Legislature(2003 - 2004)
04/02/2004 09:10 AM Senate JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 323 WORKERS COMPENSATION AND CONTRACTORS
CHAIR SEEKINS announced SB 323 to be up for consideration and
informed the committee of a proposed CS, version\H.
SENATOR OGAN asked to have the changes explained before a motion
is made.
CHAIR SEEKINS explained the changes are in language to make it
clear that if a subcontractor does not carry workmen's
compensation insurance, the contractor is liable for it. If the
contractor does not carry workers compensation insurance then
the project owner would be responsible. The next part clarifies
who is a contractor and who is a project owner. He says we do
have statutes that require contractors to be registered with the
state. He states the intent of the bill is very clear.
MS. PAMELA LABOLLE said the Chamber of Commerce suggested the
amendments that are contained in this committee substitute for
the purpose of clarification. Discussions with many parties
identified that the language caused confusion, which is now
clarified. She says they want to make certain that all
interested parties in a project will assure their employees are
covered. She cited instances where injured employees received
worker's compensation and then later under tort law and filed
suits against other interested parties who were not clearly
covered under the worker's compensation umbrella.
I think no one intended the worker's compensation law
to be used this way. The idea is the worker be covered
for their work-related losses. It's also important for
the safety factor because the only way the project
owner could stay out of the issue was if they were not
actively involved. They could not assess or assure
that the contractor and subcontractor had good safety
practices because, in so doing, they became an
involved person or involved party and they were then
able to be sued because they did not directly have
compensation coverage or had not assured that the
other parties all had coverage. And so that was the
purpose of the bill is to make sure that everybody in
the chain was involved and insured. And secondly to
eliminate the ability for them to go back and double
dip and collect payments from two sources, from both
the worker's compensation law and the courts for tort.
CHAIR SEEKINS asked for questions.
SENATOR FRENCH said:
I go back to a letter we got from Mr. Jack Miller a
month or so ago regarding how this bill would change
the obligation of parties to procure workman's
compensation coverage and in his letter he said, 'The
bill would have no effect on the obligation of parties
to procure workman's compensation coverage. As you
know with very few exceptions, current law requires
all employees...'
Tape 04-33 Side A
SENATOR FRENCH continued and said you're required to carry
worker's compensation and that requirement is not affected by SB
323. He wondered whether something in the CS has changed the
obligation of the parties to get worker's compensation coverage.
CHAIR SEEKINS said, "Mr. Miller is online but I don't think so."
MS. LABOLLE said no it does not change that. The employers have
to have worker's compensation coverage.
SENATOR FRENCH said he has difficulty with the bill in that you
get no more coverage but the worker is giving up his ability to
sue project owners who may or may not be covering him with
worker's compensation. He said what the worker is getting is no
more coverage in exchange for giving up his right to sue in
tort.
CHAIR SEEKINS said absolutely not.
SENATOR FRENCH said it strikes him that the worker is giving up
his right to sue in tort in exchange for no more coverage. He
doesn't see how a worker gains anything with this bill.
CHAIR SEEKINS stated that he has seen a number of instances that
would relate to this bill, such as cases where someone claims to
be a sole proprietor and then later claims to be an employee.
He goes on to say that the project owner who hires a contractor
or a contractor who hires a subcontractor will have to make sure
that workmen's compensation exists because if they do not, the
project owner has to provide it.
CHAIR SEEKINS asked for Mr. Miller online.
MR. JACK MILLER, attorney for the State Chamber of Commerce,
said that even though state law requires everyone to have
worker's compensation doesn't mean they all do. By extending the
obligation to provide workmen's compensation coverage all the
way up the project line to the project owner does enhance the
benefits to the employees who suffer injuries. Under current
law because of tort claim potential, project owners and
contractors all refuse to take an integrated approach to project
safety. He thinks the law is important because it gives an
incentive for all parties involved in the project to integrate
their safety practices and reduce work related injuries.
CHAIR SEEKINS announced the need to do some housekeeping and
asked for a motion to consider the proposed CS, labeled version
H, before the committee.
SENATOR THERRIAULT moved to adopt version H, dated 4/1/04, as
the working document before the committee.
CHAIR SEEKINS heard no objections. He responded to Mr. Miller's
announcement that he does not have a copy of version H by
offering to get him a copy. He asked Mr. Miller to respond to
Senator French's question regarding what is an employee getting
by not being able to sue someone up the line.
MR. MILLER said they are getting two things: 1) if their
employer does not have worker's comp coverage that obligation is
transferred to the contractor and the project owner. Says there
are situations where this has happened before and current law
does not address that; 2) this is an opportunity to get rid of
the disincentive for project owners, contractors, and sub-
contractors to alienate themselves as far as state work
practices go. This allows participants to coordinate safety
activities. He believes this is an important opportunity to
dramatically reduce work related injuries.
SENATOR OGAN asked how this affects a homeowner building his own
house who has a sub-contractor do a few things.
MR. MILLER said it excludes anyone who is a project owner who is
not engaged in business. A homeowner is not liable under this
statute.
MS. EDEN LARSON identified herself as President and CEO of the
Associated Builders and Contractors, an association with over
160 member companies who employ approximately 5000 employees
throughout the state. She supports SB 323 and adds further
comment on Ms. LaBolle's statements.
What happens to a contractor when an employee receives
a workman's compensation claim and then pursues tort
remedies thru the project owner, the project owner in
most cases today has included in his contract with the
contractor an indemnification agreement. What happens
is that if the tort claim is successful the contractor
is then liable to the project owner to reimburse and
indemnify the project owner for the cost of that tort
settlement. The contractor is then consistently caught
paying both the compensation costs as well as the
court costs. And this is a remedy to that problem the
situation that occurs regularly for construction
today.
Chair Seekins asked for any further testimony. He said they are
not going to move this bill at this time. Having no other
witnesses, Chair Seekins announced they will carry the bill over
and adjourned the judiciary committee.
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