03/06/2017 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB79 | |
| HB141 | |
| HB79 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 141 | TELECONFERENCED | |
| += | HB 79 | TELECONFERENCED | |
| + | HB 132 | TELECONFERENCED | |
| + | SB 14 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 6, 2017
3:16 p.m.
MEMBERS PRESENT
Representative Sam Kito, Chair
Representative Adam Wool, Vice Chair
Representative Andy Josephson
Representative Louise Stutes
Representative Chris Birch
Representative Gary Knopp
Representative Colleen Sullivan-Leonard
MEMBERS ABSENT
Representative Mike Chenault (alternate)
Representative Bryce Edgmon (alternate)
COMMITTEE CALENDAR
HOUSE BILL NO. 79
"An Act relating to workers' compensation; repealing the second
injury fund upon satisfaction of claims; relating to service
fees and civil penalties for the workers' safety programs and
the workers' compensation program; relating to the liability of
specified officers and members of specified business entities
for payment of workers' compensation benefits and civil
penalties; relating to civil penalties for underinsuring or
failing to insure or provide security for workers' compensation
liability; relating to preauthorization and timely payment for
medical treatment and services provided to injured employees;
relating to incorporation of reference materials in workers'
compensation regulations; relating to proceedings before the
Workers' Compensation Board; providing for methods of payment
for workers' compensation benefits; relating to the workers'
compensation benefits guaranty fund authority to claim a lien;
excluding independent contractors from workers' compensation
coverage; establishing the circumstances under which certain
nonemployee executive corporate officers and members of limited
liability companies may obtain workers' compensation coverage;
relating to the duties of injured employees to report income or
work; relating to misclassification of employees and deceptive
leasing; defining 'employee'; relating to the Workers'
Compensation Board's approval of attorney fees in a settlement
agreement; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 141
"An Act relating to allocations of funding for the Alaska
Workforce Investment Board; and providing for an effective
date."
- HEARD & HELD
HOUSE BILL NO. 132
"An Act relating to transportation network companies and
transportation network company drivers."
- SCHEDULED BUT NOT HEARD
SENATE BILL NO. 14
"An Act relating to transportation network companies and
transportation network company drivers."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: HB 79
SHORT TITLE: OMNIBUS WORKERS' COMPENSATION
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/25/17 (H) READ THE FIRST TIME - REFERRALS
01/25/17 (H) L&C, JUD, FIN
02/20/17 (H) L&C AT 3:15 PM BARNES 124
02/20/17 (H) Heard & Held
02/20/17 (H) MINUTE(L&C)
03/01/17 (H) L&C AT 3:15 PM BARNES 124
03/01/17 (H) <Bill Hearing Canceled>
03/06/17 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 141
SHORT TITLE: AK WORKFORCE INVESTMENT BOARD;FUNDS
SPONSOR(s): FANSLER
02/22/17 (H) READ THE FIRST TIME - REFERRALS
02/22/17 (H) L&C, FIN
03/06/17 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
REPRESENTATIVE ZACH FANSLER
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As sponsor, presented HB 141.
PALOMA HARBOUR, Director
Central Office
Division of Administrative Services
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding HB 141.
HEIDI DRYGAS, Commissioner
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding HB 141.
FRED VILLA, Associate Vice President
Workforce Programs
University of Alaska Fairbanks
POSITION STATEMENT: Testified in support of HB 141.
PEARL BROWER, Ph.D., President
Ilisagvik College
Barrow, Alaska
POSITION STATEMENT: Testified in support of HB 141.
DENNIS DISHION, Executive Director
Yuut Elitnaurviat
Bethel, Alaska
POSITION STATEMENT: Testified in support of HB 141.
JOEL ALOWA, Community Health Services Director
Maniilaq Association
Kotzebue, Alaska
POSITION STATEMENT: Testified in support of HB 141.
ANISHA ELBIE, Co-executive Director
Southwest Alaska Vocational Educational Center (SAVEC)
King Salmon, Alaska
POSITION STATEMENT: Testified in support of HB 141.
ANNETTE CARUSO, Co-executive Director
Southwest Alaska Vocational Educational Center (SAVEC)
King Salmon, Alaska
POSITION STATEMENT: Testified in support of HB 141.
D'ANNE HAMILTON, Personnel Officer
Teck Alaska
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 141.
CHERYL EDENSHAW, Director
Alaska Technical Center (ATC)
Kotzebue, Alaska
POSITION STATEMENT: Testified in support of HB 141.
KAREN CEDZO
Partners for Progress in Delta
Delta Junction, Alaska
POSITION STATEMENT: Testified in support of HB 141.
DEBBIE BANASZAK, Legislative Liaison
Office of the Commissioner
Department of Labor & Workforce Development (DLWD)
POSITION STATEMENT: Presented the proposed changes in HB 79.
MARIE MARX, Director
Division of Workers' Compensation
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding HB 79.
ACTION NARRATIVE
3:16:51 PM
CHAIR SAM KITO called the House Labor and Commerce Standing
Committee meeting to order at 3:16 p.m. Representatives Wool,
Knopp, Sullivan-Leonard, Stutes, Josephson, and Kito were
present at the call to order. Representative Birch arrived as
the meeting was in progress.
