Legislature(2007 - 2008)HOUSE FINANCE 519
03/20/2008 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB391 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 391 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 20, 2008
1:56 p.m.
CALL TO ORDER
Co-Chair Meyer called the House Finance Committee meeting to
order at 1:56:54 PM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Harry Crawford
Representative Les Gara
Representative Reggie Joule
Representative Mike Kelly
Representative Bill Thomas Jr.
MEMBERS ABSENT
Representative John Harris
Representative Mike Hawker
Representative Mary Nelson
ALSO PRESENT
Representative Mike Kelly; Don Etheridge, Alaska State
AFL/CIO; Rebecca Logan, President, Associated Builders and
Contractors Association; Krista Crum, Chief Financial
Officer, Northern Industrial Training; Ms. Barbara Huff
Tuckness, Director of Governmental and Legislative Affairs,
Teamsters Local 959.
PRESENT VIA TELECONFERENCE
Mike Samson, Chairman of the Board, Associated Builders and
Contractors & President, Samson Electric, Anchorage &
Fairbanks; Jeff Robinson, Division Manager, Klebs
Mechanical, Anchorage; Bill Meade, Attorney, Turner and
Meade, Anchorage.
SUMMARY
HB 391 An Act relating to project labor agreements.
HB 391 was HEARD and HELD in Committee for further
consideration.
HOUSE BILL NO. 391
An Act relating to project labor agreements.
REPRESENTATIVE MIKE KELLY, Sponsor, explained that when the
Alaska Gasline Inducement Act (AGIA) was introduced last
year, it had no project labor agreement (PLA) requirement.
As the Act moved through committee, it picked up a PLA
requirement, and then a collective bargaining PLA
requirement. The collective bargaining PLA causes a
challenge for non-union contractors. House Bill 391 was
introduced to address that.
Representative Kelly pointed out that when non-union
companies are employed on PLA projects, workers are
compelled to pay union dues and make union health, training
and pension contributions into plans that are different than
the plans with their non-union employer. These contributions
may have little or no long-term benefit to the workers
because they may not be employed long enough to meet vesting
requirements for the union plan. In addition, for the
duration of the project contributions are not made into the
employee's regular pension plan, and if contributions were
required to be made to maintain that plan, the employer
would be required to double-pay for expensive benefits.
2:01:44 PM
Representative Kelly stated that he did not intend to
criticize labor contracts. In his experience lor contracts
are excellent. His intention is to level the playing field.
House Bill 391 says that if Alaska mandates that a project
be covered by collective bargaining PLA, then it is
appropriate for the State to ensure the PLA contains
adequate safeguards to ensure non-union workers benefit from
the pension contributions they make. He wanted to put as
many Alaskans to work as possible, whether union or non-
union. The bill states that any collective bargaining PLA
mandated by the State must permit employees who are not
covered by a local collective bargaining unit to execute a
"Benefits Election Declaration." The Declaration would allow
employees the option to have fringe benefit payments and/or
contributions made on their behalf to either the employer's
existing benefits program or to the applicable union trust
fund.
Representative Kelly described an additional provision that
had been added in the last committee of referral: Within
seven days of request, the employee must be provided with a
notice comparing the union plan with non-union plan
benefits, so that the employee can make an informed choice.
2:04:31 PM
Representative Crawford related a personal story about his
work history. He described benefits he would receive for the
rest of his life because of excellent defined benefit
pension plans from union jobs. When he was young he could
not imagine being older and wanted an annuity plan that he
had easy access to. He was grateful that he had been
compelled to invest in a pension plan. He thought the bill
would help younger workers make that same investment in
their futures.
2:07:49 PM
Representative Kelly clarified that the bill was addressing
non-union companies with employees that want to work on the
pipeline. If a worker has time invested with a contractor
and intends to return to that contractor after the pipeline
project, the bill would permit them to protect and add to
their primary plan during the years on the pipeline. They
also have the choice to invest in the union piece. The point
is the freedom to make the decision.
Representative Crawford said a good portion of his
retirement comes from the pipeline years, short as they
were. He wondered if the proper time to make a decision
about long-term benefits is during a worker's younger years.
Younger people seem to prefer the cash annuity, but they
tend to take it out before they are retired. He thought the
bill would jeopardize the longer term benefit.
2:12:52 PM
Representative Kelly agreed that young workers were not
always in the right frame of mind to make long-term
decisions. He intended the bill to give workers some counsel
on the long-term effects of the decisions. He referred to
some of the problems associated with the previous pipeline
project, some of which have been addressed. The situation is
still not perfect for non-union contractors, but the bill
would help.
2:15:36 PM
Vice-Chair Stoltze wondered where rural workers who do not
have the same opportunities to work on long-term projects
fit into the picture. Representative Kelly replied that
someone from a rural community who works on a short project
for a contractor or sub-contractor is unable to vest.
