Legislature(1993 - 1994)

03/30/1993 01:38 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
               SENATE LABOR AND COMMERCE COMMITTEE                             
                         March 30, 1993                                        
                            1:38 p.m.                                          
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Senator Tim Kelly, Chairman                                                  
  Senator Steve Rieger, Vice Chairman                                          
  Senator Bert Sharp                                                           
  Senator Georgianna Lincoln                                                   
  Senator Judy Salo                                                            
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  All Present                                                                  
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  Alaska Public Utilities Commission Confirmation: Jim Carter                  
                                                                               
  SENATE BILL NO. 173                                                          
  "An Act relating  to health  insurance for small  employers;                 
  and providing for an effective date."                                        
                                                                               
  CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 91(HES)                        
  "An   Act   prohibiting   unfair    discrimination   against                 
  direct-entry midwives who perform services  within the scope                 
  of their  certification; providing  for coverage of  midwife                 
  services under Medicaid; reordering the priority of optional                 
  services provided by the state under Medicaid; and providing                 
  for an effective date."                                                      
                                                                               
  SENATE BILL NO. 174                                                          
  "An Act exempting  certain taxicab  operators from  coverage                 
  under  the Alaska Wage  and Hour Act,  the Alaska Employment                 
  Security Act, and the Alaska Workers' Compensation Act."                     
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
  SB 173 - See Labor & Commerce minutes dated 3/30/93                          
                                                                               
  SB 91 - See HESS minutes dated 3/19/93, 3/30/93.                             
                                                                               
  SB 174  - See  Labor &  Commerce minutes  dated 3/30/93  and                 
  4/1/93                                                                       
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  Ken Sykes                                                                    
  Division of Insurance                                                        
  Department of Commerce and Economic Development                              
  P.O. Box 110805                                                              
  Juneau, Alaska 99811-0805                                                    
                                                                               
                                                                               
  POSITION STATEMENT:  Commented on SB 173.                                    
                                                                               
  Representative Gail Phillips                                                 
  State Capitol                                                                
  Juneau, Alaska 99801-1182                                                    
  POSITION STATEMENT:  Supported Jim Carter, nominee for APUC.                 
                                                                               
  Jim Carter                                                                   
  P.O. Box 212                                                                 
  Kenai, Alaska 99611                                                          
  POSITION STATEMENT:  APUC nominee.                                           
                                                                               
  Marilyn Holmes                                                               
  Consumers of Midwifery                                                       
  969 Goldbelt Ave.                                                            
  Juneau, Alaska 99801                                                         
  POSITION STATEMENT:  Supported SB 91.                                        
                                                                               
  Senator Loren Leman                                                          
  State Capitol                                                                
  Juneau, Alaska 99801-1182                                                    
  POSITION STATEMENT:  Sponsor of SB 91.                                       
                                                                               
  Sally Burne, Midwife                                                         
  P.O. Box 2110                                                                
  Kodiak, Alaska 99615                                                         
  POSITION STATEMENT:  Supported SB 91.                                        
                                                                               
  Susan Kiggins                                                                
  3802 Thompson Ave.                                                           
  Anchorage, Alaska 99508                                                      
  POSITION STATEMENT:  Supported SB 91.                                        
                                                                               
  Josh Fink, Staff Assistant                                                   
  % Senator Kelly                                                              
  State Capitol                                                                
  Juneau, Alaska 99801-1182                                                    
  POSITION STATEMENT:  Commented on SB 91.                                     
                                                                               
  William Colburn                                                              
  3101 Erueka St. #A                                                           
  Anchorage, Alaska 99503                                                      
  POSITION STATEMENT:  Supported SB 174.                                       
                                                                               
  Jim Brennan                                                                  
  Anchorage, Alaska                                                            
  POSITION STATEMENT:  Supported SB 174.                                       
                                                                               
  Robin Bieberdorf                                                             
  City Cab                                                                     
  P.O. Box 1520                                                                
  Petersburge, Alaska 99833                                                    
  POSITION STATEMENT:  Supported SB 174.                                       
                                                                               
                                                                               
  Robert Garrett                                                               
  King Cab Company                                                             
  299 Alta Way                                                                 
  Fairbanks, Alaska 99707                                                      
  POSITION STATEMENT:  Supported SB 174.                                       
                                                                               
  Kirsten Bomengen, Assistant Attorney General                                 
  Department of Law                                                            
  P.O. Box 110300                                                              
  Juneau, Alaska 99811-0300                                                    
  POSITION STATEMENT:  Commented on SB 174.                                    
                                                                               
  Arbe Williams, Special Assistant                                             
  Department of Labor                                                          
  P.O. Box 21149                                                               
  Juneau, Alaska 99802-1149                                                    
  POSITION STATEMENT:  Commented on SB 174.                                    
                                                                               
