Legislature(2003 - 2004)
04/27/2004 03:50 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 27, 2004
3:50 p.m.
MEMBERS PRESENT
Representative Tom Anderson, Chair
Representative Carl Gatto, Vice Chair
Representative Nancy Dahlstrom
Representative Bob Lynn
Representative Norman Rokeberg
Representative Harry Crawford
Representative David Guttenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 555
"An Act relating to occupational licensing fees and receipts."
- MOVED HB 555 OUT OF COMMITTEE
CS FOR SENATE BILL NO. 194(FIN)
"An Act authorizing delivery of up to two bottles of distilled
spirits and 40 ounces of beer to a cruise ship passenger or
hotel guest."
- MOVED HCS CSSB 194(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 94
"An Act exempting flight crew members of certain air carriers
from overtime pay requirements."
- HEARD AND HELD
CS FOR SENATE BILL NO. 323(JUD) am
"An Act relating to a subcontractor's, contractor's, and project
owner's liability for workers' compensation, to sole proprietors
and partnerships without employees, and managers or managing
members of limited liability companies, and to the exclusiveness
of liability for workers' compensation."
- MOVED CSSB 323(JUD)am OUT OF COMMITTEE
HOUSE BILL NO. 346
"An Act relating to health insurance coverage for gastric bypass
surgery; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 555
SHORT TITLE: OCCUPATIONAL LICENSING FEES AND RECEIPTS
SPONSOR(S): RULES
04/19/04 (H) READ THE FIRST TIME - REFERRALS
04/19/04 (H) L&C, FIN
04/26/04 (H) L&C AT 3:15 PM CAPITOL 17
04/26/04 (H) -- Meeting Canceled --
04/27/04 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/27/04 (H) L&C AT 3:30 PM CAPITOL 17
BILL: SB 194
SHORT TITLE: LIQUOR DELIVERED TO HOTELS/CRUISE SHIPS
SPONSOR(S): SENATOR(S) STEVENS G
04/23/03 (S) READ THE FIRST TIME - REFERRALS
04/23/03 (S) L&C, FIN
05/13/03 (S) L&C AT 2:00 PM BELTZ 211
05/13/03 (S) <Bill Hearing Rescheduled to 5/15/03>
05/15/03 (S) L&C AT 7:45 AM BUTROVICH 205
05/15/03 (S) Moved Out of Committee
05/15/03 (S) MINUTE(L&C)
05/16/03 (S) L&C RPT 3DP
05/16/03 (S) DP: BUNDE, SEEKINS, STEVENS G
02/27/04 (S) FIN AT 9:00 AM SENATE FINANCE 532
02/27/04 (S) Heard & Held
02/27/04 (S) MINUTE(FIN)
03/01/04 (S) FIN RPT CS 2DP 4NR NEW TITLE
03/01/04 (S) NR: GREEN, DYSON, HOFFMAN, OLSON;
03/01/04 (S) DP: STEVENS B, BUNDE
03/01/04 (H) FIN AT 9:00 AM HOUSE FINANCE 519
03/01/04 (S) Moved CSSB 194(FIN) Out of Committee
03/01/04 (S) MINUTE(FIN)
04/20/04 (S) TRANSMITTED TO (H)
04/20/04 (S) VERSION: CSSB 194(FIN)
04/21/04 (H) READ THE FIRST TIME - REFERRALS
04/21/04 (H) L&C
04/26/04 (H) L&C AT 3:15 PM CAPITOL 17
04/26/04 (H) -- Meeting Canceled --
04/27/04 (H) L&C AT 3:30 PM CAPITOL 17
BILL: HB 94
SHORT TITLE: OVERTIME PAY FOR AIRLINE EMPLOYEES
SPONSOR(S): TRANSPORTATION BY REQUEST
02/12/03 (H) READ THE FIRST TIME - REFERRALS
02/12/03 (H) L&C
03/03/03 (H) L&C AT 3:15 PM CAPITOL 17
03/03/03 (H) Heard & Held
03/03/03 (H) MINUTE(L&C)
04/27/04 (H) L&C AT 3:30 PM CAPITOL 17
BILL: SB 323
SHORT TITLE: WORKERS COMPENSATION AND CONTRACTORS
SPONSOR(S): SENATOR(S) SEEKINS
02/13/04 (S) READ THE FIRST TIME - REFERRALS
02/13/04 (S) L&C, JUD
03/04/04 (S) L&C AT 1:30 PM BELTZ 211
03/04/04 (S) Heard & Held
03/04/04 (S) MINUTE(L&C)
03/09/04 (S) L&C AT 1:30 PM BELTZ 211
03/09/04 (S) Moved SB 323 Out of Committee
03/09/04 (S) MINUTE(L&C)
03/10/04 (S) L&C RPT 2DP 2NR 1AM
03/10/04 (S) DP: BUNDE, SEEKINS; NR: DAVIS,
03/10/04 (S) STEVENS G; AM: FRENCH
03/17/04 (S) JUD AT 8:00 AM BUTROVICH 205
03/17/04 (S) Heard & Held
03/17/04 (S) MINUTE(JUD)
04/02/04 (S) JUD AT 8:00 AM BUTROVICH 205
04/02/04 (S) Heard & Held
04/02/04 (S) MINUTE(JUD)
04/07/04 (S) JUD AT 8:00 AM BUTROVICH 205
04/07/04 (S) Heard & Held
04/07/04 (S) MINUTE(JUD)
04/14/04 (S) JUD AT 5:30 PM BUTROVICH 205
04/14/04 (S) Heard & Held
04/14/04 (S) MINUTE(JUD)
04/16/04 (S) JUD RPT CS 2DP 1DNP 1NR NEW TITLE
04/16/04 (S) DP: SEEKINS, OGAN;
04/16/04 (S) DNP: FRENCH; NR: THERRIAULT
04/16/04 (S) JUD AT 8:00 AM BUTROVICH 205
04/16/04 (S) Moved CSSB 323(JUD) Out of Committee
04/16/04 (S) MINUTE(JUD)
04/21/04 (S) TRANSMITTED TO (H)
04/21/04 (S) VERSION: CSSB 323(JUD) AM
04/22/04 (H) READ THE FIRST TIME - REFERRALS
04/22/04 (H) L&C
04/27/04 (H) L&C AT 3:30 PM CAPITOL 17
WITNESS REGISTER
RICK URION, Director
Division of Occupational Licensing
Department of Community & Economic Development (DCED)
Juneau, Alaska
POSITION STATEMENT: Explained HB 555.
DOUG LETCH, Staff
to Senator Gary Stevens
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SB 194 on behalf of the sponsor,
Senator Gary Stevens.
SENATOR RALPH SEEKINS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the sponsor of SB 323.
