02/22/1996 01:40 PM Senate L&C

 SL&C                                                                          
                                                                               
                SB 261 UNEMPLOYMENT COMPENSATION                              
                                                                              
                                                                               
 CHAIRMAN KELLY called the Senate Labor and Commerce Committee                 
 meeting to order at 1:40 p.m. and announced  SB 261  to be up for             
 consideration.                                                                
                                                                               
 DWIGHT PERKINS, Special Assistant, Department of Labor, said SB 261           
 is their housekeeping bill.  One of the areas it covers is income             
 tax withholding on unemployment checks and makes it current with              
 federal guidelines.  Another is confidentiality of records allowing           
 the Department to provide additional specific unemployment                    
 insurance information to other entities under strict disclosure and           
 guidelines.                                                                   
                                                                               
 Two provisions would provide important tools for collecting                   
 delinquent contributions.  First, the Department would be                     
 authorized to require a deposit or bond from an employer who is at            
 least two quarters delinquent in making contributions to the                  
 Unemployment Compensation Fund.  The bill also allows the                     
 Department to enjoin a delinquent employer who refuses to post a              
 bond or pay contributions from operating as an employer.  These               
 uncollectible accounts are currently being subsidized by the rest             
 of Alaska's employers.                                                        
                                                                               
 The standard for waiving benefit overpayments would be changed from           
 great hardship to equity and good conscience allowing other factors           
 like the claimant's degree of good faith in claiming benefits and             
 the claimant's detrimental reliance on the benefits.  It would also           
 permit the Department to right of uncollectible overpayments after            
 two years.  Practice has shown that most recoverable overpayments             
 are collected within two years.                                               
                                                                               
 The Department would be given clear authority to correct any                  
 determination during the benefit year of an unemployment claim                
 increasing the accuracy of claim adjudication.                                
                                                                               
 MR. PERKINS continued saying a proposed amendment would provide a             
 uniform 30 day time period (currently only 15 days) for filing                
 appeals from any determination.  This impacts rural parties                   
 unfairly.                                                                     
                                                                               
 It would also clarify the legal affect of appeal decisions.                   
 Findings of fact and conclusions of law would not be binding in               
 another proceeding.  This is to prevent excess litigation based on            
 the affect the Department's rulings may have on later civil                   
 litigation.  This will help keep unemployment hearings speedy.                
                                                                               
 Both the extended 30 day appeals period and the provision                     
 restricting the scope of the Department decisions address concerns            
 of a recent legislative audit of the Unemployment Insurance Appeals           
 process.                                                                      
                                                                               
 MR. PERKINS said there were other minor and technical changes which           
 would allow an insured worker to continue receiving benefits while            
 attending the funeral of an immediate family member, require a                
 worker to file a compensable claim for the week immediately before            
 jury duty or attendance at a funeral in order to receive an                   
 eligibility exemption for those reasons, exempt extended benefit              
 claimants from the work search requirement while attending an                 
 approved training course, correct the definition of waiting week              
 from the Employment Security Act, and clarify treatment of                    
 cafeteria plan payments under the wage definition of the Act.                 
                                                                               
 SENATOR KELLY asked what was the cafeteria plan payment.                      
                                                                               
 RON TORGERSON, Hearing Officer, explained that this change simply             
 clarifies the definition of covered wages to exclude the cafeteria            
 land payments.  It also brings the wage definition in the                     
 Employment Security Act into conformity with the federal wage                 
 definition.                                                                   
                                                                               
 Number 103                                                                    
                                                                               
 SENATOR MILLER asked for an example of the waiving of standards of            
 great hardship to equity and good conscience and for an overpayment           
 procedure.  MR. TORGERSON explained that the current standard in              
 statute is great hardship.  They are proposing a more flexible                
 standard so they can consider the elements of good faith and                  
 honesty, etc.  He emphasized that under the new standard a person             
 will not be getting more benefits than he would normally.  He said            
 the overpaid benefits would be charged against the account; they              
 would not be offset later in the claim which would be a form of               
 payment recoupment.                                                           
                                                                               
 Number 174                                                                    
                                                                               
 SENATOR KELLY said their concern was fraudulent claims. MR.                   
 TORGERSON said in that case there is a restitution requirement.               
 They prosecute those cases regularly and they have had 100 percent            
 conviction rate, averaging 30 - 45 per year.  In addition, there is           
 a 50 percent penalty attached (which is diverted to the general               
 fund).                                                                        
                                                                               
 MR. PERKINS said their concern at this point is not when the                  
 employee is at fault, but when it is an error in over-calculations            
 by the Department or some system error.                                       
                                                                               
 SENATOR MILLER said he understood that it was the Department's                
 problem, but he said the employer was the one who would eventually            
 pay for it, if it happened often enough.                                      
                                                                               
 MR. PERKINS said he understood his concern, but that this is a                
 situation that doesn't happen regularly.  MR. TORGERSON added that            
 this is a low traffic problem, something the Department would like            
 to do for people who really need this money and very often                    
 virtually require it for survival.  Sometimes the hardship standard           
 is too rigid.  He reiterated that they recover over 90 percent of             
 all non-fraud overpays.                                                       
                                                                               
 SENATOR MILLER said he understood and his concern was if there were           
 a lot of them, it would affect the rate and the employer would have           
 to pay eventually.                                                            
                                                                               
 MR. PERKINS said the Department was trying to be more customer                
 oriented and give themselves more flexibility to help the claimant            
 rather than to "come down on them."  He repeated that they are                
 right on top of the fraud situations and the non-fraud cases are              
 over 90 percent repaid.                                                       
                                                                               
 SENATOR MILLER asked if this legislation were adopted, what would             
 that bring the percentage down to.  MR. PERKINS said he didn't                
 think it would make one percentage point difference.  The ones they           
 have are visible - the ones members of the legislature get calls              
 on.  He didn't thing the public was being served fairly with this             
 restrictive of a standard.                                                    
                                                                               
 Number 290                                                                    
                                                                               
 SENATOR KELLY asked how long a person is eligible for unemployment            
 insurance.  MR. TORGERSON answered 26 is the maximum with an                  
 extension of 13 more.                                                         
                                                                               
 SENATOR KELLY asked how long after 39 weeks you had to wait to go             
 back on unemployment.  MR. TORGERSON replied that you would have to           
 wait until you could establish a new benefit year and you would               
 have to have base period wages.                                               
                                                                               
 SENATOR KELLY said they would set SB 261 aside.