  Jim Coate, Manager                                                           
  Unemployment Insurance Program                                               
  P.O. Box 25509                                                               
  Juneau, Alaska 99802-5509                                                    
  POSITION STATEMENT:  Commented on SB 174.                                    
                                                                               
  Regina Doyle                                                                 
  Yellow Cab                                                                   
  3647 East 65th                                                               
  Anchorage, Alaska                                                            
  POSITION STATEMENT:  Supported SB 174.                                       
                                                                               
  Ms. Putnam                                                                   
  Taku Taxi                                                                    
  102 N Franklin                                                               
  Juneau, Alaska 99801                                                         
  POSITION STATEMENT:  Supported SB 174.                                       
                                                                               
  Bart Lair                                                                    
  Workmen's Compensation Board                                                 
  P.O. Box 25512                                                               
  Juneau, Alaska 99802-5512                                                    
  POSITION STATEMENT:  Commented on SB 174.                                    
                                                                               
  John Hibbert                                                                 
  Alaska Cab                                                                   
  4141 B Street                                                                
  Anchorage, Alaska 99503                                                      
  POSITION STATEMENT:  Supported SB 174.                                       
                                                                               
  ACTION NARRATIVE                                                             
  TAPE 93-24, SIDE A                                                           
  Number 001                                                                   
  SENATOR KELLY called  the Senate Labor and  Commerce meeting                 
  to order at 1:38 p.m. and announced SB 173 GROUP HEALTH INS.                 
                                                                               
                                                                               
  FOR SMALL EMPLOYERS to up for consideration.                                 
                                                                               
  SENATOR SALO asked what rates could be expected.                             
                                                                               
  SENATOR RIEGER said there  was no reason to expect  the cost                 
  for a smaller  employer to be different than the  cost for a                 
  large employer except, maybe for the administrative cost.                    
                                                                               
  Number 84                                                                    
                                                                               
  SENATOR LINCOLN asked why the department is neutral.                         
                                                                               
  KEN  SYKES,  Alaska  Division of  Insurance,  said  they are                 
  neutral  because  they haven't  received direction  from the                 
  Commissioner.  His  Division agrees with all  the amendments                 
  and the function which  the bill serves.   It is a  workable                 
  bill here in Alaska.                                                         
                                                                               
  SENATOR  KELLY asked for a  position paper from the Director                 
  of the Division of  Insurance.  MR. SYKES said  he would get                 
  it to the Committee.                                                         
                                                                               
  Number 101                                                                   
                                                                               
  SENATOR  RIEGER  moved to  pass SB  173 from  Committee with                 
  individual recommendations.  There were no objections and it                 
  was so ordered.                                                              
  SENATOR  KELLY  said   they  would  take  up   Jim  Carter's                 
  confirmation  to  the  Alaska  Public  Utilities  Commission                 
  (APUC).                                                                      
  The following is a verbatim excerpt which was requested.                     
                                                                               
  JIM CARTER                                                                   
                                                                               
  Good afternoon.                                                              
                                                                               
  SENATOR KELLY                                                                
                                                                               
  Mr.  Carter,  we  are  in  the  process  of  confirming your                 
  appointment  to  the  Alaska  Public  Utilities  Commission.                 
  Representative Phillips did want to say a few words.  If you                 
  would, please, Gail.                                                         
                                                                               
  SENATOR PHILLIPS                                                             
                                                                               
  I would just  like to give  a personal endorsement for  this                 
  appointment.  I have known Jim  Carter for many, many years.                 
  I've worked  with him  in many  different organizations  and                 
  activities on the Kenai Peninsula.  He is very knowledgeable                 
  about business.   He is  very knowledgeable about  utilities                 
  and energy issues and I would  make a wholehearted report of                 
  support for his appointment.                                                 
                                                                               
                                                                               
  SENATOR KELLY                                                                
                                                                               
  Mr. Carter, do  you want to make  a statement as to  why you                 
  believe you should be confirmed?                                             
                                                                               
  MR. CARTER                                                                   
                                                                               
  Thank you, Mr. Chairman, I think  that after being in Alaska                 
  for  about 47 years and being involved in various activities                 
  as  my resume'  shows.   I  was 32  years  with the  Federal                 
  Aviation  Administration  in  Anchorage   occupying  various                 
  positions  on up through  executive management.   I  think I                 
  have had exposure to many state issues.  I've also served as                 
  the wing commander  of a civil air patrol  for many years in                 
  settling up  to rescue in the  state back in  the late '50's                 
  and the early '60's.  My resume'  shows I also served as the                 
  president of the first RCAC, the Cook Inlet  RCAC, President                 
  of  that..and up through  last year.   I  have also  had the                 
  pleasure  of  serving as  president  of the  Kenai Peninsula                 
  caucus which is made  up of the Chambers of  Commerce of the                 
  Peninsula.                                                                   
                                                                               