HB 79-OMNIBUS WORKERS' COMPENSATION
3:17:37 PM
CHAIR KITO announced that the first order of business would be
HOUSE BILL NO. 79, "An Act relating to workers' compensation;
repealing the second injury fund upon satisfaction of claims;
relating to service fees and civil penalties for the workers'
safety programs and the workers' compensation program; relating
to the liability of specified officers and members of specified
business entities for payment of workers' compensation benefits
and civil penalties; relating to civil penalties for
underinsuring or failing to insure or provide security for
workers' compensation liability; relating to preauthorization
and timely payment for medical treatment and services provided
to injured employees; relating to incorporation of reference
materials in workers' compensation regulations; relating to
proceedings before the Workers' Compensation Board; providing
for methods of payment for workers' compensation benefits;
relating to the workers' compensation benefits guaranty fund
authority to claim a lien; excluding independent contractors
from workers' compensation coverage; establishing the
circumstances under which certain nonemployee executive
corporate officers and members of limited liability companies
may obtain workers' compensation coverage; relating to the
duties of injured employees to report income or work; relating
to misclassification of employees and deceptive leasing;
defining 'employee'; relating to the Workers' Compensation
Board's approval of attorney fees in a settlement agreement; and
providing for an effective date."
3:17:56 PM
CHAIR KITO closed public testimony on HB 79.
[HB 79 was set aside and taken up again later in the meeting.]
HB 141-AK WORKFORCE INVESTMENT BOARD;FUNDS
3:18:23 PM
CHAIR KITO announced that the next order of business would be
HOUSE BILL NO. 141, "An Act relating to allocations of funding
for the Alaska Workforce Investment Board; and providing for an
effective date."
3:18:43 PM
REPRESENTATIVE ZACH FANSLER, Alaska State Legislature, as
sponsor, presented HB 141. He read from the sponsor statement,
which read as follows [original punctuation provided]:
AS 23.15.820 authorizes the Alaska Workforce
Investment Board to administer the Alaska Technical
and Vocational Education Program (TVEP). This
legislation reauthorizes the allocation of the TVEP
funding for five years.
TVEP was established by Legislature in 2000 with the
purpose of enhancing the quality and accessibility of
job training across the state, and aligning training
with regional workforce demands. TVEP funds are
obtained from a portion of employee contributions to
the unemployment insurance trust fund.
The TVEP funds are allocated to technical and
vocational education entities across Alaska designated
by AS 23.15.835. Each entity receives a set percentage
of the TVEP funds available each fiscal year. The
current allocation sunsets June 30, 2017. Unless the
allocation is reauthorized this funding will sit
unused in the TVEP account instead of being used by
these entities to train Alaskans.
TVEP recipients are required by statute to track and
report program outcomes to the Alaska Workforce
Investment Board. Each year the Board compiles and
provides to the legislature a TVEP performance report
containing this information. In Fiscal Year 2016, the
ten TVEP recipients were allocated $12,510,900 and
served 10,295 youth and adults. A statewide network of
training providers is critical to developing an
Alaskan workforce.
This legislation is necessary to help educate and
train Alaskans for Alaska's jobs.
REPRESENTATIVE FANSLER listed the programs that currently
receive TVEP funds: University of Alaska statewide receives 45
percent, Galena Interior Learning Academy (GILA) receives 4
percent, the Alaska Technical Center in Kotzebue receives 9
percent, Alaska Vocational Technical Center (AVTEC) in Seward
receives 17 percent, the Northwestern Alaska Career and
Technical Center (NACTEC) in Nome receives 3 percent, the
Southwest Alaska Vocational and Education Center (SAVEC) in King
Salmon receives 3 percent, Yuut Elitnaurviat in Bethel receives
9 percent, Partners for Progress in Delta receives 3 percent,
the Amundsen Educational Center in Soldotna receives 2 percent,
and Ilisagvik College in Utqiagvik receives 5 percent.
REPRESENTATIVE FANSLER explained that the bill would reauthorize
funding for five years and the distributions would be set until
June 30, 2022. He expressed that the bill is important to many
communities around the state and is important to the state's
resource development systems. The bill would ensure that
Alaskans are trained to perform the jobs in their regions.
3:23:12 PM
REPRESENTATIVE BIRCH asked where the funds come from.
REPRESENTATIVE FANSLER described that TVEP is funded by a
portion of the contributions to unemployment insurance paid by
every working Alaskan. The funds are distributed to technical
and vocational education entities across Alaska's regions in
accordance with AS 23.15.835.
REPRESENTATIVE BIRCH asked how TVEP benefits his constituents
who have funds taken out of their wages.
REPRESENTATIVE FANSLER noted that unemployment [insurance
contributions] are currently pulled out for "unemployment
reasons." He said that one benefit of TVEP is the ability to
train a worker for a well-paying job, like those on the North
Slope. He added that the programs are regionally based and
target the industries of each region. He explained that the
Yuut Elitnaurviat in Bethel does a lot of [Commercial Driver's
License] (CDL) training. He proposed one might consider the
TVEP program as an opportunity for upward mobility for employees
to get better jobs, for Alaska to keep its high-paying jobs
within the state, and [to have the wages from such jobs remain]
in Alaska's economy.
3:25:25 PM
REPRESENTATIVE BIRCH offered his interpretation that [TVEP
funding] "comes out of the hide of the working person" and the
money is taken out of an individual's paycheck to fund training
for someone that might replace him/her. He said he is not
convinced that is a good thing. He acknowledged the pot of
money is big, but he questioned what the return value is for the
person who is working and seeing his/her paycheck diminish.
REPRESENTATIVE FANSLER responded that there is a wide
distribution of jobs around the state that require a
professional degree. He said that TVEP is a program designed
specifically for jobs that would utilize resource development
industries to provide skills to Alaskans. He stated that the
funding mechanisms for [TVEP] have been in place for many years.
He remarked:
Ideally, I think what we all want as Alaskans is to
[at] some point get to a place where workers can ...
get that upward mobility and be able to say, "I no
longer ... qualify for ... just the bare minimum wage
job."
