Legislature(1995 - 1996)

03/28/1995 08:10 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             HOUSE STATE AFFAIRS STANDING COMMITTEE                            
                         March 28, 1995                                        
                           8:10 a.m.                                           
 MEMBERS PRESENT                                                               
 Representative Jeannette James, Chair                                         
 Representative Scott Ogan, Vice Chair                                         
 Representative Joe Green                                                      
 Representative Caren Robinson                                                 
 Representative Ed Willis                                                      
 MEMBERS ABSENT                                                                
 Representative Ivan                                                           
 Representative Brian Porter                                                   
 COMMITTEE CALENDAR                                                            
 SCR 9:    Relating to the twenty-seventh annual Girls' State.                 
           PASSED OUT OF COMMITTEE                                             
 SCR 10:   Relating to the twenty-ninth annual Boys' State.                    
           PASSED OUT OF COMMITTEE                                             
 *HB 238:  "An Act excluding certain direct sellers of consumer                
           products from coverage under the state unemployment                 
           compensation laws."                                                 
           PASSED OUT OF COMMITTEE                                             
 *HJR 9:   Requesting the governor to file suit in the United                  
           States Supreme Court against the United States                      
           government alleging violations of the civil                         
           rights of Americans listed as prisoners of war or                   
           missing in action in Southeast Asia, demanding that                 
           documents concerning these individuals be released; and             
           requesting the other states to join in this suit.                   
           PASSED OUT OF COMMITTEE                                             
 HSTA - 03/28/95                                                               
 *HB 267:  "An Act relating to review and expiration of                        
           regulations; and providing an effective date."                      
           SCHEDULED BUT NOT HEARD                                             
 HSTA - 03/28/95                                                               
 SB 1:     "An Act relating to state implementation of federal                 
           SCHEDULED BUT NOT HEARD                                             
 (* First public hearing)                                                      
 WITNESS REGISTER                                                              
 SENATOR JOHN TORGERSON                                                        
 Alaska State Legislature                                                      
 Capitol Building, Room 427                                                    
 Juneau, AK  99801                                                             
 Telephone:  465-2828                                                          
 POSITION STATEMENT:  Sponsored SCR 9 and SCR 10                               
 GEORGE DOZIER, Legislative Assistant                                          
 Representative Pete Kott                                                      
 Capitol Building, Room 432                                                    
 Juneau, Alaska  99801                                                         
 Telephone:  465-3777                                                          
 POSITION STATEMENT:  Provided information on HB 238                           
 MICHAEL LUNCEFORD                                                             
 Mary Kay Cosmetics                                                            
 8787 Stemmons                                                                 
 Dallas, TX  75247                                                             
 Telephone:  214-905-5734                                                      
 POSITION STATEMENT:  Supported CS for HB 238                                  
 BILL JERMAIN, Attorney                                                        
 Jermain, Dunnigan, and Owens                                                  
 Suite 300, 3000 A Street                                                      
 Anchorage,  AK  99503                                                         
 Telephone:  56308844                                                          
 POSITION STATEMENT:  Supported CS for HB 238                                  
 JAMES CROSS, Distributor                                                      
 Kirby Company of Anchorage                                                    
 76 Old Seward Highway                                                         
 Anchorage, AK  99504                                                          
 Telephone:  344-4545                                                          
 POSITION STATEMENT:  Supported HB 238                                         
 ROB SHUMAY, In-House Counsel                                                  
 Kirby Company                                                                 
 28800 Clemens Road                                                            
 West Lake, Ohio 44145                                                         
 Telephone:  216-892-3000                                                      
 POSITION STATEMENT:  Supported HB 238                                         
 EVELYN JARVIS-FERRIS, Vice President of Government Relations                  
 Shaklee Corporation                                                           
 444 Market Street                                                             
 San Francisco, CA                                                             
 Telephone:  4415-954-2016                                                     
 POSITION STATEMENT:  Supported CS for HB 238                                  
 DIRK BLOEMENDAAL, Corporate Government Affairs Counsel                        
 Amway Corporation                                                             
 7575 East Fulton Road                                                         
 Ada, Michigan                                                                 
 POSITION STATEMENT:  Supported CS for HB 238                                  
 JOSEPH MARIANO, Vice-President and Legal Counsel                              
 Direct Selling Association                                                    
 1666 K Street Northwest                                                       
