Legislature(2015 - 2016)BELTZ 105 (TSBldg)
03/19/2015 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearings | |
| SB58 | |
| SB71 | |
| SB2 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 58 | TELECONFERENCED | |
| *+ | SB 2 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| = | SB 71 | ||
SB 58-TRANSPORT NETWORK SVES. & WORKERS COMP
1:36:31 PM
CHAIR COSTELLO announced the consideration of SB 58. "An Act
relating to workers' compensation and transportation network
companies; and providing for an effective date."
1:37:10 PM
SENATOR BILL STOLTZE, speaking as chair of the Senate State
Affairs Committee, said he introduced SB 58 by request. He spoke
to the following sponsor statement:
Senate Bill 58 establishes a workers' compensation
exemption for individuals who operate a motor vehicle
under a service agreement with a transportation
network company.
Recently emerging in Alaska, transportation network
companies provide services by connecting passengers to
drivers through a digital network, commonly in the
form of a mobile device application.
Currently, taxi companies are allowed an exemption
from the Workers' Compensation Act, which creates an
unfair advantage over transportation network
companies. Senate Bill 58 is intended to provide equal
treatment between taxis and transportation network
companies.
The communities of Chugiak and Eagle River have
desperately sought transportation options without
success. Hopefully, this small piece of the solution
will allow municipalities, including Anchorage, the
ability to facilitate unmet transportation needs for
all Alaskans.
SENATOR STOLTZE related that horse carriage drivers are
disadvantaged by current law and he'd like that to be added to
the bill.
1:42:47 PM
CHAIR COSTELLO noted the supporting letter in the packets from
legislators in the greater Anchorage area.
SENATOR GIESSEL asked him to comment on the lack of
transportation services in other areas of the municipality. She
said Eagle River and Girdwood come to mine.
SENATOR STOLTZE confirmed that there is an issue in Girdwood.
People are willing to pay for transportation services but the
industry isn't responsive. This is an effort to remove some of
the obstacles.
SENATOR MEYER agreed there is need for additional transportation
services city wide. He asked if this is an insurance or workers'
compensation bill.
SENATOR STOLTZE described it as an insurance bill that relates
to a potential industry.
1:46:26 PM
SENATOR MEYER asked how this bill compares to the way other
states have dealt with transportation issues.
SENATOR STOLTZE said he didn't know; he was relying on input
from the municipality and trying to remove a barrier.
SENATOR MEYER said he appreciates that the legislation was
introduced because he has heard it is a problem in many areas.
1:48:47 PM
MICHAEL MONAGLE, Director, Division of Workers' Compensation,
Department of Labor and Workforce Development (DOLWD), testified
in opposition to SB 58. He said the department doesn't have a
problem with the concept if the transportation network company
is defined similar to a taxicab business, but the application
could be broader than that because of the wording. A tour
company could use this model and be exempt from workers'
compensation insurance, for example. If the bill was strictly
limited to taxicabs and limousine type services the department
wouldn't have as much concern.
He raised concern with the language in subparagraph (C) on page
2, line 25. It says a person is exempted once they take on a
passenger and that concludes when the passenger exits. He
questioned what happens with insurance in between the time the
network driver drops off one passenger and picks up another. He
also raised concern with Sections 3 and 4 on page 3 that apply
the legislation retroactively. If a driver currently had a
workers' compensation claim or the division had a proceeding
before the Workers' Compensation Board, those claims or
proceedings or claims would be set aside by the retroactive
clause. If the bill moves forward, the department would prefer
that provision be deleted.
SENATOR STEVENS asked why taxicab companies are exempted from
workers' compensation.
MR. MONAGLE said he didn't know the history of the exemption,
but there are specific limitations to that exemption. There has
to be a written contract between the business owner and its
drivers and under the labor law there are restrictions on how
the person can accept payment.
1:53:25 PM
SENATOR STEVENS questioned the rationale for exempting taxicabs
in the first place.
MR. MONAGLE said the broader question is whether a person is an
employee or an independent contractor. The legislature concluded
that a taxicab driver is an independent contractor. This
legislation provides a similar exemption under that same
analysis.
CHAIR COSTELLO asked who, other than taxicab drivers, is exempt
from workers' compensation.
MR. MONAGLE read the list found under AS 23.30.230. He added
that there is a "relative nature of the work" test to determine
whether there is an employee employer relationship in the event
of an accident.
CHAIR COSTELLO asked if the department's concerns can be
addressed through an amendment.