REPRESENTATIVE FANSLER suggested that TVEP provides an
opportunity for such a worker to get a job with a respectable
living wage to bring back to the community and help the overall
economy of Alaska. He noted that billions of dollars leave the
state each year with people that don't live in Alaska: He said,
"They're working two on, and then they're flying down to live
their two off." He observed that such money is being taken out
of the Alaskan economy and is directly impacting Alaskans. He
remarked:
We want those jobs to being going to folks that are
going to - if they are taking a two on, two off,
they're going to return to your ... region; they're
going to come back, and they're going to put that
money back ... into the economy locally.
REPRESENTATIVE FANSLER offered that the goal of HB 141 is to
train Alaskans to do Alaska's jobs.
3:28:53 PM
REPRESENTATIVE STUTES asked whether the funds for the program
come from "the unemployment that is paid."
REPRESENTATIVE FANSLER answered yes.
REPRESENTATIVE STUTES offered her understanding that
unemployment insurance would not be reduced even if the TVEP
program were discontinued.
REPRESENTATIVE FANSLER agreed. He remarked:
This is not going to be a means of putting money back
in the pockets of currently working Alaskans. This is
money that is simply designated from that unemployment
removal to make sure that we can get as many Alaskans
back to work as possible.
3:29:56 PM
REPRESENTATIVE WOOL asked where the Alaska Technical Center is
located.
REPRESENTATIVE FANSLER said it is in Kotzebue, Alaska.
3:30:14 PM
REPRESENTATIVE JOSEPHSON asked if other states make similar
investments with unemployment insurance benefits. He also asked
what percent of all the collected unemployment insurance TVEP
receives.
REPRESENTATIVE FANSLER said he would follow up with information
on other states' unemployment investments. He noted that TVEP
receives .16 percent of the employee unemployment insurance
contributions.
3:31:34 PM
REPRESENTATIVE BIRCH asked if [paying unemployment] is optional
to the employee. He said, "Obviously, if people ... choose to
have a benefit, then they can opt to." He offered his
understanding that the program is basically just "layered into"
what is perceived to be unemployment insurance; however, the
program takes $5 million from working people's paychecks to fund
training all over the state.
REPRESENTATIVE FANSLER responded that there is a good chance the
working Alaskans [who contribute to unemployment insurance] have
passed through TVEP programs to qualify for their jobs. He
suggested that they are paying back into a system that has
already benefited them. He mentioned that the program provides
training at a reasonable price close to communities allowing
individuals to become a "very important part of our fiscal
climate."
REPRESENTATIVE BIRCH pointed out that employees don't have a
choice to participate.
3:33:33 PM
CHAIR KITO indicated that the money is being paid by the
employees regardless of whether or not the TVEP program
continues. He commented that the program provides opportunities
for retraining individuals who might need to change career
paths. He remarked:
Not having that opportunity, I think, is going to be a
challenge for Alaska, especially when we see a
contraction in the economy where people might need to
be retrained. So, we could we let the program go
away, but then we're not going to have opportunities
for individuals in Alaska that could get the training
that could get them into productive careers in the
future. So I do think that the idea is ... keep the
program going so we can keep some training available
for people that might need to change careers.
REPRESENTATIVE BIRCH asked for clarification that the program is
paid for with unemployment insurance.
CHAIR KITO answered, "Correct."
3:34:34 PM
REPRESENTATIVE KNOPP expressed that Representative Birch's
concerns are unrelated to HB 141. He noted that the bill
extends the deadline by five years and allocates a percentage of
money already collected.
3:35:05 PM
REPRESENTATIVE FANSLER agreed that the bill does not affect how
much is taken out of the unemployment compensation. Rather, the
bill designates a method to use those funds for vocational and
technical education programs.
3:36:17 PM
REPRESENTATIVE WOOL asked if the approximately $4 million [of
TVEP funds] represents .016 of all [unemployment insurance] (UI)
contributions.
REPRESENTATIVE FANSLER clarified that it is .16 percent.
3:37:28 PM
REPRESENTATIVE SULLIVAN-LEONARD asked how much unemployment
insurance is captured on an average yearly basis since it began
in 2000.
3:37:49 PM
PALOMA HARBOUR, Director, Central Office, Division of
Administrative Services, Department of Labor & Workforce
Development (DLWD), responded that she does not have a rolling
total from 2000. She explained that the amount projected to be
available in the fund for distribution in fiscal year 2018 (FY
18) is almost $12 million, which is similar to the last three
years.
3:38:49 PM
CHAIR KITO asked whether $12 million is the entire collection of
unemployment insurance or the amount available for TVEP.
MS. HARBOUR clarified that it is the amount available for TVEP.
3:39:03 PM
REPRESENTATIVE BIRCH asked what flexibility the legislature has
in designating the use of the TVEP funds.
MS. HARBOUR reported that the entities are designated in
statute; therefore, the legislature decides who receives the
funding and what percentage they receive. She noted that HB 141
is a straight reauthorization of the current distribution for
five more years.
REPRESENTATIVE BIRCH asked if the .16 percent is the percentage
of the total unemployment insurance received by TVEP.
MS. HARBOUR responded that .16 percent is the percent of each
employee's UI taxable wage base - which is close to $40,000 -
that goes into the TVEP fund for each employee. She noted that
overall UI employment contributions vary each year, but on
average they are about .5 percent of the taxable wage base.
REPRESENTATIVE BIRCH asked, "So .16 goes into .5 about 3 times,
so it's like 30 percent?"
MS. HARBOUR responded, "That would makes sense."
REPRESENTATIVE BIRCH concluded that 30 percent of the
unemployment insurance is being redirected to TVEP funds.