 Washington, D.C.  20006                                                       
 Telephone 202-293-5760                                                        
 POSITION STATEMENT:  Supported HB 238                                         
 STEVE EGLI                                                                    
 Kirby Corporation                                                             
 9310  Glacier Highway                                                         
 Juneau, AK  99801                                                             
 Telephone:  790-4446                                                          
 POSITION STATEMENT:  Supported HB 238                                         
 PAM NEAL, Executive Director                                                  
 Alaska State Chamber of Commerce                                              
 217 2nd Street                                                                
 Juneau, AK  99801                                                             
 Telephone:  586-2323                                                          
 POSITION STATEMENT:  Supported HB 238                                         
 ED FLANAGAN, Deputy Commissioner                                              
 Alaska Department of Labor                                                    
 1111 W. 8th Street                                                            
 Juneau, AK  99801                                                             
 Telephone:  465-2700                                                          
 POSITION STATEMENT:  Provided information on HB 238                           
 GARY TYNDALL                                                                  
 P.O. Box 82977                                                                
 Fairbanks, AK  99708                                                          
 Telephone:  488-1433                                                          
 POSITION STATEMENT:  Supported HJR 9                                          
 WILLIAM FREDERICK                                                             
 P.O. Box 71771                                                                
 Fairbanks, AK  99707                                                          
 Telephone:  488-7922                                                          
 POSITION STATEMENT:  Supported HJR 9                                          
 TOM GOGGINS                                                                   
 c/0 119 N. Cushman                                                            
 Fairbanks, AK  99701                                                          
 Telephone:  458-6710                                                          
 POSITION STATEMENT:  Supported HJR 9                                          
 ART GRISWOLD                                                                  
 873 Runamuck                                                                  
 North Pole, AK  99705                                                         
 Telephone:  488-7805                                                          
 POSITION STATEMENT:  Supported HJR 9                                          
 DEE FIELDS                                                                    
 2050 Resolution Road                                                          
 Fairbanks, AK  99712                                                          
 Telephone:  322-2720                                                          
 POSITION STATEMENT:  Supported HJR 9                                          
 LADD MCBRIDE                                                                  
 P.O. Box 83567                                                                
 Fairbanks, AK  99708                                                          
 Telephone:  479-8096                                                          
 POSITION STATEMENT:  Supported HJR 9                                          
 JACK HETHERTON                                                                
 P.O. Box 2376                                                                 
 Soldotna, AK  99669                                                           
 Telephone:  262-5455                                                          
 POSITION STATEMENT:  Supported HJR 9                                          
 NANCY GOURLEY                                                                 
 P.O. Box 1082                                                                 
 Kenai, AK 99611                                                               
 Telephone:  283-3208                                                          
 POSITION STATEMENT:  Supported HJR 9                                          
 PREVIOUS ACTION                                                               
 BILL:  SCR  9                                                               
 SHORT TITLE: TWENTY-SEVENTH ANNUAL GIRLS' STATE                               
 SPONSOR(S): SENATOR(S) TORGERSON, R.Phillips, Pearce, Green,                  
 Leman, Ellis, Rieger; REPRESENTATIVE(S) Bunde, Navarre,                       
 JRN-DATE     JRN-PG               ACTION                                      
 03/08/95       538    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 03/08/95       538    (S)   STATE AFFAIRS                                     
 03/14/95              (S)   STA AT 03:30 PM BELTZ ROOM 211                    
 03/14/95              (S)   MINUTE(STA)                                       
 03/15/95       616    (S)   STA RPT  4DP                                      
 03/15/95       616    (S)   ZERO FN (LAA)                                     
 03/16/95              (S)   RLS AT 12:00 PM FAHRENKAMP                        
                             ROOM 203                                          
 03/16/95              (S)   MINUTE(RLS)                                       
 03/17/95       664    (S)   RULES TO CALENDAR  3/17/95                        
 03/17/95       668    (S)   READ THE SECOND TIME                              
 03/17/95       678    (S)   COSPONSOR:  RIEGER                                
 03/17/95       668    (S)   PASSED Y18 N- E2                                  
 03/17/95       679    (S)   TRANSMITTED TO (H)                                
 03/20/95       801    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/20/95       801    (H)   STATE AFFAIRS                                     
 03/20/95       825    (H)   CROSS SPONSOR(S): BUNDE, NAVARRE                  
 03/20/95       825    (H)   CROSS SPONSOR(S): GRUSSENDORF                     
 03/28/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 BILL:  SCR 10                                                                
 SHORT TITLE: TWENTY-NINTH ANNUAL BOYS' STATE                                  
 SPONSOR(S): SENATOR(S) TORGERSON, R.Phillips, Pearce, Green,                  
 Leman, Ellis, Rieger; REPRESENTATIVE(S) Bunde, Navarre,                       
