Legislature(1995 - 1996)

02/13/1996 01:30 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                    
 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              
 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.                               

Document Name Date/Time Subjects