Representative Gara noticed that the bill is written to
apply to any PLA in Alaska. He did not support the bill for
reasons similar to Representative Crawford's; however, he
wondered if the Sponsor would accept restricting the bill to
PLAs connected with the gas pipeline project. Representative
Kelly said that would not be his preference because the
provisions in the bill would only be triggered in state-
mandated collective bargaining PLAs. He thought it
preferable to leave the language the way it is because if
IGIA does not work, another project might have the same
issues. He did not see risk in tying the provision to other
projects.
2:20:14 PM
Representative Crawford explained how benefits work in the
union model. When a worker dies, all the money paid in goes
back into the pension trust fund. Because of the fund, other
workers can draw out for a longer time. In a 401(k) plan,
the money is gone once drawn out. He gave examples of rural
workers who work in many short stints and build up good
retirements through a defined benefit pension plan. Others
have 401(k) plans but run into tough times and draw the
money out, and then the retirement is gone. He did not want
the State to give people a way out of defined benefits. Two
or three years on the pipeline could result in more long-
lasting benefits than a 401(k) accumulated during the rest
of a work life.
2:24:28 PM
Representative Kelly asserted that it was not necessarily
more secure to have a defined benefit plan than a defined
contribution plan. He referred to the unfunded PERS
liability. He thought there would be no unfunded liability
with defined contribution plans. He acknowledged that there
is less threat of an unfunded liability now.
Co-Chair Meyer opened public testimony.
DON ETHERIDGE, ALASKA STATE AFL/CIO, spoke in opposition of
HB 391 and made some clarifications regarding previous
discussion. He pointed out that the unions to do not get any
of the trust funds. They go to the different trusts, whether
health, training, or pension. If someone leaves before
getting vested, the contributions stay with the trust, not
the union. Locals do their best to make sure workers are
vested and don't lose their money.
Mr. Etheridge explained that in earlier testimony, AFL/CIO
had stated that they were not opposed to the bill but wanted
to see some amendments that would make sure the plans were
equal for the covered as well as the non-covered units. He
said AFL/CIO had determined that it was time to oppose the
legislation.
Mr. Etheridge was concerned that the language in the bill
will cause legal problems with the federal Employment
Retirement Income Security Act (ERISA) provisions. The
unions are committed and willing to negotiate in good faith.
All employees working under the PLA will have better
benefits than what exists in the non-union sector at this
time.
2:31:04 PM
Representative Kelly revealed that he had not known AFL/CIO
would oppose the bill if the plans were not the same. He did
not think it was practical to say that a non-union
contractor that has been in business for twenty or more
years could make that happen. He did not think it would be
workable to put the plans together. Mr. Etheridge responded
that under the PLA the wage package would have to be the
same.
REBECCA LOGAN, PRESIDENT, ASSOCIATED BUILDERS AND
CONTRACTORS (ABC) ASSOCIATION, spoke in support of the bill.
She said ABC had actively pursued not having PLA language in
AGIA and were disappointed to see it included. They thought
HB 391 cleanly addressed their issues. The worker has a
choice to stay with current employer's plan or make
contributions to the union plan. She thought that was fair.
Representative Gara queried her as to ABC's interest in the
bill. Ms. Logan said that ABC has long fought project labor
agreements in any form. One of the issues with PLAs that
they struggle with most is fringe contributions to union
pension plans.
Representative Gara wondered what was at stake economically
for ABC if workers had one plan or the other. Ms. Logan
responded that ABC wanted to see all workers treated fairly.
She described a scenario of an Alaskan company that would
very likely be working on a gas pipeline project, Udelhoven
Oilfield System Services. In the scenario, Udelhoven would
sign an agreement. They would have employees who have been
working for them for decades with existing benefit packages.
When Udelhoven signs a labor agreement like that, then the
employees traditionally would be required to make the
pension contributions to a union plan. The bill would allow
them to choose.
Representative Gara asked if under the provision there would
be a cost to the employer. Ms. Logan replied that there
would be an economic impact if the bill does not pass. A
company like Udelhoven would face making duplicate
contributions for the term of the project.
2:36:37 PM
Representative Crawford asked for clarification regarding
the duplicate contributions. Ms. Logan replied that the
labor agreement would determine the amount of the
contribution. A company like Udelhoven would be bound to
make the negotiated contribution. For that employee for that
project they make a contribution based on the terms of the
contract. Without the legislation in place, they would make
it to the union pension plan and might also have to maintain
contributions to their own plan on behalf of the same
employee.
2:39:29 PM
Representative Crawford asked, for sake of discussion, if
the amount negotiated in the PLA was $5.50, but Udelhoven's
plan stipulated they pay $4.00, what would happen to the
difference. Ms. Logan did not answer the question.