MS. HARBOUR answered no. She explained that 30 percent of an
employees' contribution goes to TVEP, and the employer pays
another .7 percent.
REPRESENTATIVE BIRCH described that one-third of employee's
contribution is being directed by the legislature to these
programs. He asked whether there are any constraints on the
percentages. He said he is challenged by the idea that
unemployment insurance is funding education.
MS. HARBOUR stated that [the legislature] could direct up to 100
percent of the employee contribution to TVEP. She explained
that doing so would impact the amount contributed by the
employer: There is a formula describing how much money needs to
be collected to support unemployment insurance. She remarked,
"If you decide to divert more of the employee's contribution to
training programs, then the employer will have to fund more of
that total contribution that's needed to fund unemployment
insurance."
REPRESENTATIVE BIRCH said that unemployment insurance is
supposed to be available to those who are unemployed. He
offered his belief that using a third of the insurance to fund
an education program for those who are already employed is not
using the funds as they were originally intended.
3:43:24 PM
HEIDI DRYGAS, Commissioner, Department of Labor & Workforce
Development (DLWD), said she will follow up with the percentage
of overall UI [that goes to TVEP]. She offered her
understanding that TVEP has been working since 2000. She
offered that the adage 'A rising tide lifts all boats' really
encapsulates what the TVEP program is about. She stated that UI
is an insurance program which kicks in when someone is out of
work. She explained that the TVEP programs fall "squarely
within the ambit of unemployment insurance." She opined that
the idea is for people to collectively have a portion of their
insurance syphoned off to help all Alaskans go back to work.
She noted that TVEP has 10 recipients across the state who use
the money to train Alaskans for jobs - which is why UI was
created. She noted that the program has been extremely
successful and the department fully supports the program.
REPRESENTATIVE BIRCH expressed that he buys insurances which
benefit him or his beneficiaries. He opined that the one-third
of employees' contributions to unemployment insurance is being
taken away to train other people, which does not benefit the
payers. He offered that [the TVEP program] doesn't fill the
role of insurance since it does not benefit the payer.
Syphoning off a third of $12 million to support colleges and
learning academies is not insignificant. He again noted that he
is not comfortable with using unemployment insurance for that
purpose.
3:46:24 PM
CHAIR KITO offered that he pays for auto insurance without
receiving a benefit unless he is in an accident. He stated, "I
can pay for many years and not receive a benefit of that
insurance." He added that [employees] pay to try and benefit
the overall program which provides education and retraining for
unemployed individuals.
3:47:10 PM
FRED VILLA, Associate Vice President, Workforce Programs,
University of Alaska Fairbanks (UAF), testified in support of HB
141. He stated that the university uses TVEP funding to respond
to the needs of the state of Alaska with outreach, academic,
certification, and professional development programs. He said
that the funding is critical to provide the size, scope, and
quality of the programs and is critical to the access to
programs throughout the state. He relayed that the university
is focused on career pathways, opportunities for economic
development, and high-demand jobs in areas throughout the state.
He remarked:
We work specifically based on the priorities
established by the [Alaska] Workforce Investment
Board, in priority industries and occupations. So
this is a critical[ly] important program to the
university as we look at addressing issues across the
state.
MR. VILLA drew attention to documents [included in the committee
packet] which show the milestones and contributions TVEP has
made across the university system. He explained that TVEP has
helped all health related fields, which is the largest industry
sector in the state; TVEP has helped double the number of
engineers; and it has helped high school students receive double
credit for technical skills.
3:49:53 PM
PEARL BROWER, Ph.D., President, Ilisagvik College, testified in
support of HB 141. She explained that Ilisagvik College is
Alaska's only tribal college and only independent community
college. In the fall of 2016, it was rated the number two
community college in the nation and Alaska's number one
community college. Ilisagvik College is a public institution
accredited by the Northwest Commission on Colleges and
Universities. She stated that Ilisagvik College advocates for
the reauthorization of the TVEP funds through HB 141. Ilisagvik
College is among nine other organizations that are part of the
[TVEP] program and that all have a mission of providing quality,
workforce development designed education to support the needs of
Alaskans.
DR. BROWER noted that Ilisagvik College receives five percent of
the allocated TVEP funding. The funding has allowed Ilisagvik
to serve over 700 students. She stated that Ilisagvik College
ranks the highest in 2016 performance measures among the
programs that receive TVEP funding. She relayed that 82.7
percent of Ilisagvik's TVEP students were employed with a median
wage of over $24,000 within seven to twelve months of exiting
the program.
DR. BROWER explained that TVEP allows Ilisagvik College to offer
training opportunities to residents across the state in order to
get credentialed for jobs or to advance in their current jobs.
Due to the many required certifications, many employed residents
must get certified and recertified every year. She stated that
without TVEP funding, Ilisagvik College would not be able to
reach as many Alaskans or provide as many workforce development
training opportunities. She remarked:
As we look to the future, I believe we all know that
education must be a priority for all of us Alaskans.
We must continue to support programs that provide
opportunity for the future of our state. At
Ilisagvik, we say, "More education, more options, more
out of life."
3:52:44 PM
DENNIS DISHION, Executive Director, Yuut Elitnaurviat, testified
in support of HB 141. He explained that Yuut Elitnaurviat
translates to "The people's learning center." The center
educates local people for family-wage jobs locally. Various
programs use TVEP funding for new training and incumbent worker
training, and several programs operate on an as-needed basis.
He remarked, "All of our programs are structured to where people
go to work at the completion of their program." In FY 16, Yuut
Elitnaurviat serviced 724 individual students with 1,082
services given.