JOHN BITNEY, Lobbyist
Alaska State Homebuilders Association
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 323 as a step in
the right direction.
JACK MILLER, Attorney
State Chamber of Commerce
Anchorage, Alaska
POSITION STATEMENT: During discussion of SB 323, answered
questions.
STEVE CONSTANTINO, Attorney at Law
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to SB 323.
PAUL DILLON, Attorney at Law
Dillon & Findley, PC
Juneau, Alaska
POSITION STATEMENT: Expressed concerns with SB 323.
PAMELA LaBOLLE, President
Alaska State Chamber of Commerce
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 323.
JACK MILLER, Attorney at Law (of counsel)
Eide, Miller & Pate, PC
Anchorage, Alaska
POSITION STATEMENT: Testified on SB 323.
ACTION NARRATIVE
TAPE 04-48, SIDE A
Number 0001
CHAIR TOM ANDERSON called the House Labor and Commerce Standing
Committee meeting to order at 3:50 p.m. Representatives
Anderson, Dahlstrom, Lynn, Rokeberg, and Crawford were present
at the call to order. Representatives Gatto and Guttenberg
arrived as the meeting was in progress.
HB 555-OCCUPATIONAL LICENSING FEES AND RECEIPTS
CHAIR ANDERSON announced that the first order of business would
be HOUSE BILL NO. 555, "An Act relating to occupational
licensing fees and receipts."
Number 0085
RICK URION, Director, Division of Occupational Licensing,
Department of Community & Economic Development (DCED), reminded
the committee that the division charges fees based on the cost
to regulate the profession. One of the largest costs associated
with the licensing programs are disciplinary actions. Until two
years ago the fines collected from disciplinary actions were
placed in the funds used to offset the costs of the particular
profession. This legislation merely allows the division to take
the fines collected from various disciplinary actions to be
credited to that profession in order to offset the cost of
collection. Mr. Urion noted that the [collection of fines]
averages about $67,000 a year.
Number 0233
REPRESENTATIVE ROKEBERG recalled that AS 08.01.065 requires that
all professions be self-supporting, and therefore this
legislation merely allows the fines to be credited toward
licensure. Representative Rokeberg also recalled that a recent
Real Estate Commission case went to major hearings, and inquired
as to the cost of such.
MR. URION said that he didn't know the exact cost, but the
particular case with the Real Estate Commission was a
considerable sum. He related that the fine itself was $25,000
and agreed with Representative Rokeberg that the cost [of the
disciplinary process] could be over $100,000. In further
response to Representative Rokeberg, Mr. Urion confirmed that
currently the fine would have to be placed in the general fund
rather than go toward the licensure fees, and therefore the
licensees would have to pick up the cost of that [disciplinary]
hearing.
Number 0369
REPRESENTATIVE GUTTENBERG asked if there are any boards or
commissions in which the state has a vested interest in having,
but can't pay for themselves. He also asked if there has been a
fine levied against a board or commission, which was cost
prohibitive and couldn't be passed on to the members of the
profession.
MR. URION said that the division's purpose is public protection.
He confirmed that there have been some expensive disciplinary
actions, which have caused licensure fees to double.
REPRESENTATIVE GUTTENBERG reiterated his question regarding
whether expensive disciplinary actions have been so cost
prohibitive that the members of a profession couldn't afford
[the licensure fees] and left the profession.
MR. URION explained that the division doesn't increase the fees
to a point at which folks decide to leave the profession, an
incremental approach over a period of years is taken. He
mentioned the possibility of a proposal next session to create a
pool to address those large [fee increases].
CHAIR ANDERSON closed public testimony.
Number 0535
REPRESENTATIVE DAHLSTROM moved to report HB 555 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, it was so ordered.
SB 194-LIQUOR DELIVERED TO HOTELS/CRUISE SHIPS
CHAIR ANDERSON announced that the next order of business would
be CS FOR SENATE BILL NO. 194(FIN), "An Act authorizing delivery
of up to two bottles of distilled spirits and 40 ounces of beer
to a cruise ship passenger or hotel guest."
Number 0574
DOUG LETCH, Staff to Senator Gary Stevens, Alaska State
Legislature, explained that SB 194 adds statutory language
allowing the delivery to hotel guests or cruise ship passengers
of up to two bottles of distilled spirits or 40 ounces of beer
with floral arrangements. Adding the distilled spirits and beer
language to the current statute will capture all consumable
alcohol products currently for sale. He noted that for purposes
of the Alcoholic Beverage Control Board (ABC) regulations beer
would also include any malt beverages. Mr. Letch related that
this legislation builds on HB 69 of the Twenty-First Alaska
State Legislature, which was amended to allow the delivery of up
to two bottles of wine and champagne with a floral arrangement.
This legislation, SB 194, would open opportunities for some
additional business, particularly in areas where cruise ships
come. In response to Representative Rokeberg, Mr. Letch related
that the 40 ounce amount was recommended by the ABC Board
because it represents two 20 ounce bottles. The ABC Board said
that it would entertain the ability to set the amount by
regulations, but the sponsor felt that a gift-sized bottle of
beer would be appropriate.
REPRESENTATIVE DAHLSTROM inquired as to why this legislation was
introduced.
MR. LETCH reiterated that this legislation further expands HB 69
of the Twenty-First Alaska State Legislature, which was
introduced because a floral business in Seward wanted to deliver
gift baskets with champagne and wine. The same business wanted
to expand the aforementioned in order to include other forms of
alcohol. In further response to Representative Dahlstrom, he
specified that this would be effective throughout the state and
the business would have to obtain a permit from the ABC Board to
deliver such gift baskets.
Number 0957
REPRESENTATIVE CRAWFORD drew attention to the language "two
bottles", which could refer to one ounce bottles to half gallon
bottles. Therefore, he asked whether the language should be
tightened.
MR. LETCH offered to research that because the regulations would
seem to fall under the ABC Board in terms of volume of alcohol.
REPRESENTATIVE CRAWFORD expressed concern that a business, on
the pretense of supplying flower arrangements, could supply
alcohol to young individuals. He said that he didn't want to
open the door to abuses.
MR. LETCH confirmed that this legislation is merely addressing
delivery to hotel and cruise ship guests. He opined that
Representative Meyer's legislation would probably discourage
much of the concerns of Representative Crawford.
REPRESENTATIVE ROKEBERG reiterated his concern with the 40 ounce
specification, and indicated his size preference of 72 ounces.
He questioned whether the Alaska Brewing Company used these
sizes.
MR. LETCH said that he would entertain any sizes the committee
would desire.
Number 1241
REPRESENTATIVE GATTO asked if this legislation refers to one
delivery per passenger, port, day, et cetera.
MR. LETCH opined that it's a relatively low volume business with
one visit per customer. However, he offered to review this with
the ABC Board.
