Legislature(1993 - 1994)
03/30/1993 01:38 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.