
benefits to those fired for misconduct and retains the provision
shifting the tax burden from employers to employees by amending
the percentages. Currently employers pay 80 percent and
employees pay 20 percent. Version L changes that to 73 percent
paid for by employers and 27 percent paid for by employees. That
shifts an approximate aggregate of $7 million from the employers
onto the employees. Another $.8 million in savings to the
employer was found by raising the minimum amount necessary to
qualify for benefits from $1000 to $2500.
MR. OWEN said the savings of $7.4 million in the previous CS for
the employer increased to $7.8 million in Version L.
2:18:28 PM
SENATOR STEVENS asked him to explain raising the minimum from
$1000 to $2500.
MR. OWEN explained that current law says you have to have earned
a minimum of $1000 in each of two quarters to qualify for
benefits; the CS raises that minimum to $2500.
CHAIR ELLIS said updating the $1000-minimum seemed like a good
idea to him because it was established a long time ago, and
$2500 seemed like a reasonable figure. He explained that
everyone thought that under the suggested dismissal provision no
one would be ever laid off again. They would be dismissed for
conduct, and the appeals process is a hassle as well as time
consuming. That seemed to be a show stopper for this
legislation, so he decided to leave it out and give more
significant benefit to the employers without significantly
impacting the employee. He didn't know how he could be any more
fair or impactful in a positive way to the employees.
MR. OWEN said some states raise the minimum amount to qualify
regularly with either an escalator clause or as a routine, but
Alaska hadn't raised it since 1970.
CHAIR ELLIS said if this bill passes, Alaska would still be
below the middle of the pack among other states for average
weekly benefits.
2:24:14 PM
PAULA SCAVARA, Special Assistant to the Commissioner, Department
of Labor and Workforce Development (DOLWD) said she is also the
legislative liaison. She offered to answer questions.
CHAIR ELLIS asked her to explain the 73/27 percent split between
employer and employee and trying to save money for employers
without harming anyone's interest significantly. He also asked
her to put the cost savings into context, especially since
Governor Palin announced the system was being changed on the
federal level to show savings anyhow.
MS. SCAVARA deferred to Mr. Wilson for the answer.
2:25:18 PM
JAMES WILSON, Unemployment Insurance Actuary, Research and
Analysis Section, Department of Labor and Workforce Development
(DOLWD), said over the last few years Alaska has been enjoying
lower-than-average tax rates and in the last three years they
have come down significantly. Figures from 2008 show they were
the lowest employer tax rates in 30 years. Unemployment and the
cost of the program are both at low levels and he sees that
trend continuing. He said the bill attempts to increase the
maximum benefit amount. The existing schedule qualifies workers
for an increased benefit of $2 per each $250 increment; this
bill adds additional steps on top of that schedule. The last
modest benefit increase was in 1997. He said that Alaska has
fallen further down the ladder in past years at being able to
replace wages compared to other states. This bill would move
Alaska up more toward the center.
2:29:31 PM
MR. WILSON explained that it increases the benefit maximum to
$370; it also increases the cost per worker for the average
employer from $470 to $548. It would take until 2013 for that
cost to work its way into the financing system, a result of the
WBA increase. The new CS dropped the disqualifying issue. Also
the tax share was changed significantly in the new CS from 80/20
employer/employee contribution to 73/27, a $7 million shift.
MR. WILSON said the proposal to raise the minimum qualifying
wage from $1000 to $2500 was a modest increase that would result
in $.8 million of savings, an additional savings to the employer
of $5 per worker.
2:32:48 PM
SENATOR STEVENS asked how many employees did not reach the $1000
minimum and how many won't reach the $2500 minimum.
MR. WILSON answered that approximate 1466 claimants were between
the $1000 and $250, and he didn't have a number for those who
weren't able to reach the $1000 point.
2:34:05 PM
CHAIR ELLIS asked if the department would get an updated chart
on employer figures for the committee.
MS. SCAVARA replied she didn't have enough time to put the
charts together for today, but she would have it ready later in
the week. She asked Mr. Wilson to comment on how much the
employer pays now compared to the changes in the bill.
MR. WILSON explained that under the proposal, by 2013 the full
cost of the benefit increase to employers would be $548 per
worker. Factoring in the change of going from 80/20 to 73/27
would make that go down to $498. The employee portion alone,
with the WBA increase by 2013, would amount to $157, which is
essentially what they are paying currently. That would go up to
$197. These numbers are before factoring in the $.8 million that
would result from changing the minimum qualifying wage from
$1000 to $2500. He speculated it would amount to about $1/hr.
increase on the employee side.
CHAIR ELLIS asked Ms. Scavara to "do a commercial" about the
confidentiality provisions in this legislation and explain how
important it is for the state to comply with federal law.
