Legislature(2003 - 2004)

04/07/2004 01:55 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 490 - EMPLOYMENT SECURITY ACT AMENDMENTS                                                                                   
Number 0385                                                                                                                     
CHAIR McGUIRE announced that the  next order of business would be                                                               
HOUSE  BILL  NO.  490,  "An   Act  relating  to  the  release  of                                                               
employment   security   records,    to   the   admissibility   of                                                               
determinations and decisions  regarding unemployment compensation                                                               
benefits,   and  to   contributions,  interest,   penalties,  and                                                               
payments  under the  Alaska  Employment  Security Act;  providing                                                               
that property  under the  Alaska Employment  Security Act  is not                                                               
subject to the Uniform Unclaimed  Property Act; and providing for                                                               
an effective date."                                                                                                             
Number 0401                                                                                                                     
THOMAS  NELSON,   Director,  Division  of   Employment  Security,                                                               
Department  of Labor  & Workforce  Development (DLWD),  explained                                                               
that he  would be speaking  to Sections 4-7,  9, and 11-13  of HB                                                               
490 and  that a representative  from the Department of  Law (DOL)                                                               
would address other  sections of the bill.   He characterized the                                                               
proposed   changes   as   largely   housekeeping   measures   and                                                               
clarification  of existing  statute  that will  provide Alaska  a                                                               
language  alignment  with  federal  law  and  bring  Alaska  into                                                               
compliance   with   the    unemployment   insurance   overpayment                                                               
arrangement it has with other states.                                                                                           
MR.  NELSON said  that Section  4  authorizes the  DLWD to  adopt                                                               
regulations providing  for the distribution of  unclaimed, excess                                                               
contributions.   Sections 5, 6,  and 9 clarify statute  by adding                                                               
the terms  "manager" and "limited liability  company" to existing                                                               
definitions.   Section 7 brings  Alaska into conformity  with the                                                               
interstate  reciprocal   overpayment  recovery   arrangement  and                                                               
provides  the  Division of  Employment  Security  the ability  to                                                               
collect unemployment  insurance overpayments  on behalf  of other                                                               
states  for reasons  other than  fraud;  states participating  in                                                               
this agreement already provide this service to Alaska.                                                                          
MR.  NELSON said  that  Section 11  aligns  Alaska language  with                                                               
federal  law by  clarifying  which  healthcare professionals  are                                                               
excluded from  the definition of employment;  only student nurses                                                               
and  medical  interns are  excluded,  and  Section 11  clears  up                                                               
existing language.   Section 12 clarifies  language that provides                                                               
an  exclusion,  from the  definition  of  wages, of  payments  or                                                               
benefits  provided by  an employer  for  purposes of  educational                                                               
assistance to  its employees; federal  law already  provides this                                                               
exclusion  from its  definition  of wages.    Section 13  removes                                                               
reference to  the provisions of  Department of Revenue  (DOR) law                                                               
regarding disposal  of abandoned  property; federal  law requires                                                               
that unclaimed  excess contributions  be deposited back  into the                                                               
unemployment insurance trust fund.                                                                                              
CHAIR McGUIRE  said she  sees nothing  particularly controversial                                                               
about  HB  490 in  that  it  appears  to  bring Alaska  law  into                                                               
compliance with federal law.                                                                                                    
Number 0654                                                                                                                     
TOBY  NANCY STEINBERGER,  Assistant Attorney  General, Labor  and                                                               
State Affairs Section, Civil  Division (Anchorage), Department of                                                               
Law (DOL),  explained that Sections  1-3 pertain to  allowing the                                                               
release   of    employment   security   records    for   criminal                                                               
investigation  and  prosecution  purposes,  and  that  Section  8                                                               
pertains  to  the  binding effect  of  unemployment  compensation                                                               
decisions.  Sections 1-3 will  help federal, state, and municipal                                                               
prosecutors in  investigating and  prosecuting criminal  cases by                                                               
helping them locate suspects, witnesses,  victims, and persons on                                                               
parole.    When  paying   employment  security  taxes,  employers                                                               
provide quarterly  payroll information  for each employee  to the                                                               
Division of  Employment Security;  thus the  location information                                                               
on employees is very current.                                                                                                   
MS. STEINBERGER  also pointed  out that  because the  Division of                                                               
Employment  Security  pays  unemployment benefits  to  qualifying                                                               
persons,  these persons  provide  the  division with  information                                                               