2:42:12 PM
KRISTA CRUM, CHIEF FINANCIAL OFFICER, NORTHERN INDUSTRIAL
TRAINING (NIT), spoke in support of HB 391. In 2007 they
trained over 800 Alaskans, both union and non-union people.
She described an experience of being employed by a union.
When the position was terminated, she was not vested, so she
will not get those contributions. She thought all workers
should have the right to chose where the funds go.
2:44:32 PM
MS. BARBARA HUFF TUCKNESS, DIRECTOR OF GOVERNMENTAL AND
LEGISLATIVE AFFAIRS, TEAMSTERS LOCAL 959, spoke in
opposition to the bill. Teamsters 959 is strongly for
employee choice and agrees with the concept of choice in HB
391. One of the reasons they are opposed to the bill is
because benefits are a mandatory subject of collective
bargaining. She is paid to represent union workers and
ultimately non-union workers, because the better benefit and
wage packages they are able to negotiate in a collective
bargaining agreement makes everything better for all
workers.
Ms. Huff Tuckness explained that the majority of non-union
contractors do not have the same overhead as union
contractors with respect to wage and benefit packages. In
fact, ABC is on record fighting the prevailing wage,
something Teamsters has fought to increase.
Ms. Huff Tuckness referred to litigation in relation to the
pipeline thirty years ago because of changes in legislation
at the state level. She emphasized that all pension and
health benefit plans are governed under ERISA. State law
cannot be inconsistent with the federal law.
Ms. Huff Tuckness said that ABC is trying to get laws
changed so they can provide benefits to their particular
contractors through this process and they use the unions and
they use the big employers as examples.
Ms. Huff Tuckness thought the public conversation was
important.
Ms. Huff Tuckness maintained that HB 391 says potential sub-
contractors for the gas pipeline do not have to trust the
contract negotiations with the unions. The big oil companies
will be ultimately responsible for negotiating the PLA with
union representatives who know and understand employee
issues. Those non-union contractors should be required to
provide a benefit plan. Her concern is litigation resulting
from changing a particular term under AGIA, but also
attempting to legislate on a state level what is already
mandatory subjective bargaining under a federal law. The
communication that matters in contract negotiations is at
the table, not in legislation.
2:54:59 PM
Ms. Huff Tuckness described concerns that HB 391 would be at
odds with the terms and conditions of the existing AGIA
legislation as well as ERISA.
Representative Gara asked if she thought HB 391 would allow
a selection between a defined benefit plan and a defined
contribution plan. Ms. Huff Tuckness replied that she reads
the bill as providing the same expectations for union or
non-union regarding benefit packages. Representative Gara
asked if passed what would it do in terms of benefit
packages that would be made available to an employee.
Ms. Huff Tuckness reiterated the centrality of negotiations
in collective bargaining.
2:59:03 PM
Representative Thomas described a friend who took his
retirement out of the State and moved it in order to get a
better return. He asked if a retiring state employee can
take their benefit package with them. Ms. Huff Tuckness said
that under the old system the employee could take benefits
with them and continue to get credit. It is no longer
transferrable under the current system.
Representative Thomas asked how many people she thought
would work the planned pipeline. Ms. Huff Tuckness said that
at the peak of the previous pipeline, Teamsters Local 959
alone represented well over 25,000 employees. Representative
Thomas wondered how many of those people left their money in
the retirement account because they left and went elsewhere.
Ms. Huff Tuckness replied that she could not answer that but
could find numbers.
3:02:26 PM
Representative Thomas stated that he favored the bill. He
does not support PLAs. He appreciated the ability to work
flexibly and still have something to show for that time.
Ms. Huff Tuckness stated that many people attempt to get
vested. It is a choice to get that vesting.
3:03:51 PM
Representative Crawford thought the key was to negotiate at
the beginning of the pipeline so that everyone who works the
pipeline gets the benefit of what they paid in. The five
year vesting can be adjusted now.
3:05:47 PM
Representative Gara said although he supports defined
benefits, he thought the best argument on the other side is
that when someone works for a few years without intending to
vest, he doesn't want them walking away with no retirement
or defined contribution. Ms. Huff Tuckness emphasized the
employee's choice to walk away. She responded that if there
are other opportunities, they could move from one job to
another, which is not unusual in the construction industry.
They may walk away, but they do not lose their vestment
option and can come back later and work until they are
vested.
Representative Gara asked if the benefit plan could be
transferrable in circumstances where an employee worked a
job with one union and then transferred to another job with
another union. Ms. Huff Tuckness replied that the plans
would be different. Representative Gara reiterated his
support of defined benefits. He thought defined
contributions worked best for those making more money and
defined benefits worked best for those who make less.
3:09:38 PM
Representative Thomas asked how many workers Teamsters 959
represented three years after the pipeline and how many
currently. Ms. Huff Tuckness replied that currently they
represent approximately 7,500 people across the state.