MR. MONAGLE answered yes and highlighted the concern about
whether there is sufficient insurance in the event of an
accident.
1:59:33 PM
CHAIR COSTELLO asked Mr. Hester if he wanted to comment on the
legislation.
1:59:52 PM
MARTY HESTER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), said SB 58
does not affect Title 21, the insurance statute, but the
division is monitoring the bill to ensure that there is
insurance provided during all phases of the operation of these
vehicles.
2:01:04 PM
BRYCE EDWARDS, Operations Manager, Uber in the Northwest,
explained that Uber is a technology platform that connects
riders and drivers. The system is cashless and brings in an
unprecedented level of accountability. SB 58 solely focuses on
workers' compensation and whether the people that partner on the
system are small businesses or employees. He explained the
process for becoming a driver on the Uber platform. Once someone
becomes a driver they have the flexibility to log on and log off
the application as they see fit. Drivers average 20 hours a
month, are not dispatched, take 80 percent of the fare, and
receive a 1099 at the end of the year.
MR. EDWARDS advised that Uber is working with the city of
Anchorage to address transportation network companies.
2:07:28 PM
SENATOR MEYER asked how a passenger knows what the rate will be
and whether the Uber driver is taking the correct route.
MR. EDWARDS explained that a rider can open the application and
click on the rates. This shows costs per mile and per minute as
well as the base charge. The rider can enter the final
destination and receive an estimate for the trip. To determine
the best route the rider can enter the final destination and
push the navigate button to get step-by-step instructions. The
rider can rate the driver at the end of the trip on a five star
scale. A three star or below is an indication to Uber that
follow up is needed.
SENATOR MEYER asked if there is an opportunity for a third party
to track the rider.
MR. EDWARDS confirmed that is possible if the rider chooses to
share the information.
SENATOR MEYER asked if Uber encourages drivers to put up a
Plexiglas barrier behind the front seat as a safety measure.
MR. EDWARDS said Uber drivers feel very safe; they are not
carrying cash and they have the option of turning down a
passenger. He hasn't seen the Plexiglas shield.
SENATOR STEVENS asked him to address Mr. Monagle's concerns and
if some common ground could be found.
MR. EDWARDS addressed the concern about opening the door for
other types of operators. He said the bill has a standard
definition of what a transportation network company (TNC) does.
It clearly states that the partners in the system pick a
passenger up and carry them from A to B. The issue of a package
provider was mentioned but Uber doesn't own or lease any
vehicles. He said that Uber prefers that Sections 3 and 4
relating to retroactivity remain in the bill because Uber has
been giving many of free rides in Anchorage.
CHAIR COSTELLO asked how other states have addressed the issue
of employee versus independent contractor.
MR. EDWARDS said it is being addressed in a number of states and
Arkansas and Florida are the farthest along.
CHAIR COSTELLO asked if they're moving toward identifying
drivers as independent contractors.
MR. EDWARDS replied it is shifting in that direction in Arkansas
and Florida.
CHAIR COSTELLO asked if there has been litigation on the issue.
MR. EDWARDS said he isn't familiar with any outside the piece in
Alaska.
2:16:36 PM
SENATOR ELLIS asked what insurance is affected other than
workers' compensation. He noted there could be some interplay.
MR. EDWARDS offered to distribute a handout showing Uber's
insurance information.
2:17:16 PM
At ease
2:18:54 PM
CHAIR COSTELLO reconvened the meeting.
MR. EDWARDS explained that the insurance for TNCs bridges the
gap between what is typically a commercial and personal
insurance industry. From the time the driver accepts a passenger
through the application to the time that the rider leaves the
vehicle, there is $1 million primary insurance coverage. That
extends to underinsured and uninsured motorist coverage as well
as comprehensive coverage. When the application is on but before
the ride has been accepted, there is contingent insurance that
would cover in the case of any issues with the driver's personal
insurance. This is referred to as period 1. No transaction is
occurring and the driver's personal insurance is primary.
CHAIR COSTELLO opened public testimony.
2:21:28 PM
SHELDON WINTERS retained counsel, State Farm Insurance, stated
that State Farm has no position on whether or not TNCs should be
exempt from workers' compensation insurance, but has concerns
about the narrow definition of TNCs in SB 58. As currently
drafted it may have unintended but dire consequences for
insurance coverage liability issues. He referenced the consumer
warning on the Division of Insurance website which has joined 22
other states by issuing warnings about the risks of ride
sharing/vehicle sharing programs. The key point is that personal
auto insurance is not intended to cover people who use their
vehicles for commercial purposes and coverage in the event of an
accident in those cases is unlikely.