about where they reside.   The Division of Employment Security is                                                               
heavily federally  funded, she remarked, and  the U.S. Department                                                               
of Labor  requires that the  employment security records  be kept                                                               
confidential,  but  has allowed,  over  the  years, a  number  of                                                               
exceptions, which are found in  AS 23.20.110.  Unfortunately none                                                               
of the  current exceptions allow  for the release  of information                                                               
for criminal  prosecution and  investigation purposes  other than                                                               
for  prosecuting cases  against claimants  who have  fraudulently                                                               
received unemployment compensation benefits.                                                                                    
MS.  STEINBERGER  relayed  that   over  the  years,  because  the                                                               
Division   of  Employment   Security's  information   is  updated                                                               
quarterly, the  Criminal Division of  the DOL has  requested this                                                               
information   in   order   to   find   witnesses   and   victims.                                                               
Unfortunately,  the Division  of Employment  Security has  had to                                                               
deny these requests.  She noted  that upon review of Sections 1-3                                                               
of  HB  490,  the  U.S.  Department of  Labor  has  approved  the                                                               
proposed changes and has in  fact permitted other states to allow                                                               
the release  of employment security  information for  purposes of                                                               
criminal  investigations and  prosecutions.   These other  states                                                               
include Washington, Iowa, Arkansas, Georgia, Utah, and Oklahoma.                                                                
MS.  STEINBERGER, directing  attention to  Section 8,  which will                                                               
amend  AS  23.20.497,  explained  that  persons  who  are  denied                                                               
unemployment  benefits are  entitled  to a  hearing, but  current                                                               
statute  provides that  unemployment  compensation decisions  are                                                               
not admissible  in a subsequent  action or proceeding  in another                                                               
forum,  for example,  if  an employee  brings  a lawsuit  against                                                               
his/her   employer.     Employers   have   little  incentive   to                                                               
participate  in  unemployment compensation  proceedings  because,                                                               
unless they are self insured,  they have no financial interest in                                                               
the  outcome.     Section  8   will  clarify   that  unemployment                                                               
compensation decisions  are not only  inadmissible in a  court or                                                               
administrative  proceeding  but  are   also  inadmissible  in  an                                                               
arbitration proceeding.                                                                                                         
Number 0884                                                                                                                     
REPRESENTATIVE  GRUENBERG  asked  whether   there  would  be  any                                                               
objections to adding  the words "to them" to page  3, line 7; the                                                               
text of  Section 7  would then  read in part,  "if the  sums were                                                               
obtained by an individual who is not entitled to them".                                                                         
CHAIR McGUIRE surmised that such language is not needed.                                                                        
REPRESENTATIVE HOLM surmised that that meaning is implicit.                                                                     
REPRESENTATIVE GRUENBERG,  turning attention to page  3, line 15,                                                               
asked  whether  "limited   partnership"  and  "limited  liability                                                               
partnership" should be added.                                                                                                   
MS.  STEINBERGER  pointed  out   that  "partnership"  is  already                                                               
included in the text of Section  9, which merely updates Title 23                                                               
to  include "limited  liability company",  which is  a whole  new                                                               
entity that has been provided for in Title 10.                                                                                  
REPRESENTATIVE GRUENBERG offered  his recollection, however, that                                                               
Title 32 was recently amended  by adding a new chapter pertaining                                                               
to "limited  liability partnerships", which are  not addressed in                                                               
the "uniform partnership Act."                                                                                                  
MS. STEINBERGER  said, "You  may want  to add  'limited liability                                                               
CHAIR  McGUIRE suggested  that they  make a  conceptual amendment                                                               
"to ask  the drafters to  be clear  that whenever these  forms of                                                               
businesses or employing units are  referenced throughout, that it                                                               
includes  all  of  the various  forms  of  partnerships,  limited                                                               
liability partnerships,  limited liability companies, and  so on,                                                               
that it could."                                                                                                                 
Number 1049                                                                                                                     
REPRESENTATIVE GRUENBERG  made a motion to  adopt Chair McGuire's                                                               
suggestion as Conceptual Amendment 1.   There being no objection,                                                               
Conceptual Amendment 1 was adopted.                                                                                             
REPRESENTATIVE  GRUENBERG turned  attention to  Section 2  of the                                                               
bill  and  asked  if  it should  include  language  allowing  the                                                               
release  of  information  for  the  purpose  of  enforcing  child                                                               
