Legislature(2023 - 2024)BARNES 124

02/02/2024 03:15 PM House LABOR & COMMERCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 251 EXEMPTIONS FOR HOMEMADE FOODS TELECONFERENCED
<Bill Hearing Rescheduled to 02/05/24>
*+ HB 237 TEMPORARY PERMIT FOR LAPSED NURSE LICENSE TELECONFERENCED
<Bill Hearing Rescheduled to 02/05/24>
+ Bills Previously Heard/Scheduled TELECONFERENCED
*+ HB 147 RETIRED TEACHER CERTIFICATE TELECONFERENCED
Heard & Held
+= HB 192 DELIVERY/PICK UP OF ALCOHOL; LICENSING TELECONFERENCED
Heard & Held
+ SB 37 CRIME COUNTERFEIT/NONFUNCTIONING AIRBAG TELECONFERENCED
Scheduled but Not Heard
+= HB 186 VOLUNTEER LABOR COMPLIANCE OFFICER PRGM TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
         HB 186-VOLUNTEER LABOR COMPLIANCE OFFICER PRGM                                                                     
                                                                                                                                
3:49:37 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER announced  that the next order of  business would be                                                               
HOUSE  BILL  NO.  186,  "An   Act  relating  to  volunteer  labor                                                               
compliance officers; and providing for an effective date."                                                                      
                                                                                                                                
3:49:56 PM                                                                                                                    
                                                                                                                                
ALICIA  MALTBY, President,  Alaska  Building Contractors  Alaska,                                                               
read her written  testimony in opposition to HB  186 [included in                                                               
committee packet],  which read  as follows  [original punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Associated Builders  and Contractors of  Alaska ("ABC"}                                                                    
     is  the  voice  of the  Alaska  construction  industry,                                                                    
     advocating  the ideals  of free  enterprise, developing                                                                    
     training for  the workforce, and  providing contractors                                                                    
     the resources required to  compete in the ever-changing                                                                    
     environment.                                                                                                               
     ABC  opposes  House  Bill  186   "An  Act  relating  to                                                                    
     volunteer labor compliance officers".                                                                                      
     ABC  supports enforcement  of Alaska's  labor laws  but                                                                    
     while we  may have a  common goal to  ensure compliance                                                                    
     the solution contained  in House Bill 186  is the wrong                                                                    
     approach  and  would  set  a  dangerous  precedent  for                                                                    
     enforcement   of    Alaska   laws    and   regulations.                                                                    
     Enforcement of Alaska labor  laws and regulations often                                                                    
     requires  site  visits  to  private  property,  private                                                                    
     businesses and  place the investigator  on construction                                                                    
     sites.  These   types  of  activities  should   be  the                                                                    
     responsibility of trained  public employees, who should                                                                    
     not  have any  conflicts of  interest, while  operating                                                                    
     under Alaska  ethics laws where  the State can  be held                                                                    
     responsible for their actions.                                                                                             
                                                                                                                                
     While  HB 186  deals with  construction the  underlying                                                                    
     premise  would  support  expansion  to  other  agencies                                                                    
     where  complaints   arise  of   inadequate  enforcement                                                                    
     allowing citizen  investigators in a myriad  of sectors                                                                    
     such as  the Alaska  Public Offices Commission  or food                                                                    
     safety inspectors of restaurants.  Simply put, the bill                                                                    
     seems  to  indict  the  Department  of  Labor  and  the                                                                    
     current Administration  as failing  to do their  job in                                                                    
     enforcing  state   labor  laws  and   regulations.  The                                                                    
     solution   proposed    would   have    privately   paid                                                                    
     "investigators"  stepping  in  to do  the  Department's                                                                    
     work.  We believe  a  better path  would  be to  better                                                                    
     identify  and define  problems, if  any, and  work with                                                                    
     the Department to ensure they  have the tools necessary                                                                    
     to do their job.                                                                                                           
                                                                                                                                
     With  regard   to  this  bill,  when   looking  at  the                                                                    
     information  from the  Department of  Labor there  does                                                                    
     not seem to be a  significant issue that justifies such                                                                    
     a  radical  approach   to  change  current  enforcement                                                                    
     programs, but ABC is willing  to engage and collaborate                                                                    
     with stakeholders  to further understand  any potential                                                                    
     issues.                                                                                                                    
                                                                                                                                
     With  regard   to  specific  concerns,  we   offer  the                                                                    
     following preliminary thoughts:                                                                                            
                                                                                                                                