 JRN-DATE     JRN-PG               ACTION                                      
 03/08/95       538    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 03/08/95       538    (S)   STATE AFFAIRS                                     
 03/14/95              (S)   STA AT 03:30 PM BELTZ ROOM 211                    
 03/14/95              (S)   MINUTE(STA)                                       
 03/15/95       617    (S)   STA RPT  4DP                                      
 03/15/95       617    (S)   ZERO FN (LAA)                                     
 03/16/95              (S)   RLS AT 12:00 PM FAHRENKAMP                        
                             ROOM 203                                          
 03/16/95              (S)   MINUTE(RLS)                                       
 03/17/95       664    (S)   RULES TO CALENDAR  3/17/95                        
 03/17/95       669    (S)   READ THE SECOND TIME                              
 03/17/95       678    (S)   COSPONSOR:  RIEGER                                
 03/17/95       669    (S)   PASSED Y18 N- E2                                  
 03/17/95       679    (S)   TRANSMITTED TO (H)                                
 03/20/95       801    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/20/95       801    (H)   STATE AFFAIRS                                     
 03/20/95       825    (H)   CROSS SPONSOR(S): BUNDE, NAVARRE                  
 03/20/95       825    (H)   CROSS SPONSOR(S): GRUSSENDORF                     
 03/28/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 BILL:  HB 238                                                                
 SPONSOR(S): LABOR & COMMERCE BY REQUEST                                       
 JRN-DATE     JRN-PG               ACTION                                      
 03/08/95       641    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/08/95       641    (H)   STATE AFFAIRS, LABOR & COMMERCE                   
 03/23/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 03/28/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 BILL:  HJR  9                                                                
 SHORT TITLE: SUIT RE POWS & MIAS AGAINST U.S. & OTHERS                        
 SPONSOR(S): REPRESENTATIVE(S) JAMES,Kubina,Therriault,Mulder                  
 JRN-DATE      JRN-PG              ACTION                                      
 01/16/95        18    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/16/95        18    (H)   MLV, STA, JUD                                     
 01/19/95        87    (H)   COSPONSOR(S): KUBINA                              
 03/15/95       757    (H)   COSPONSOR(S): THERRIAULT                          
 03/20/95              (H)   MLV AT 05:00 PM CAPITOL 17                        
 03/20/95              (H)   MINUTE(MLV)                                       
 03/22/95       847    (H)   MLV RPT  CS(MLV) 4DP                              
 03/22/95       847    (H)   DP: IVAN, WILLIS, FOSTER, KOTT                    
 03/22/95       847    (H)   INDETERMINATE FISCAL NOTE (LAW)                   
 03/27/95       946    (H)   COSPONSOR(S): MULDER                              
 03/28/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 BILL:  HB 267                                                                
 SHORT TITLE: REGULATION REVIEW AND EXPIRATION                                 
 SPONSOR(S): REPRESENTATIVE(S) JAMES,Kelly                                     
 JRN-DATE     JRN-PG               ACTION                                      
 03/17/95       779    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/17/95       779    (H)   STATE AFFAIRS, FINANCE                            
 03/20/95       825    (H)   COSPONSOR(S): KELLY                               
 03/23/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 03/28/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 BILL:  SB   1                                                                
 SPONSOR(S): SENATOR(S) TAYLOR,Kelly,Halford,Sharp                             
 JRN-DATE      JRN-PG              ACTION                                      
 01/06/95        12    (S)   PREFILE RELEASED - 1/6/95                         
 01/16/95        12    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 01/16/95        13    (S)   STATE AFFAIRS, JUDICIARY                          
 02/07/95              (S)   STA AT 03:30 PM BELTZ ROOM 211                    
 02/07/95              (S)   MINUTE(STA)                                       
 02/08/95       204    (S)   STA RPT  2DP 2NR                                  
 02/08/95       204    (S)   FN(S):DOT #9,REV #13,DPS #14,                     
                             LAW #15                                           
 02/08/95       204    (S)   DHSS #16, F&G #17, DCRA #18                       
 02/08/95       204    (S)   ZERO FN(S):(DNR #1,DMVA#2,DOE                     
 02/08/95       204    (S)   CORR #5, DCED #6, ADM #7, GOV #8,                 
 02/08/95       204    (S)   #10, F&G #11, DEC #12)                            
 02/08/95       209    (S)   JUD REFERRAL WAIVED                               
 02/08/95       209    (S)   FIN REFERRAL ADDED                                
 03/02/95       454    (S)   FIN RPT  4DP 3NR                                  
 03/02/95       454    (S)   ZERO FISCAL NOTE (S.FIN/ALL DEPTS                 
 03/02/95              (S)   FIN AT 09:00 AM SENATE FINANCE 520                
 03/03/95              (S)   RLS AT 11:20 AM FAHRENKAMP ROOM 203               
 03/03/95              (S)   MINUTE(RLS)                                       
 03/08/95       537    (S)   RULES TO CALENDAR  3/8/95                         
 03/08/95       539    (S)   READ THE SECOND TIME                              
 03/08/95       539    (S)   ADVANCE TO 3RD READING MOTION                     
 03/08/95       539    (S)   THIRD READING 3/9  CALENDAR                       
 03/09/95       559    (S)   READ THE THIRD TIME  SB 1                         
 03/09/95       559    (S)   PASSED Y11 N8 E1                                  
 03/09/95       565    (S)   TRANSMITTED TO (H)                                
 03/10/95       696    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/10/95       696    (H)   STATE AFFAIRS, FINANCE                            
 03/15/95       755    (H)   WTR REFERRAL ADDED                                
 03/22/95       868    (H)   WTR REFERRAL WAIVED                               
 03/28/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 ACTION NARRATIVE                                                              
 TAPE 95-36, SIDE A                                                            
 Number 000                                                                    
 CHAIR JEANNETTE JAMES called the meeting to order at 8:10 a.m.                
 Present at roll call were Representatives Robinson, Ogan, Green,              
 and James.  Representative Willis arrived later.                              
