Legislature(1995 - 1996)

05/03/1995 09:14 AM Senate JUD

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

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