HB 377-VOLUNTEER AMATEUR SPORTS OFFICIALS  1:55:03 PM CHAIR PASKVAN announced HB 377 to be up for consideration. 1:55:08 PM REPRESENTATIVE BILL STOLTZE, sponsor of HB 377, introduced himself. He said this issue was brought to him by folks active in both Southcentral and Interior youth sports activities facing the prospect of finding themselves in a unique situation of becoming something they didn't realize - direct employers. The problem arises out of enforcement by the Alaska Department of Labor and Workforce Development (DOLWD) to protect workers from manipulation and by strictures of the federal government on employee exemptions for volunteer work as sports officials. 1:56:27 PM SENATOR BUNDE joined the committee. REPRESENTATIVE STOLTZE said his intent is to bring forth a vehicle that provides for as much latitude for these volunteer organizations, which are basically scraping by to just keep kids on the ice or on the soccer fields and providing the basic scoring and officiating that is needed, without the having the responsibilities of unemployment tax. The federal government provides a $1500 exemption for volunteer activities that have some compensation. It is not a wage, but rather a stipend or a per diem type of compensation. He preferred a broader approach, but his hands are tied by the federal law. He said that many Alaskans are involved in youth sports; so this is an important issue. He said the Alaska School Activities Association (ASAA) is the main entity that brought this forward and it has avalanched into other folks presenting their interests. 1:59:46 PM MORGAN HOBSON, staff to Representative Stoltze, said the intent of the bill is not to help folks who referee as a full time job, but to help people who volunteer their time at local sporting events and receive money to cover incidentals such as food and travel. These volunteers cover many of their own expenses including training, certification, costs associated with their officials organizations, uniforms, and this job is performed purely as an avocation for the sake of community sports. This measure would only apply to volunteers who receive less than $1500 cumulatively per year over all sports they are involved with as well as supporting organizations. This amount cannot be raised, although many people have testified that it would be beneficial to have a higher amount. But the state would lose funding for unemployment insurance if that amount was raised. Sports officials, whether they are volunteers or amateurs cannot be entirely exempted from unemployment insurance, but this gives leeway to help folks who do this for several games in the summer or who help out with a son or daughter's sport event. 2:01:40 PM SENATOR BUNDE said he received several communications from people supporting this issue, but nothing from people opposing it and he wanted to know if there is any opposition. MS. HOBSON replied that the only concerns they have heard are from folks who want a higher limit, but after looking into that they found it is not a possibility. REPRESENTATIVE STOLTZE added that the opposition has been in legal form from the federal government. SENATOR BUNDE asked if these various groups have liability insurance that would cover injuries. MS. HOBSON answered that workers' compensation would be totally outside of this. REPRESENTATIVE STOLTZE added that ASAA carries workers' compensation insurance, but he would leave that to them to testify about. 2:03:40 PM CHAIR PASKVAN asked if it is possible for one of these officials to receive unemployment insurance, and if so, under what conditions. SENATOR JOE THOMAS asked relative to the $1500 cap for compensation, would it be a good idea to consider the soccer association or whatever as the employer so they can fill out some kind of contract acknowledging that they are a volunteer, and setting out standards to eliminate confusion at a later date. REPRESENTATIVE STOLTZE replied that these people are not employees of the school districts or associations. They are usually dispatched through an official's association. They do it for love of the sport and to stay involved. 2:06:23 PM SENATOR KEVIN MEYER joined the committee. 2:06:31 PM SENATOR BUNDE said he is all in favor of the bill, but sometimes the push back from people who do activities like this for a living is that their opportunity to make a living is being undercut. His comment earlier was if they were full-time employees there would be some workers' compensation involved if there was an injury. What kind of liability coverage do these part time workers have? PAULA SCAVERA, legislative liaison, Alaska Department of Labor and Workforce Development (DOLWD), said that she asked this question of the workers' compensation division and she was told that volunteers are volunteers and they are exempt from workers' compensation laws. SENATOR BUNDE said that is a little part of his problem. It's a contradiction in terms. How can someone get paid for volunteering? MS. SCAVERA replied that these are not considered wages - they get their uniform cleaned or they get reimbursed for a new rule book. Language on page 7 of HB 377 says that volunteer work means "work for which compensation does not exceed and is paid only to defray or reimburse the reasonable food, travel, and incidental expenses the person occurs in order to perform the work." The word "wages" isn't there. SENATOR BUNDE said he is more familiar with it being labeled as an honorarium. MS. SCAVARA stated that she wasn't a drafting attorney and that is the way it was drafted. 2:09:17 PM CHAIR PASKVAN asked if they are exempted, could they still be covered under Unemployment Insurance. BILL CRAEMER, Chief, Unemployment Insurance, Department of Labor and Workforce Development (DOLWD), answered if someone has covered wages in the system and then they file an unemployment claim they could draw unemployment benefits based on those wages. Reimbursement for expenses - uniforms and travel, for instance - are not considered wages. They are not taxed and they wouldn't help someone qualify for a claim. 