Legislature(1995 - 1996)
05/03/1995 09:14 AM Senate JUD
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 237 WORKERS' COMPENSATION AMENDMENTS
CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to
order at 9:14 a.m. The committee took up SCS CSHB 237 (L&C).
KEVIN DOUGHERTY, co-chair of the Ad Hoc Committee, and a member of
the Workers' Compensation Committee since 1981, testified HB 237
represents a joint effort between labor and management members of
the committee. He urged the committee's support of the bill.
WILLIE VON HEMERT, co-chair of the Ad Hoc Committee, discussed his
background. He stated SCS CSHB 237 (L&C) is essentially the same
as SB 140, with the following three exceptions. A House amendment
adopted on the floor presented problems and was removed by the
Senate Labor and Commerce Committee. The second change also made
by the Senate Labor and Commerce Committee, pertains to the method
of calculating expendable wages, for seasonal and temporary workers
new to the workforce. The third change is a narrower definition of
"seasonal." The Ad Hoc Committee supported all three changes. He
reiterated Mr. Dougherty's statement about the hard work done by
both labor and management to make this bill a fair compromise.
Number 102
NOEL LOWE, legislative aide to Rep. Sanders, a member of the House
Labor and Commerce Committee, gave the following testimony. Rep.
Sanders is concerned with subsection 7 on page 6, line 23. The
Representative sought opinions from Legal Services and the Director
of Workers' Compensation on the language. The legal opinion states
that if the employee does not disclose, or if the employer is not
aware, of multiple employment prior to an injury, then the employer
liable for workers' compensation benefits does not have to take
into account the wages from both jobs, to calculate the benefit.
Representative Sanders is concerned that employees may lose a job
if they disclose that they have additional jobs.
Number 136
SENATOR TAYLOR noted Senator Adams will be offering an amendment to
change subsection 7. He asked if this provision exists under
current law.
MR. LOWE replied it is a change from current law. SENATOR TAYLOR
clarified existing law requires the employee to notify employers of
other employment. He believed this proposed change would give the
employee with multiple jobs a larger income base from which
benefits would be calculated if injured. If a person earned
$20,000 per year driving a delivery van, and $40,000 per year as a
longshoreman, and is injured while driving the delivery van, the
workers' compensation benefit would take into account the wages
lost from both jobs. He felt both employers would need to know
about the other employment in order to make adequate benefit
payments.
MR. LOWE commented it is Rep. Sanders' opinion, that under current
law, regardless of whether or not employer A is aware of employer
B, the wages from employer B are being used to determine weekly
gross income. The employee is receiving worker compensation
benefits based on both incomes. Rep. Sanders' concern is that
requiring employees to notify employers of other employment may
prompt an employer to dismiss the employee for several reasons,
notably the assumption the employee's job performance will
diminish.
Number 190
SENATOR ADAMS indicated the amendment would keep current practice
in place by eliminating the proposed requirement of employer
notification.
SENATOR GREEN asked what specifically requires employer
notification in lines 23-26, since the language reads if the
employer is aware.
SENATOR TAYLOR remarked subsection 7 acts as a penalty so that if
an employee failed to notify the employer, the employee could not
collect benefits based on other employment. SENATOR GREEN stated
the subsection does not specifically require notification.
Number 210
MR. LOWE added if an employee was injured on a job, and had not
notified the employer of other employment, the benefit would be
limited to the income earned on the job where injured.
SENATOR ADAMS moved amendment #3 (there was no objection to moving
the amendments out of numerical order). SENATORS GREEN and MILLER
objected.
PAUL GROSSI, Director of the Division of Workers' Compensation,
testified. He was uncertain as to whether the removal of
subsection 7 would require an employer to consider all wages when
determining the workers' compensation benefit amount. Under
current law, the benefit is based on two historical years, not on
wages at the time of injury. The bill keys everything in to wages
at the time of injury. He was uncertain whether multiple earnings
would be included without language specifying that intent. He
expressed concern that by deleting subsection 7 the possibility of
including multiple earnings might be eliminated.
Number 244
SENATOR TAYLOR agreed the deletion of subsection 7 might prevent
multiple earnings from being used in the benefit calculation
because of the contents of the rest of the bill. He noted the
purpose is to not force people into disclosure when it might
jeopardize their employment, yet they might be jeopardizing the
benefit package they would receive should they fail to do so. The
subsection does not mandate any form or type of requirement for
notification. The question would then become a factual one before
the worker's compensation board, as to whether the employer had
knowledge of other employment.
MR. GROSSI commented the burden of proof would fall on the employer
to prove he/she did not have knowledge.