REPRESENTATIVE GATTO related his understanding that the federal
government used to allow infants into the country with a certain
amount of alcohol.
Number 1302
REPRESENTATIVE ROKEBERG moved that the committee adopt
Conceptual Amendment 1, as follows:
Page 1, line 1;
Delete "40"
Insert "72"
Page 1, line 1;
Delete "and"
Insert "or"
Page 1, line 6
Delete "and"
Insert "or"
Page 1, line 7;
Delete "40"
Insert "72"
REPRESENTATIVE GATTO moved that the committee adopt an amendment
to Conceptual Amendment 1, such that the language "bottles" be
changed to "liters". He opined, "Typically speaking people who
are buying a special brew or something, are not buying it by the
gallon, they're generally going for a special bottle of wine or
something like that."
REPRESENTATIVE ROKEBERG commented that although there seems to
be a shift with regard to the availability of fifths, or liters,
the predominant measurement of sale in the U.S. is the fifth.
REPRESENTATIVE GATTO withdrew his amendment to Conceptual
Amendment 1.
[Conceptual Amendment 1 was treated as adopted.]
MR. LETCH, in response to Representative Dahlstrom, confirmed
that the House Labor and Commerce Standing Committee is the only
committee of referral for SB 194, which has a zero fiscal note.
Number 1498
REPRESENTATIVE ROKEBERG moved to report CSSB 194(FIN), as
amended, out of committee with individual recommendations and
the accompanying zero fiscal note. There being no objection,
HCS CSSB 194(L&C) was reported from the House Labor and Commerce
Standing Committee.
The committee took a brief at-ease.
HB 94-OVERTIME PAY FOR AIRLINE EMPLOYEES
CHAIR ANDERSON announced that the next order of business would
be HOUSE BILL NO. 94, "An Act exempting flight crew members of
certain air carriers from overtime pay requirements."
Number 1548
REPRESENTATIVE DAHLSTROM moved to adopt CSHB 94, Version D dated
4/23/04, as the working document. There being no objection,
Version D was before the committee.
CHAIR ANDERSON highlighted that HB 94 is the companion to SB 54,
which exempted flight crews from the [Alaska] Wage and Hour Act
per the request of flight crews. Last year SB 54 passed the
legislature with a unanimous vote. He explained that Version D
of HB 94 removes the language that was already passed in SB 54
and inserts language to establish the effective date of SB 54 as
January 1, 2000. The aforementioned will preserve many small
airlines in rural Alaska from costly legal action. This is a
major policy call and Version D would merely establish the
effective date of the policy. Chair Anderson noted that this
legislation was brought forward upon the request of some rural
airlines.
Number 1633
REPRESENTATIVE CRAWFORD related his understanding that the rural
airlines wanted this policy to be retroactive because there was
a class action lawsuit that was won by an employee. Therefore,
passage of [Version D] would make the result of the
aforementioned lawsuit moot.
CHAIR ANDERSON said he couldn't answer the question, and
therefore he said he would have one of the requestors of the
legislation speak to Representative Crawford's understanding.
He announced that CSHB 94 would be held over. Chair Anderson,
in response to Representative Dahlstrom, explained that in SB 54
in the Twenty-First Alaska State Legislature, the effective date
wasn't included.
REPRESENTATIVE CRAWFORD said he believes that in SB 54 in the
Twenty-First Alaska State Legislature there was an immediate
effective date and the decision was not to make the legislation
retroactive.
[HB 94 was held over.]
SB 323-WORKERS COMPENSATION AND CONTRACTORS
[Contains discussion of HB 311.]
CHAIR ANDERSON announced that the next order of business would
be CS FOR SENATE BILL NO. 323(JUD) am, "An Act relating to a
subcontractor's, contractor's, and project owner's liability for
workers' compensation, to sole proprietors and partnerships
without employees, and managers or managing members of limited
liability companies, and to the exclusiveness of liability for
workers' compensation."
Number 1768
SENATOR RALPH SEEKINS, Alaska State Legislature, spoke as the
sponsor of SB 323. He paraphrased from the following written
sponsor statement [original punctuation provided]:
Senate Bill 323 revises the Workers' Compensation Act
as it applies to subcontractors, contractors and
project owners. The two principal modifications are
as follows:
1. Responsibility for payment of compensation is
extended up the chain of contracts to include
project owners; and,
2. Injured parties in receipt of benefits under
the Workers' Compensation Act would be barred
from "double dipping" via a tort liability claim.
Under AS 23.30.045(a), an injured employee has
recourse for workers' compensation benefits only
against his immediate employer and if the employer is
a subcontractor, against the contractor who retained
the subcontractor. The proposed legislation allows
recourse for the payment of compensation benefits
against project owners, as well as contractors and
subcontractors.
This extension of the rights of injured employees is
sensible inasmuch as the project owner is the
beneficial user of the work performed by the injured
employee. It should be noted that a project owner
does not include individuals who have engaged the
services of contractors to build or renovate a
residential home.
Additionally, the proposed legislation extends the
exclusivity protection set forth in AS 23.30.055 to
all parties in the contracting chain relating to a
project. This includes the employer of the injured
employee, and those parties, which are upstream in the
chain of contracts from the employer of the injured
employee.
It is important to note that sole proprietors and
members of a partnership or Limited Liability Company
will not fall within the scope of the Act provided
upstream contractors are held harmless, through
written agreement, from payment of compensation
benefits and claims of tort liability. However, this
only applies where these entities have no employees.
Senate Bill 323 encourages parties participating in a
project to identify and enforce strict safety
standards for the benefit of all employees rather than
deflecting responsibility through the use of indemnity
agreements as is common practice currently. At the
same time, it ensures that injured employees receive
all benefits available under the Alaska Workers'
Compensation Act.
SENATOR SEEKINS related an example in which a subcontractor has
an injured employee. In this example there was an indemnity
agreement in order for the subcontractor to hire the employee.
Furthermore, there was an indemnity agreement [between] the
project owner and the contractor. Therefore, the sole recourse
for an injured employee is workers' compensation insurance and
the [employee's] attorney would sue the project owner. Senator
Seekins explained, "The indemnification agreement basically said
... now the guy who's the sole remedy acted in their favor ...
with the subcontractor now had to defend against a suit that was
taken against the project owner and if there was a judgment to
pay it. So, they never did have any guarantee of a sole remedy
because of the common practice of indemnification agreements."
Therefore, this legislation specifies that if project owners are
liable in case the contractor or subcontractor didn't have
workers' compensation insurance on the employee, then the
exclusive remedy extends all the way up the chain.
Number 1975
REPRESENTATIVE ROKEBERG turned attention to the definition of
"project owner" on page 2, lines 9-11, which he interpreted
could refer to a small group of investors. He asked if the
sponsor is suggesting that this group of people should have
workers' compensation if there are no employees.