 HSTA - 03/28/95                                                               
 SCR 9 - TWENTY-SEVENTH ANNUAL GIRLS' STATE                                   
 SCR 10 - TWENTY-NINTH ANNUAL BOYS' STATE                                     
 SENATOR JOHN TORGERSON read his sponsor statement for SCR 9 and               
 SCR 10.                                                                       
 "I have requested these two concurrent resolutions because I                 
 am a lifetime member of the Veterans of Foreign Wars and                      
 also a member of the American Legion.  Senate Concurrent                      
 Resolutions 9 and 10 applaud the sponsors and the                             
 participants of the twenty-ninth annual Girls' and Boys'                      
 State Programs.  These programs work toward bringing an                       
 increased awareness of the roles young men and women have in                  
 the future of our state.  The annual program sponsored by                     
 the American Legion and the Auxiliary as well as other                        
 cooperating organizations do not receive governmental or                      
 taxpayer monetary support but rather are completely                           
 organized through volunteer efforts.  Without question, the                   
 organizers of this annual event are to be congratulated and                   
 recognized.  Their commitment to preparing our young men and                  
 women is outstanding, and I would urge your support for                       
 these resolutions."                                                           
 Number 056                                                                    
 CHAIR JAMES noted the arrival of Representative Willis.                       
 REPRESENTATIVE JOE GREEN added, for the record, he could not                  
 think of a finer place for young people to go than Boys' State or             
 Girls' State.  He went when he was young and it was a tremendous              
 experience where he learned a great deal about government.                    
 Number 073                                                                    
 REPRESENTATIVE ED WILLIS agreed with Representative Green, adding             
 as a Legionnaire he was privileged to attend and participate in               
 Boys' State last year.  It was a tremendous experience.  One of               
 his sons attended Boys' State years ago and benefitted greatly.               
 He urged support for the resolutions.                                         
 Number 101                                                                    
 REPRESENTATIVE CAREN ROBINSON asked why they should use a                     
 resolution and not a citation.                                                
 CHAIR JAMES replied a resolution was a little higher honor than a             
 REPRESENTATIVE SCOTT OGAN made a motion to move SJR 9 and SJR 10              
 out of committee.                                                             
 CHAIR JAMES added she had participated in Girls' State in                     
 Fairbanks recently, doing their inauguration twice and giving                 
 educational speeches to the group.  They are a fine group of                  
 young ladies, and she added her support to the resolutions.                   
 Number 128                                                                    
 CHAIR JAMES repeated there was a motion to move the resolutions,              
 with unanimous consent and zero fiscal notes.  There were no                  
 objections, so SJR 9 and SJR 10 were moved from the State Affairs             
 HSTA - 03/28/95                                                               
 HB 238 - NO UNEMPLOYMENT COMP FOR DIRECT SELLERS                            
 Number 139                                                                    
 GEORGE DOZIER, Legislative Assistant to Representative Pete Kott,             
 reported HB 238 would amend Alaska law to exempt direct sellers               
 from unemployment compensation coverage.  The sponsor,                        
 Representative Kott, believes that outside salesmen who are                   
 direct sellers are not traditional employees, but independent                 
 contractors because they have no supervision and are not                      
 controlled by an employer.  They assume the risk of their                     
 activities, earning money only when they sell.                                
 Number 169                                                                    
 MR. DOZIER offered a committee substitute, CS HB 238(STA) version             
 F, for consideration.                                                         
 Number 184                                                                    
 REPRESENTATIVE GREEN asked why the CS was significantly shorter               
 than the original bill.                                                       
 MR. DOZIER replied the original bill potentially excluded a                   
 significant number of sales people from its coverage, so the CS               
 broadens the coverage with respect to the original bill.                      
 Number 204                                                                    
 MICHAEL LUNCEFORD, Mary Kay Cosmetics, testified via                          
 teleconference from Dallas in support of the proposed CS because              
 it now includes many other direct sales people than the original              
 bill, and because it is now consistent with employment statutes.              
 Number 256                                                                    
 BILL JERMAIN, attorney who represented the Kirby Company in                   
 litigation regarding the employment security act, testified via               
 teleconference from Anchorage in support of HB 238 or the CS,                 
 stating individuals covered by the bill are clearly not                       
 employees, they are independent contractors, and it will help                 
 avoid a great deal of litigation.                                             
 Number 309                                                                    
 JAMES CROSS, a Kirby Company distributor, testified via                       
 teleconference from Anchorage in support of HB 238.  He said the              
 bill defines independent contractors and avoids many potential                
 Number 340                                                                    
 ROB SHUMAY, in-house counsel for the Kirby Company, testified via             
 teleconference from Ohio in support of HB 238.  He agreed with                
 previous testifiers and stated he was available for questions.                
 Number 340                                                                    
 EVELYN JARVIS-FERRIS, Vice President of Government Relations,                 
 Shaklee Corporation, testified via teleconference from San                    
 Francisco in favor of the CS for HB 238, stating it would bring               
 Alaska law into consistency with federal law in its definition of             
 independent contractor as it relates to direct sellers.                       
