Legislature(2005 - 2006)CAPITOL 17
02/27/2006 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB409 | |
| HB416 | |
| HB389 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 409 | TELECONFERENCED | |
| + | HB 416 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 389 | TELECONFERENCED | |
HB 409-NO WORKERS' COMP. FOR REAL EST. LICENSEE 3:32:57 PM REPRESENTATIVE KOTT announced that the first order of business would be HOUSE BILL NO. 409, "An Act relating to excluding qualified real estate licensees from workers' compensation coverage." REPRESENTATIVE LYNN noted that he is a licensed real estate broker, therefore he has a conflict of interest. He explained that HB 409 exempts real estate licensees from workers' compensation. All states require companies to purchase workers' compensation insurance for their employees. However, real estate agents are independent contractors, and are not considered employees. This means that the real estate licensee does not receive a salary or benefits, but rather receives payment for services directly related to [real estate] sales. REPRESENTATIVE LYNN went on to say that the real estate licensee is required to sign an Independent Contractor Agreement with the broker, and then the agent is responsible for all business expenses, in addition to filing and paying federal income tax. The broker does not have control over how the real estate agent spends his or her time, as long as it remains within the boundaries of the law. He pointed out that the Internal Revenue Service (IRS) considers real estate licensees to be independent contractors, and said that the state should also. Representative Lynn noted that the commissioner of the Department of Labor & Workforce Development (DLWD) supports the bill. 3:35:40 PM PERRY UNDERWOOD, Director at Large, Alaska Association of Realtors (AAR), expressed support for HB 409 and deferred questions to Dave Feeken, who is also representing the AAR. DAVE FEEKEN, Legislative Chair, Alaska Association of Realtors (AAR), explained that the AAR has been working to resolve the "very unclear" relationship between a real estate broker and a licensee. The AAR has worked with [DLWD] in an attempt to clear up this issue. He opined that it may be better to, on page 2, line 15, replace the word "employed" with the word "contracted," as this better describes the relationship between licensees and brokers. He pointed out that [Greg O'Claray, Commissioner, DLWD] has written a letter in support of HB 409. 3:38:01 PM REPRESENTATIVE LEDOUX opined that HB 409 was introduced to reduce the premium paid for workers' compensation insurance and asked whether this would change liability insurance rates, especially if an independent contractor is injured on the job due to negligence. MR. FEEKEN answered that he is not sure about liability insurance, but stated that independent contractor agreements require the licensee to have general liability insurance with a limit of [$500,000 to $1 million]. REPRESENTATIVE LEDOUX restated her question regarding liability insurance rates. MR. FEEKEN said that [the legislation] does not prevent real estate agents from purchasing liability insurance and opined that oftentimes individual real estate agents are able to receive a better rate than a larger company. REPRESENTATIVE ROKEBERG explained that [HB 409] would not have any impact on liability insurance due to the nature of workers' compensation insurance. He stated his understanding that workers' compensation covers work-related injuries, while liability insurance covers the policy holder if he/she causes damage to another person's property. REPRESENTATIVE LEDOUX expressed disagreement with this, and opined that if a worker is an independent contractor and is injured on the job, he/she has the right to sue the entity with whom he/she holds the contract agreement. 3:41:03 PM REPRESENTATIVE ROKEBERG remarked that this is the case now. REPRESENTATIVE LEDOUX replied that it is incorrect, and pointed out that if a person has workers' compensation insurance, they cannot sue. REPRESENTATIVE ROKEBERG noted that the purpose of the legislation is to fix this issue. REPRESENTATIVE CRAWFORD commented that HB 409 does not require the independent contractor to maintain workers' compensation insurance and said that if a person is injured on the job, they are not able to access their health insurance. He gave an example of a person who is at the broker's office and develops carbon monoxide poisoning from a heater that had not been properly inspected and explained that the contractor would be able to sue in this case. He said "wouldn't it be better ... if you're going to take away the liability under workers' comp. ... but add the liability under negligence, to require the licensee's to now have workers' comp. insurance on themselves as independent contractors." 3:43:38 PM REPRESENTATIVE LYNN said that he has worked in real estate for many years and has never had life insurance provided. 3:44:12 PM PAUL LISANKIE, Director, Central Office, Division of Workers' Compensation, Department of Labor & Workforce Development, explained that HB 409 is intended to clear up the confusion regarding the relationship between realtors and their associates. He said that if a person is not an employee and is injured on the job due to negligence, they should be able to sue because the general understanding is that realtors are independent contractors. In regard to whether the cost for liability insurance will increase, he stated that he does not know. REPRESENTATIVE KOTT asked if the suggested amendment which would replace "employed" with "working" is potentially problematic for the department. MR. LISANKIE replied that he does not see a problem with this. He explained that regardless of which word is used, "qualified real estate professionals" would not receive workers' compensation. He added that the word "employed" is often used as a generic term meaning that the person is working and does not necessarily mean that the person is an employee. 