MR. DISHION noted that the programs at Yuut Elitnaurviat
include: National Center for Construction and Education
Research certifications, adult basic education, [General
Educational Development](GED) training, dental assistant and
health aid therapy training, certified nursing training, federal
apprenticeship programs for plumbers and electricians, driver's
license and CDL programs, and other various on-demand trainings
that lead directly to employment. He said that TVEP is
important to Yuut Elitnaurviat to maintain its structure and the
ability to train local Alaskans close to their home for high-
paying jobs.
3:54:44 PM
CHAIR KITO opened public testimony on HB 141.
3:55:08 PM
JOEL ALOWA, Community Health Services Director, Maniilaq
Association, testified in support of HB 141. He explained that
the Maniilaq Association is a regional non-profit that provides
medical, social, and tribal services for the 8,500 residents of
the Northwest Artic Borough and the community of Point Hope. He
said that the Maniilaq Association has an important working
relationship with the Alaska Technical Center (ATC) in Kotzebue,
which provides training and training facilities for regional
medical providers and water sanitation and infrastructure
technicians. He observed that the medical and health field is
continually changing with new practices and technology. He
remarked, "Our partnership with ATC enables our staff to be
trained and be provided with the best medical and health
environment services possible to all of our regional and state
residents." He stated his support of HB 141 and urged the
reauthorization of funds for technical training.
3:56:39 PM
ANISHA ELBIE, Co-executive Director, Southwest Alaska Vocational
Educational Center (SAVEC), urged the committee's support of HB
141. She stated that with large declines in taxable wages, TVEP
will have a shortfall of $1.32 million, and SAVEC will have a
detriment of $39,600 for FY 18. She said that providing
training and retraining Alaskans for Alaskan jobs becomes more
important as more workers get displaced. She explained that
SAVEC provides workforce training for 31 villages within its
service area, which has a direct impact on the local economy.
She remarked:
In the state's 2014 wage report for SAVEC, 115
[Hazardous Waste Operations and Emergency Response]
(HAZWOPER) trainees contributed over $5 million to the
state's economy in the first year after training.
This April, SAVEC will have three HAZWOPER restructure
courses and one 40-hour HAZWOPER class. These
students ... will continue to add to the local and
state economy.
MS. ELBIE noted that SAVEC is working to improve the hiring of
Alaskans in the seafood processing industry. She acknowledged
that the state has made gains in hiring residents but still
battles [high] non-resident hire. She pointed out the Bristol
Bay Borough has a non-resident hire rate of 93.8 percent,
Dillingham 84.6 percent, and Lake and Peninsula Borough 91.3
percent. This amounts to over 3,300 jobs and over $29 million
that could have stayed in the state and multiplied in the local
economy. She expressed that SAVEC provides workforce training
through strong partnership funding including TVEP and local
contributions from regional organizations: the Bristol Bay
Native Corporation, the Bristol Bay Native Association, the
Bristol Bay Borough, and the Bristol Bay Housing Authority. She
stated that the [University of Alaska Fairbanks] (UAF) Bristol
Bay Campus and the Bristol Bay Economic Development Corporation
provide contributions directly for training. Since the fall of
2016, 152 students have been trained in 22 classes at SAVEC, and
there are 12 more trainings planned this spring. She thanked
the committee and the bill sponsor.
4:00:06 PM
ANNETTE CARUSO, Co-executive Director, Southwest Alaska
Vocational Educational Center (SAVEC), testified in support of
HB 141. She stated that she had nothing further to add to Ms.
Elbie's testimony.
4:00:19 PM
D'ANNE HAMILTON, Personnel Officer, Teck Alaska, testified in
support of HB 141. She explained that Teck Alaska operates the
Red Dog mine in Northwest Alaska and employs 600 people at its
busiest time of the year. She stated that Teck Alaska works
closely with the Alaska Technical Center and provides input to
develop [Alaska Technical Center's] (ATC) process technology
program. She noted that the ATC responded quickly to Teck
Alaska's request for more soft skill development, which was
important to Teck Alaska. She explained that ATC revised its
schedule to demonstrate to students what working long days at a
mine would be like and show a realistic viewpoint of life in a
mine.
MS. HAMILTON offered her belief that [training at ATC] improves
employee retention. She noted that Teck Alaska recently brought
11 ATC students to the mine to build on ATC training by
providing job shadow experience and allowing the students to see
firsthand the work they could be doing after completing
training. She remarked that ATC helps students gain access to
high-paying jobs and make connections to the industry that would
likely not have happened without ATC. Through its process
technology and millwright maintenance programs, ATC works very
hard to teach the skills needed at the mine. She expressed that
TVEP funding is important for ATC to continue its work and she
urged the committee to reauthorize funding for TVEP by passing
HB 141.
4:02:28 PM
CHERYL EDENSHAW, Director, Alaska Technical Center (ATC),
testified in support of the reauthorization of funding for TVEP
proposed under HB 141. She noted that ATC is recognized by the
state as a statewide post-secondary training center eligible for
TVEP funding. She thanked the committee and the State of Alaska
for the support of workforce development by investments to ATC
over the years. She stated that ATC has key partnerships with
business and industry to train safe and responsible Alaskan
workers and to help develop and sustain the state's economy.
She remarked:
Without the TVEP funds, we would not be in a position
to maintain our long-term commitment to meet
employers' needs in the local and statewide economy
that we fulfilled since our inception in 1981.
Without TVEP funding, we would not be able to provide
training necessary for jobs in the ... areas of health
care, resource development, process technology,
culinary arts, and construction training. We would
also be not poised to respond to employers' market-
driven, on-demand training needs in a timely fashion
to align with those job opportunities. I urge you to
support reauthorization of TVEP and, with the state's
help, we can build a future for Alaskans strengthening
our families and communities across the state.