 Number 397                                                                    
 DIRK BLOEMENDAAL, Corporate Government Affairs Counsel, Amway                 
 Corporation, testified via teleconference from Oklahoma in favor              
 of the committee substitute for HB 238, stating it tracks federal             
 law.  He agreed with previous testifiers that the original bill               
 had problems in terms of location of sale as well as the                      
 definition of compensation.  A bill similar to the proposed CS                
 has passed both legislative houses in Michigan.                               
 Number 338                                                                    
 JOSEPH MARIANO, Vice President and Legal Counsel, Direct Selling              
 Association, supported proposed committee substitute for HB 238.              
 His association applauded Representative Kott's efforts for                   
 bringing Alaska law into agreement with federal law.                          
 Number 460                                                                    
 STEVE EGLI, Kirby Company of Southeast Alaska, testified in favor             
 of HB 238, saying he had been in a legal dispute with the                     
 Department of Labor for three years and the laws need to be                   
 redefined to end such disputes.                                               
 Number 487                                                                    
 REPRESENTATIVE GREEN asked Mr. Egli whether either version might              
 stop the litigations currently in Superior Court.                             
 MR. EGLI replied "yes."                                                       
 Number 500                                                                    
 CHAIR JAMES said she had gotten a FAX from the Department of                  
 Labor and they oppose the bill, but they had prefaced that                    
 statement by saying the Department of Labor is rarely, if ever,               
 in support of legislation removing classes of employees from                  
 coverage under any of its protective statutes.  She added the                 
 committee therefore could not count on ever getting a positive                
 response from the Department of Labor; their function is to                   
 include, not exclude, people.                                                 
 CHAIR JAMES added the committee substitute for HB 238 would also              
 help independent contractors get out from under other                         
 requirements such as minimum wage and overtime.                               
 Number 525                                                                    
 REPRESENTATIVE ROBINSON said her understanding was the Department             
 of Labor was against the proposed working draft, not the original             
 bill, and in fact had worked with Senator Kelly to help draft the             
 original Senate bill.                                                         
 Number 533                                                                    
 MR. EGLI said the Senate committee substitute says on line 11                 
 "commissions on sales or other remuneration directly related to               
 sales or sales performance," and this covers their concerns.  He              
 added sales people want to be independent.  Selling is a skill,               
 and successful direct sellers are never out of a job or                       
 unemployed.  Unsuccessful sellers would never make enough money               
 to pay into unemployment so could never collect it anyway and                 
 would have no benefits, so it is an unfair tax on the successful              
 direct sellers.                                                               
 Number 558                                                                    
 CHAIR JAMES observed HB 238 is somewhat open-ended regarding                  
 employee or nonemployee status.                                               
 Number 570                                                                    
 MR. MARIANO reinforced Chair James' comments, adding the typical              
 profile of a direct seller is a person who is a woman who sells               
 on a part-time basis.  The most important aspect is they view                 
 themselves as independent business people, not employees, both                
 legally and philosophically.  The committee substitute clarifies              
 Number 585                                                                    
 REPRESENTATIVE GREEN observed the Department of Labor prefers the             
 original bill, and wondered whether the committee should adopt                
 the committee substitute as a working draft.                                  
 CHAIR JAMES noted the Department of Labor would soon be available             
 for questions on conference call.                                             
 Number 605                                                                    
 PAM NEAL, Executive Director, Alaska State Chamber of Commerce,               
 stated Avon is a member of the Chamber, as are some other direct              
 sellers.  She agreed the changes outlined in HB 238 are                       
 Number 632                                                                    
 ED FLANAGAN, Deputy Commissioner, Alaska Department of Labor,                 
 testified via conference call, stating he was not familiar with               
 the proposed CS for HB 238.                                                   
 CHAIR JAMES read the proposed committee substitute for Mr.                    
 Flanagan and asked for his comments.                                          
 Number 680                                                                    
 MR. FLANAGAN referred to the letter he had FAXed outlining the                
 department's position.  He said the department opposes any                    
 exemption to protective statutes.  He had, however, met with                  
 proponents of this bill, namely people from the Kirby Vacuum                  
 Company of Alaska, and asked why Kirby was in litigation when                 
 other direct sellers were not.  It became apparent Kirby sellers              
 are set up as distributors with their own stores, engaging also               
 in retail sales, and thus could not meet the test of being                    
 independent contractors.                                                      
 MR. FLANAGAN continued the Department of Labor has problems with              
 the draft CS.  Independent contractor status has been abused, and             
 the original bill dealt with this.  The department would oppose               
 adopting the CS or any other language similar to the federal law,             
 which leaves too many loopholes and is too open to abuse.  He                 
 urged the committee to adopt the original bill.                               
 Number 696                                                                    
 CHAIR JAMES referred to her own experience as a small business                
 owner, accountant, and tax preparer.  She added she believes the              
 original bill is just as open as the federal law.                             