2:10:46 PM RICHARD WISENEN, certified USA Hockey official, Kenai, Alaska, said he is also a certified National Federation high school hockey official, a volunteer local supervisor and a trainer for USA Hockey that trains hockey officials. He also sits on the board of directors for their local hockey referee association. He said they need to avoid any unintended consequences of passing any bill, and if this bill passes it won't alleviate the current problem that is forcing sport programs to cut back due to the increased cost of obtaining officials for the games. In the case of the Hockey Referee Association, they supply official for everything from youth hockey to varsity junior varsity at the high school level and adult leagues. If they have to charge each group the extra fees to cover unemployment and workers' compensation for these games it will be even more expensive for the programs. He said the $1500 cap only adds confusion. Any time a referee is assigned a game he has to charge the league for those fees and might have no idea which person that is going to bid for the job will be able to pass that threshold in their year. Their officials' contracts, which were drawn up with the help of an attorney, include the statement that they are working for the association as independent contractors and as such no workers' compensation or unemployment needs to be withheld. His association pays $35,000 - $40,000 a year to approximately 50 different officials. With these regulations, they are thinking about hiring an accountant that would add an extra $10,000 to the fees they have to charge the association. Currently a volunteer treasurer handles this as an independent contractor. He said a number of young people officiate at boys and girls soccer as well as the hockey program, and many are beyond the $1500 threshold. Most states he has worked in treat officials as independent contractors and thus avoid this dilemma completely. They would be better served providing an exemption under AS 23.10.055 where 17 other exemptions for the Employment Security Act reside rather than forward HB 377. He suggested using language saying that "anyone officiating amateur sports where they are compensated on a per game basis" and that would eliminate the problem they are facing. Sports programs are already very costly, but they are important to the welfare and health of our communities. They are trying to help the kids out. 2:15:01 PM REPRESENTATIVE STOLTZE commented that he prefers an exemption as well, but this is what the Department of Labor says the feds will allow. It's not as simple as what the gentleman from Kenai stated. The path in SB 377 will meet the legal test. SENATOR BUNDE said previous testimony indicated that volunteers were part of an organization. His conception is that a lot of these teams are not hiring out of a main hall; they're getting their volunteer workers from an informal group locally. REPRESENTATIVE STOLTZE responded that some of the more organized sports generally have an a bigger more sophisticated official's association like USA Hockey that that has expenses. It makes the operation of a local summer soccer league pale in comparison. This issue is difficult, he said, and HB 377 won't help everybody, but it will provide relief for many. He would have preferred an exemption, but he didn't want to open other doors and provide abuse of contract employees. He said it's frustrating because their hands are tied at a level far beyond the borders of our state. 2:19:32 PM MS. SCAVERA added that she helped Representative Stoltze's office send four different bill versions to the US Department of Labor (USDOL) to see what would pass. Then they looked at what other states tried to do and found this. USS Code 26.33.09 says non profits and government entities cannot exempt employees totally from the Unemployment Insurance Act. One of the drafts tried the exclusion and USDOL said no. 2:21:30 PM SENATOR THOMAS said he was a little confused about what they are actually considering. They talked about volunteers in the bill, yet some of the attached information doesn't talk about volunteers at all, but rather people in two different classifications that are independent contractors or employees. Is that what is confusing the situation? Is workers' compensation the issue they are looking at? MS. SCAVERA said she hadn't read the article he was referring to, but she knew there was a difference between independent contractors and volunteers. This bill is just about volunteers; it has nothing to do with the relationship of contractors and independent contractors. Since December she had been talking to people from other states that are trying to do the same thing, and some of them have gone to an independent contractor situation and later had those struck down by the USDOL. SENATOR THOMAS asked if there is a way to solve the situation that was brought to them by Mr. Wisenen short of where they are. His concern seemed to be paying the individuals and somehow keeping track of the pay and when a person hits the $1500 cap. Is that your understanding of the problem? 2:24:34 PM MR. CRAEMER answered that the federal law is very clear that wages of sports officials working for non-profit organizations may not be exempted from being covered under the Unemployment Insurance Program. The federal statute tries to be very inclusive to provide coverage for workers; so they want the wages included. They specifically say they may not be exempted because of being for a nonprofit organization. The question about employees versus independent contractors gets complicated fairly quickly. Alaska statute is very clear on it. To meet the level of independent contractor is a pretty difficult test. He said he understands that HB 377 clarifies that reimbursement for incurred expenses should not be reported as covered wages. SENATOR THOMAS said he didn't see this reimbursement up to $1500 as wages, and he thought this bill was the best solution they could find. MS. SCAVERA said this bill was for those people who have actually tried to referee a soccer game once, to reimburse them for gas or meals, a uniform or studying the rules. They aren't wages whatsoever. It's to help reimburse the "mom and pop" organizations. She said she has a friend who goes through a couple of uniforms a year officiating kids' basketball games - kids bleed on his shirt and things like that. So he can put in to be reimbursed for his uniform. CHAIR PASKVAN stated he thought Representative Stoltze indicated it very well when he said this is not a solution for everyone. Federal law does not allow a broader solution. This is the best that can be done. 2:29:33 PM SENATOR BETTYE DAVIS said she thought the Department of Law was on line and wanted to know if they had something to add. No one from the department was on line, so they moved on. 2:30:02 PM SENATOR THOMAS moved to report HB 377 from committee with individual recommendations and attached zero fiscal note(s). There were no objections and it was so ordered. 2:30:31 PM CHAIR PASKVAN announced an at ease from 2:30 to 2:32 p.m.