3:47:50 PM REPRESENTATIVE CRAWFORD asked whether, under current law, an independent contractor would be able to sue for negligence if the broker carries workers' compensation insurance on the licensee. MR. LISANKIE replied that the simple answer is no, although a "creative" attorney may turn this around. He added that if a person is found to be an employee subject to workers' compensation, he/she cannot sue. In response to another question, he said that this bill would allow an independent contractor to sue if there was basis for recovery. He opined that a person would be able to purchase insurance that does not differentiate between work-related and non work-related injuries. 3:51:04 PM REPRESENTATIVE GUTTENBERG asked for the history of workers' compensation claims. MR. LISANKIE replied that he does not have reliable information on claims involving real estate agents. He stated that there have been cases in which a real estate agent has gone before the Workers' Compensation Board and argued whether he/she is an independent contractor or an employee. REPRESENTATIVE LEDOUX commented that in the field of maritime law, seamen can elect whether they have workers' compensation or maritime insurance. 3:54:19 PM CHARLIE MILLER, Lobbyist, Alaska National Insurance, in response to an earlier question, opined that the liability insurance rates would not increase unless they could show the loss, but suggested that the committee look into this. 3:55:51 PM REPRESENTATIVE KOTT closed public testimony. REPRESENTATIVE ROKEBERG noted a personal conflict of interest, as he is a licensed real estate broker, and opined that if there was a negative impact from liability insurance rates, the brokerage community would accept this compared to the current rate it's paying for workers' compensation. He went on to explain that larger "brokerage houses" are employing more people, and therefore they are required to carry workers' compensation insurance. He added that there are assistant brokers within the brokerage house who hire assistants and are also required to have workers' compensation insurance. REPRESENTATIVE CRAWFORD opined that the intent of the legislation is to shift the cost of workers' compensation from the brokers to the independent contractors. He said that the brokers may not be as supportive of the legislation if they understood that they are creating more opportunity for the independent contractors to sue if they are injured on the job. REPRESENTATIVE CRAWFORD then moved Conceptual Amendment 1, which would require licensees to carry personal workers' compensation insurance. REPRESENTATIVE LYNN objected. He said that independent contractors are independent, and mandating that they have workers' compensation insurance would be a disservice. He expressed that he does not think this is required. REPRESENTATIVE GUTTENBERG asked what is covered by the independent contractor's liability insurance. REPRESENTATIVE ROKEBERG replied that brokerage houses usually have -- insurance, and liability insurance. He expressed his belief that independent contractors should have business liability and an "umbrella policy," but to mandate that would defeat the purpose of the legislation. REPRESENTATIVE LEDOUX remarked that this is a cost-shifting measure and said that [Conceptual Amendment 1] would simply shift the cost of workers' compensation to the broker. He questioned the reasoning behind this. REPRESENTATIVE CRAWFORD replied that when a person is injured on the job and goes to the hospital, the first question asked is whether the injury occurred on the job. He explained that when the injury occurs on the job, it cannot be charged to regular insurance, which [leads people to sue.] REPRESENTATIVE ROKEBERG expressed disagreement with this view and said an independent contractor has the right to access his or her health insurance. REPRESENTATIVE GUTTENBERG asked whether a licensee with no employees is currently required to have workers' compensation insurance. REPRESENTATIVE ROKEBERG said no. REPRESENTATIVE GUTTENBERG asked if a licensee would be able to purchase workers' compensation insurance if he/she wished. REPRESENTATIVE KOTT replied yes. 4:03:23 PM REPRESENTATIVE LEDOUX shared her experience of having a law firm and said that she does not have workers' compensation insurance. She asked if it is correct that if an accident happened while working, a person's health insurance would not cover it and opined that the real issue is whether another source will pay for the [medical bills]. 4:03:58 PM REPRESENTATIVE LYNN pointed out that there are other groups of [independent contractors] who are not required to have workers' compensation insurance. 4:05:08 PM REPRESENTATIVE KOTT asked if there was further debate on Conceptual Amendment 1. Hearing none, a roll call vote was taken. Representatives Guttenberg and Crawford voted in favor of Conceptual Amendment 1. Representatives Rokeberg, Lynn, LeDoux, and Kott voted against it. Therefore, Conceptual Amendment 1 failed by a vote of 2-4. REPRESENTATIVE ROKEBERG moved Conceptual Amendment 2, as follows: Page 2, line 15, Delete "employee" Insert "working" There being no objection, Conceptual Amendment 2 was adopted. 4:05:43 PM REPRESENTATIVE ROKEBERG moved to report HB 409 [as amended] out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE CRAWFORD objected. He expressed concern that real estate brokers will no longer have the protection of the employer/employee relationship [which results from] workers' compensation insurance. REPRESENTATIVE LYNN opined that the majority of brokers are "pretty smart individuals" and understand the issues. REPRESENTATIVE GUTTENBERG recommended that the sponsor of the bill have the Division of Insurance available to answer questions when the bill is heard in the next committee of referral. REPRESENTATIVE CRAWFORD removed his objection. [There being no further objection, CSHB 409(L&C) was reported from the House Labor and Commerce Standing Committee.]
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