HB 277: "An Act relating to public employers defending and indemnifying public employees with respect to claims arising out of conduct that is within the scope of employment."

00HOUSE BILL NO. 277 01 "An Act relating to public employers defending and indemnifying public employees 02 with respect to claims arising out of conduct that is within the scope of 03 employment." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 39.90 is amended by adding a new section to read: 06  Sec. 39.90.160. DEFENSE AND INDEMNIFICATION OF EMPLOYEES. 07 (a) Unless a collective bargaining agreement that covers the employee includes a 08 provision for defense and indemnification, a public employer shall provide legal 09 defense of claims against, and pay settlements and judgments including attorney fees 10 and costs entered against, a public employee when the claims, settlements, or 11 judgments are based on acts or omissions that occurred during the course and within 12 the scope of the employee's employment with the public employer. 13  (b) A public employer's obligation to defend and indemnify an employee 14 under (a) of this section arises only if

01  (1) the employee notifies the public employer in writing, in the manner 02 required by the employer, within 10 days after receipt of a claim, demand, or suit, 03 unless there is good cause for the employee's failure to provide timely or proper notice 04 and the employer has not been materially prejudiced; 05  (2) the employee makes a good faith effort to cooperate in the defense 06 of the claim or action; and 07  (3) the act or omission was not a result of gross negligence or 08 intentional or wilful misconduct on the part of the employee. 09  (c) A public employer may not, based solely on an allegation of gross 10 negligence or intentional or wilful misconduct made by a party other than the public 11 employer, withhold legal defense in a civil action. 12  (d) If a public employer refuses to provide legal defense for an employee, the 13 employer shall provide the employee with written notice of this decision. The notice 14 must include a copy of this section. An employee whose employer refuses to provide 15 legal defense under this section may file an action for declaratory relief in superior 16 court. The employee must file the action for declaratory relief within 30 days after the 17 employee received a written notice of refusal to defend from the employer. 18  (e) If a public employer denies indemnification to an employee in an action 19 in which the plaintiff has named the public employer and the employee as parties to 20 the action and from which the public employer has not been dismissed, the employee's 21 exclusive remedy is to bring a cross-claim for indemnification against the employer. 22  (f) If a public employer denies indemnification to an employee in an action 23 in which the plaintiff has not named the employer as a party or, if the employer was 24 made a party and has been dismissed, the employee's exclusive remedy is to bring an 25 action for indemnification against the employer. Notwithstanding any other provision 26 of law, the employee 27  (1) must bring the action for indemnification under this subsection not 28 later than one year after the execution of a written agreement settling the underlying 29 claim or action against the employee or the entry of the final judgment against the 30 employee; 31  (2) may not bring the action under this subsection before the

01 employee's liability in the case has been determined. 02  (g) A public employer does not have an obligation under this section to 03  (1) pay an award of punitive damages entered against an employee; 04  (2) defend or indemnify an employee in a 05  (A) disciplinary, administrative, or criminal action brought 06 against the employee or in an appeal from a disciplinary, administrative, or 07 criminal action; or 08  (B) civil action based on conduct for which the employee has 09 been convicted of a criminal offense or terminated from employment by the 10 public employer. 11  (h) A public employer may adopt an internal policy or enter into an agreement 12 with an employee that requires the employer to defend or indemnify the employee or 13 pay punitive damages in circumstances in which the employer would not otherwise 14 have an obligation to do so. 15  (i) A public employer is not required to provide legal defense or 16 indemnification to a public employee who settled or compromised a claim or action 17 before requesting the public employer to provide legal defense or indemnification. If 18 the employer denies a request for legal defense, the employee may settle without the 19 employer's consent and may seek indemnification under (e) or (f) of this section. An 20 employee on whose behalf a public employer has undertaken representation under this 21 section may not settle the claim brought against the employee unless the public 22 employer approves the settlement. 23  (j) A public employer may provide legal defense while contesting the 24 obligation to indemnify an employee. A public employer who has defended an 25 employee may bring an action against the employee for expenses incurred in the 26 defense if the trier of fact found that the employee's conduct was not within the course 27 or scope of employment. The action for expenses under this subsection must be 28 brought not later than one year after the execution of a written agreement settling the 29 underlying claim or action or entry of the final judgment in the action. Defense or 30 indemnification provided to a public employee under this section does not constitute 31 a waiver, limitation, or expansion of sovereign immunity or of other immunity.

01  (k) In this section, 02  (1) "employee" or "public employee" means a person who performs a 03 service for wages or other remuneration under a contract of hire, written or oral, 04 express or implied, for a public employer and includes a member of a board or 05 commission established by the employer; "employee" or "public employee" does not 06 include an independent contractor; 07  (2) "employer" or "public employer" means the state, a public or 08 quasi-public corporation or authority established by state law, and a political 09 subdivision of the state including a municipality and a public or quasi-public 10 corporation established by a municipality; however, "employer" or "public employer" 11 does not include the University of Alaska, a school district, or a rural educational 12 attendance area.