Legislature(1995 - 1996)
02/13/1996 01:30 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 261 UNEMPLOYMENT COMPENSATION CHAIRMAN TIM KELLY called the Labor and Commerce Committee meeting to order at 1:30 p.m. and announced SB 261 to be up for consideration. DWIGHT PERKINS, Department of Labor, said SB 261 makes several changes to the Employment Security Act in six major areas: federal income tax withholding; confidentiality of records; contributions and collections; benefit overpayments; finality in determinations; and appeals. In addition, the bill contains a few minor and technical amendments. The federal income tax withholding provision brings the Employment Security Act into conformity with a new federal provision that requires states to allow claimants to have income withheld from benefits to cover their income tax liability. The confidentiality of records section proposes changes to AS 23.20.110 and allows the Department to provide additional specific unemployment insurance information to other entities under strict disclosure guidelines. This exchange will support and enhance the department's own programs as well as assist other state programs. The information would be used only to protect the unemployment compensation fund, enhance employment, training, and labor market information programs. These changes do not rescind the public disclosure prohibitions already in statute. The intent is to increase efficiency of state government while retaining current privacy safeguards. Regarding contributions and collections, two provisions would provide important tools for collecting delinquent contributions: first from an employer who is at least two-quarters delinquent. The bill also allows the department to enjoin a delinquent employer who refuses to post a bond or pay contributions from operating as an employer. The department would use these provisions when existing remedies are not effective. These uncollectible accounts are currently subsidized by the rest of Alaska's employers, who pay contributions timely. In the benefit overpayment section, the standard for waiving unemployment insurance overpayments would be changed from great hardship to equity in good conscience. The new standard would allow the department to consider other factors, such as the degree of good faith in claiming benefits, and the claimant's detrimental reliance on the benefits. The bill would also permit the department to write off uncollectible overpayments after two years. Practice has shown that most recoverable overpayments are collected within two years. The department would be given clear authority to correct any determination during the benefit year of an unemployment claim. This change will increase the accuracy of claim adjudication. In the appeals section, a proposed amendment would provide a uniform 30 day period for filing appeals from any determination made by the department. The current 15 day period probably impacts rural parties unfairly and may not allow enough time to review and consider an appeal. The bill would also clarify the legal effect of appeal decisions. It would make it clear that findings of fact, and conclusions of law in unemployment hearings are not binding in another proceeding. The purpose of this amendment is to prevent parties from excessively litigating issues based on the effect the department's ruling may have on a later civil litigation. Both the 30 day appeal provision, and the provision restricting the scope of the department decisions, address concerns of a recent legislative audit of the unemployment insurance appeals process. Additional amendments would allow an insured worker to continue receiving unemployment benefits while attending the funeral of an immediate family member. The worker would be required to file a compensable claim for the week, immediately before jury duty or attendance at a funeral in order to receive an eligibility exemption for those reasons. The bill also exempts extended benefit claimants from the work search requirement while attending an improved training course and corrects the definition of a waiting week in the Employment Security Act, and clarifies the treatment of cafeteria plan payments under the wage definition of the Act. Number 113 SENATOR KELLY asked Mr. Perkins to explain the cafeteria plan. MR. PERKINS replied cafeteria plan payments are not considered wages so long as the payments would not be otherwise treated as wages under the Act. For example, payments made to a cafeteria plan for retirement or medical expenses would not be considered wages. SENATOR KELLY questioned whether those payments are considered as income by the IRS and whether SB 261 would exempt them from being considered as wages for the unemployment compensation program. MR. PERKINS replied wages are considered to be the hourly pay wage. The benefits are other compensable benefits. SENATOR KELLY asked how compensable benefits are currently treated. RON TORGERSON, a hearing officer with the Department of Labor, testified that he was not sure what the taxable status of compensable benefits is with respect to the employee, but they are currently exempted from the Federal Insurance Contribution Act tax and the federal unemployment tax. Since there are no federal payroll taxes on those payments, SB 261 would harmonize the Employment Security Act with the federal standard. Number 151 SENATOR SALO asked if an Alaska employee who failed a urinalysis drug test when applying for a job with the Department of Transportation would be eligible for unemployment benefits. MR. TORGERSON stated the Department of Labor does not have a standard to apply to people that are going to take a job but fail the test. There is no case law or statutory requirement that would support a disqualification for refusing work. SENATOR SALO said she was concerned with the difference between the way the private and public sector treatment this issue. CHRIS CHRISTENSEN, Alaska Court System, said they supported section 3. He said it would give the Department of Labor access to information to determine eligibility for a public defender. MARILYN MAY, Department of Labor, also supported section 3 of SB 261. DOUG GARDNER, Collections, said section 3 would help them in collecting on unpaid bills. SENATOR KELLY asked why the Governor had a separate bill to amend the benefit amount for unemployment. MR. PERKINS explained that the benefit amount was a separate issue from access to Department of Labor information.