MR. WINTERS maintained that commercial activities by a TNC
driver that are not covered by a personal policy do not just
begin and end with picking up a passenger and dropping them off.
Commercial activities include the moment the TNC driver turns on
the application and is open for business, similar to the taxicab
driver that turns on their "for hire" light.
Reiterating the concern about the narrow definition of TNCs, he
directed attention to the language on page 3, line 6 and
suggested that the language should be broadened to include all
aspects of T&Cs. He discussed problems that occurred in other
states after an accident and warned that if the bill passes in
its current form it could be used to preclude an injured party's
recovery from the TNC. He noted that State Farm submitted
broader language to the sponsor of SB 58 and the sponsor of
companion legislation.
SENATOR STEVENS assumed that commercial insurance is more
expensive than private insurance. He asked him to discuss the
insurance requirements for taxicabs.
MR. WINTERS confirmed that a commercial insurance policy is more
expensive than a personal policy and advised that taxicab
insurance requirements are set through municipal code.
SENATOR STEVENS asked if a taxicab has to carry commercial
insurance 24 hours a day with no switching back to a personal
policy.
MR. WINTERS said that is probably true, but State Farm does not
insure taxicabs. He clarified that insurance companies do not
accommodate switching back and forth and it's a problem that TNC
drivers are under the mistaken impression that their personal
policy will cover them.
2:31:54 PM
ARMAND SELICIANO, Property Casualty Insurers Association (PCIA)
of America, stated that PCIA has deep concerns with SB 58
because it does not address liability insurance. Nothing in
Alaska law addresses the liability aspect in the event of an
accident involving a TNC. The bill provides two definitions of
TNC services but neither covers the roaming period. Under the
language in SB 58 Uber could argue that a driver who is roaming
and gets in an accident is not covered by the commercial
insurance. He cited a case in California with that fact pattern
and Uber made that argument. He suggested amending the bill to
include the roaming period and keeping an eye on the litigation
in California where Uber drivers filed suit claiming they are
employees, not independent contractors.
2:36:39 PM
CHAIR COSTELLO announced that she would hold SB 58 in committee
with public testimony open.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Accountancy - Johnson #3.pdf |
SL&C 3/19/2015 1:30:00 PM |
Board of Public Accountancy |
| Marital and Family - Webber #3.pdf |
SL&C 3/19/2015 1:30:00 PM |
Board of Marital and Family Therapists |
| SB 58 - Version A.PDF |
SL&C 3/19/2015 1:30:00 PM |
SB 58 |
| SB 58 - Sponsor Statement.pdf |
SL&C 3/19/2015 1:30:00 PM |
SB 58 |
| SB 58 - Hearing Request.pdf |
SL&C 3/19/2015 1:30:00 PM |
SB 58 |
| SB 58 - Sectional Analysis.pdf |
SL&C 3/19/2015 1:30:00 PM |
SB 58 |
| SB 58 - Fiscal Note.pdf |
SL&C 3/19/2015 1:30:00 PM |
SB 58 |
| SB 58 - Letter of Support - CER Chamber.pdf |
SL&C 3/19/2015 1:30:00 PM |
SB 58 |
| SB 58 - Supporting Documents - MOA Bus Service Change Proposal.pdf |
SL&C 3/19/2015 1:30:00 PM |
SB 58 |
| SB 2 - Version H.pdf |
SL&C 3/19/2015 1:30:00 PM |
SB 2 |
| SB 2 - Sponsor Statement.pdf |
SL&C 3/19/2015 1:30:00 PM |
SB 2 |
| SB 2 - Hearing Request.pdf |
SL&C 3/19/2015 1:30:00 PM |
SB 2 |
| SB 2 - Letter of Support - DOD.pdf |
SL&C 3/19/2015 1:30:00 PM |
SB 2 |
| SB 2 - Supporting Documents - Veterans Employment Facts.pdf |
SL&C 3/19/2015 1:30:00 PM |
SB 2 |
| SB 2 - Title 18 Excerpt.pdf |
SL&C 3/19/2015 1:30:00 PM |
SB 2 |
| SB 2 - NCSL Briefing Paper.pdf |
SL&C 3/19/2015 1:30:00 PM |
SB 2 |