 MR. FLANAGAN said he did not agree; the exemption would provide a             
 safe harbor which would be too broad and would open itself to                 
 other businesses that should not be considered independent                    
 TAPE 95-36, SIDE B                                                            
 Number 000                                                                    
 MR. FLANAGAN noted there is a difference between the Senate and               
 House versions of the bill.  The CS for Senate Bill 122 (JUD) is              
 a little tighter, but both bills allow bogus schemes for abusing              
 the definition of independent contractors.                                    
 Number 047                                                                    
 CHAIR JAMES stated she thinks the Department of Labor's goal                  
 should be to include as many people as possible for benefits, and             
 secondary to that should be collecting the tax from those people,             
 rather than having the goal be just collecting the tax for their              
 MR. FLANAGAN replied the two go hand in hand.  Concern for the                
 trust fund is to assure there is money to pay the benefits; it is             
 basically an insurance system for people who need it.                         
 Number 084                                                                    
 REPRESENTATIVE ROBINSON said it was her understanding the                     
 Department of Labor favors the bill as amended in the Senate and              
 asked if that was correct.                                                    
 MR. FLANAGAN said she was correct.                                            
 Number 100                                                                    
 MR. MARIANO observed it is vital to the direct selling industry               
 that the CS and the federal language be adopted.  It would be                 
 unfortunate to inadvertently exclude a majority of direct sellers             
 from a direct seller exemption, which could happen without the                
 CS.  He added the federal language is very clear cut and                      
 articulate and would not allow unintended beneficiaries to take               
 advantage of the exclusion.                                                   
 Number 141                                                                    
 CHAIR JAMES said she believed it would be most fair to include                
 the federal language.                                                         
 Number 154                                                                    
 REPRESENTATIVE OGAN moved to accept the CS as the working                     
 REPRESENTATIVE GREEN asked for a delay in the vote until the back             
 page of the CS was available.                                                 
 MR. EGLI said the back page was the same as the back page of the              
 original HB 238.                                                              
 Number 171                                                                    
 REPRESENTATIVE ROBINSON asked Mr. Flanagan why the Department of              
 Labor was opposed to the working draft.                                       
 MR. FLANAGAN said it references a federal statute which lends                 
 itself to problems.  True direct sellers who are truly                        
 independent contractors "aren't broke and they don't need                     
 fixing."  Although Kirby needs a special exemption, others do                 
 Number 219                                                                    
 REPRESENTATIVE ROBINSON said as she understood it, Mr. Flanagan               
 was saying the laws in Alaska have not presented a problem to                 
 date except for Kirby, and the Department of Labor wants the                  
 language narrowed to accommodate just that one problem.                       
 MR. FLANAGAN said she was correct, and the Department of Labor                
 could only support a bill which was that narrow and limited.                  
 Number 235                                                                    
 CHAIR JAMES asked Mr. Flanagan how he would define "sale of                   
 MR. FLANAGAN this could be construed as the performance of actual             
 labor on somebody's dwelling, which is frequently abused, and                 
 this is what he wants to avoid.  A ludicrous example is when a                
 restaurant owner tries to apply it to waiters and waitresses.                 
 Number 258                                                                    
 CHAIR JAMES said she recognized the exemptions are abused, and                
 this occurs because the rules and regulations regarding employees             
 make it impossible for many people to work and they have created              
 a depressed economy in the country.                                           
 Number 267                                                                    
 MR. FLANAGAN responded the statutes and regulations are "pretty               
 basic stuff" such as minimum wage, time and a half for overtime,              
 unemployment insurance, and workers compensation.  He did not see             
 these "basic protections" as creating excessive costs.                        
 Number 280                                                                    
 CHAIR JAMES gave an example of a sales person who works ten hours             
 a day and sells nothing for three days, then on the fourth day                
 makes a sale.  If that person is an employee for those three                  
 days, he is on minimum wage plus overtime, and his employer has               
 to pay that.  That is a deterrent.  There are a lot of products               
 that can be sold by direct sale, other than Kirbys, and those                 
 direct sellers should not be treated as employees.  We have been              
 putting dampers on employment opportunities, in a depressed                   
 economic situation, and including direct sellers under the                    
 federal law might solve the problem.                                          
 Number 320                                                                    
 MR. FLANAGAN replied the language the Department of Labor                     
 supports would accomplish the same goal, if a seller is truly an              
 independent contractor.                                                       
 CHAIR JAMES responded she has done federal audits, and they are               
 just as stringent as the state, and they are not likely to allow              
 restaurant workers.                                                           
 Number 335                                                                    
 REPRESENTATIVE OGAN reminded the Chair there was a CS on the                  
 CHAIR JAMES said the discussion was about whether to accept the               
 CS as a working document.                                                     
 REPRESENTATIVE GREEN requested the maker of the motion to                     
 withdraw it, because he was not ready to vote.                                
 REPRESENTATIVE OGAN withdrew his motion to accept the CS as the               
 working document.                                                             
 Number 350                                                                    
 REPRESENTATIVE GREEN disclosed his wife had been a dental                     
 hygienist and had worked as an independent contractor.  When her              
 boss realized the criteria was whether she had to work at the                 
 direction and discretion of someone else, it became apparent to               
 the dentist that she did not qualify as an independent contractor             
 but was actually an employee.  Representative Green asked if this             
 would be a criteria in the case of network marketing                          
 organizations such as Shaklee: do the organizations exercise any              
 direct authority or instruction over their network people, or are             
 they completely independent in their marketing.                               