Number 270
MR. LOWE suggested a conceptual amendment to the amendment that
would state that when an employee works under concurrent contract
with two or more employers, the employee's earnings from all
employers is considered as if earned from the employer liable for
compensation. [Delete "and the employer liable for compensation
has knowledge of the dual employment before the injury" from
subsection 7.] He stated regardless of the vagueness of the
paragraph, that language would still permit the employee to have
benefits based on multiple jobs, without notifying the employer.
Number 294
SENATOR ADAMS asked Mr. Grossi's position on the amendment proposed
by Mr. Lowe. MR. GROSSI replied the Department of Labor did not
have a position on that amendment at this time.
SENATOR ADAMS asked Senator Taylor if he intended to hold the bill
for a week for further review. SENATOR TAYLOR responded that was
not his intention and that he planned to move it out since both
chambers were quickly drawing to a close.
SENATOR GREEN asked Senator Adams why he was offering the
amendment. SENATOR ADAMS replied he was concerned that people
working two jobs might be terminated if the employer found out, and
that many people cannot make ends meet without working two jobs.
SENATOR TAYLOR felt the Ad Hoc Committee must have been concerned
on the part of employers about how to calculate the base for risk.
He assumed that would have to be based upon some knowledge of the
exposure of an employee. He illustrated his point by saying if
McDonald's has four employees who are working in other jobs that
pay a great deal more, but are injured while at McDonald's,
McDonald's would be hit with a much higher rate of compensation
that has to be paid than what their carrier contemplated paying.
KEVIN DOUGHERTY informed the committee there is a model, known as
the Uniform Act, which is used by many states and was cited by the
Supreme Court in the Gilmore decision. The bill is based on that
Act. The Ad Hoc Committee discussed the fact that having knowledge
is a much lower standard than employee notification, whether formal
or informal, and that the employer would have to project benefit
costs. He was unsure whether the Uniform Act contained a rationale
for the provision.
Number 351
MR. VON HEMERT commented the two-year "look back" approach used by
the Division of Workers' Compensation seemed like a very fair
approach in most cases, and Alaska was one of the few states that
used it. The model language contained a 13 week "look back"
period, and the majority of the courts and people who deal with
this issue believe that basing benefits on immediate wages is the
fairest way to apply workers' compensation benefits, which is the
premise of the bill. He believed that eliminating subsection 7
would hinder the process. Making notification mandatory would have
an impact on the rating system for workers' compensation benefits,
and rates would increase.
Number 374
SENATOR ADAMS repeated his intent for proposing the amendment was
to enable people who have to work two jobs to do so. He did not
want employers to be able to dismiss an employee because the
employer feels there is additional risk or a conflict. He asked if
there was any opposition to working on the amendment to the
amendment as follows:
(7) when the employee is working under concurrent
contracts with two or more employers and the employees
earnings from all employers is considered as if earned from
the employer liable for compensation;
SENATOR ADAMS stated he was merely trying to protect Alaska workers
who have two jobs. He asked why it is taking so long for the
Division to respond to this suggestion.
MR. GROSSI answered the Division studied the bill without the
amendment, therefore had no time to consider it. He noted Senator
Taylor's concern about calculating compensation premiums is part of
the problem.
Number 396
SENATOR ELLIS noted requests to hold the bill for one week, then
three days, were denied. He asked if the Chairman would consider
holding the bill for one day so that the Division could review it.
SENATOR ADAMS asked if the bill could be held until the 1:30 p.m.
meeting. SENATOR TAYLOR stated that would create difficulties as
far as reading it over to the Rules Committee.
MR. LOWE agreed with Mr. Von Hemert's assessment that this might
result in an adjustment in unemployment insurance. Conversely, if
there is no amendment, such as the one proposed, it is guaranteed
that a lot of low income Alaskans will lose jobs, and will need
public assistance.
SENATOR TAYLOR noted there was objection to the motion to adopt the
amendment proposed by Senator Adams. The motion passed with
Senators Green, Ellis, and Adams, voting "yea," and Senators Miller
and Taylor voting "nay."
DAVE HUTCHENS, Executive Director of the Alaska Rural Electric Coop
Association, testified on behalf of most of the electric utilities
in the state, and the ARECA insurance exchange which insures many
of the electric utilities. ARECA supports the bill as it is a
reasonable package that compromises the interests at play. He
stated from ARECA's perspective, the most important section is
Section 12. ARECA has an extensive safety program, financed by the
insurance operation, but it has become much less effective over the
years because of the Van Bien decision. ARECA has been hopeful
this bill would address that issue. He believed the workers'
compensation programs needs many corrections, and that HB 237
should be passed this session, and another bill should be
introduced next session to deal with other issues.