  SENATOR KELLY                                                                
                                                                               
  O.K., Mr. Carter, I don't imagine with that resume' you'd be                 
  willing to serve on the legislative ethics committee instead                 
  of the public utilities?...                                                  
                                                                               
  MR. CARTER                                                                   
                                                                               
  I thought you already had that filled.                                       
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  Mr. Carter, I have several questions I would like  to ask if                 
  you don't mind. One  is in looking  at your resume' I  don't                 
  see  what  your  educational  background   is.    Could  you                 
  enlighten us please.                                                         
                                                                               
  MR. CARTER                                                                   
                                                                               
  Well, I'm a 12th grader, Senator.                                            
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  Mr. Carter, were  you made aware  that under a provision  of                 
  the qualification of members that the seat you're seeking to                 
  fill has  a requirement which is listed as, and I quote from                 
  that,  "one  member shall  be  a graduate  of  an accredited                 
  university with a major in  finance, accounting, or business                 
  administration?"                                                             
                                                                               
  MR. CARTER                                                                   
                                                                               
                                                                               
  Yes, I am and  I believe it goes on to  further explain that                 
  if you have 5  years of experience that it  would substitute                 
  for that qualification.                                                      
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  What   are   your  5   years   of  experience   that  you're                 
  substituting?                                                                
                                                                               
  MR. CARTER                                                                   
                                                                               
  I have 32 years with the Federal Aviation Administration.  I                 
  occupied  various management and executive positions.  Those                 
  that put together the  budget and financing for the  region,                 
  for  the traffic  control..finance  and  budgeting  for  the                 
  region.  In  addition to supervising  many people.  I  don't                 
  know if you have my resume' there or not...                                  
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  Yes, I do.                                                                   
                                                                               
  MR. CARTER                                                                   
                                                                               
  There's  a  one page  in itself  that explains  the business                 
  administration experience.                                                   
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  Mr. Carter, I'm  going to  have to look  up that  provision,                 
  again that's under the  law, because I wasn't aware  that it                 
  could be substituted.                                                        
                                                                               
  What is it  in your background  that you feel qualifies  you                 
  for a position on the APUC.                                                  
                                                                               
  MR. CARTER                                                                   
                                                                               
  In the background - the business administration  experience.                 
  I believe I fit, as you know, there are 5 commissioners..and                 
  2 of them  are consumer  related employments and  one is  an                 
  attorney,  one  is  an  engineer,  and  one  is  a  business                 
  administration.    So  I  represent   that  portion  of  the                 
  Commission requirements  set out  by statute...The  business                 
  administration background.                                                   
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  Could  you  tell  me what  you  know  about  the power  cost                 
  equalization  program  and  the  role  APUC  plays  in  that                 
  program?                                                                     
                                                                               
  MR. CARTER                                                                   
                                                                               
                                                                               
  I understand..I've been there  a few months, but let  me say                 
  that we  have presented to  us twice monthly  adjustments on                 
  the PCE that comes before us.  Of course, the aide  does the                 
  administration of  the finance and we do  the record keeping                 
  of determining  whether the various communities  are meeting                 
  their PCE requirement..if the power  equalization is too low                 
  or too high..and they come in to us  for adjustments of that                 
  PCE.   Ours is a  record keeping/administration part  of the                 
  PCE program.                                                                 
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  Do you support the PCE program?                                              
                                                                               
  MR. CARTER                                                                   
                                                                               
  Yes, I do.                                                                   
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  I  notice  that  in  your  resume'  that  you're  quoted  in                 
  there...in the synopsis you have a "selection of sights, and                 
  budgeting   and  allocation  of   millions  of  dollars  for                 
  construction  of  airports,  aviation,  communications,  air                 
  traffic   control   facilities,  housing,   and   hiring  of                 
  personnel, including Alaska natives"...could you tell me why                 
  you used that particular wording in your resume'?                            
                                                                               
  MR. CARTER                                                                   
  Why I used "Alaska natives?"                                                 
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  Right and hiring of personnel including Alaska natives..                     
                                                                               
  MR. CARTER                                                                   
                                                                               
  Well,  the reason I used that in  there is because there has                 
  always  been a concern  of government agencies  in hiring of                 
  native people.   And I think the  FAA has always had  a very                 
  good record of doing that and I chose to highlight  that for                 
  that reason..and I think in the air traffic control business                 
  we have extended the opportunity for the Alaska native folks                 
  to receive that training in Oklahoma  City and to become air                 
  traffic controllers and to advance in the FAA overall.                       
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  I have in the  packet a letter that  is dated February  16th                 
  from  Glenn Schrader  to  the Chair  of  LNC regarding  your                 
  wife's position as a member of the Board of Directors of the                 
  Homer  Electric  Association.    Do  you  see  this  as  any                 
  potential conflict and, if so, how do envision  handling it?                 
                                                                               