 Number 374                                                                    
 REPRESENTATIVE OGAN said his wife used to sell Shaklee, and she               
 was a completely independent business person, setting her own                 
 hours.  He added the language in the federal law is pretty clear              
 on this issue.                                                                
 Number 391                                                                    
 REPRESENTATIVE ROBINSON noted sales people for companies like                 
 Avon and Amway are already exempt.                                            
 CHAIR JAMES agreed, adding the Department of Labor said they                  
 never audit them because they do not have retail establishments               
 and have no employees.                                                        
 REPRESENTATIVE ROBINSON referred to Merle Norman make-up sales                
 people, for example, who can either sell independently or set up              
 a retail business.  She believes that once a person sets up a                 
 retail business, all the laws should be followed.                             
 Number 412                                                                    
 MR. MARIANO agreed, adding the reason the federal government                  
 exempted people in his industry was because it was clear no                   
 controls were imposed on the sellers.  He would like to see the               
 committee substitute passed to include all who should be included             
 in the exemption.                                                             
 Number 455                                                                    
 REPRESENTATIVE GREEN asked Mr. Flanagan if the independent                    
 sellers excluded would later be subject to unemployment                       
 MR. FLANAGAN said they are not subject to it now and would not be             
 under the proposed bill.  He referred to the "ABC test" for                   
 employees:  A. The individual is free of control and direction in             
 the performance of service; B. The service is performed outside               
 the places of business; and C. The individual is engaged in an                
 independently established business of the same nature.                        
 MR. FLANAGAN said sellers for Avon, Shaklee, and the others, meet             
 this test now and had no problems in the first place.                         
 Number 495                                                                    
 REPRESENTATIVE ROBINSON noted the bill has a referral to the                  
 Labor and Commerce Committee.  She believes it is in the state's              
 interest to address the problem and would recommend moving HB 238             
 as written and let the next committee decide the best direction               
 to go.                                                                        
 Number 514                                                                    
 MR. DOZIER said he believed Representative Kott would not have a              
 problem with passing it on to Labor and Commerce, which he                    
 CHAIR JAMES listed the committee's options:  They could move the              
 original bill without the CS, or they could move the CS, or they              
 could do a conceptual amendment similar to SB 122 in accordance               
 with the Department of Labor's wishes.  Her personal opinion was,             
 in an effort to put more people to work and allow businesses to               
 profit, and to lessen rules and regulations which strangle                    
 employment opportunities, a change needed to be made and the CS               
 needed to be adopted.                                                         
 Number 551                                                                    
 REPRESENTATIVE OGAN commented people in direct sales are one of               
 "the last of a dying breed of true capitalists in this country,"              
 where everyone is regulated by government intervention in all                 
 aspects of life.  He moved the committee substitute for HB 238.               
 Number 567                                                                    
 REPRESENTATIVE GREEN said, after hearing all the debate, he                   
 tended to learn toward the CS.  He observed that a large number               
 of the direct sellers affected were women with children at home,              
 and he was in favor of the motion.                                            
 Number 580                                                                    
 REPRESENTATIVE WILLIS said he agreed with the Department of Labor             
 and favored the Senate version of the bill because it addressed               
 the specific concerns of Alaska as opposed to the federal law.                
 He did not want to see Alaska tied to regulations and laws at the             
 federal level.                                                                
 Number 604                                                                    
 CHAIR JAMES said there already is a direct tie to the federal                 
 law, because all income is reported to the federal government.                
 So it is imperative we define employees the same way the federal              
 government does in order to avoid penalties.                                  
 Number 625                                                                    
 REPRESENTATIVE ROBINSON observed SB 122 is already in Rules, so               
 the House will probably be seeing that version soon anyway and it             
 will probably be the vehicle.                                                 
 Number 630                                                                    
 CHAIR JAMES repeated the motion, to use the CS as the working                 
 document.  There were objections.  A roll call vote was taken.                
 Representatives Ogan, Green, and James voted yes. Representatives             
 Robinson and Willis voted no.  The motion passed 3 to 2.                      
 REPRESENTATIVE OGAN made a motion to move the CS from committee               
 with individual recommendations and zero fiscal note.  Hearing no             
 objection, CSHB 238(STA) passed out of committee.                             
 HSTA - 03/28/95                                                              
 HJR 9 - SUIT RE POWS & MIAS AGAINST U.S. & OTHERS                            
 Number 660                                                                    
 GARY TYNDALL testified via teleconference from Fairbanks in                   
 support of HJR 9, noting similar resolutions had been passed or               
 introduced in 37 states.  Alaska has the highest percentage of                
 veterans of any state.  During the Vietnam peace talks in 1973,               
 Alaska presented the North Vietnamese with a list of over 3,700               
 names of people known or suspected of being alive in enemy hands.             