   - While the bill prohibits investigators from having a                                                                       
     conflict of interest  there is no definition  of what a                                                                    
     conflict  is. This  should be  defined in  great detail                                                                    
     and not  left for  regulations. Would a  union employee                                                                    
     investigating  a nonunion  contractor have  an inherent                                                                    
     conflict  of  interest?  Alaskans  should  know  before                                                                    
     passing the  bill what is  intended within  the context                                                                    
     of "conflict  of interest." Additionally,  there should                                                                    
     be  some public  disclosure  of  the "  investigator's"                                                                    
     personal interests  such as who  they have  worked for,                                                                    
     if  they own  a business  in construction,  and who  is                                                                    
     paying them to be an "investigator."                                                                                       
                                                                                                                                
   - The bill inadequately addresses liability. Who will be                                                                     
     liable for any accidents or  injuries that are a result                                                                    
     of the  "investigators" on site activities?  Will it be                                                                    
     the investigator  personally or  the entity  paying the                                                                    
     "investigator"? How  much liability coverage  will they                                                                    
     be required to cover?                                                                                                      
                                                                                                                                
   - The bill is insufficient in how it deals with                                                                              
     conflicts of  interest. By  simply removing  the person                                                                    
     from having  authority to continue  investigating, this                                                                    
     leaves  little  to  no deterrence  for  malfeasance  or                                                                    
     holds  anyone  accountable  for   any  actions  of  the                                                                    
     "volunteers."  At a  minimum,  investigating a  private                                                                    
     business  with  a  conflict of  interest  should  be  a                                                                    
     crime. Who  will manage  the complaints  over conflicts                                                                    
     of  interest?   If  the   underlying  concern   is  the                                                                    
     Department does  not have the resources  to investigate                                                                    
     labor violations, how would they  have the resources to                                                                    
     investigate conflicts of  interest or other complaints?                                                                    
     What  type of  due process  procedure is  envisioned to                                                                    
     deal with  complaints? One suggestion  would be  to add                                                                    
     "volunteer"  citizen hearing  officers/investigators to                                                                    
     the bill to investigate the investigators?                                                                                 
                                                                                                                                
   - We do not understand the prohibition on an employee of                                                                     
     the  State taking  leave and  "volunteering"  to be  an                                                                    
     investigator.  What  is  the  rationale  for  excluding                                                                    
     state employees?                                                                                                           
                                                                                                                                
     Enforcement of State of Alaska  laws and regulations is                                                                    
     the  sole responsibility  of the  State. When  the full                                                                    
     power and  authority of the  State of Alaska  is behind                                                                    
     individuals   performing    said   enforcement,   those                                                                    
     individuals  should  have  the  same  consequences  for                                                                    
     improprieties than  any other State of  Alaska employee                                                                    
     has. In  short ABC  of Alaska  feels strongly  that any                                                                    
     labor compliance  should be performed  by the  State of                                                                    
     Alaska,  and volunteers  would  not  be appropriate  or                                                                    
     suitable to perform these duties.                                                                                          
                                                                                                                                
     ABC  is  willing  to  collaborate   with  you  and  the                                                                    
     legislature   to  better   define  any   problems  with                                                                    
     enforcement and  if any exist ensure  the Department of                                                                    
     Labor has the tools to  solve those problems but cannot                                                                    
     support the radical idea to  delegate such an important                                                                    
     responsibility to "volunteers."                                                                                            
                                                                                                                                
     We  do  appreciate  your interest  in  seeing  Alaska's                                                                    
     labor   laws  and   regulations  enforced   and  Alaska                                                                    
     businesses  and   workers  being  protected.   We  look                                                                    
     forward  to further  engagement and  collaborating with                                                                    
     you on this matter.                                                                                                        
                                                                                                                                
3:56:15 PM                                                                                                                    
                                                                                                                                
TANYA KEITH,  Director, Division  of Labor Standards  and Safety,                                                               
Department of  Labor and Workforce  Development (DLWD),  said she                                                               
is present to take questions.                                                                                                   
                                                                                                                                
3:56:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FIELDS  offered his  understanding that  there has                                                               
been  declining  staffing  in Departments  of  Labor  across  the                                                               
country.   He asked Ms.  Keith how she would  characterize DLWD'S                                                               
approach to standards and safety.                                                                                               
                                                                                                                                