                                                                               
  MR. CARTER                                                                   
                                                                               
  Well, I don't see it as a conflict.  I believe history tells                 
  us that those  appointed to APUC  most everyone has gone  to                 
  the  Attorney  General  for  interpretation.   I  know  just                 
  talking  to  Susan Knowles  when  her husband  was  mayor of                 
  Anchorage she had  to abstain from participating  in certain                 
  dockets and  so I  also asked  the Attorney  General for  an                 
  interpretation and they have advised me...                                   
                                                                               
  SENATOR KELLY                                                                
                                                                               
  Mr. Carter,  we do  have a  copy of  the Attorney  General's                 
  opinion here  in front  of  us, so  we  know what  he  tells                 
  you..that there are  certain things  you can't  do, and  you                 
  have to be  careful of, but, in fact, you  don't violate the                 
  executive branch ethics act by serving on the APUC.                          
                                                                               
  MR. CARTER                                                                   
                                                                               
  That's correct.                                                              
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  Mr. Carter,  I'm reading from  the section  of the  statutes                 
  here now that talk about the actual experience equivalent to                 
  a degree and it reads, "actual  experience for a period of 5                 
  years  and  in  the  practice of  law  or  in  the  filed of                 
  engineering,  or   in   the  field   of  finance,   business                 
  administration, or  accounting is  equivalent to  a degree."                 
  Which portion of that do you see that you fall under?                        
                                                                               
  MR. CARTER                                                                   
                                                                               
  Business administration.                                                     
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  That you have had the experience for 5 years in the practice                 
  of business administration that would be the equivalent to a                 
  degree?                                                                      
                                                                               
  MR. CARTER                                                                   
                                                                               
  Yes, Mam.                                                                    
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  One final question I would have is if you could tell me what                 
  you feel your main duties and responsibilities would be as a                 
  member of the Alaska Public Utilities  Commission.                           
                                                                               
  MR. CARTER                                                                   
                                                                               
                                                                               
  Actually, it's pretty  well set  out  in  statute just  what                 
  we're to do  and not to do..and  I think there is  also some                 
  room  for collective  interpretation.  As  you know,  we are                 
  dealing  with  many  areas  in  the  utility  business,  the                 
  pipeline  business, water, sewer..Everyone that does on APUC                 
  that I've talked to and those that aren't  on there now have                 
  all  gone  through  a  tremendous  learning  process.    I'm                 
  certainly  no  exception to  that.    I think  that  with my                 
  executive background  and as  I proceed  to understand  more                 
  that I will be able to make some very excellent decisions on                 
  the APUC.                                                                    
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  Thank you, Mr. Carter, for answering my questions.                           
                                                                               
  SENATOR SALO                                                                 
                                                                               
  In  the Attorney  General's opinion regarding  the potential                 
  conflict of interest and which  votes from which you  should                 
  abstain, I thought the list was potentially fairly broad.  I                 
  note  on  here that  your term  on the  APUC would  be until                 
  October of  1998.  Can you tell what  your wife's term is on                 
  the Homer Electric Board.                                                    
                                                                               
  MR. CARTER                                                                   
                                                                               
  Sue's been  on  HEA for  about  14  years and  she  will  be                 
  finishing her last term now.  I think she has a little under                 
  or over  a year  to go..and  then  she will  not be  seeking                 
  reelection to HEA.                                                           
                                                                               
  SENATOR KELLY                                                                
                                                                               
  Thank you, Mr. Carter.                                                       
                                                                               
  Number 316                                                                   
  SENATOR KELLY announced  SB 91 MEDICAID COVERAGE  OF MIDWIFE                 
  SERVICES to be up for consideration.                                         
                                                                               
  MARILYN  HOLMES, Consumers  of  Midwifery,  said  she  chose                 
  midwifery from all of the options available to  her, because                 
  she thought it was the best care she could have.  She quoted                 
  an article from  REASON MAGAZINE that supported her view and                 
  which said midwifery is a wave of the future.                                
                                                                               
  MS. HOLMES  explained that  midwifery is  a sustained,  high                 
  quality,  individualized system  for birth.    It emphasizes                 
  health  for  the  mother.     She  noted  that  America  has                 
  shockingly high incidence of infant mortality.  She said use                 
  of this  method reduces health  care costs,  because of  the                 
  individualized   attention   and  because   the  traditional                 
                                                                               
                                                                               
  obstetric method forces a doctor, because of insurance, etc.                 
  to  use  technologies which  cost  a  lot and  lead  to more                 
  caesarians. Midwives have a caesarian section rate 50% - 70%                 
  lower   than   physician  attended   births   in  comparable                 
  populations.                                                                 
                                                                               