4:04:35 PM
KAREN CEDZO, Partners for Progress in Delta, testified in
support of HB 141. She explained that Partners for Progress in
Delta has been a part of TVEP's regional training center group
since 2008. Partners in Progress for Delta came about as a
result of the U.S. Department of Defense (DoD) identifying a
lack of skilled workers in Delta Junction when it was making the
decision whether to establish a ground-based military
installation in Delta Junction. She noted that the DoD
completed an economic development report identifying a lack of
skilled workers, which resulted in the Delta/Greely School
District taking the lead to bring educational partners together.
This led to a very formal educational consortium which includes
partners such as: the Delta/Greely School District, the Alaska
Works Partnership, the UAF Community and Technical College, and
the UAF Cooperative Extension Service. She stated that all the
partners have a dedicated vision of building Alaska's workforce
through education and training.
MS. CEDZO stated that "the board" remains committed to that
mission. She stated her interviews with students involved in
the program have shown her how life-changing the program is,
especially for the young people in the community. She stated,
"Many would not have the opportunity to go on and get real jobs
and be able to contribute to a fund that makes it possible for
those in need to be assisted." She noted that some young people
who do not plan on attending college are not sure what do to
with their lives. The quality of the augmented career and
technical classes at the Delta/Greely High School operated by
Delta/Greely School district and Partners for Progress in Delta
would be at risk without TVEP funding.
MS. CEDZO explained that some high school students are taking
dual-credit courses such as occupational endorsements for
welding, certificates in applied business, expanded health
classes, construction trade, math for a trade, English 111, and
other core requirement classes. Additionally, a wealth of
programs are offered through [UAF] Cooperative Extension for
pesticide certification and agricultural related programs. She
relayed that there are adults in Delta who are not able to go to
Fairbanks to earn a degree, but can work towards a degree in
Delta with the local access to the facility. She stated, "It's
an amazing experience to walk into that building and see young
people's eyes light up getting an idea of what might be an
option for a career path in their future." She added that a
significant component of the program is the entry-level summer
construction trade academy which is a three-week intensive
training program in Delta. It is an approved training program
from which some participants might have direct opportunities.
MS. CEDZO explained that since the inception of the academy in
2006, more than 125 participants have been accepted for
opportunities in apprenticeships or construction trade related
industry [positions]. She indicated that the academy's twelfth
program would be offered in June as a three-week intensive
program. Students walk away from the program with work ethic
and safety skills, as well as certifications in such things as
[Mine Safety and Health Administration] (MSHA), [Occupational
Safety and Health Administration] (OSHA), and forklift training.
She listed that participants of the program have come from North
Pole, Delta, Tok, Glen Allen, Valdez, Juneau, and some rural
villages. She stated that the program has a very successful
working relationship with the operating engineers.
4:10:13 PM
CHAIR KITO announced that HB 141 was held over.
HB 79-OMNIBUS WORKERS' COMPENSATION
4:10:23 PM
CHAIR KITO announced that for its final order of business, the
committee would return to HOUSE BILL NO. 79, "An Act relating to
workers' compensation; repealing the second injury fund upon
satisfaction of claims; relating to service fees and civil
penalties for the workers' safety programs and the workers'
compensation program; relating to the liability of specified
officers and members of specified business entities for payment
of workers' compensation benefits and civil penalties; relating
to civil penalties for underinsuring or failing to insure or
provide security for workers' compensation liability; relating
to preauthorization and timely payment for medical treatment and
services provided to injured employees; relating to
incorporation of reference materials in workers' compensation
regulations; relating to proceedings before the Workers'
Compensation Board; providing for methods of payment for
workers' compensation benefits; relating to the workers'
compensation benefits guaranty fund authority to claim a lien;
excluding independent contractors from workers' compensation
coverage; establishing the circumstances under which certain
nonemployee executive corporate officers and members of limited
liability companies may obtain workers' compensation coverage;
relating to the duties of injured employees to report income or
work; relating to misclassification of employees and deceptive
leasing; defining 'employee'; relating to the Workers'
Compensation Board's approval of attorney fees in a settlement
agreement; and providing for an effective date."
4:10:44 PM
REPRESENTATIVE WOOL moved to adopt the proposed committee
substitute (CS) for HB 79, Version 30-GH1789\D, Wallace, 3/3/17.
There being no objection, version D was before committee as a
working document.
4:11:59 PM
DEBBIE BANASZAK, Legislative Liaison, Office of the
Commissioner, Department of Labor & Workforce Development
(DLWD), presented the proposed changes in HB 79, Version D. She
explained that the title was changed to reflect the proposed
changes in the bill. Section 9 added language stating that a
person "actively in charge of the operations of the business
entity" or a person that has "the authority to insure the
business entity" would be liable for penalties for an employer's
failure to insure. The change would ensure that if a business
entity has 11 members, all with less than 10 percent ownership
interest, then that person would still be accountable for
uninsured injuries and penalties for failing to insure. She
added that Section 11, in Version D, adds language to clarify
the Division's civil penalty assessment, which must be based on
substantial evidence. The section also clarifies that an
employer's civil penalty assessment is based on the amount the
employer would have paid had the business been insured as
required by law, including properly classifying its employees.
MS. BANASZAK relayed that Section 13 deals with civil penalty
assessment appeal process and does not have substantial changes;
the previous language in HB 79 was a bit unclear. She stated
that Section 16 addresses preauthorization by adding language to
clarify that the preauthorization request's estimated fee would
be subject to the Alaska medical fee schedule just like any
other workers' compensation medical bill. Section 18 addresses
the hearing schedule and gives the [Alaska] Workers'
Compensation Board control of the scheduling of hearings.