MS.  STEINBERGER  relayed  that  such  an  exception  is  already                                                               
included in AS 23.20.110(o).                                                                                                    
REPRESENTATIVE  GARA  asked  whether  the  state  is  allowed  to                                                               
provide  unemployment   benefits  to  people  whom   the  federal                                                               
government does not.                                                                                                            
MS. STEINBERGER  noted that current Alaska  law [allows benefits]                                                               
to "health professionals and health  nurses," but HB 490 attempts                                                               
to conform state law to federal law.                                                                                            
REPRESENTATIVE GARA  mentioned that he is  referring specifically                                                               
Sections 11 and 12.                                                                                                             
MR.  NELSON  said  of  Section  11,  "We  already  have  existing                                                               
language, but it's  quite confusing to some  employers in Alaska,                                                               
so  we're  spelling  it  out,  exactly who  is  exempt  from  the                                                               
definition  of  employment  for   the  purposes  of  unemployment                                                               
insurance contributions."                                                                                                       
REPRESENTATIVE  GARA said  he  is  not sure  he  agrees with  the                                                               
policy of limiting the  availability of unemployment compensation                                                               
to medical and  nursing interns and of not  counting the benefits                                                               
referred to in Section 12 as wages for unemployment purposes.                                                                   
Number 1223                                                                                                                     
MS.  STEINBERGER remarked  that  the language  in  the bill  will                                                               
provide that  student nurses will  not get  unemployment benefits                                                               
and the employer will not have  to pay taxes on student nurses or                                                               
medical students who are interning and receiving some income.                                                                   
CHAIR  McGUIRE characterized  the  foregoing as  an incentive  to                                                               
employers who hire student nurses.                                                                                              
MR.  NELSON  said that  Section  12  speaks to  training  systems                                                               
provided by  employers to  employees and  those amounts  of money                                                               
not being  counted toward  wages.   Federal law  currently allows                                                               
for  "this," but  Alaska law  does  not yet.   He  said that  the                                                               
exclusion provided  for via Section  11 is not a  change; rather,                                                               
the language is simply being clarified.  He added:                                                                              
       And the reason we asked for that is, there was an                                                                        
     instance in the state several years ago, or within the                                                                     
     last  two years,  in which  an employer  misinterpreted                                                                    
     this   and  it   resulted   in  a   mistake  on   their                                                                    
     unemployment  insurance contributions  as an  employer,                                                                    
     and  it was  quite expensive,  and the  remedy and  the                                                                    
     cost  of  recovering that  amount  of  money was  quite                                                                    
MR.  NELSON,  in  response  to  a  question,  said  that  in  the                                                               
aforementioned instance,  the employer employed nurses  that were                                                               
not student  nurses but  didn't pay  their contributions,  and so                                                               
the [DLWD]  had to  recover those  monies because,  under current                                                               
law, the  employer is  required to  pay for  nurses that  are not                                                               
student nurses.                                                                                                                 
CHAIR McGUIRE  acknowledged that  the current  statutory language                                                               
could be misinterpreted to apply to all nurses.                                                                                 
Number 1351                                                                                                                     
REPRESENTATIVE HOLM  moved to report  HB 490, as amended,  out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
zero fiscal note.                                                                                                               
Number 1369                                                                                                                     
REPRESENTATIVE  GARA  objected for  the  purpose  of providing  a                                                               
comment.  He said:                                                                                                              
     There's potentially  another side  to this  whole story                                                                    
     and  I  don't know  that  I've  heard  it ...  -  maybe                                                                    
     there's not, maybe there is  - and I feel uncomfortable                                                                    
     voting on  this with the  amount of information  I have                                                                    
     right now.  ... To the  extent that I  hear information                                                                    
     that makes me think otherwise,  I might vote against it                                                                    
     on the floor; I just wanted you to know that.                                                                              
REPRESENTATIVE GARA then withdrew his objection.                                                                                
Number 1393                                                                                                                     
CHAIR McGUIRE asked whether there  were any further objections to                                                               
the  motion.    There  being  no  objection,  CSHB  490(JUD)  was                                                               
reported from the House Judiciary Standing Committee.                                                                           

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