SENATOR SEEKINS stated that if the project owner hasn't ensured
that his or her contractor has workers' compensation insurance,
then the project owner still bears the responsibility of payment
if the contractor doesn't have workers' compensation insurance.
He clarified, "I'm not saying that they have to buy the policy,
but they have to secure the payment to the injured employee if,
for some reason, that contractor or subcontractor did not have
that policy. This is in exchange for their not being able to be
sued under the double dipping scenario that I talked about
earlier." In further response to Representative Rokeberg,
Senator Seekins provided an example. He posed a situation in
which British Petroleum (BP) hires a drilling company to drill a
well and the drilling company has a subcontractor that works for
it. In order to obtain the contract with BP, an indemnification
agreement holding [BP] harmless for any claims downstream would
have to be signed. In this situation if one of the employees of
the subcontractor is hurt, the employee's exclusive remedy is
workers' compensation. If for some reason the subcontractor
doesn't have the coverage and the contractor hasn't made sure
that the subcontractor provided the coverage, the contractor's
workers' compensation coverage would provide the coverage or the
contractor would have to secure the payment for it. If the
contractor doesn't have workers' compensation insurance, then
the project owner bears the responsibility.
SENATOR SEEKINS posed the following:
If, for an example, now ... my employee is hurt.
That's the exclusive remedy against me and he decides
that's not good enough for me ... he sues British
Petroleum for providing an unsafe workplace. In the
defense against that you ... are required to indemnify
them in that defense and you've required me to
indemnify that expense. So, the very person -- I
being the one who has an exclusive remedy now carries
the expense of the defense. And if there's a
judgment, has to pay the judgment because of the
indemnification agreements that exist. So, ... [the
legislation] says if BP makes sure that you and I have
workers' compensation insurance and that covers the
employee, they can't be sued farther up because if I
didn't have it, you didn't have it, they [BP] would
have to provide it. So, there's a trade off up and
down the line.
SENATOR SEEKINS related that as a result of the [current
situation] in which the responsibility moves up stream, project
owners don't want to know about the safety procedures of a
project because knowledge of it means a higher level of
responsibility. Therefore, this legislation will help provide a
safer work environment throughout the chain, he opined.
Number 2170
CHAIR ANDERSON turned attention to an e-mail from Paul Dillon,
which relates the following [original punctuation provided]:
3) The killer aspect of 323 is that it trades away the
employees right to sue responsible third parties in
exchange for nothing, absolutely nothing because the
injured employee is already protected the workers comp
(by state law, See 1 above) ... what this bill really
is a wolf in sheep's clothing, because it extends to
all contractors and the project owner the exclusivity
of workers comp to them. Meaning that the employee
cannot sue them even though they are at fault!
CHAIR ANDERSON surmised that Senator Seekins sponsored this
legislation in order to provide clear and concise responsibility
for workers' compensation.
SENATOR SEEKINS said that Mr. Dillon's interpretation is
inaccurate. He further said that there are attorneys around
that don't like this legislation because it eliminates the
opportunity for double dipping. "In my opinion, when there is
an exclusive remedy that makes employer-employee whole ... under
state law, ... that person isn't trading anything away when they
say now I can go back against somebody else for more money after
I have already been taken care of under the provisions of
workers' comp," he opined. This legislation merely removes the
ability to accept an exclusive remedy and then force additional
settlement on someone else.
Number 2257
REPRESENTATIVE CRAWFORD opined that this legislation "turns the
system on its ear." He related his understanding that if a
third party is responsible for negligence and there's a further
suit, beyond workers' compensation, there is a payback
provision. Therefore, workers' compensation has to be paid back
for any other judgment that's awarded.
SENATOR SEEKINS said that he wasn't aware of any such provision.
REPRESENTATIVE CRAWFORD said he believes the law includes [a
payback provision].
SENATOR SEEKINS acknowledged that there are subrogation laws.
However, he wasn't aware of a workers' compensation insurer who
has pursued a claim against someone up stream, under
subrogation. Senator Seekins said that he wasn't aware that a
contractor would have to pay back the injuries sustained by a
subcontractor unless it could be shown [that it was an injury
outside of workers' compensation]. This legislation doesn't
exempt any injuries other than those covered under workers'
compensation. The legislation doesn't address product liability
or extreme negligence.
Number 2367
CHAIR ANDERSON highlighted the legislation he and Representative
Crawford had sponsored, HB 311, which ensured that a
subcontractor secures payment for the compensation payable to
the subcontractor's employees. Therefore, if the subcontractor
fails to secure payment for the compensation payable to his or
her employees, the general contractor would be liable for the
payment. Chair Anderson said that he didn't believe HB 311 and
SB 323 necessarily cross because he believes that SB 323 takes
[HB 311] one step further by extending protection for the
workers ... [tape changes mid-sentence].
TAPE 04-48, SIDE B
CHAIR ANDERSON related his understanding that SB 323 would
extend exclusivity of liability protection to all the parties in
the chain. Those injured parties receiving workers'
compensation benefits would be precluded from double dipping via
the tort claim liability. Chair Anderson reiterated that he
didn't believe HB 311 and SB 323 cross, in fact, he said that he
tended to agree with Senator Seekins "that it has to be broader
and it has to make sure the double dipping effect isn't there."
Number 2346
REPRESENTATIVE CRAWFORD related his personal experience in which
his company was hired as a subcontractor to build a barn at the
Palmer State Fair. The general contractor also hired a number
of employees whom they made obtain a contractor's license and
thus became sole proprietor's of a small company. The [general
contractor] coerced the aforementioned employees into becoming
subcontractors so that [the general contractor] wouldn't have to
have workers' compensation insurance. Therefore, these
employees were "much cheaper" than other companies were able to
do. Had SB 323 been in effect, he predicted that these
individuals would've been coerced into signing a waiver
eliminating any liability [on the part of the general
contractor]. This legislation is leaving a large loophole. He
said that with HB 311 he had hoped to level the playing field
and close the loophole so that all subcontractors are
responsible for having workers' compensation.
SENATOR SEEKINS emphasized that those who commit fraud should be
handled per the statutes. He said that [with this legislation]
he's not talking about an ironworker, but rather a window
washer, in which he or she is the only employee, who chooses not
to cover himself or herself with workers' compensation.
However, by law if the aforementioned window washer hires
another window washer, workers' compensation must be carried.
Currently, by law a contractor must ensure that workers'
compensation is provided for the subcontractor's employees and
this legislation is extended to the project owner. Senator
Seekins noted that he has 120 employees of which 119 are covered
by workers' compensation, the one not covered is himself who has
the exclusive remedy against himself. With regard to fraud, he
noted that his workers' compensation insurance company audits
him annually. There are some checks and balances in the
industry to avoid [fraud].