  SENATOR LEMAN, sponsor, said he would answer questions.                      
                                                                               
  SENATOR  SALO asked if  in the Senate  HESS Committee didn't                 
  they just put  direct entry midwives onto the medicaid list?                 
  The title of SB 91 said  they should reorder the priority of                 
  optional services.  SENATOR LEMAN  said that is correct  and                 
  this places the direct entry midwives first in case there is                 
  a  shortage of funds.   It doesn't  change any of  the other                 
  orders.  It doesn't bump anybody else.                                       
  Number 401                                                                   
  SALLY BYRNE, Kodiak,  supported SB 173.   Midwives encourage                 
  family  centered  childbearing   and  are  committed   to  a                 
  philosophy  of  nonintervention  during  birth,  within  the                 
  limits  of  safety.   Poverty  should  not be  a  barrier to                 
  quality health care.                                                         
  SUSAN KIGGINS,  Anchorage, supported SB  91.   She said  she                 
  would  like  the choice  to  decide  who  would deliver  her                 
  children and where.                                                          
                                                                               
  JAY (Indistinct), Anchorage, supported SB 91.                                
                                                                               
  SENATOR  SALO moved  to pass  CS SSSB91 from  Committee with                 
  individual recommendations.  There were no objections and it                 
  was so ordered.                                                              
  SENATOR KELLY announced  SB 174  EXEMPTING CAB DRIVERS  FROM                 
  EMPLOYMENT LAW to be up for consideration.                                   
                                                                               
  JOSH FINK, Aide for Senator Kelly, explained the legislation                 
  clarified  existing  statues  to  maintain  the  independent                 
  working conditions of taxicab drivers  who currently operate                 
  as  independent  contractors.    More  than 177  drivers  in                 
  Anchorage signed a petition requesting this  legislation and                 
  more than 300 drivers in Juneau and others.                                  
                                                                               
  WILLIAM COLBURN, Anchorage,supported SB 174.                                 
                                                                               
  JIM BRENNAN, Attorney representing a  group of permit owners                 
  and  operators  in  Anchorage, said  the  statutory  test of                 
  whether  one  is considered  an  employee or  an independent                 
  contractor for purposes  of the  Employment Security Act  is                 
  producing absurd results in this particular field of taxicab                 
  drivers.     Any   common  sense   interpretation  of   what                 
                                                                               
                                                                               
  constitutes an employer/employee relationship  has to assume                 
  that  the  so-called  employer  is  paying  a  wage  to  the                 
  employee.  This is not the case for the operators covered in                 
  this  bill.   This  is not  a  scheme to  try to  get around                 
  employer  requirements,  this  is a  situation  that  exists                 
  naturally, because  there is no  way an employer  could keep                 
  track of the amount of money a taxi driver makes.                            
                                                                               
  The Department of Labor's concern with  Section 5 is that it                 
  would  violate  the constitutional  prohibition  against ex-                 
  post  facto  clause.   He  said  that clause  has  only been                 
  applied to criminal  statute and this applies  to Employment                 
  Security.    He  said  there  is  nothing  wrong  with   the                 
  retrospective clause.                                                        
                                                                               
  SENATOR KELLY interrupted  Mr. Brennan  saying there were  a                 
  lot of people who wanted to  testify and asked him to remain                 
  on line so he could comment.                                                 
                                                                               
  ROBIN BIEBERDORF, Petersburg,  said he was concerned  if the                 
  bill  didn't pass, it  would severely  limit the  service to                 
  small areas all  over the state of Alaska.   It would either                 
  close his doors to have an employer/employee relationship or                 
  just about  double the  price of  a fare  around town.  It's                 
  important to have this  service around. They take care  of a                 
  lot  of seniors  and  other people  who couldn't  get around                 
  otherwise.                                                                   
                                                                               
  ROBERT GARRETT, King Cab Company  in Fairbanks, said his was                 
  the  second  company  in  Alaska  to  be   assessed  by  the                 
  Employment Security Division as having their drivers defined                 
  as employees.  This amounted to about $23,000 in back taxes.                 
  He didn't have control of the  driver's funds.  He said they                 
  have  employees mechanic,  managers, etc., but  the drivers,                 
  themselves work  on another type  of agreement.   They never                 
  pay the  drivers.   They get  their income  solely from  the                 
  public.                                                                      
                                                                               
  TAPE 93-24, SIDE B                                                           
  Number 561                                                                   
                                                                               