MS.  KEITH   answered  that  the  department   uses  a  strategic                                                               
approach,  with  10 to  12  investigators  across the  state;  it                                                               
covers  21,000 businesses  in the  state,  as well  as the  2,400                                                               
public projects that have been started since 2021.                                                                              
                                                                                                                                
REPRESENTATIVE  FIELDS   asked  how   the  department   looks  at                                                               
staffing,  whether it's  per man  hour, per  a certain  number of                                                               
dollars  in  the industry.    He  asked whether  industries  with                                                               
higher union density have more complaints.                                                                                      
                                                                                                                                
MS. KEITH  responded that investigations are  prioritized through                                                               
complaints  received; the  department's authority  of enforcement                                                               
is tied  to an assignment  received from  an employee.   She said                                                               
that  union  representation  doesn't necessarily  correlate  into                                                               
more  complaints.   She  explained  that  job sites  with  unions                                                               
typically have a  person who advocates for the  employees, and in                                                               
some cases, takes care of issues  before they come to the office.                                                               
She  said  the division  receive  many  complaints from  low-wage                                                               
workers because they have no other avenue of recourse.                                                                          
                                                                                                                                
4:00:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRAX asked whether the  state has people that just                                                               
monitor complaints.                                                                                                             
                                                                                                                                
MS.  KEITH answered  yes, most  agencies that  have contracts  do                                                               
have project managers who oversee projects.                                                                                     
                                                                                                                                
REPRESENTATIVE PRAX  inquired about  grant agencies  and whether,                                                               
if they are  operating under a grant or contract  with the state,                                                               
the state would  audit those companies as it relates  to wage and                                                               
hour and job safety.                                                                                                            
                                                                                                                                
MS.  KEITH explained  that only  public  construction is  audited                                                               
regularly.    She  shared that  some  industries,  like  assisted                                                               
living, are  subject to licensing  requirements; many  reports of                                                               
violations in that  industry come from other  state agencies that                                                               
monitor the industry.                                                                                                           
                                                                                                                                
4:02:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER asked where  else the department looks for                                                               
volunteers  to enforce  labor standards  and  safety and  whether                                                               
there  are regulations  allowing people  to report  an unsafe  or                                                               
illegal labor practice they witnessed.                                                                                          
                                                                                                                                
MS. KEITH  stated that  the department  does not  have volunteers                                                               
who enforce  labor laws.   She said it  takes tips or  calls from                                                               
anybody on  a job  site that  sees an  issue.   In response  to a                                                               
follow-up question  regarding what is typically  reported in tips                                                               
and how many,  she said the department gets calls  everyday.  She                                                               
explained that if  someone is having issues  with their employer,                                                               
it usually  isn't limited to  just their  pay.  If  the complaint                                                               
deals with another  department, the complaint is  referred to the                                                               
other  department.   She  listed  the  sorts  of tips  they  get,                                                               
including  no   final  paycheck,   unsafe  work   practices,  and                                                               
harassment.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SADDLER pointed  out  that  testifiers said  they                                                               
don't see a need for this  legislation.  He asked if the proposed                                                               
volunteer program  would be helpful in  improving compliance with                                                               
labor practice laws.                                                                                                            
                                                                                                                                
MS. KEITH stated that she has no opinion.                                                                                       
                                                                                                                                
4:05:11 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER asked  how the department would process  a labor law                                                               
violation report from a third-party non-employee.                                                                               
                                                                                                                                
MS. KEITH  explained that, based  on how egregious  the violation                                                               
was,  there are  several steps  the department  could take.   She                                                               
said those steps  include calling the employer,  sending a letter                                                               
notifying them about  the issue, informing them on  what the laws                                                               
are,  and  going   to  site  visits,  which  could   lead  to  an                                                               
investigation.                                                                                                                  
                                                                                                                                
CHAIR  SUMNER  asked whether  it  is  department policy  to  only                                                               
respond to employee complaints.                                                                                                 
                                                                                                                                
MS.  KEITH answered  no,  it is  not policy  to  only respond  to                                                               
employee complaints.  She commented  that third party information                                                               
is taken and  considered, but investigations cannot  begin from a                                                               
third-party report  because enforcement comes  from investigating                                                               
complaints.    To  take  court  action,  there  needs  to  be  an                                                               
assignment from the employee.                                                                                                   
                                                                                                                                
4:07:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FIELDS  asked about wage  theft, as well  as which                                                               
groups of employees are less aware of their labor rights.                                                                       
                                                                                                                                
