Legislature(1999 - 2000)
01/31/2000 03:18 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
HB 316-EMPLOYMENT SECURITY ACT CHAIRMAN ROKEBERG announced that the next order of business would be HOUSE BILL NO. 316, "An Act relating to standard industrial classification for, eligibility for benefits under, and the definition of 'benefit year' for, the Alaska Employment Security Act; and providing for an effective date." Number 2392 REBECCA NANCE GAMEZ, Director, Division of Employment Security, Department of Labor and Workforce Development (DLWD), came forward to testify on HB 316. She explained that Section 1 amends AS 23.20.110 (n) and addresses the change in industry codes. The United States Department of Labor is moving from the Standard Industrial Classification System (SIC) to the North American Industry Classification System (NAICS). This would bring the (DLWD) into conformity when the new reporting system is ready. CHAIRMAN ROKEBERG asked if these are the SIC codes. MS. GAMEZ clarified that the SIC codes are going to NAICS codes, in order to conform with the U.S. Department of Labor's reporting requirements for industry. CHAIRMAN ROKEBERG wondered if it is being mandated. MS. GAMEZ replied yes. Under the Workforce Investment Act (WIA), many things are changing. There are things occurring that have already been reflected in the actions of the State of Alaska. For example, the passage of HB 40 last year created DLWD, the Department of Community and Economic Development (DCED), and the Department of Education and Early Development (DEED). She said the DLWD has been posturing itself for the workforce changes that are coming down from the national level. TAPE 00-08, SIDE B Number 0006 MS. GAMEZ further stated that Section 1 basically pertains to statistical information that the federal government requires be reported in its form. The new system will be in place in January 2001. Section 2 amends AS 23.20.179 (b) and pertains to Employer Rate Contributions, which are related to the type of industry. For example, the rate for the fishing industry is different than that of the tourism industry. Analysis done does not show that there would be any significant - if any - effect on the employer rate. MS. GAMEZ indicated Section 3 amends AS 23.20.379 (a)(2). She said: Apparently, in the late 70's, when an unemployment insurance piece of legislation went to committee, some language was accidentally dropped off. And so, we're just trying to tidy that up. MS. GAMEZ noted that a person who quits a job voluntarily has an automatic six-week disqualification of unemployment insurance benefits because it was completely in that person's control. If a person is discharged for reasons that were within that person's control, then that person will also receive a six-week disqualification. She indicated it parallels the "voluntary leaving" provision with the misconduct provision that is in law. Number 0136 MS. GAMEZ said Section 4 amends AS 23.20.382 (d). It allows for benefits to continue while a person is attending vocational training approved under the WIA. The Workforce Investment Act repeals the Job Training Partnership Act (JTPA) effective July 1, 2000. CHAIRMAN ROKEBERG asked if this is a change in nomenclature. MS. GAMEZ said JTPA is being phased out, while WIA is being phased in. The job training dollars that come into the state from the federal government will now be WIA dollars. Section 5 amends AS 23.20.520 (5). It repeals the current definition of an unemployment benefit year and replaces it with a new definition. The benefit year will begin on the Sunday of the week filed and continue for 52 weeks, which allows for a 53-week benefit year. She indicated it is a technical change, and 45 other states do this now. She said problems occur during a leap year. This cleans up the language so that a person's base period and eligibility do not get messed up. CHAIRMAN ROKEBERG wondered what is done now. Number 0217 MS. GAMEZ responded, "We spend a lot of money, with human hands touching these claims, as opposed to letting our automated system take care of the problem." CHAIRMAN ROKEBERG asked if that is because of the definition of a benefit year. MS. GAMEZ replied yes. She commented that 53 weeks are needed to eliminate the possibility of an eligible person's claiming in the prior year or the next year. Benefit weeks currently begin on a Sunday and are mutually exclusive. The change in Section 5 makes the benefit year mutually exclusive and eliminates confusion. MS. GAMEZ noted that Section (6) adds a transitional provision in uncodified law to address the benefit years that began under the current definition. These will expire under the new definition. Section 7 states that Sections 1 through 4 will take effect July 1, 2000. Section 8 states that Sections 5 and 6 will take effect on October 7, 2001. CHAIRMAN ROKEBERG asked what the significance of the October 7, 2001, date is. MS. GAMEZ said it deals with the new definition of the 53-week benefit period. CHAIRMAN ROKEBERG wondered if that is because of the federal fiscal year. MS. GAMEZ commented, "We're funded on a federal fiscal year." CHAIRMAN ROKEBERG wondered why it is October 7. MS. GAMEZ deferred to Charles Blankenship. Number 0299 CHARLES BLANKENSHIP, Assistant Director, Division of Employment Security, Department of Labor and Workforce Development, stated: The October 7 date is almost a little embarrassing, Mr. Chair. When we started looking at calendars and deciding that claims would begin on a Sunday from the enactment of this legislation forward, the first time that we would mess it up would be October 1 of the year 2001. ... To avoid that, we just went to the seventh. The 53rd-week provision in here would eliminate any problems (indisc.