MS. SCAVARA responded that sections 1-8 conform state law to
federal law; without them, the state would be sanctioned by the
U.S. Department of Labor for millions of dollars.
2:38:49 PM
SENATOR STEVENS asked if something is happening on a national
level for people who are fired for misconduct and if other
states successfully address the issue of denying benefits to
those people.
2:40:09 PM
BILL KRAMER, Chief, Unemployment Insurance, Department of Labor
and Workforce Development (DOLWD), explained that the current
law puts the responsibility on the employer to show that there
was actually misconduct in connection with the work. Simple
incompetence on the job does not rise to misconduct and a worker
wouldn't be denied benefits. Typically an employer has to show
that a policy was explained and that the worker understood it -
like for drinking or drugs or treating customers rudely.
He said 45 or 46 other states disqualify benefits indefinitely
if someone is discharged for misconduct in connection with their
work. The person is denied indefinitely or until he goes back
into the workforce and earns wages and gets laid off again.
Alaska's current statute denies benefits to people who are
discharged for misconduct for six weeks from the date of the
discharge. Their benefits are reduced by three times the weekly
benefit amount, and they are ineligible for any federal
extensions that may be available.
SENATOR STEVENS commented that this bill basically says the
state is going to deal with people who are fired for misconduct
and that will cost $5.4 million, but it is going to deny 1460
people benefits who earn between $1000 and $2500. Denying those
benefits saves $.8 million, but the state is losing $5.4 million
by giving benefits to people who have been fired for misconduct.
He wasn't sure this was where the state wants to go.
MS. SCAVARA said the department didn't draft this bill.
SENATOR STEVENS asked her why the misconduct language shouldn't
be deleted.
MS. SCAVARA replied that the department is neutral on the bill
after the first 8 sections, and it will follow whatever policy
decisions the legislature makes.
2:46:26 PM
SENATOR DAVIS said she appreciated some things in the bill, but
she also understood where Senator Stevens was coming from.
CHAIR ELLIS remarked that this bill would not change the status
quo for misconduct dismissal.
2:48:05 PM
VINCE BALTRAMI, President, AFL-CIO, said he was not happy with
some of the compromises in SB 120 because he didn't want to see
anything that was more punitive to the employees. He saw some
punitive things in light of the fact that the employers got such
a break on their taxes. However he supported this bill because
he didn't think they could do much better at this point.
2:49:29 PM
REPRESENTATIVE HARRY CRAWFORD said sometimes it's hard to tell
who is at fault when someone is fired. He has been fired a
number of times for his union organizing activities. And while
he got back wages for it, they came two or three years down the
road. Other states have found that the misconduct provision
gives employers the incentive to fire people when the job is
almost finished rather than laying them off. Six weeks is a
pretty severe penalty as it is, and he didn't want the state to
go to a longer penalty and give an unscrupulous employer that
additional incentive to fire people.
WAYNE STEVENS, President/CEO, Alaska State Chamber of Commerce,
said he appreciated all the efforts made on this issue. He
pointed out that while the rates have virtually stayed the same,
the taxable amounts have increased every year for the employer.
Since 1996 the taxable amount to the employer and the employee
has gone from $24,400 to $31,300. He said the state is in a
period of low unemployment, and as a result the contributions to
the trust fund have gone up. He saw no benefit to employers
other than that the draw on the fund has been reduced; so this
notion that perhaps employers are getting an unfair advantage
was not correct. He encouraged them to make SB 120 revenue
neutral, because he understood the need to make the change.
2:54:30 PM
SENATOR STEVENS moved to adopt CSSB 120(L&C) version L. There
were no objections and it was so ordered.
2:55:01 PM at ease 3:03:06 PM
3:03:10 PM
DENNY DEWITT, State Director, National Federation of Independent
Business (NFIB), commented that he appreciated their efforts on
this issue also. He said the NFIB has not been supportive of
employees being charged more nationally, and this moves more in
that direction and away from eliminating benefits for workers
discharged for cause. He wanted something as close to revenue
neutral as possible, and appreciated changing the $1000 to
qualify for benefits to $2500. In general, he said that he
supported the direction in which the bill was going, but he also
wanted to look at it more closely and get back to the committee
with a more coherent response.
3:05:06 PM
CHAIR ELLIS recapped and asked for further testimony.
3:05:58 PM
SENATOR DAVIS moved to report CSSB 120(L&C) version L from
committee with individual recommendations and updated and
attached fiscal notes.
SENATOR STEVENS said he didn't object to moving it on to
Finance, and he recommended that it would be amended because he
was still concerned about people being fired for misconduct and
the additional 1400 people being denied benefits who make
between $1000 and $2500.
CHAIR ELLIS saw no further discussion or objection and the bill
moved from committee. There being no further business to come
before the committee, he adjourned the meeting at 3:07:40 PM.
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