MS. KEITH  answered that Alaska  law does not define  wage theft,                                                               
but many employees  don't receive a final  paycheck, for example.                                                               
She explained issues that DLWD  finds, like an employer not aware                                                               
of overtime  laws, or another that  didn't pay based on  the wage                                                               
rate they  promised to the employee.   She said many  reports are                                                               
from immigrants who are not aware of their rights.                                                                              
                                                                                                                                
4:10:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PRAX offered  his  understanding that  employers,                                                               
union  shops, and  merit shops,  as examples,  would be  quick in                                                               
addressing  a   contractual  problem.    He   said  the  previous                                                               
testimony made  it sound like  the state was getting  involved in                                                               
the contractual  relationship between employer and  employee.  He                                                               
asked  whether  the  state  should  be  involved  in  contractual                                                               
violations, as opposed to state labor law.                                                                                      
                                                                                                                                
MS. KEITH responded that the  department does not get involved in                                                               
labor issues  or contracts.   She explained  that, when  a public                                                               
construction  site  is  investigated,   DLWD  verifies  that  all                                                               
employees and  contractors are getting  paid the  prevailing wage                                                               
for  the classification  of work  they  are doing;  on a  private                                                               
construction site,  the department  enforces wage and  hour laws,                                                               
which requires that  employes are paid minimum  wage and overtime                                                               
for all of the hours they are working.                                                                                          
                                                                                                                                
4:13:04 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER asked how labor  laws are enforced with out-of-state                                                               
employees.                                                                                                                      
                                                                                                                                
MS. KEITH  answered that  it is the  same with  Alaska employers.                                                               
Upon notification of an awarded  contract, the department ensures                                                               
receipt  of  notice  of work  from  the  contractors,  determines                                                               
whether they  have current licensure, and  provides education the                                                               
employee might need.                                                                                                            
                                                                                                                                
CHAIR  SUMNER  sought  clarification  as to  whether  it  is  the                                                               
position of DLWD  that Alaska labor laws do not  apply to out-of-                                                               
state contractors.                                                                                                              
                                                                                                                                
MS.  KEITH answered  no, all  employees working  in the  state of                                                               
Alaska are subject  to labor laws.  She stated  that the location                                                               
of the employer makes no  difference, as the department routinely                                                               
does investigations into businesses that are out of state.                                                                      
                                                                                                                                
4:14:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER questioned  the  need  to deputize  labor                                                               
compliance officers.                                                                                                            
                                                                                                                                
MS.  KEITH  commented that  the  department  is not  receiving  a                                                               
significant  number of  complaints  about public  projects.   She                                                               
explained that  staff within  the wage  and hour  division audits                                                               
certified payroll and catches issues.  In response to a follow-                                                                 
up  question regarding  private construction  projects, she  said                                                               
the  department   is  not  receiving  a   significant  number  of                                                               
complaints in  that area either.   She pointed out that  in 2023,                                                               
one  public construction  complaint and  11 private  construction                                                               
complaints were filed.                                                                                                          
                                                                                                                                
4:16:36 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:16 p.m. to 4:22 p.m.                                                                       
                                                                                                                                