Number 2104
REPRESENTATIVE CRAWFORD explained that the type of coercion to
which he was referring is one in which employees are being told
by an [employer] that he or she can't afford to hire them unless
the individual obtains a business license. The aforementioned
happens quite often. He agreed that once someone is hurt, the
workers' compensation claim requires the [general contractor] to
go back and pay the premiums for that individual who was really
an employee, although referred to as a subcontractor. The
loophole needs to be closed, and SB 323 is the place to do it.
SENATOR SEEKINS clarified that the intent of SB 323 is to ensure
that those on the job are covered by workers' compensation while
continuing the current law allowing sole proprietors to exempt
themselves and any waiving of that would be done in writing.
REPRESENTATIVE CRAWFORD commented that as long as the loophole
allowing the sole proprietors to waive having workers'
compensation insurance exists, it will be used to get a job done
cheaper. It's wrong to take [sole proprietors] out of the
liability chain, he said.
REPRESENTATIVE ROKEBERG referred to Section 4, which clarifies
the responsibility of limited liability companies (LLCs), and
asked if this legislation places LLCs on the same level of
enforcement as a sole proprietor, member of a partnership, or
members of a partnership. Therefore, would an LLC not have to
have workers' compensation if the LLC doesn't have any
employees, he asked.
SENATOR SEEKINS replied yes, if one is actually a member of the
LLC.
Number 1931
JOHN BITNEY, Lobbyist, Alaska State Homebuilders Association,
reminded the committee that the association was in favor of HB
311, which addressed sole proprietors such that a sole
proprietor could be retroactively charged a premium for risk
incurred during the period in which workers' compensation
insurance wasn't carried. The preferred solution is to have
sole proprietors carry workers' compensation insurance.
However, there seem to be some drafting problems with the way in
which HB 311 approached it. Mr. Bitney related, "We are in
support of ... SB 323 as a step in the right direction ... it
doesn't go as far as we would like it to go ...." The question
is how the carriers will view this legislation and the extent to
which the carriers believe this will alleviate some risk on
their part when a claim is filed.
REPRESENTATIVE CRAWFORD inquired as to how the Alaska State
Homebuilders Association views the ability to waive one's right
to workers' compensation.
MR. BITNEY clarified that this is a matter of how the courts
will view this when the claim is filed. Until the courts make a
ruling, he wasn't sure whether the carriers would feel that this
legislation alleviates any risk.
REPRESENTATIVE ROKEBERG related his understanding that an
individual hiring a homebuilder can't be held responsible [for
workers' compensation].
MR. BITNEY related his understanding that a project owner is
shielded from a general liability claim after a workers'
compensation claim has been filed. However, he didn't believe
the legislation shields a project owner from workers'
compensation issues any more than current law. Mr. Bitney
agreed with Representative Rokeberg that when one builds a
house, the project owner is the contractor not the people who
hire the contractor.
Number 1731
REPRESENTATIVE GUTTENBERG asked whether that's always the case
because often in residential development, there wouldn't be an
owner until the home is built. Many homes are built under
contract of a homeowner, and therefore he questioned whether the
homeowner would be liable for later claims.
MR. BITNEY said that he didn't know how this legislation would
address a project owner on a residential project.
SENATOR SEEKINS directed attention to the definitions of the
legislation, which don't include "homeowner". Currently, no law
holds a homeowner responsible for workers' compensation.
JACK MILLER, Attorney, State Chamber of Commerce, stated that a
residential homeowner, not as a business, who hires an
individual to do renovations in his or her home retains no
liability under the current law or this proposed legislation.
Number 1596
STEVE CONSTANTINO, Attorney at Law, noted that he has been a
hearing officer for the Alaska Workers' Compensation Board,
although he currently practices workers' compensation law
representing injured workers. Mr. Constantino spoke in
opposition to SB 323 which is based on the rationale of
protecting employers from double dipping employees, which
doesn't occur. In an example in which a worker is injured by
the negligence or fault of a third party, in addition to
workers' compensation benefits, that employee or his or her
insurer have the right to file suit against the wrongdoer.
However, should the injured worker or his or her workers'
compensation insurer file suit against the wrongdoer, there is a
lien by the workers' compensation insurer for the full amount of
all benefits paid to the injured worker. In other words, the
workers' compensation insurer is repaid all the benefits by the
wrongdoer before the injured worker receives any damages from
the wrongdoer, the project owner or general contractor. He
specified that the aforementioned is found in AS 23.30.015,
which has been part of the workers' compensation statute since
1955. He reiterated that there is no possibility for double
dipping. This legislation provides a special exemption for
project owners and prime contractors in order to protect them
against their own negligence. By extending the exclusive remedy
provision, the project owners and prime contractors would only
be liable for the minimal damages allowed under the Alaska
Workers' Compensation Act. Therefore, the injured worker would
receive nothing for pain and suffering or future loss of
benefits.
MR. CONSTANTINO said the notion that SB 323 would encourage
safety on the part of project owners or prime contractors is
fallacious. Under the Workers' Compensation Act there is no
deterrent for an employer who violates safety standards or is
negligent. Drawing from his time practicing in the workers'
compensation area, he opined that workers' compensation is
protection against liability and paying damages, while safety is
encouraged due to the imposition of damages and the risks
entailed. Mr. Constantino highlighted that in the Alaska State
Chamber of Commerce's support for SB 322, the Moloso case, a
1982 Alaska Supreme Court case, is cited. In that case, the
state wanted a highway constructed that required dangerous
excavation. The state retained many experts to advise it how to
do this construction safely and responsibly. After the project
was bid, the prime contractor presented a change order saying
that the prime contractor had its own experts who said that the
project could be done quicker and cheaper if the project wasn't
as elaborate or safe. The state agreed to the change order and
took one half of the savings predicted. Mr. Moloso, a CAT
driver, was the first one on the site and the slope subsided, as
the state's experts predicted, and Mr. Moloso was killed. Were
this proposed legislation in effect back in 1982, Mr. Moloso's
widow and children wouldn't be allowed to sue the contractor or
the project owner and would only be limited to workers'
compensation. Therefore, the widow would have received a
maximum of 12 years of compensation benefits for her husband's
wrongful death. Mr. Constantino opined that the aforementioned
isn't fair nor a good public policy. Those who, through their
own negligence, injure others should be held responsible for a
reasonable amount of damages, not the limited amount of damages
provided under workers' compensation, which is the product of a
political compromise between employers and employees.
REPRESENTATIVE GUTTENBERG pointed out that this legislation
allows the subcontractor to waive workers' compensation by a
written agreement. If the aforementioned is the case and an
accident occurs, would there be any recourse, he asked.
