Legislature(2009 - 2010)BELTZ 105 (TSBldg)
04/01/2010 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB38 | |
| SB303 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 38 | TELECONFERENCED | |
| += | SB 303 | TELECONFERENCED | |
| += | SB 304 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 303-WORKERS' COMPENSATION AND CONTRACTORS
3:04:13 PM
CHAIR PASKVAN announced SB 303 to be up for consideration. He
recapped that SB 303 was originally addressed a week ago and he
hoped the committee members had the opportunity to review the
bill that is "just an undo of what was done a number of years
ago." The state had a system that adequately operated from
statehood for approximately 45 years and then the system was
changed in what he thought was an improper manner.
He said he thought SB 303 was the right policy for the State of
Alaska. He noted a Legal Services memo that indicated the extent
of the injustice - even if someone operated with a gross
deviation from the standard of care they would be immune from
responsibility or accountability for their conduct as the law is
now written. Generally, when people hear that someone could be
criminally negligent in their conduct and not be accountable for
it they are troubled.
3:06:31 PM
TRENA HEIKES, Director, Division of Workers' Compensation,
Department of Labor and Workforce Development (DOLWD), said she
would answered questions.
SENATOR MEYER said he still couldn't remember why it got changed
and asked if there was some concern and does this bill rectify
double dipping by a victim. In other words, can an injured party
sue the subcontractor who they are working for and the general
who hired the sub-contractor?
MS. HEIKES replied that they could never sue their employer.
"The exclusiveness of liability for an employer is still in
effect under this bill as it has been since workers'
compensation systems were first developed at the turn of the
century." There would be no double-dipping vis-a-vis the
employer and employee, and if they sued the general their
recovery would be offset under AS 23.30.015 by the employer's
lien, a lien that is equal to the amount of workers'
compensation benefits that the employer has paid less the
employer's pro-rata share of attorney's fees, per a Supreme
Court decision.
SENATOR MEYER apologized for being so dense, but asked again
hypothetically if Senator Paskvan is the general contractor and
hires him as the subcontractor, and he was delinquent in
providing a safe working environment and an employee that is
working for him gets injured, can the employee come back to both
him and Senator Paskvan or just to him as the sub-contractor.
MS. HEIKES answered:
If you're insured for workers' compensation your
insurance carrier would provide benefits to that
injured worker. If you were uninsured, then under that
statute as it now reads and as it would read, with
[SB] 303, the general contractor would be liable for
the workers' compensation benefits. As the statute now
reads, if the general contractor was the tort
'feeser,' you couldn't sue the general contractor or
the project owner. And you can never sue your
employer, period - unless they are uninsured. If they
are uninsured for workers' compensation, then you
lose, understandably, the benefits of workers'
compensation which is the exclusive liability.
SENATOR MEYER asked why a general contractor would hire a sub
that didn't have insurance.
MS. HEIKES said that was a good question. As the law now reads,
and as it will read if SB 303 were passed, it makes the
contractor responsible for making sure subs are carrying
workers' compensation, because otherwise their carrier will be
on the hook.
SENATOR MEYER said he understood that in the past the sub was
able to do the work cheaper because they didn't have the
insurance.
MS. HEIKIS answered that was correct. If a subcontractor is not
carrying workers' compensation insurance they are at an
advantage in a bidding situation because of its expense.
3:10:45 PM
KEITH MONTGOMERY, Alaska Regional Council of Carpenters (ARCC),
Anchorage, said he supported SB 303. He said that this bill is a
start to solving a bigger problem that affects the construction
industry as a whole. Last year he said he testified on HB 22,
and both bills have a piece of puzzle correct, but with many
holes and missing puzzle pieces such as independent
subcontractors and tier subcontractors. He said the real issue
is to close the loophole that will level the playing field and
protect the construction industry and Alaskan workers and stop
labor brokers that refuse to take personal responsibility for
workers that get hurt on jobs.
MR. MONTGOMERY said that he recently spoke to a contractor
working on a state construction project who said the reason he
tier subcontracted is that they have many levels where these
workers don't provide workers' compensation. Why would a
contractor hire these guys? It's because they can come in 30
percent lower on the bid and get the job. So, you have a sub of
a sub of a sub that has no workers' compensation; he directs the
work and employees of the subcontractor, but each person carries
a business license. This contractor said the reason he tier
subcontracts in the State of Alaska is because he can get away
with it; that Alaska laws are real weak.
3:13:31 PM
SCOTT HANSEN, Alaska Regional Council of Carpenters (ARCC) Local
1281, Anchorage, said in the construction industry the use of
subcontracting, independent contracting and tier contracting as
become totally out of control. They receive information on a
daily basis on tier contracting 3-4 levels deep where the
"employees" are not under a workers' compensation policy
anywhere past the general contractor or the first level of
subcontractor. This is very detrimental to legitimate
subcontractors and gives a huge advantage to the subcontractor
who in turn hires the independent tier contractors. A high
percentage of these independent contractors work as subs to the
subs to the subs, but they are truly working within every
definition as an employee. They are required to show up and work
certain hours and work off of other contractor's equipment, but
do not supply any materials and have no risk for loss. General
contractors should be scared to death of the possibility of
independent contractors working on their jobs.
He said that SB 303 is a start in controlling this situation and
will help protect legitimate contractors. It will help the abuse
of 1099 issues in the non reporting problem in the prevailing
wage reporting, as well.
3:14:47 PM
CHRIS GREGG, Business Manager, Painters and Allied Trades, said
he supported SB 303. He said this issue affects his contractors
immensely. They have a 2-25 percent bigger disadvantage for
providing workers' compensation for their employees. It has
become common business practice to subcontract all work to avoid
workers' compensation, social security and unemployment
insurance. While this bill is not the complete answer, it is a
start. If you don't get action on this bill "You can kiss
legitimate contracts goodbye they can't compete with this
loophole available to unscrupulous business owners who
misclassify their employees as owner-operators."
CHAIR PASKVAN thanked them for their comments; he closed public
testimony and asked for discussion. He said there is "absolutely
no double dipping." If there is a recovery workers' compensation
is reimbursed and it's allocation according to fault.
SENATOR THOMAS stated he didn't remember the genesis of the
bill, but he did remember that some people were killed on a
particular job. He wasn't sure that the subcontractor had
workers' compensation or not. It almost sounds like if they did,
that would have been the only recovery. He thought something
else allowed the owner to be sued because they had been
negligent in performance of their duties in preparing the
workplace as they had the authority to do. But today, it appears
that some subs don't purchase workers' compensation and the
generals don't require them to do what they are supposed to
which is post the proof of their workers' compensation or at
least give them a copy of their binder. So, therefore, in an
attempt to make sure that people are protected, including the
generals, one of the ways to do it is to implement a law that
allows them to be responsible if they are not going to hold
their subcontractors responsible for having workers'
compensation.
3:18:33 PM
SENATOR THOMAS moved to report SB 303 from committee with
individual recommendations and attached zero fiscal note(s).
There were no objections and it was so ordered.
Finding no further business to come before the committee, he
adjourned the meeting at 3:20.
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