4:21:52 PM                                                                                                                    
                                                                                                                                
BRONSON FRYE,  President, Alaska  Local 1959,  stated that  he is                                                               
testifying  in support  of  HB  186.   He  explained the  bidding                                                               
process as the  summation of four categories:  the materials, the                                                               
overhead,  the profit,  and the  labor.   Material costs  are the                                                               
same  for everyone,  as  is  overhead and  profit,  but labor  is                                                               
variable.   He said  the construction industry  is faced  with an                                                               
issue  where  whoever can  reduce  labor  costs, whether  through                                                               
honest or dishonest means, is  often rewarded by getting the job.                                                               
He  stressed that  wage theft  is real  in Alaska,  and that  the                                                               
easiest employee to  fall victim to wage theft are  those who are                                                               
already victims  of human trafficking.   Another example  is when                                                               
an employer  requires that each  employee get a  business license                                                               
and  self-perform the  work as  an  independent contractor;  this                                                               
makes  it  so the  employer  is  no  longer required  to  provide                                                               
worker's  compensation, which  in  the  construction industry  is                                                               
typically about  30 percent  of labor  costs.   He pointed  out a                                                               
combination  of   employee  misclassification,  wage   theft,  no                                                               
overtime,   and  victimizing   those   being  human   trafficked;                                                               
contractors are  incentivized to adopt dishonest  business models                                                               
and  are  awarded for  doing  such.    He  commented that  he  is                                                               
mystified as to  why the Associated Builders  and Contractors are                                                               
not in full  support of the bill, since their  mission is to help                                                               
qualified  and  responsible  low  bidders  with  an  emphasis  on                                                               
honesty and  fairness.  He  stated that  the reality is  that the                                                               
responsible, honest  contractors are  the ones being  cheated out                                                               
of  the  opportunities  to  do  the jobs.    He  offered  that  a                                                               
contractor  would be  happy to  support something  that prevented                                                               
dishonest employers from gaming the  system.  He detailed that an                                                               
employee who  is being trafficked  is disincentivized  from self-                                                               
reporting to the  department due to the fear of  retaliation.  He                                                               
said  honest   contractors  are  being  cheated,   and  dishonest                                                               
contractors  are  incentivized  to  adopt  unscrupulous  business                                                               
models.   He stated that  it is  reasonable that the  state takes                                                               
the  position  that  there  would   be  utility  in  a  voluntary                                                               
compliance officer  program, like the  one proposed in  the bill.                                                               
He  stressed that  there  will be  $4 billion  to  $6 billion  of                                                               
construction  work coming  to Alaska  over the  next decade,  and                                                               
that  the state  should not  be  a place  that rewards  cheating,                                                               
dishonest,   and   unscrupulous    contractors   that   victimize                                                               
employees.                                                                                                                      
                                                                                                                                
4:28:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRAX  noted that  there are contractors  that work                                                               
on small  and big projects.   He asked whether the  practices Mr.                                                               
Frye referred to  are prevalent in small,  medium, or large-scale                                                               
projects.                                                                                                                       
                                                                                                                                
MR.  FRYE  answered, "All  of  them."    He  shared that  he  has                                                               
recently been on  small, medium, and large projects  and has seen                                                               
it.                                                                                                                             
                                                                                                                                
REPRESENTATIVE PRAX offered his  understanding that, in using the                                                               
term  "prevailing wage,"  a condition  of the  contract would  be                                                               
that the  employer would pay  whatever the prevailing  wage might                                                               
be.   He asked  if Mr.  Frye is talking  about projects  that are                                                               
under  written contract  that pay  a prevailing  wage until  it's                                                               
found out that they are not.                                                                                                    
                                                                                                                                
MR.  FRYE  explained  that  when  an  employee  becomes  a  self-                                                               
contractor, the  main business  does not have  them listed  for a                                                               
prevailing wage.  He detailed  a hypothetical: while there may be                                                               
five drywall  painters on  a site,  certified payroll  only shows                                                               
one person.  He stressed  that dishonest employers are gaming the                                                               
system.                                                                                                                         
                                                                                                                                
REPRESENTATIVE  PRAX   asked  Mr.  Frye  if   he  had  personally                                                               
witnessed what he is alleging.                                                                                                  
                                                                                                                                
MR. FRYE answered, "Yes, all over the state."                                                                                   
                                                                                                                                
REPRESENTATIVE PRAX suggested that  this issue would be something                                                               
that the  union handles.   He  asked if Mr.  Frye works  with the                                                               
union.                                                                                                                          
                                                                                                                                
MR. FRYE  confirmed that  he works  for the  union, and  that the                                                               
projects he referred to were open bid with both union and non-                                                                  
union workers on them.                                                                                                          
                                                                                                                                
REPRESENTATIVE  PRAX offered  that if  a person  is working  on a                                                               
union  contract, it  would seem  to be  the job  of the  union to                                                               
represent  their  members.    He  asked  why  the  union  is  not                                                               
representing their members.                                                                                                     
                                                                                                                                
MR. FRYE answered that he is  a union organizer, and that his job                                                               
is to  talk to  workers.   He stressed that  he is  testifying on                                                               
authority and with certainty regarding what is going on.                                                                        
                                                                                                                                
4:33:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CARRICK  said the  bill as  written would  allow a                                                               
current  construction   worker  to  be  a   voluntary  compliance                                                               
officer.   She  asked  about  people that  work  for a  company's                                                               
competitor on a project.                                                                                                        
                                                                                                                                
MR.  FRYE responded  that owners  of  construction companies  are                                                               
mindful  of their  budget, and  so  he cannot  imagine a  company                                                               
investing  in going  around and  abusing the  proposed compliance                                                               
officer.   He stated that  he does not  believe that would  be an                                                               
issue.                                                                                                                          
                                                                                                                                