3:11:58 PM
MIKE SAMSON, CHAIRMAN OF THE BOARD, ASSOCIATED BUILDERS AND
CONTRACTORS & PRESIDENT, SAMSON ELECTRIC, ANCHORAGE &
FAIRBANKS (Testified via teleconference), noted his support
for HB 391. He pointed out that Samson offers two pension
plans, one of which is a defined contribution. For
electricians currently, the fringe benefit is $17.83 per
hour for pension, training and health. Samson contributes
the entire $17.83 into the defined contribution for every
hour worked. Outside of a union program, this contribution
money is considered wage. The money is 100% vested with the
first dollar that goes into it; the worker can draw on it at
any time. There is also a profit sharing pension plan, with
401(k), 50 cents on the dollar with 3% cap. He noted that
they are 100% behind their workers and pay for 75% of
workers' health insurance outside of the fringe package. He
thought the bill is about choice, not negotiation. Once the
negotiations with AGIA are complete, the fringe package
would have to comply with ERISA. If a company has an ERISA
approved pension plan, then the workers should be able to
choose to put their money in that.
Mr. Samson was disappointed in the shortsightedness of
official vote taken last year when collective bargaining was
inserted in the PLA language.
3:16:42 PM
Representative Gara asked about the non-defined benefit plan
cap at 3%. Mr. Samson described the 401(k) plan, which was
previously not capped; now it is capped at 3%.
JEFF ROBINSON, DIVISION MANAGER, KLEBS MECHANICAL, ANCHORAGE
(Testified via teleconference), stated that PLAs place an
unfair financial disadvantage on the workers on a project
who have not previously been part of a collective bargaining
agreement. He thought forcing workers to make contributions
to a benefit plan, knowing they would not receive it, was
unethical. An employee could stay five years and be vested,
but he thought the majority probably would not do that.
Klebs Mechanical makes contributions to benefit plans
ranging from $27,000 to $36,000 annually per worker. Workers
cannot afford to make annual contributions in that amount to
plans that will never benefit them.
Mr. Robinson said Klebs would never sign a PLA because of
the hardships that would place on the workers;
unfortunately, smaller companies may decide to go with a
PLA, which would put their workers at a disadvantage. If
they had to contribute to the union plan, they would see
none of it if they didn't stay long enough to become vested.
He was concerned about rural workers who work short stints.
The biggest non-union contribution vehicle is the 401(k);
however, another option approved by ERISA is the Individual
Retirement Account (IRA) or Roth IRA. The employee would be
able to contribute to the plan if the employer did not have
one. The employee can walk away and that money is always
there.
Mr. Robinson spoke to Representative Crawford's description
of his union benefits, but stated that there are good and
bad plans. Some plans put workers in jeopardy in their later
years. The bill gives the worker a choice.
3:22:30 PM
Representative Crawford stated that the company-sponsored
pension plans that are in trouble did not have a set amount
that they had to contribute on the worker's behalf each
year. The building trades are in good shape. They have a
multiple employer welfare association. He did not know of a
company that would be working on the pipeline that was in
trouble. The amount of money for the plan is set by hour and
invested wisely.
Mr. Robinson had heard that some pension funds were in
jeopardy. He referred to Department of Labor statistics that
union membership is declining from 26% in 1977 to at 13.3%
in 2007 Unions.
Co-Chair Meyer thought there was risk in all plans.
BILL MEADE, ATTORNEY, TURNER AND MEADE, ANCHORAGE (Testified
via teleconference), spoke in support of HB 391. He
negotiates collective bargaining agreements. He thought the
bill ensures the employee the opportunity to get something
from the pension contributions made under mandated PLAs. The
State is compelling a PLA. Many employees make contributions
to union pension plans and never see a penny of it.
3:27:06 PM
PUBLIC TESTIMONY CLOSED.
Vice-Chair Stoltze wanted quantifiable information regarding
how many people don't end up vesting and what that adds up
to.
Representative Gara voiced his skepticism regarding defined
contribution plans for people who are not making high wages,
because that translates to less money put away. If they
retire in a good stock market, it might be good, but
retiring in a bad stock market could be bad.
Representative Kelly responded that the purpose of the bill
is for the employee to be able to choose, not to address
defined contribution or defined benefit. He related his
experience with the effects of the unfunded liability. He
pointed out that nation-wide, seven out of eight people are
not union. In Alaska three out of four workers are not
union. He intends HB 391 to protect those people now that
the State has the collective bargaining PLA language.
3:36:16 PM
Vice-Chair Stoltze said he would like to have Commissioner
Bishop from Department of Labor and Workforce Development
testify and clarify some issues related to the law. Co-Chair
Meyer agreed. He asked about the stance the Administration
was taking on the issue. Representative Kelly replied that
they are remaining neutral.
HB 391 was HEARD and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 3:37 PM.
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