-coughing). The secondary reason was workload. For unemployment insurance, at the beginning of a new quarter we get a significant increase in workload because it changes the base period of earnings on which the claim would be established, and we wanted to get any change we made to our definition outside of that period of increased workload. CHAIRMAN ROKEBERG said he needs a better explanation. MS. GAMEZ replied that Dwight Perkins, Deputy Commissioner, DLWD, would be happy to provide any "bullet points" that Chairman Rokeberg would need. MR. BLANKENSHIP said a situation occurs with the workload for the claims-processing units. Whenever there is a new quarter, a new base period of earnings can be used to establish claims. An unemployed worker can take advantage of some of the wages earned during the summer when moving into the October 1 quarter. He stated, "With our seasonal employment situation in Alaska, this affects a lot of people, and we do get a significant influx during the first week." He explained that introducing a significant change to statute during the first week of any quarter runs the risk of decreasing the level of service that can be delivered. Number 0416 REPRESENTATIVE MURKOWSKI referred to Section 3, regarding discharge for misconduct. She indicated there was a constituent running a business with a zero-tolerance drug policy. An employee working there was subjected to a random drug test, failed the drug test, applied for unemployment insurance benefits, and received the benefits right away. She said the conclusion from Unemployment Insurance was that "because the circumstances involved in your discharge did not show a willful disregard of your employer's interest, it has been determined you were discharged for reasons other than misconduct in connection with your work, and, therefore, benefits are allowed to begin right away." REPRESENTATIVE MURKOWSKI said when this came to her attention, she was dumbfounded that someone could immediately receive benefits after being terminated for obvious misconduct in the workplace. She noted it had been explained to her that the employer in this particular situation had failed to appeal. She had asked Ms. Gamez previously if this was something that required some kind of a legislative fix. She indicated she ran this by Legislative Legal and Research Services, who explained "you don't necessarily want to run a laundry list of those things that constitute misconduct." She feels it is a troubling enough issue, however, that she wanted to bring it to the attention of the committee. She wondered if Ms. Gamez has any further comments regarding this issue. Number 0543 MS. GAMEZ explained there are a couple of types of misconduct. She said: There's property damages, reckless disregard, and that follows under one thing. I hate to do this under Employment Insurance, and I don't want to step too far out on the limb. We try not to do what-if's because we have a case-by-case determination of benefits. We have a lower appeals system and then the commissioner level appeals. And I would have thought that the employer would've probably been in pretty good shape had the employer [chosen] to appeal. MS. GAMEZ stated that the appeals process in the Unemployment Insurance system is very easy. A person can make a phone call or send an e-mail, fax or letter. There is also a little flexibility with the 30-day time limit. She asked Mr. Blankenship to explain the different levels of misconduct connected with Unemployment Insurance. She also asked Representative Murkowski to clarify whether or not there was a six-week waiting period in the situation she had described. REPRESENTATIVE MURKOWSKI said there was a three-day delay. MS. GAMEZ said she wished the employer had appealed. REPRESENTATIVE MURKOWSKI said she hoped that Mr. Blankenship could help clarify the situation. Number 0648 MR. BLANKENSHIP provided some background on the general disqualification for a discharge for misconduct. The federal guidelines indicate that if a worker loses his or her job for work-related misconduct there will be some disqualification imposed. In Alaska there are two levels of work-related misconduct. He stated: In Alaska, we had had just the one misconduct provision for anything that constituted a deliberate act or omission that was contrary to your employer's best interest and in connection with the work. A few year's ago, there was a second piece of legislation added - I believe it's [HB]379 D [version] - which allows for a much more significant disqualification for someone who commits a felony or a theft while on the job, and that imposes a 52-week disqual[ification]. That's, in general, the misconduct provision. You're referring specifically to why would we pay somebody unemployment insurance if they failed a drug test. We do have a fairly large body of policy on this. It's been developed from court cases, previous commissioner decisions on the issue. As I said, the basic requirement in a discharge for misconduct case is that there be a connection to the work. And in drug testing we went into a kind of a muddy area there. It's possible that 30 days ago they used some marijuana. It'll show up in a drug test, and they'll fail the test. Is there, in fact, a connection to the work there? ... Much of our precedent indicates that unless there's a showing of impairment on the job, that ... would not be disqualifying. It's very clear that if someone's under the influence or using drugs or alcohol on the job, that is work-related misconduct. The evolution of our policy, as far as drug testing and the use of intoxicants or drugs on the job, has become much less liberal and, in the case that you're referring to, ... we look at each case by the facts presented. I cannot say