REPRESENTATIVE CARRICK  pointed out  that the bill  also requires                                                               
construction  experience in  order to  be a  volunteer compliance                                                               
officer.   She asked if  there is  a pool of  former construction                                                               
people,  not  currently  employed,  who  can  volunteer  for  the                                                               
position.                                                                                                                       
                                                                                                                                
MR. FRYE answered  that there are many industry  groups that want                                                               
to see honest employers do good.   He said it is fair to expect a                                                               
pool of people that'll step up.                                                                                                 
                                                                                                                                
4:36:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRAX said  Mr. Frye must be getting  his info from                                                               
non-union job sites.  He asked how he gets on these job sites.                                                                  
                                                                                                                                
MR. FRYE  stated that he's not  a union contractor, he's  a union                                                               
organizer.  He  said it is easy to find  construction workers and                                                               
talk to them about such information.                                                                                            
                                                                                                                                
4:37:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER pointed out that  DLWD says there is not a                                                               
problem, and that  total wage claims have reduced from  250 to 50                                                               
since 2018.                                                                                                                     
                                                                                                                                
MR. FRYE  answered that there  is a lot  of ground to  cover with                                                               
only just 12 investigators.   He highlighted that most wage theft                                                               
victims  are  disincentivized  from self-reporting  for  fear  of                                                               
retaliation.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER asked  about employees  being independent                                                               
contractors, and asked if this bill would solve that.                                                                           
                                                                                                                                
MR. FRYE  responded yes, and that  it would be done  by asking if                                                               
each individual  employee is covered  by a  worker's compensation                                                               
policy.  He said most of  the time, workers are not covered; once                                                               
an employer  classifies the worker as  an independent contractor,                                                               
the employer is no longer responsible for worker's compensation                                                                 
premiums.                                                                                                                       
                                                                                                                                
4:39:51 PM                                                                                                                    
                                                                                                                                
MATT  CAPECE, Representative  of  the  General President,  United                                                               
Brotherhood, Carpenters and Joiners  of America, read his written                                                               
testimony on  HB 186 [included  in committee packet],  which read                                                               
as follows [original punctuation provided]:                                                                                     
                                                                                                                                
     Dear Representative Sumner,                                                                                                
                                                                                                                                
     I am  writing on  behalf of  the United  Brotherhood of                                                                    
     Carpenters and  Joiners of America ("UBC")  to give our                                                                    
     support  for  House  Bill  186,   An  Act  Relating  to                                                                    
     Volunteer Labor Compliance Officers.                                                                                       
                                                                                                                                
     The focus  of my  work for  the UBC  is on  the growing                                                                    
     problem   of  illegal   employment  practices   in  the                                                                    
     construction industry.  My work  on the topic  began in                                                                    
     1989 when I was associate  general counsel for my local                                                                    
     carpenters'  union in  Connecticut.  Since  then I  was                                                                    
     hired by the  UBC, which has put me in  the position of                                                                    
     witnessing   the   spread   of  illicit   and   immoral                                                                    
     employment practices  throughout the country  that harm                                                                    
     workers,   responsible   construction  businesses   and                                                                    
     taxpayers.                                                                                                                 
                                                                                                                                
     The  illicit and  immoral employment  practices in  our                                                                    
     industry sadly  do not  stop at  tax fraud,  wage theft                                                                    
     and  workers'  compensation  premium fraud.  They  also                                                                    
     include  labor trafficking,  child  labor, mail  fraud,                                                                    
     wire    fraud,   immigration-law    violations,   money                                                                    
     laundering and racketeering.                                                                                               
                                                                                                                                
     In  one outrageous  case  in  Minnesota, a  subcontract                                                                    
     labor provider,  Ricardo Batres,  was sent to  jail for                                                                    
     labor  trafficking and  employer workers'  compensation                                                                    
     premium fraud. He kept  his construction workers packed                                                                    
     in living quarters without  hot running water. Whenever                                                                    
     his workers  complained about their housing  and unsafe                                                                    
     working conditions,  he threatened to  call immigration                                                                    
     authorities to  keep them  quiet. Those  unsafe working                                                                    
     conditions resulted  in one of his  workers suffering a                                                                    
     broken back. Batres' response was  to insist that he be                                                                    
     brought to a massage therapist.                                                                                            
                                                                                                                                