MR. CONSTANTINO said that it isn't his understanding of the
legislation. He related that it's against public policy and the
law to waive workers' compensation. Every employer, save sole
proprietors, general partnerships, and some LLCs, of workers
must have workers' compensation and it can't be waived. Mr.
Constantino recalled that the sponsor discussed the need for
this legislation in terms of indemnification agreements between
contractors, subcontractors, and project owners.
Indemnification agreements shift the risks as they exist in the
law. Mr. Constantino said, "I think it is inappropriate for our
legislature to be distorting public policy and the general law
to accommodate the private agreements between the parties that
the law has indicated should be responsible for the consequences
of their own actions."
Number 1213
PAUL DILLON, Attorney at Law, Dillon & Findley, PC,
characterized Mr. Constantino's testimony as correct legal
analysis. He highlighted AS 23.30.015 and AS 09.17.080. He
said that Senator Seekins' statement that SB 323 could affect
the livelihood of attorneys is inappropriate. This legislation
waives a fundamental right of those who work in any of the
building trades, construction, or work on the North Slope. Mr.
Dillon stated that there are indications that the insurance
industry through the Alaska Chamber of Commerce is driving this
legislation. This legislation, he opined, is an effort to cloak
business with the exclusivity provisions of workers'
compensation and doesn't protect employees. The existing law
protects employees to the extent that workers' compensation
protection is required. He posed an example in which his son
worked in a subcontractor arrangement on the North Slope and BP
is the owner. As the result of the negligence of an employee of
BP, his son is injured, the workers' compensation remedy
wouldn't be satisfactory. With regard to the double dipping
claim, Mr. Dillon emphasized that the law is clear and has been
interpreted on numerous occasions by the Alaska Supreme Court.
Furthermore, it's settled law.
REPRESENTATIVE ROKEBERG surmised that Mr. Dillon was saying that
it isn't within the legislature's purview to look at the public
policy of whether workers' compensation exclusivity remedies
should be a barrier to any tort causes of action for the same
injury event. However, he indicated that the aforementioned is
the fundamental reason for workers' compensation benefits: to
limit those liabilities and ensure that the worker is
compensated and cared for due to a specific accident.
MR. DILLON clarified that workers' compensation is an exclusive
remedy between the employer and the employee and it doesn't
impact the remedies of the employee with regard to a third
party. For example, assuming a situation in which there was
negligence on the part of a BP employee who injured an employee
of a subcontractor of BP, workers' compensation wouldn't come
into play with the rights and remedies [of the subcontractor's
employee] in suing BP.
REPRESENTATIVE ROKEBERG questioned whether the indemnification
and subrogation provisions of contracts typically make the
claims fall back on the level of the contracting chain under
which [the employee] is.
MR. DILLON reiterated that there would be no double dipping with
regard to the injured employee. The workers' compensation
carrier is paid in full. Furthermore, the apportionment of
damages is divided on the basis of fault. If the parties
privately contract to exchange or indemnify each other, that's a
matter of contracting. In further response to Representative
Rokeberg, he agreed that the aforementioned is common practice
in most of the construction fields.
Number 0796
PAMELA LaBOLLE, President, Alaska State Chamber of Commerce,
announced the Alaska State Chamber of Commerce's support of SB
323, the issue of which was brought to the chamber's attention
by its members. Members are concerned that the very idea of the
workers' compensation system is that an employee has the ability
to have his or her injuries covered and can [also seek remedy]
with those connected with the project who weren't responsible
for the injury or the project's safety.
JACK MILLER, Attorney at Law (of counsel), Eide, Miller & Pate,
PC, representing the Alaska State Chamber of Commerce, turned to
the comment that this legislation addresses a public policy that
the legislature shouldn't address and said such sentiment is
patently wrong. The current public policy specifies that an
injured employee's exclusive remedy against his or her employer
is workers' compensation benefits. This legislation extends the
aforementioned public policy to enhance the guarantee that
injured workers have of collecting workers' compensation
benefits all the way up the line to the project owner and
extends the exclusivity protection against tort claims through
the project owner. Therefore, the guarantee of recovering
workers' compensation benefits now goes beyond the direct
employer, the contactor, and all the way up to the project
owners. [This legislation] enhances the guarantee that injured
workers will recover workers' compensation benefits. The entire
workers' compensation (indisc.) the acknowledgement are entitled
to reasonable compensation for their injuries and the entire
workers' compensation benefits system is geared toward making
the individual whole based on the injury. Furthermore, workers'
compensation treats work-related injuries as compensable, which
goes all the way up the contracting chain under SB 323,
regardless of anyone's negligence or fault in causing the injury
along with the enhanced financial guarantee.
MR. MILLER turned to the Moloso case. He said that because of
the Moloso case and other similar cases, the only defense for
project owners and contractors in the state to a tort claim for
a work-related injury is that the contractor or subcontractor is
an independent contractor. However, to establish that
independent contractor defense, a project owner and contractor
can't retain control of any part of the work, which is based on
the last 20 years of Alaska Supreme Court decisions. The
aforementioned potential tort liability has resulted in
companies refusing to become involved in efforts to integrate
safety programs. Therefore, Mr. Miller opined that passage of
SB 323 would allow project owners and contractors to integrate
and coordinate their safety programs. Mr. Miller concluded by
specifying that SB 323 is the most important legislation that
the legislature could pass in an effort to enhance safety in
Alaska's workplace and greatly reduce the number work-related
injuries. Furthermore, SB 323 will enhance the guarantee that
workers injured on the job will be able to recover the full
benefits of the Workers' Compensation Act.
Number 0314
REPRESENTATIVE CRAWFORD inquired as to Mr. Miller's view of a
subcontractor's ability, under SB 323, to claim he or she is a
sole proprietor and opt out of workers' compensation by signing
a waiver that he or she has no right to recover from any part of
the chain. He questioned why such a loophole would be left in
the system.
MR. MILLER characterized this as a policy decision. He related
that under current law a disreputable company that forced
individuals to obtain contracting licenses and work for a
company without workers' compensation benefits can't avoid
existing employment laws. If an individual is hired and given
the tools to do his or her work and directed in his or her work,
that individual is an employee not a contractor. In such a
situation the company can't ignore its obligations as an
employer. Therefore, existing laws protect individuals and
provide a remedy against disreputable or dishonest employers.
MR. MILLER highlighted that there are a number of sole
proprietors that work in the home building association. For
example, one individual does a specific job, such as build a
deck or lay tile. If those members of ABC - Alaska have to
obtain workers' compensation for themselves, they won't remain
competitive and won't be able to continue to work. The
aforementioned is why sole proprietors offered the option to
sign a waiver. Mr. Miller opined that the current law protects
both the sole proprietor that has to go out and obtain a
contracting license as well as [tape ends midspeech].
