01/31/1996 03:10 PM House L&C

 SB 160 - EXCLUSIONS FROM UNEMPLOYMENT COVERAGE                              
                                                                               
 CHAIRMAN KOTT announced the next order of business was SB 160 am,             
 "An Act excluding certain employment by students from the                     
 definition of 'employment' in the state employment security laws."            
                                                                               
 MARY JACKSON, Legislative Staff to Senator John Torgerson, sponsor            
 of SB 160 am, informed the committee members they have a zero                 
 fiscal note in their committee packet.  She also noted that                   
 included in the packet is the sponsor statement, sectional                    
 analysis, etc.  The history of the bill is straight forward.  A               
 constituent in Senator Torgerson's district called him after having           
 written a letter to the Department of Labor regarding unemployment            
 insurance for their college age daughters.  The constituent's                 
 concerns were that their college age children were in school nine             
 months out of every year, they work seasonally in their "mom and              
 pop" business.  They are required to pay unemployment taxes but               
 they are not eligible to receive unemployment.  From their point of           
 view, it is an unfair tax and Senator Torgerson agreed.  The                  
 constituent then wrote a follow-up to the department and received             
 a response from the commissioner, the gist of which was, "Yes, a              
 full-time employee pays a potential of $119 and some odd cents per            
 year."  If they are a part-time student, they pay even less.  She             
 said he recognized that if you pay anything towards what you don't            
 get a benefit from, it's not fair, but he said there is a benefit.            
 Ms. Jackson said there is not.  The regulations are very specific.            
 It is in the Alaska Employment Security Act which says, "However,             
 and uninsured worker who has been pursuing an academic education              
 for at least one school term and who was working at least 30 hours            
 a week during a significant portion of the time that the worker was           
 pursuing an academic education, would not be disqualified for the             
 unemployment insurance if the worker's academic schedule does not             
 preclude or prevent full-time work in the worker's occupation and             
 if the worker of student became unemployed because the worker was             
 laid off."   Ms. Jackson said the constituent asked how many full-            
 time students do you know that could possibly fit under that                  
 scenario.  Senator Torgerson's response was none.  The constituent            
 then noted that the real issue, in their opinion, was whether or              
 not the student is supporting themselves.  If they're full-time               
 employees, they obviously are supporting themselves.  If they have            
 full-time student status and only part-time with a seasonal                   
 adjustment, they're not supporting themselves.  Mom and dad are.              
                                                                               
 MS. JACKSON pointed out that the statute exempts service that is              
 performed by an individual in the employ of the individual's son,             
 daughter, spouse and service performed by the child under the age             
 of 18 and in the employ of the child's mother and father.  What SB
 does is it expands that to service performed in the employ of             
 the parent or legal guardian for 21 or under who are also full-time           
 students.  Ms. Jackson said she doesn't know what the department's            
 position is on the amended bill.                                              
                                                                               
 Number 849                                                                    
                                                                               
 DWIGHT PERKINS, Special Assistant, Department of Labor, came before           
 the committee.  He informed the committee that in the amended                 
 version of SB 160, page 1, line 7, is different in that it starts             
 off by saying, "parent or legal guardian if the individual was                
 under the age of 21 years and full-time student during the eight of           
 the last 12 months and intends to resume full-time student status             
 within the next four months;".  In the original version of SB 160             
 it says, "if the individual was a full-time student during eight of           
 the last 12 months and intends to resume full-time student status             
 within the next four months;".                                                
                                                                               
 CHAIRMAN KOTT asked if there was a title change.  MR. PERKINS                 
 indicated there wasn't.                                                       
                                                                               
 CHAIRMAN KOTT asked Ms. Jackson if a title change was considered.             
 MS. JACKSON indicated there wasn't any discussion regarding a title           
 change, and in fact it still conforms because the statute was for             
 full-time students, but now they're under the age of 21.                      
                                                                               
 MR. PERKINS stated the Department of Labor opposes SB 160 am, for             
 the following reasons:                                                        
                                                                               
 "The Employment Security Act already goes far enough in excluding             
 employment of children by their parents and excluding employment of           
 students by educational institutions.  Coverage of student workers            
 should not be further eroded.                                                 
                                                                               
 "The terms of the exclusion are vague, and there is no feasible way           
 to base tax liability on a worker's `intention' to remain in                  
 school.                                                                       
                                                                               
 "The bill has a disparate impact on one subset of workers on the              
 basis of family relationship, exempting these workers from                    
 contributing to unemployment insurance, but also denying these                
 workers from collecting benefits should they quit school or become            
 eligible for receiving benefits while in school.                              
                                                                               
 "The existing tax burden on affected students is minimal.  As Mary            
 stated, a full-time employee working the entire calendar year, you            
 and I, pays a maximum of $119.50 in unemployment insurance                    
 contributions.  A student employed only between school terms would            
 pay substantially less.                                                       
                                                                               