     Conditions  in our  industry  have  become so  alarming                                                                    
     that the  U.S. Department  of the  Treasury's Financial                                                                    
     Crimes  Enforcement  Network  ("FinCEN") has  issued  a                                                                    
     notice  to banks,  money service  businesses and  other                                                                    
     financial  institutions requiring  them  to report  the                                                                    
     suspicious transactions  of their  construction account                                                                    
     holders. In its notice, FinCEN wrote:                                                                                      
                                                                                                                                
     The  Financial Crimes  Enforcement Network  (FinCEN) is                                                                    
     issuing  this Notice  to  call financial  institutions'                                                                    
     attention to  what law enforcement has  identified as a                                                                    
     concerning increase  in state  and federal  payroll tax                                                                    
     evasion  and workers'  compensation insurance  fraud in                                                                    
     the  U.S.   residential  and  commercial   real  estate                                                                    
     construction industries.                                                                                                   
                                                                                                                                
     Every year across the United  States, state and federal                                                                    
     tax authorities  lose hundreds  of millions  of dollars                                                                    
     to  these schemes,  which  are  perpetrated by  illicit                                                                    
     actors primarily  through banks  and check  cashers. As                                                                    
     described in this Notice, many  payroll tax evasion and                                                                    
     workers'  compensation fraud  schemes involve  networks                                                                    
     of  individuals  and the  use  of  shell companies  and                                                                    
     fraudulent documents. These  schemes further affect the                                                                    
     local and  national construction  job markets,  and put                                                                    
     legitimate    construction   contractors    and   their                                                                    
     employees at a competitive disadvantage.                                                                                   
                                                                                                                                
     By now  you may  have been  made aware  of the  data on                                                                    
     illegal  practices in  our industry  nationally and  in                                                                    
     Alaska, so  please bear  with me  as I  summarize here.                                                                    
     Nationally, up to 2.1  million construction workers, or                                                                    
     19  percent, are  either  misclassified as  independent                                                                    
     contractors  or   paid  off   the  books.5   Those  are                                                                    
     conservative  estimates. State  and federal  tax losses                                                                    
     amount  to  $10  billion. Construction  workers  suffer                                                                    
     $1.9 billion  of wage theft, and  workers' compensation                                                                    
     insurers  lose $5  billion a  year to  employer premium                                                                    
     fraud.  To  add  insult  to  injury,  working  families                                                                    
     suffer  a $5.1  billion tax  increase, because  crooked                                                                    
     contractors foist  the employment taxes they  should be                                                                    
     paying  onto the  backs of  their workers.  Nationally,                                                                    
     this  race to  the  bottom  has led  to  39 percent  of                                                                    
     construction worker  families relying  on some  form of                                                                    
     public assistance to make ends  meet, costing state and                                                                    
     federal taxpayers $28 billion a  year.6 It is no wonder                                                                    
     that  under these  conditions  the  industry is  having                                                                    
     difficulty   attracting   and   retaining   a   skilled                                                                    
     workforce.                                                                                                                 
                                                                                                                                
     In  Alaska,  up to  19.2  percent  of the  construction                                                                    
     workforce  is   either  misclassified   as  independent                                                                    
     contractors or paid off the  books.7 The workers suffer                                                                    
     $4.7  million in  wage theft  a year  and the  state is                                                                    
     losing  $5.8  million  a year  in  unpaid  unemployment                                                                    
     insurance   contributions,   and  the   offloading   of                                                                    
     employment-tax    obligations    result    in    Alaska                                                                    
     construction  workers having  their taxes  increased by                                                                    
     $12.9  million.  Unpaid workers  compensation  premiums                                                                    
     are   $12.4  million.   You  can   bet  that   workers'                                                                    
     compensation  insurers are  passing  along those  fraud                                                                    
     losses to  honest construction  employers who  then see                                                                    
     their  premiums go  up,  making  them less  competitive                                                                    
     against the cheaters.                                                                                                      
                                                                                                                                
     How did  things get this  bad? There are  a combination                                                                    
     of  factors, chief  among  them  include a  marketplace                                                                    
     favoring  the  lower  bids   of  the  crooks,  workers'                                                                    
     compensation  insurer  practices   that  enable  fraud,                                                                    
     failed immigration  laws, the industry's adoption  of a                                                                    
     labor  provider (whom  we call  "labor brokers")  fraud                                                                    
     model   that  protects   upper-tier  contractors   from                                                                    
     liability,  the absence  of  accountability for  upper-                                                                    
     tier contractors  that use law-breaking  labor brokers,                                                                    
     the  underfunding  of  law  enforcement,  the  industry                                                                    
     giving up on  self policing, and the  lack of knowledge                                                                    
     and understanding of the  construction industry and the                                                                    
     severity of the problem.                                                                                                   
                                                                                                                                