  KIRSTEN BOMENGEN, Department of Law, said she provides legal                 
  counsel to the Department of Labor.  She said there did seem                 
  to be a  problem with retrospective application.   Currently                 
  it  is   only  intended   to  apply   to  the   Unemployment                 
  Compensation Act.   The law may  be unclear.  She  presented                 
  some  instances a  court might  look at  in considering  the                 
  retrospective application on vested rights to cab drivers in                 
  similar circumstances.   She mainly wanted  them to see  how                 
  the court may construe the situations.                                       
                                                                               
  SENATOR KELLY  noted that  Terry Craemer,  Legislative Legal                 
  Services, said it is constitutionally sound.                                 
                                                                               
                                                                               
  The following is  a verbatim excerpt  that was requested  by                 
  the Committee.                                                               
                                                                               
  Number 520                                                                   
                                                                               
  SENATOR KELLY                                                                
                                                                               
  My understanding is  we're here today because  somebody from                 
  the Department of  Labor wrote a  letter and said you  folks                 
  were  now going  to be  covered under  workmen's  comp laws,                 
  unemployment law, etc.,  etc.   Is that person  in the  room                 
  today?                                                                       
                                                                               
  ARBE WILLIAMS, Special Assistant, Department of Labor                        
                                                                               
  We have Jim Coate here from Unemployment insurance.                          
                                                                               
  SENATOR KELLY                                                                
                                                                               
  O.K. Can  you explain  to us  today why  the Department  has                 
  taken this particular position.                                              
                                                                               
  JIM COATE, Department of Labor                                               
                                                                               
  I  can  only  speak  to  parts  of  the  bill  that  reflect                 
  unemployment insurance today.  In  terms of the Department's                 
  position on the bill,  the language that was referred  to by                 
  SENATOR LINCOLN only refers to the section 5 language.                       
                                                                               
  ....                                                                         
                                                                               
  SENATOR KELLY                                                                
                                                                               
  Nonetheless, there has been no change in statute in the last                 
  several years and  all of a sudden the DOL is asking them to                 
  change the way they make their computation.  What's changed?                 
                                                                               
  MR. COATE                                                                    
                                                                               
  It's not because of  a law change or any  particular change,                 
  but an issue  was raised  to the department  from a  company                 
  that caused an audit to occur on a taxicab in the  state and                 
  part  of  the argument  they  used  on appeal  was  that the                 
  Anchorage people  are doing it  this way,  why can't I.   In                 
  terms of fairness  that brought the Department to  the place                 
  where we have started an audit process for taxicab companies                 
  across the state  in order to make sure  we are dealing with                 
  folks fairly.                                                                
                                                                               
  ...                                                                          
                                                                               
  MR. COATE                                                                    
                                                                               
  The only other  comment I wanted  to add was the  Employment                 
                                                                               
                                                                               
  Security Act  itself is  there to  protect the employees  of                 
  this  state  and  so  when  considering  an  exception,  the                 
  consideration must  be  in the  light of  protection of  all                 
  employees.  There are  already exceptions in the law.   This                 
  would add an  additional one.   Most of the exceptions  that                 
  are  in  there   are  for  various  kinds   of  federal  and                 
  governmental kinds of  relationships and the other  one that                 
  sticks out  a  lot  are  the professional  real  estate  and                 
  insurance kinds of  people.   The only thought  I can  leave                 
  there is most of the time  those people are aware when  they                 
  take those  kinds of  jobs that  they don't  have rights  to                 
  these  particular benefits.    Personally,  when someone  is                 
  being  hired  as  a  cab  driver,  I'm not  sure  that  they                 
  understand  all  those   rights.    That's  only   for  your                 
  consideration.  That's all I've got to say.                                  
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  Are you speaking, then, for DOL?                                             
                                                                               
  MR. COATE                                                                    
                                                                               
  I'm speaking for the Employment Security Division.                           
                                                                               
  ...                                                                          
                                                                               
  Number 404                                                                   
                                                                               
  ARBE WILLIAMS                                                                
                                                                               
  My  name  is Arbe  Williams.  I'm Special  Assistant  to the                 
  Commissioner  of  Labor.   Our  position paper  reflects our                 
  concern that that is not clarified.   Part of the problem we                 
  understand here is  that the  Department of  Labor has  come                 
  into audits and investigations in response to the  laws that                 
  are on the books at this point.   If this body does not want                 
  us to investigate certain types of employees, want's to make                 
  clear to the Department that  certain types of employees are                 
  exempted from the provisions of the employment laws, then we                 
  need clear direction to that effect.  This  is just so there                 
  is no confusion at a later  date.  Providing clear direction                 
  to us  would be  making it  clear  that there  is a  written                 
  contractual relationship.  If that is  not in there, someone                 
  will come, and whether the law  says the people are eligible                 
  for  minimum  wage  or for  unemployment  insurance,  or for                 
  worker's comp coverage,  they will file a complaint with us,                 
  in any  case.  They  don't go to  the statutes first.   They                 
  come  to the Department  of Labor.   We have to  look at the                 
  law.  If the law  is unclear, we will have to go  in and try                 
  to determine if there  is a contractual arrangement.   If it                 
  is oral,  or if it  is in writing,  and we  do not have  the                 
  staff  or the  expertise  to  do  that.   So  we  will  find                 
  ourselves back in  the same situation  we are in right  now.                 
  That's  why just  to clarify  and  provide direction  to the                 
                                                                               