TAPE 04-49, SIDE A
MR. MILLER opined that this legislation also recognizes that
honest sole proprietors without employees should be able to
continue working and be competitive in Alaska industry.
Number 0046
REPRESENTATIVE CRAWFORD inquired as to the type of coercion in
which two virtually identical contractors bid on the same job.
One contractor bids $15,000 for the job and another bids $20,000
for the job. One of the contractors has workers' compensation
and the other doesn't. The aforementioned, not having workers'
compensation [and its associated costs], is a way to undercut
the market. "As long as you ... leave this loophole in there
for people to ... not have workers' comp, then it keeps the
playing field unlevel," he remarked.
MR. MILLER said that he isn't aware that such coercion is a
major issue, and this is after discussing the matter with
hundreds of businesses throughout the state. Under the current
law, company owners, including sole proprietors, partners, and
owner/shareholders of corporations, are considered employers
under the Alaska Workers' Compensation Act unless they opt out
of coverage under the Act. Therefore, he didn't see a need to
overhaul that entire system because he didn't see a major
problem. Again, if there is coercion, fraud, or an actual
employment relationship, the current law provides good remedies.
This legislation doesn't impact the aforementioned in any way.
MR. CRAWFORD interjected that the Associated General Contractors
(AGC) views this [coercion, fraud, or an actual employment
relationship] as a huge problem. For the last four years, the
AGC has been trying to pass legislation to require all
subcontractors to have workers' compensation insurance.
MR. MILLER, in response to Chair Anderson, related his belief
that SB 323 was introduced early in the session. In further
response, he said he wasn't aware of any letter from AGC. He
noted that the Alaska State Chamber of Commerce, ABC-Alaska, and
the Alaska Miners Association have all supported this
legislation.
Number 0285
REPRESENTATIVE ROKEBERG returned to the definition of "project
owner" found in Section 3. He expressed concern "with the
entrepreneurialism in the ... various different types of
business organizations that real estate developers and builders
that hire contractors to build commercial real estate would be
included in this." Unless the aforementioned organizations are
a corporation and an active development company, they don't have
any employees. Representative Rokeberg related his
understanding that under SB 323 that a group of people organized
as an LLC or partnership would have to have a policy of workers'
compensation when there were no employees. He asked if a
workers' compensation policy is available for those without
employees. Furthermore, he asked if the intention is for those
[LLCs and partnerships] to have workers' compensation insurance.
MR. MILLER replied no, this legislation doesn't require the
procurement of a workers' compensation policy when a group of
people, say an investment group, organize without any employees.
However, when a building contractor is hired a certificate of
insurance would need to be obtained in order to ensure that the
contractor has a workers' compensation policy and can secure
payments to injured workers. If the contractor didn't have a
workers' compensation policy, the contractor still has the
independent obligation to secure the workers' compensation
benefit payments to its injured workers. If all of the
aforementioned fails, the project owner would have liability for
the workers' compensation payments and simultaneously couldn't
be the subject of a tort remedy, which is currently available
under the law.
REPRESENTATIVE ROKEBERG surmised then that the investment group
dealing with the general contractor would have an agreement.
Therefore, if the general contractor failed or went bankrupt and
become judgment proof, would a workers' compensation claim still
look to the project owner or would this legislation change that,
he asked.
MR. MILLER specified that under the existing law the project
owner wouldn't have liability for workers' compensation
payments, but would have tort liability. This legislation
limits the individual's recovery against the project owner. In
the event of bankruptcy and no workers' compensation policy by
the contractor, the remedy against the project owner would be
for workers' compensation benefits. There couldn't be a claim
in tort against the investors or the project owner.
Number 0603
REPRESENTATIVE GUTTENBERG surmised that under this legislation
an injured worker's only recourse under any scenario is workers'
compensation. No longer is there any liability for negligence
or anything else, he further surmised.
MR. MILLER replied yes, "so long as he receives his workers'
compensation benefits,"
REPRESENTATIVE GUTTENBERG inquired as to what would happen in a
situation in which a subcontractor is negligent on a project.
MR. MILLER clarified that SB 323 only relates to parties under
the legislation that have liability for workers' compensation
benefits payments to an injured worker. Therefore, if the
injured worker works for a subcontractor, that employee would
have a financial guarantee of workers' compensation from his
employer [the subcontractor], the contractor that hired [the
subcontractor], and the project owner that hired the contractor.
If there's another subcontractor, contractor, defective
equipment, or third party who crosses a road barrier for road
construction, all those parties would be free of potential
liability for workers' compensation benefits. However, those
groups wouldn't have protection against a tort claim. "This
bill tracks liability for workers' compensation benefits and
protection against tort claims. And again the purpose is to
allow companies involved in a project to integrate their safety
program," he said.
REPRESENTATIVE GUTTENBERG inquired as to any scenario by which a
worker would have the right for compensation under any tort.
MR. MILLER said that the Alaska Supreme Court has made it clear
that a reckless or intentional act resulting in injury isn't
currently protected under the exclusivity doctrine. The Alaska
Supreme Court has said that in situations in which it's clear
there is an intent to injure someone, the Workers' Compensation
Act doesn't apply and that injured individual could even sue his
or her direct employer.
Number 0805
REPRESENTATIVE GUTTENBERG noted his 30 years in construction and
the discussion regarding a level playing field. Representative
Guttenberg said he was amazed that a small contractor with five
or so employees bidding on a contract that required only sending
one person for the job would be considered a level playing field
under a bidding process in which one [bidder] was able to avoid
liability. "It amazes me that small contractors wouldn't have a
problem with this. And yet we hear from the Chamber that nobody
has said anything," he commented.
CHAIR ANDERSON opined that there's going to be disagreement in
terms of the coverage, the definition of the responsible party,
and the parameter upon which an injured party can seek redress.
MS. LaBOLLE added that SB 323 extends coverage and workers
safety beyond its current level by moving the responsibility up
the chain. Furthermore, tort is still available when the courts
deem [an action] to be negligible to the point of a tort claim.
She opined that SB 323 is an improvement over the current law.
Number 0973
REPRESENTATIVE DAHLSTROM related her belief that the Alaska
State Chamber of Commerce represents some 700 [businesses in the
state]. Of that 700, she inquired as to how many are
professional businesses versus worker [organizations].
MS. LaBOLLE answered that the Alaska State Chamber of Commerce
represents businesses who employ approximately 70,000 Alaskans,
and therefore are all employers or sole proprietors. She noted
that there has been no word from the AGC that it has any problem
with SB 323.
CHAIR ANDERSON interjected that he hasn't heard any vehement
opposition to SB 323 from labor organizations.