     This now  brings us to  our support of House  Bill 186.                                                                    
     The  bill  wisely   improves  the  state's  enforcement                                                                    
     capabilities at  little cost. The  fiscal notes  on the                                                                    
     legislation put  the yearly cost  at $464.6  thousand a                                                                    
     year. This  is far  less, for  instance, than  the $5.8                                                                    
     lost to the state unemployment  trust fund and the $4.7                                                                    
     million  in   wage  theft.  The   volunteer  compliance                                                                    
     officers  will be  trained by  the Department  of Labor                                                                    
     and  Workforce  Development ("DLWD").  The  legislation                                                                    
     includes  safeguards that  ensure the  impartiality and                                                                    
     professional conduct of  the volunteers. The volunteers                                                                    
     will  not be  issuing  citations-they will  serve as  a                                                                    
     vanguard,  reporting  suspected   violations  of  state                                                                    
     labor   law   to   DLWD   who   can   conduct   further                                                                    
     investigations   that  can   lead  to   citations.  The                                                                    
     volunteers  amount to  a  much-needed force  multiplier                                                                    
     for DLWD,  thus improving law  enforcement capabilities                                                                    
     for  the construction  industry,  especially when  DLWD                                                                    
     uses  volunteers with  industry expertise.  This checks                                                                    
     many  of the  boxes needed  to improve  compliance with                                                                    
     state  employment,  tax,   and  anti-labor  trafficking                                                                    
     laws.                                                                                                                      
                                                                                                                                
     The UBC  and it  [sic] affiliates  simply seek  a level                                                                    
     playing   field   for  all   law-abiding   construction                                                                    
     employers and a ticket to  the middle class for the men                                                                    
     and  woman who  do the  hard  work. HB  186 assists  in                                                                    
     getting  there.  For  these   reasons  we  support  the                                                                    
     legislation and urge its adoption.                                                                                         
                                                                                                                                
4:48:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRAX  noted that there may  be competing companies                                                               
that  seek to  suppress competition.   He  asked how  conflict of                                                               
interest is defined in other states.                                                                                            
                                                                                                                                
MR.  CAPECE  answered that,  in  the  construction industry,  the                                                               
marketplace   is  favoring   employers  who   cheat;  there's   a                                                               
suppression of business for law-abiding  employers.  He said that                                                               
law-abiding employers need  protection from cheating competitors.                                                               
He said  he cannot answer the  conflict-of-interest question, but                                                               
pointed out  that the bill provides  for people to be  trained by                                                               
DLWD on  how to act  professionally, and  how to not  benefit any                                                               
one person or entity.  He  said the volunteers would be "eyes and                                                               
ears,"  as they  are not  issuing citations;  whatever they  see,                                                               
they will report  to DWLD, who will handle  the investigation and                                                               
issue citations.                                                                                                                
                                                                                                                                
4:51:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FIELDS  said  there   are  many  worker  advocacy                                                               
groups.  He asked where immigrant advocacy groups are.                                                                          
                                                                                                                                
MR. CAPECE  commented that in every  state there are going  to be                                                               
low-wage  employee  advocacy/protection  groups.   He  shared  an                                                               
anecdote about such a group in Minnesota.                                                                                       
                                                                                                                                
4:52:50 PM                                                                                                                    
                                                                                                                                
CHAIR SUMNER announced that HB 186 was held over.                                                                               
                                                                                                                                

Document Name Date/Time Subjects
HB192 Letter of Support - Uber Eats.pdf HL&C 2/2/2024 3:15:00 PM
HB 192
AK HB 192 - letter of support FINAL.pdf HL&C 2/2/2024 3:15:00 PM
HB 192
DOLWD HB 186 Response.pdf HL&C 2/2/2024 3:15:00 PM
HB 186
HB 147 I am oppossed to the non-payment for the license..docx HL&C 2/2/2024 3:15:00 PM
HB 147
HB192 Support Letter HLC 2-13-24.pdf HL&C 2/2/2024 3:15:00 PM
HB 192
HB192 Amendments Updated.pdf HL&C 2/2/2024 3:15:00 PM
HB 192