                                                                               
  Department, we've asked for  that amendment to be made.   If                 
  that is the wish of the body...                                              
                                                                               
  SENATOR KELLY                                                                
                                                                               
  I'm getting  the feeling that we  might be able to  reach an                 
  agreement on this bill.   If we can work with  staff and Mr.                 
  Coate and  Arbe and the  Commissioner, Mr.  Brennan and  Joe                 
  Hayes, the taxi  folk's representative, I think we  might be                 
  able to come back  with a committee substitute that  will be                 
  acceptable  to the  Department and  would take  care of  the                 
  problem...                                                                   
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  As I  understood from  you're earlier  statement... maybe  I                 
  misunderstood, Department of Labor did  not force going onto                 
  a  payroll.   Isn't  that  correct?    Wasn't Department  of                 
  Labor... Didn't I  hear you  all say that  this is  proposed                 
  that you haven't forced anybody to go on a payroll yet.                      
                                                                               
  MR. COATE                                                                    
                                                                               
  All  this   actually  occurs...  We  have   determined  that                 
  employee/employer   relationship   to   exist   in   certain                 
  instances, and I'm not up to speed on exactly what companies                 
  -  what details.   We  have made  a determination  in  a few                 
  instances at this point and we're  in the process of looking                 
  at   others   to   determine   if   that   employer/employee                 
  relationship exists,  an if  it does,  determining what  the                 
  wages would be and what the taxes do.                                        
                                                                               
  SENATOR KELLY                                                                
                                                                               
  So you're taking the companies one by one?                                   
                                                                               
  MR. COATE                                                                    
                                                                               
  Correct.                                                                     
                                                                               
  SENATOR KELLY                                                                
                                                                               
  ...and how do you determine the order in which you take 'em?                 
                                                                               
  MR. COATE                                                                    
                                                                               
  We have field tax offices in, except for S.E. Alaska, Kenai,                 
  Anchorage, and Fairbanks.  Each  of those field tax  offices                 
  is working  the companies  of  their particular  areas.   So                 
  there are several that are going on at the same time.                        
                                                                               
  SENATOR KELLY                                                                
                                                                               
  So there might  be companies that you've  already approached                 
                                                                               
                                                                               
  and here are your choices and  other that haven't heard from                 
  you yet but expect to.  They  don't give you a choice.  What                 
  do they say?                                                                 
                                                                               
  MR. COATE                                                                    
                                                                               
  We can't determine how they do their particular arrangements                 
  for payment.   But if we  determine, under the law,  if that                 
  relationship  exists,  under the  ABC  test that  we've been                 
  talking about,  then they're liable for  employment security                 
  taxes.  That's all that...                                                   
                                                                               
  REGINA DOYLE                                                                 
                                                                               
  I  can  only  speak  to  the  Anchorage district.    We  are                 
  currently under  investigation.   That  is  our  assumption.                 
  Twenty-two or more  drivers were subpoenaed... just  one day                 
  some  subpoenas came  out to  these  drivers asking  them to                 
  produce records  for the  prior year,  etc.   That is  still                 
  ongoing.  Then came subpoenas  to the dispatch companies for                 
  "check-in sheets" as  we commonly refer  to them.  You  know                 
  daily  logs as  to who  is working  and how  many days  they                 
  worked.  That is where we're  at right now.  We've heard  no                 
  more from them at this point.                                                
                                                                               
  SENATOR KELLY                                                                
                                                                               
  Who is spending the money to do this?  Department of Labor?                  
                                                                               
  MR. COATE                                                                    
                                                                               
  Yes.                                                                         
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  If this bill  should pass, you  would cease and desist  with                 
  what  you  are doing  right  now with  the employer/employee                 
  relationship?                                                                
                                                                               
  MR. COATE                                                                    
                                                                               
  This bill, as  I understand it, if  the relationship between                 
  the dispatch services  and the lessees and/or  drivers meets                 
  the  criteria  that's set  out in  the  bill, they  would be                 
  exempt  from our definition of wages which is the particular                 
  statute  we are dealing with.   If there are no wages, there                 
  is no relationship, there would be no taxes due.                             
                                                                               
  SENATOR KELLY                                                                
                                                                               
  What you're saying is if that were to come out in  the bill,                 
  that they still might  have problems with the IRS.   They're                 
  saying we don't have a problem with the IRS.                                 
                                                                               