Having the parties control the hearing scheduling process has
led to inefficiencies and protracted resolution.
4:14:34 PM
MS. BANASZAK noted that Section 19 simplifies the self-
representation language of the previous version. Section 23
addresses the reporting of a change in compensation and adds
language stating that the division would provide notice to an
employee when an employer has terminated or changed
compensation. She explained that Section 24 clarifies how an
employee would be notified that his/her employer denied
benefits. Section 25 addresses penalties for failure to timely
preauthorize medical care: the penalty would be 25 percent of
the amount in the preauthorization request.
MS. BANASZAK drew attention to Section 27, which repeals an
earlier section addressing how benefits are paid. The previous
section required payment by check, but with so many current
options for payment, it was determined that this section was no
longer needed. She noted that Section 28 revises language to
allow the Benefits Guaranty Fund to file a lien within one year
of its knowledge of an employee's injury or death. She
explained that sometimes the fund may not become aware of an
injury or death when it occurs. She stated that Section 30
refines the definition of independent contractor to ensure that
true independent contractors can continue to operate as
independent contractors.
4:16:11 PM
REPRESENTATIVE BIRCH recalled a letter from the Alaska Trucking
Association - an association that relies on independent
contractors. He asked if the association's concerns have been
addressed.
4:16:40 PM
MARIE MARX, Director, Division of Workers' Compensation,
Department of Labor & Workforce Development (DLWD), answered
yes: the department believes the current definition addresses
the concerns. She added that truckers and other stakeholder
groups such as the [Alaska State Home Building] Association
relayed their concerns to the department and she offered to
detail how the concerns were met.
4:17:23 PM
MS. BANASZAK continued presenting the changes in the bill. She
noted that Section 36 discusses persons liable for criminal
penalties for failure to pay compensation and adds language
similar to language in Section 9. She explained that Section 37
talks about persons liable for criminal penalties for
transferring assets. It adds a person "actively in charge of
the operations of the business entity" or a person that has "the
authority to insure the business entity" as persons liable for
criminal penalties for knowingly transferring assets with the
intent to avoid the payment of compensation. She said that
Section 39 changes the definition of employee by removing "in
the service of" and inserting "employed by".
4:19:10 PM
REPRESENTATIVE JOSEPHSON asked Ms. Marx to go through the
changes to the definition of employee.
MS. MARX explained that the new revision is found in Section 30,
page 17, line 7, which states that the definition is intended to
apply only to workers' compensation definitions, not [Internal
Revenue Service] (IRS) or other labor law definitions. She
noted that line 8 addresses a relayed concern by adding "for the
purposes of this chapter only". She noted that another change
was made on page 17, lines 13-15, to address concerns raised
about required control and direction; the new language clarifies
that control and direction performed as a result of a
requirement of law or contract would be allowed. An independent
contractor could still have control and oversight without
impacting whether the individual is determined to be an
independent contractor.
MS. MARX offered an example in response to a question: If hard
hats are required for health and safety reasons, then the
business for whom the services are being provided can control
whether the independent contractor wears a hard hat. Such
business control would not disqualify the individual from being
considered an independent contractor.
4:21:45 PM
MS. MARX noted that another change was made on lines 16-18, page
17 of Version D. A concern was raised that contractors may
provide materials or equipment for use but an independent
contractor provides all the other tools and labor. She
remarked:
After hearing from various stakeholder groups, this
clarified that an independent contractor is a person
who provides tools, labor, and other operational costs
necessary, and recognized now that materials and
equipment can be supplied by the contractor to the
independent contractor without pushing that person -
that independent contractor - out of the definition.
MS. MARX mentioned another change found on page 17, line 23,
which clarifies that any license, permit, or certification
required by the work the independent contractors does would
suffice: the previous version had only mentioned a business
license. She said that based on input from various stakeholder
groups and researching other states' determining tests, the
department eliminated the requirement to meet 11 or 12 factors
to be considered an independent contractor. Instead of 11 or 12
necessary factors, Version D provides 7 required factors that
must be met, and 5 optional factors, of which 3 must be met.
She offered her opinion that such a test allows a wide enough
net to capture the true independent contractors, but still
narrow enough to make sure that employees are not included in
the definition. Subparagraph (H), on page 18, lists the
optional "prongs" which allow for more flexibility.
4:24:31 PM
REPRESENTATIVE WOOL asked if the earlier test had required 11
factors.
MS. MARX answered that there were 11 factors, although one
factor was a two-part requirement, so she indicated [that could
be considered a total of 12].
REPRESENTATIVE WOOL asked if the 7 required factors and the 5
optional factors are the same 12 that were in the original
description. He asked if it is accurate to say that the
description went from 12 [factors] to 10 out of 12.
MS. MARX answered, "That's correct." She noted that the most
controversial and complicated "prong" for stakeholder groups was
(H)(v), which read as follows:
the person engages in a trade, occupation, profession,
or business to provide services that are outside the
usual course of business for the individual
MS. MARX explained that prong is optional under the current
version. She stated that stakeholder feedback indicated that
this "prong" would be complicated to apply; therefore, it was
reclassified from a mandatory to an optional factor. If a
person does not meet that factor but he/she does meet three of
the other factors, then he/she could still qualify as an
independent contractor.
4:26:30 PM
REPRESENTATIVE JOSEPHSON offered his assumption that if the
independent contractor [requirements are] met by an individual
who has employees, then he/she would also need to buy workers'
compensation.
MS. MARX stated that is correct. She added that the test is
used to determine whether a person providing services is an
independent contractor. She said that whether or not the
independent contractor has employees is a separate inquiry.