Number 450
SENATOR TAYLOR moved the adoption of amendment #1 (Ford, 5/2/95).
Amendment #1 slides the effective date back six months on the
provision of benefit payments. The Ad Hoc Committee failed to take
into consideration that many people in the construction industry
already entered into their contracts for this summer season. Many
of those contracts are dependent on the total cost of workers'
compensation coverage. If the effective date takes place in July,
a major shift in benefits will occur halfway through the
construction season, and a surcharge will be charged. The
amendment will allow carriers and employers to negotiate a fair
rate that everyone can be advised of before entering into contracts
for the next construction season.
There being no objection to amendment #1, the motion carried.
SENATOR TAYLOR moved amendment #2. The purpose of amendment #2 is
to provide simple and definitive language for injuries that occur
at remote camp sites or remote job sites where that injury occurs
outside the normal work pattern. If, in fact, one is working seven
days per week, 12 hours per day for ARCO on the North Slope, and
staying within a confined building, that employee is obviously
still on the work site. In Southeast Alaska, where people live at
remote sites, and literally live there for years, such as Thorne
Bay which is a city, people reside year round. Pursuant to an
earlier decision, all recreational activities are required to be
covered on remote sites under the workers' compensation law. This
problem predates Van Bien, and each of the other cases discussed
today.
SENATOR ELLIS objected to the motion to adopt amendment #2.
Number 488
MICHAEL HINCHEN, general manager and comptroller of the Alaska
Timber Insurance Exchange, testified from Ketchikan. The remote
site issue is one the timber industry feels strongly about because
of the remote locations of many logging camps. Most employers
involved in the industry provide off-work coverage for their
employees in the form of health insurance. In situations where an
employee is injured off the job, that coverage should be relied on,
rather than workers' compensation. One of the problems that has
resulted from remote site liability is the restriction of personal
freedom for workers that work at the camps. The employer, fearing
the possibility of injury while not working, restricts the
activities of employees.
Number 512
SENATOR TAYLOR asked if rates have been impacted. MR. HINCHEN
replied the bill would help lower rates. He noted an employee who
broke his back on a rope swing was considered to be compensable
under the Workers' Compensation Act because the accident occurred
on a worksite.
SENATOR ADAMS asked Mr. Hinchen his definition of a remote job
site. MR. HINCHEN answered a remote site is one that does not have
road access to an incorporated town. SENATOR ADAMS asked Mr.
Hinchen if he would be amenable to an amendment that says, "a
remote job site not near a community." MR. HINCHEN expressed
concern that such language would leave too much room for
interpretation because of the word "near," since a town could be 10
miles away with no road access, or 100 miles away with road access.
Number 537
MR. GROSSI noted the department would have some concerns with such
an amendment. The remote site rule was adopted because there is
increased risk in remote sites. Although employees might be
injured while not working, they would not be under those risks
except for that employment, and would be home in a safer
environment.
A roll call vote was taken on the motion to adopt amendment #2.
The motion passed with Senators Taylor, Green, and Miller voting
"yea," and Senators Ellis and Adams voting "nay."
Number 555
SENATOR ADAMS referred to a letter to committee members from
committee staff regarding Section 9, subsection 10. He asked if
anyone was available to testify on that section and the effect that
language might have on the disabled.
MR. GROSSI explained that provision has to do with permanent or
long term disability cases. If the wages calculated under Sections
1-7 don't fairly calculate the employee's earning capacity is, the
employee can appeal to the board for a change in the compensation
rate, and vice versa, the employer would have the same right.
SENATOR ADAMS asked what would happen if Section 10 was eliminated.
MR. GROSSI replied the right to an appeal would not be available.
TAPE 95-28, SIDE B
SENATOR TAYLOR asked if this provision works as a "catch all" in
case the formula calculation does not fit. MR. GROSSI stated it
does, but only for permanent or long term disability cases.
SENATOR TAYLOR commented Senator Adams' concern is that it is
limited to permanent or long term disability cases and should be
available to others.
SENATOR ADAMS commented he brought it to the attention of the
committee in case an amendment is offered to change that section.
SENATOR MILLER moved CSHB 237 (JUD) out of committee with
individual recommendations. SENATOR ADAMS objected and stated he
has not had a chance to review this bill in light of tort reform
and several Alaska Supreme Court cases. He stated he was objecting
because moving the bill is premature since tort reform hearings
will be held this summer.
A roll call vote was taken. Senators Taylor, Green, and Miller
voted "yea," and Senators Ellis and Adams voted "nay," therefore
the motion carried.
| Document Name | Date/Time | Subjects |
|---|