from the information you've given whether this decision was correct or incorrect. My assumption would be that based on the information we received from both parties, ... the decision was correct in that, for some reason, we did not have a clear connection between that drug test and the job, even though the employer may have required it. MR. BLANKENSHIP continued: There was a great increase in the requirements for random drug testing on the job in the last ten years. We found that 7-11 franchises began to require drug testing. I don't want my air traffic controller testing positive for drugs, but the guy that makes my Slurpy, I'm not sure that's really a reason to discharge him if he fails his drug test. In general, our policy now says that if you're operating any equipment that could be life-threatening or property- threatening, in a position where there's a federal or state requirement, that you ... not have drugs in your system; those are generally disqualifying provisions. Now, beyond the fact that we don't know all of the ... facts to this instant case, there is the appeal period. But I'm not going to say that the employer is under an obligation to appeal just to get a correct decision. We do try to make a correct decision, based on the initial facts. There is not an assumption that the ... unemployed worker is eligible automatically for benefits. However, since the moving party in a discharge is the employer, much of the burden does rest on him in that case to show that it was, in fact, an action that constituted misconduct, just as if, in the case of somebody quitting a job, the burden largely rests on the employee [who] quit to show that those reasons were with good cause. Number 0850 REPRESENTATIVE MURKOWSKI agreed it would be a much better case to pursue if, in fact, the employer had appealed and that appeal had been denied. She wondered if there are regulations that define what the misconduct is and if there is a so-called laundry list. MR. BLANKENSHIP replied there is a regulation that defines misconduct; the regulation does not have a laundry list. There is a significant body of written policy pertaining to the laundry list of things that a person could be discharged for. REPRESENTATIVE MURKOWSKI said: The reason I ask is because Ms. Gamez, when she was discussing Section 3, indicated that it was essentially anything that was within the individual's control. Well, I certainly look at taking drugs as being within my control, ... and if you happen to test positive for marijuana 30 days later and you're out, I say you're on your own, but that's my own personal opinion. ... It's an interesting discussion, and I guess I'm looking for a little guidance as to whether or not we should pursue to define this somewhere. Number 0920 MS. GAMEZ indicated she cannot say this case would have been overturned or that there would have been a disqualification period. It seems to her that would have been reasonable. She reiterated that the appeal process is very simple. She commented that a lot of their policy is based on the appeals that come up; there is ever-changing policy based on precedents. She said she would be happy to meet with Representative Murkowski to ensure that she has a clear understanding of the policies and regulations. REPRESENTATIVE HALCRO said that he would like to be included in that meeting. He commented: One of the things that's frustrating from an employer's standpoint is, even when you spend time developing company policies, rules and regulations, even go so far as to have an employee, at the point of hire, read the document and sign it, acknowledging the fact that they've ... received a copy and they understand it -- so, the employee knows doggone well that there's random drug testing and that they're in a sensitive area and they need to be drug-free. And, whether he's getting high at home or at lunch, I mean, that's really not the issue. The issue is he showed up for work, he was random drug tested, he had drugs in his system, and the employer should, in all fairness, have a right to discharge him without this person being able to come back and claim unemployment insurance. And my frustration with this is, like I said, even when you go to the extent of spending dollars having private legal counsel development company policies and adequately and clearly presenting them to the employee at the time of hire, there's always that loophole. ... I think there has to be a way to protect all employers. ... I certainly have had a number of experiences where you just say, ..."What is the use of even developing company policy?" if ... somebody's going to say, "Well, that really doesn't count in this case," when clearly it does. MS. GAMEZ said she welcomes the opportunity to have a discussion with Representative Halcro. She explained that she dealt with many of those same frustrations as an employer. She feels great strides have been made in the last five years. She wishes people would take advantage of the appeals process because it is so easy and has minimal impact. She noted they are always looking for ways to increase the customer service to employers. There used to be a 15-day appeal period, but that was increased because they wanted people to have the opportunity to appeal in a reasonable amount of time. She stated that an employee who receives unemployment insurance benefits but is then disqualified would have to repay those benefits. She said $126 million is paid out every year in benefits. She empathizes with the desire to protect the employer. CHAIRMAN ROKEBERG appointed a subcommittee on HB 316, consisting of Representative Murkowski, Chair; Representative Halcro; and Representative Cissna. [HB 316 was held over.]
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