4:27:46 PM
REPRESENTATIVE KNOPP asked if home-based businesses, such as
plumbers, are classified as a separate place of business.
MS. MARX responded that sub-subparagraph (ii), on page 18, line
10, states that the business location has to be separate from
the location for which [the independent contractor] is providing
service. She explained that the department investigates whether
or not the independent contractor operates out of the
contractor's business or receives mail at the contractor's
business. She remarked:
In this day and age, I think it is very common for
people to have merely a website as their base, but it
has to be just different from that contractor, so we
would look to where that contractor's business is and
see if they are there.
REPRESENTATIVE KNOPP asked what was amended in Sections 9 and
11.
MS. MARX explained that Sections 9 and 11 have been repealed and
reenacted in full.
4:30:01 PM
REPRESENTATIVE KNOPP read from a confidential letter he received
from a municipal attorney, as follows:
I see no benefit from deviating from the Federal Labor
Standards Act guidance in Alaska court jurisprudence
regarding the distinction between employees and
independent contractors. ... Subsection 11 of Section
31 of the bill deviates substantially from existing
status quo and adds unreasonable additional
requirements defining someone as an independent
contractor that exceeds federal guidance and prior
decisions by our Alaska Supreme Court.
REPRESENTATIVE KNOPP added that the attorney has not seen the
committee substitute. He asked if the committee substitute
alleviates the concerns mentioned by the attorney. He asked if
the bill would be substantially more restrictive than federal
labor standards.
MS. MARX answered that HB 79 has a very narrow application: It
does not apply to all labor standards, it applies to workers'
compensation. She stated that in the last 10 years, other
states have found that multi-factored balancing tests are not
effective in tackling the misclassification issue. She
explained that the IRS has a 20-factor balancing test [to
determine the status of an independent contractor]. She
suggested that although that test may work for the IRS, the
multi-factor balancing tests aren't working for workers'
compensation, which has a goal of protecting employees from
severe injury or death and protecting employers from huge
uninsured losses. She said that some employers have contacted
the Division of Workers' Compensation in order be proactive
about determining whether their employees are independent
contractors. She remarked:
They want to be proactive, and we want to be
proactive. And we give them a balancing test where no
one factor is determinative. It is very difficult for
these employers - especially small business employers
- to know whether they meet that test without going to
an attorney and perhaps getting some legal advice.
Our goal is to make this a ... much clearer test so
employers know ahead of time what the requirements are
- and employees or independent contractors can know
and protect themselves .... So it is different and it
was intended to be a change.
REPRESENTATIVE KNOPP pointed out that within the letters of
support [included in the committee packet], some components of
the bill were supported and some were not. He asked for a
breakdown of the areas of concern.
4:33:23 PM
CHAIR KITO stated that he plans to weigh the issues of concern
and determine whether the committee will move forward or cover
the issues in a future committee meeting. He said he does not
intend to move the bill today and the bill will have public
testimony in the future.
4:33:54 PM
REPRESENTATIVE JOSEPHSON expressed that the multi-factor tests
sound like a continuum of behavior or acts undertaken by an
employee; however, HB 79 lays out clear statements. He analyzed
that in the current system, which Ms. Marx claimed is
unsuccessful, the employer must sort out the employee's
classification based on tasks and actions.
4:34:41 PM
MS. MARX responded that the current test set in regulation
defines "employee". She explained that some states narrowly
define "independent contractor" instead of defining "employee"
with a broad definition. Defining "employee" has led to
complications and misclassification. She stated that
misclassification is being dealt with throughout the United
States. She assessed that the tests defining "employee" are
more difficult to apply. States defining "independent
contractor" have a much clearer application. She said that HB
79 defines "independent contractor" and revises the definition
of "employee" to mean someone that is not an independent
contractor that has a contract for hire.
4:35:54 PM
REPRESENTATIVE KNOPP offered that a constituent of his is a real
estate broker, and all of his brokers are independent
contractors. He asked how HB 79 would apply to such an
organization in regard to minimum wage and [the Federal
Insurance Contributions Act] (FICA).
MS. MARX answered, "He would be safe." She explained that
persons who perform services for real estate have an exemption
under AS 23.30.230 paragraph (10), and therefore the Workers'
Compensation Act does not apply to them.
4:37:14 PM
CHAIR KITO announced that there will be more updates to the
expansive bill.
4:37:38 PM
REPRESENTATIVE WOOL said, "Basically there's two types of people
in this world - employees and independent contractors. Trying
to define employee got complicated, so you're going to define
what an employee isn't."
MS. MARX responded that there are more than two types of people
involved. Someone could be a volunteer or a trespasser, but for
the purpose of the bill, there are two categories. She added
that since 2007, states have found that multi-factor tests
defining "employee" don't work and have led to misclassification
and confusion for employers. She explained that HB 79 is in
line with what many states are doing - defining "independent
contractor" instead of "employee".
REPRESENTATIVE WOOL asked if doing so basically defines what an
employee isn't.
MS. MARX responded that an employee would be someone who is not
an independent contractor but also has a contract for hire. It
differentiates them from a volunteer or trespasser. In response
to a comment, she added that babysitters would also be exempted.
4:39:21 PM
REPRESENTATIVE JOSEPHSON stated his understanding that the term
"contract for hire" would include lawn-mowing 12-year-olds and
could be complicated in court.
MS. MARX responded that HB 79 applies to employers, and
employers are those who conduct business. She explained that as
a homeowner, unless you do business out of your house, you are
not an employer and would not fall under HB 79.
4:40:57 PM
CHAIR KITO announced that HB 79 was held over.
4:41:40 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:42 p.m.