MS. LaBOLLE agreed. She noted that after Mr. Miller spoke with
the homebuilders and AGC regarding the difficulty with HB 311
the sole proprietor aspect of HB 311 was incorporated into SB
323.
REPRESENTATIVE DAHLSTROM asked if when the Alaska State Chamber
of Commerce does surveys, it does so for management only or the
entire work force.
MS. LaBOLLE answered that it's the management side of issues
that the Alaska State Chamber of Commerce supports. Ms. LaBolle
noted that SB 323 has had many hearings, and throughout there
has been no word from the labor community.
CHAIR ANDERSON related his belief that the lack of any comment
from the labor community seems to illustrate a lack of any
vehement opposition to this legislation.
REPRESENTATIVE CRAWFORD said that he knew that some labor
representatives wanted to be present today, but couldn't because
of other legislation being presented that they had to address.
Furthermore, there are others who didn't know that this
legislation was up for consideration today.
REPRESENTATIVE ROKEBERG stated a point of order pointing out
that SB 323 followed the rules of notice for hearings.
REPRESENTATIVE CRAWFORD agreed that the legislation had been
properly noticed. However, he was told earlier that SB 323 was
going to be heard Wednesday, which resulted in him misinforming
[labor representatives].
CHAIR ANDERSON reiterated that at this point he isn't aware of
any opposition from the labor community, which can be involved
throughout the remaining process.
REPRESENTATIVE GUTTENBERG highlighted Representative Crawford's
opposition to this legislation.
CHAIR ANDERSON closed public testimony.
Number 1321
REPRESENTATIVE CRAWFORD moved that the committee adopt Amendment
1, which read [original punctuation provided]:
Page 1, Line 6-Page 3, Line 15;
Delete all language and replace with:
*Section 1. AS 23.30.045(a) is amended to read:
(a) An employer is liable for and shall
secure [THE] payment [TO EMPLOYEES] of the
compensation payable to employees under AS 23.30.041,
23.20.050, 23.30.095, 23.30.145, and 23.30.180 -
23.30.215. If the employer is a subcontractor, the
subcontractor shall secure payment of the compensation
payable to the subcontractor's employees, and the
coverage must include securing payment of the
compensation payable to the subcontractor. If the
employer is a contractor, the [THE] contractor is
responsible for securing compliance with this
subsection by the contractor's own subcontractors
[LIABLE FOR AND SHALL SECURE THE PAYMENT OF THE
COMPENSATION TO EMPLOYEES OF THE SUBCONTRACTOR UNLESS
THE SUBCONTRACTOR SECURES THE PAYMENT].
CHAIR ANDERSON objected.
REPRESENTATIVE CRAWFORD opined that SB 323 changes the liability
to the project owner, which he didn't believe should be part of
the liability chain with workers' compensation. The project
owner shouldn't be the one who has to ensure that each and every
subcontractor has the proper workers' compensation insurance.
The aforementioned should fall under the responsibility of the
general contractor. Furthermore, the law should specify that
everyone working as a subcontractor should have workers'
compensation. Representative Crawford specified that Amendment
1 doesn't change that a sole proprietor can opt out of workers'
compensation insurance.
CHAIR ANDERSON related his belief that the sponsor would be
adverse to Amendment 1 because it seems to change the direction
of the legislation.
REPRESENTATIVE ROKEBERG spoke in opposition to Amendment 1. He
surmised that Representative Crawford wants a subcontractor,
even if a sole proprietor, to be responsible for workers'
compensation. Representative Rokeberg related that he wasn't
sure Representative Crawford would be entirely satisfied unless
every sole proprietor, partnership, and LLC without employees
had to have workers' compensation insurance. He opined that
Amendment 1 would ultimately do the aforementioned.
Number 1549
REPRESENTATIVE CRAWFORD acknowledged that some folks did want
every sole proprietor to be covered, but that's not the intent
with [Amendment 1]. Amendment 1 speaks to [requiring workers'
compensation insurance] when a subcontractor is working for a
general contractor, so that the liability isn't misplaced.
However, a sole proprietor isn't required to have workers'
compensation insurance unless working as a subcontractor for a
general contractor.
REPRESENTATIVE DAHLSTROM inquired as to the meaning of the
following portion of Amendment 1: "the subcontractor shall
secure payment of the compensation payable to the
subcontractor's employees,".
REPRESENTATIVE CRAWFORD explained that the language means that
the subcontractor will pay the premiums to the workers'
compensation carrier.
REPRESENTATIVE DAHLSTROM inquired as to how it would work with a
subcontractor who doesn't have year round business to keep a
full crew.
REPRESENTATIVE CRAWFORD clarified that with workers'
compensation insurance, premiums are paid based only on the
hours worked.
REPRESENTATIVE DAHLSTROM asked if [the subcontractor] would pay
the premiums after the hours are worked or would the payments be
made on the assumption of the hours that would be worked.
REPRESENTATIVE CRAWFORD said that he couldn't answer that.
A roll call vote was taken. Representatives Crawford and
Guttenberg voted in favor of Amendment 1. Representatives
Gatto, Dahlstrom, Lynn, Rokeberg, and Anderson voted against it.
Therefore, Amendment 1 failed by a vote of 2-5.
Number 1799
REPRESENTATIVE DAHLSTROM moved to report CSSB 323(JUD)am out of
committee with individual recommendations and the accompanying
fiscal notes.
REPRESENTATIVE CRAWFORD objected. He opined that this
legislation is far worse than having no legislation at all
because it leaves workers less than protected than the current
situation. "I think that this is a travesty," he said.
REPRESENTATIVE GUTTENBERG spoke against the legislation because
some of the assumptions made about it don't hold up to any test,
such as the assumption that the legislation would provide better
integration of safety programs. Representative Guttenberg
opined that under this legislation workers will receive fewer
rights and actually be denied rights, which is concerning.
CHAIR ANDERSON said that it can be argued that this legislation
is an expansion of worker protection. He noted his support of
the tort aspect that prevents double dipping. Therefore, Chair
Anderson noted his support the legislation.
REPRESENTATIVE ROKEBERG supported the legislation and found the
arguments that it doesn't provide greater protection of workers
noncompelling. Representative Rokeberg highlighted that the
testimony provided that private investment groups without
employees aren't intended to be covered by this legislation.
Number 2008
A roll call vote was taken. Representatives Gatto, Dahlstrom,
Lynn, Rokeberg, and Anderson voted in favor of reporting CSSB
323(JUD)am from committee. Representatives Guttenberg and
Crawford voted against it. Therefore, CSSB 323(JUD)am was
reported out of the House Labor and Commerce Standing Committee
by a vote of 5-2.
ADJOURNMENT
The House Labor and Commerce Standing Committee meeting was
recessed at 6:04 p.m. to the call of the chair.
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