 We got back 591 of those people.  Three weeks later, the                      
 remaining 3,100 were declared officially dead, just written off               
 and abandoned, with no explanation to the families.  Within the               
 last few years, individuals within our government have admitted               
 they knew some men were left behind alive and have proof of                   
 sightings; some were used as bargaining chips.  They should not               
 be declared dead just for the convenience of the government and               
 then abandoned.                                                               
 TAPE 95-37, SIDE A                                                            
 Number 000                                                                    
 MR. TYNDALL continued, HJR 9 signals Alaska's willingness to join             
 with other states in petitioning to bring our men home.                       
 WILLIAM FREDERICK testified via teleconference in Fairbanks in                
 support of HJR 9, stating he was past commander of American                   
 Legion Post 1 in Anchorage, currently commander V.F.W. Post 10029             
 in North Pole, and a Vietnam veteran.  He stated at least                     
 families of deceased veterans have the solace of knowing their                
 loved ones are accounted for.  The Missing in Action (MIAs)                   
 families have had no such comfort for 20 years.  He urged the                 
 passage of HJR 9.                                                             
 TOM GOGGINS testified via teleconference in Fairbanks in support              
 of HJR 9, saying he had served during World War II and also in                
 Korea.  He believes Americans have a duty to do all we can to                 
 recover the missing people.  It is on his mind each and every day             
 of his life.                                                                  
 Number 128                                                                    
 ART GRISWOLD testified via teleconference in Fairbanks in support             
 of HJR 9.  As a Korean veteran, he believes we must get behind                
 this resolution because these men have given the ultimate for                 
 their country.                                                                
 Number 148                                                                    
 CHAIR JAMES reminded listeners they could also send written                   
 testimony to the committee.                                                   
 Number 173                                                                    
 DEE FIELDS testified via teleconference in Fairbanks in support               
 of HJR 9, saying she is a proud member of the Alaska Independence             
 Party and it is time we resolve this issue and get our Prisoners              
 of War (POWs) and MIAs back from Vietnam.                                     
 LADD MCBRIDE testified via teleconference in Fairbanks in support             
 of HJR 9, stating he is a Korean veteran and just retired from                
 the military in 1992.  He is sorry Alaska is not in the forefront             
 on this issue because Alaska has the highest military population              
 ratio in the United States.  He is also chair of the Interior                 
 Alaska Veterans Committee which unanimously supports HJR 9.                   
 Number 203                                                                    
 JACK HETHERTON testified via teleconference from Kenai in favor               
 of HJR 9 on behalf of VFW Post 10046, of which he is Commander,               
 and on behalf of the two Alaskans still listed as missing in                  
 action.  Soldiers missing in action are too often declared dead               
 for political expediency.  This has to be the ultimate shame of               
 our country.  As a combat Vietnam veteran, there has not been a               
 day gone by in the past 25 years when he has not thought about                
 his abandoned comrades.  He carries a great shame in his heart                
 where there should be pride.  HJR 9 asks our country to honor a               
 sacred duty to our veterans.                                                  
 Number 250                                                                    
 NANCY GOURLEY testified via teleconference from Kenai in support              
 of HJR 9, stating she is a family member of a man who has been                
 missing in action from Vietnam since November 18, 1971.  In                   
 addition, her uncle has been missing from Korea since July 5,                 
 1950.  She is keenly involved and interested in this issue.  She              
 had an investigation into her brother's crash site, but the                   
 information she received was very suspicious and questionable.                
 The family has had no resolution from the Central Intelligence                
 Agency (CIA), Department of Defense (DOD), State Department,                  
 National Security Council, National Security Agency, seven                    
 congressional investigations, or from Alaska's congressional                  
 delegation, and they feel like this resolution is their last                  
 hope.  Everybody agrees on just one point:  There were live men               
 left behind.  She asked where are they now, and why aren't they               
 Number 296                                                                    
 CHAIR JAMES stated Alaska has two service men missing and                     
 unaccounted for in Southeast Asia, Thomas E. Anderson, USMF, from             
 Spenard and Howard M. Koslowski, US Navy, from Anchorage.                     
 Number 313                                                                    
 REPRESENTATIVE WILLIS moved and asked unanimous consent that HJR
 9 be moved out of committee.  There was no objection; the                     
 resolution was moved.                                                         
 REPRESENTATIVE GREEN asked if this resolution was the "last shot"             
 at recovering the MIAs and POWs.  He wondered if there was any                
 way to negotiate, or if filing suit was our last resort.                      
 CHAIR JAMES responded yes, this was our last resort.  The                     
 movement started in Michigan, where a way was found to go                     
 directly to the Supreme Court on behalf of the POWs and MIAs.                 
 Previously, any court action could only be taken by the person                
 himself; not even relatives were allowed.  But Alaska as a state              
 can do it for our residents and go directly to the Supreme Court,             
 and she hopes all the states will join in and do the same thing.              
 REPRESENTATIVE ROBINSON noted it is not just the existing                     
 President but the last several, for the last twenty years at                  
 least, who have failed to deal with this issue.                               
 CHAIR JAMES adjourned the meeting at 10:02 a.m.                               

Document Name Date/Time Subjects