 "The unemployment insurance system is just that, it's an insurance            
 system.  Coverage and payment of contributions is no more based on            
 the likelihood of collecting benefits than payment of automobile              
 insurance premiums under the state mandatory insurance law is based           
 on the expectation of getting in an accident in any given year.  A            
 chipping away at the inclusiveness of the system by exempting                 
 employers or employees who don't want to pay into the system will             
 ultimately damage the viability of the program and the health of              
 the UI Trust Fund."                                                           
                                                                               
 MR. PERKINS asked what will be the next category to be exempted.              
 He thanked the committee for listening to him.                                
                                                                               
 Number 1168                                                                   
                                                                               
 CHAIRMAN KOTT asked how many people would fall within this                    
 category.  MR. PERKINS explained he didn't have that information.             
 He said he didn't want the committee to think he is speaking for a            
 silent majority of people out there.  He said he could get the                
 numbers for the committee.                                                    
                                                                               
 REPRESENTATIVE PORTER asked if it would be a reasonable statement             
 to say very few people that fit into this category really would               
 have the benefit of coverage.  MR. PERKINS said he would hesitate             
 to give a number only because he doesn't know.  The department's              
 concern would be that to keep exempting groups of people because              
 they simply don't want to pay is maybe a wrong direction to go.  Is           
 there another group out there?  He said he doesn't know.  Mr.                 
 Perkins said he is sure there is a lot of constituencies out there            
 that would not want to pay the mandatory insurance either, but they           
 do.  That doesn't mean they're going to run out and get in an                 
 accident so they can claim on that either.                                    
                                                                               
 Number 1358                                                                   
                                                                               
 MS. JACKSON pointed out that the fiscal note from the Department of           
 Labor is zero.                                                                
                                                                               
 CHAIRMAN KOTT pointed out that the bill was introduced last year              
 and questioned if the problem still exists.  MS. JACKSON indicated            
 it does.                                                                      
                                                                               
 Number 1445                                                                   
                                                                               
 REPRESENTATIVE PORTER made a motion to move SB 160 am, out of the             
 House Labor and Commerce Committee with individual recommendations            
 and a zero fiscal note.                                                       
                                                                               
 REPRESENTATIVE SANDERS objected.  He said he doesn't feel                     
 comfortable moving the bill.  It is a very small number of people             
 and a minimal amount of money.  He said he would love to support              
 his senator, but he doesn't think it is right to move the bill.               
                                                                               
 REPRESENTATIVE ROKEBERG said he would probably vote to move the               
 bill.  He noted he isn't too worried about any other "tom cats                
 coming out of the bag."                                                       
                                                                               
 REPRESENTATIVE PORTER said he doesn't look at the bill as being a             
 bill that would result in a tweaking of the unemployment insurance            
 fund because there is a zero fiscal note.  He said he thinks it               
 fits within the stated public policy of the statute which says                
 there are exemptions for these kinds of things.  Representative               
 Porter said he doesn't think, considering the zero fiscal note, the           
 bill is a raid on the unemployment account.                                   
                                                                               
 REPRESENTATIVE ROKEBERG referred to the $119.50 collected over the            
 entire year and said the act of having to fill out the forms could,           
 in certain areas of time evaluation, be more costly than the actual           
 payment for a small business person.                                          
                                                                               
 CHAIRMAN KOTT said he believes the purpose of unemployment                    
 insurance is to provide that bridge of a person leaving a job and             
 seeking another.  It probably does not apply or is not applicable             
 to college students.                                                          
                                                                               
 REPRESENTATIVE ROKEBERG said these people are paying in but can't             
 collect.  He asked if that is right.                                          
                                                                               
 REPRESENTATIVE SANDERS said if that situation should change, they             
 could collect.  We all know it changes often, they go to school one           
 year and don't go the next.  He said you pay in, but you're                   
 collecting off of a total pool for the state.                                 
                                                                               
 Number 1712                                                                   
                                                                               
 REPRESENTATIVE SANDERS said he might change his mind, but if he               
 ever sees another bill similar to SB 160, he is not voting for it.            
 Representative Sander withdrew his objection.                                 
                                                                               
 CHAIRMAN KOTT said he generally isn't supportive of a measure that            
 is directed toward a specific small group.  He said this could be             
 a lot larger group than he is envisioning.  This takes care of a              
 single person.  It is correcting an inequity dealing with one                 
 family and one son or daughter.                                               
                                                                               
 Number 1755                                                                   
                                                                               
 CHAIRMAN KOTT said since Representative Sanders withdrew his                  
 objection, there is a motion to move the bill out of committee.               
 Hearing no further objection, SB 160 am was moved out of the House            
 Labor and Commerce Committee.