                                                                               
  MR. COATE                                                                    
                                                                               
  I'm  not speaking to  whether there is  or is not  a problem                 
  with the IRS.   I don't know their  rules all that well.   I                 
  made up copies  of how  they make their  determinations.   I                 
  raise it  only as a  potential issue.   It happens  in every                 
  other case where a state passes a law that's more lenient or                 
  restrictive.  It depends on which  side you're looking at it                 
  from,  but where we  would exempt something  from wages that                 
  they, in fact,  call wages, then  the situation I  described                 
  occurs.                                                                      
                                                                               
  ...                                                                          
                                                                               
  MS. PUTNAM, Manager, Taku Taxi, Juneau                                       
                                                                               
  We are under  audit by this  Department and we are  awaiting                 
  the outcome of it which from what I know they are going back                 
  over the last two years and they're going to present us with                 
  this neat little bill.  In my opinion, we couldn't afford to                 
  run on an employer/employee relationship.                                    
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  I  don't  want to  see our  state  government become  such a                 
  bureaucracy that  the  mom  and  pop operations  go  out  of                 
  business.  That is not what the state of Alaska, or  some of                 
  us  anyway,  intend.     When   they  talk  about   economic                 
  development for our  state and  to promote that  is the  big                 
  theme of the last couple of years...I don't hear that coming                 
  from what's been going on here.   I'm not necessarily saying                 
  I'm for or against the bill, but it just seems to me that if                 
  this bill should pass, Mr. Chairman, DOL is going to look at                 
  it  a  little differently.   Certainly,  we should  have DOL                 
  cease and desist until we get  this bill resolved which will                 
  be done shortly, I'm sure.                                                   
                                                                               
  SENATOR KELLY                                                                
                                                                               
  I think what we ought to say is "lighten up."                                
                                                                               
  SENATOR LINCOLN                                                              
                                                                               
  I'm  worried  that  those individuals,  like  you  said, one                 
  individual in Ketchikan had to fold because of us being like                 
  a gestapo,  I guess, that  go out there to  investigate.  It                 
  just doesn't make  sense to me, Mr. Chairman.   I would hope                 
  DOL  does not..we are  cutting budgets  and it  doesn't make                 
  good sense to me  to have the state  out there spending  all                 
  this money unnecessarily.                                                    
                                                                               
  MR. COATE                                                                    
                                                                               
  I would just say the efforts  we have undertaken, while they                 
                                                                               
                                                                               
  seem  like,  and the  taxicabs,  in general,  are relatively                 
  small companies.   The fact  that we have tried  to make the                 
  playing ground equal..if we make  this kind of determination                 
  on one  company, is it fair,  really, to stop  at that point                 
  and not take  a look  at some of  the others.   Particularly                 
  when one  company, in  testimony before  our appeals,  named                 
  another  company and said  they are doing it  that way.  Our                 
  decision was to  start on this process.  Once we can work on                 
  and figure out,  because I don't  have good knowledge and  I                 
  will need our  Department of Law person on the retroactivity                 
  portion of  this bill..which  I'm not  sure anybody  totally                 
  understands  at this point..I  could give  you an  answer on                 
  when we would  stop, but  it might be  that this  definition                 
  doesn't go  into effect until the bill becomes effective and                 
  so  there might  be payments due  up until that  point.  And                 
  that's what we need to work on, I guess.                                     
                                                                               
  TAPE 93-25, SIDE A                                                           
  Number 001                                                                   
                                                                               
  BART LAIR, Workers Compensation Board,  said they have found                 
  sometimes that taxi drivers are employees.                                   
                                                                               
  SENATOR KELLY  asked if they passed  legislation delineating                 
  employee  and  contractor,   would  Workmen's   Compensation                 
  recognize  that?   MR.  LAIR said  that  was correct.   This                 
  legislation would  change the  way they operate.   It  would                 
  exempt taxicab drivers from being employees under their Act.                 
                                                                               
  JOHN HIBBERT, Alaska  Cab in Kenai/Anchorage, has  about 140                 
  employees most of whom are for this bill.                                    
                                                                               
  SENATOR KELLY  said they needed  to make the  definitions of                 
  employee and contractor a little more clear.                                 
                                                                               
  MR. HIBBERT said he asked the IRS about this issue and  they                 
  said if they ran  their business like the ones  in Anchorage                 
  there   would  be   no   problem.     There   would  be   no                 
  employer/employee relationship.  He noted that fishermen are                 
  exempt from the Wage and Hour Act and Worker's Compensation,                 
  too.                                                                         
  SENATOR KELLY said  they would work on the bill and bring it                 
  before  the  committee  at another  time  and  adjourned the                 
  meeting at 3:15 p.m.                                                         
                                                                               

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