Legislature(2003 - 2004)
04/20/2004 08:08 AM Senate JUD
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SB 354-HUMAN RIGHTS COMMISSION PROCEDURES
MR. SCOTT NORDSTRAND, Deputy Attorney General, Civil Division,
Department of Law (DOL), told members he spent about 15 years
practicing in the employment field when in private practice. He
practiced before the Human Rights Commission on many occasions
and is familiar with its procedures. He maintained that the
state has an interest in having an effective administrative
procedure to root out discrimination and provide remedies, and
to have a procedure that is fair to the state when the state is
the defendant.
MR. NORDSTRAND explained that SB 354 is designed to rebalance
some of the Human Rights Commission's (HRC's) procedures to
provide more fairness in the process and more effective use of
the HRC's resources. He gave the following synopsis of the
measure:
The primary thing that this does is it gives the
executive director of the commission the power to pick
and choose those cases that are most deserving of
proceeding to hearing. That power was essentially lost
to the director in the case that's referenced here,
Department of Fish and Game v. Meyer, 906 P.2d 1365
(Alaska 1995).
To understand this, you have to understand a little
bit about what the procedure is when you go before the
commission. Let's assume for a moment we're talking
about an employer-employee situation, which is the
most common kind of case that comes before the
commission. There are housing cases and other cases
but that's the most common and probably the most
contentious. A question of whether there was
discrimination based upon age in hiring comes before
the commission. The way that happens is the person who
didn't get the job would go down to the commission,
would say that they felt they had been discriminated
against based on age, and then the commission staff
would assist them and prepare a complaint.... You can
see that's AS 18.80.100, that process.
So the complaint is filed and it's sent to the
employer. The employer has an opportunity to respond
and generally that's the point at which the employer
would hire an attorney if they choose to and the
attorney would gather evidence about the circumstances
and prepare...a response back to the commission saying
why they didn't think there was discrimination or, on
occasion, there may have been something wrong and they
offer to remedy it in some way. And so, then the
process begins for the commission to assign an
investigator. The investigator is assigned to look
into both sides of the matter and make a determination
...under AS 18.80.110 that there was substantial
evidence of a discriminatory practice.
That still is the norm. That has not changed under
here. So an investigator, if an investigator finds
there's substantial evidence of discriminatory
practice, then the case is sent to something called
conciliation. You might call it mediation, whatever
you want to call it. It's a time when the employer and
the employee and the commission staff sit down and see
if they can work something out.
If there's a failure of consideration, as they say, at
the commission, then the executive director certifies
that fact and it's assigned forward to hearing. And at
that point a human rights advocate, which is an
attorney employed by the commission, is assigned to
the case to represent the executive director. They
don't technically represent the employee but they
pursue their interests before the commission. They go
through a formal discovery process...not unlike any
lawsuit you're in - depositions, interrogatories, all
of that kind of thing happens and all of the costs
associated with that happen too. It may be somewhat
quicker, but it is, by no means, a particularly
inexpensive way to come to conclusion, and much more
than a civil case.
And then at the end, if there's a hearing, a hearing
officer is assigned. The case is not heard before the
commission.... Generally a contract-hearing officer is
hired. They hear the case, they write a recommended
decision, an order, that's then recommended to the
Human Rights Commission that it ultimately can adopt
or not. The commission has remedial powers that are
limited. They don't include, for example, the power to
award punitive damages, the power to award non-
economic damages, which is pain and suffering, that
kind of - emotional stress kinds of things. Generally
it's injunctive relief, like putting them back to
work, back pay, benefits, that kind of thing - as they
indicate, making the employee or the plaintiff whole.
Now what happened in this Meyer case that created the
problem was that the Supreme Court determination of
what is substantial evidence to require a hearing,
that is, if you have substantial evidence, you have to
have a hearing - that's what the Supreme Court says
and that's what the law has said to date.
Unfortunately...the standard is very low, according to
the Supreme Court, and I'm not sure if that's because
of the way the statute is written or because of the
Supreme Court's interpretation of it. Regardless, the
standard is very low. In fact, the allegation has to
be completely lacking in merit in order not to go to
hearing. That's a very low standard. And so, as a
result, essentially any case that's got any scrap of
evidence at all of a discriminatory event goes to
hearing. That's a problem for the commission because
the commission really has no way to weed out the good
cases from the bad and use its resources most
effectively and to be the most effective agency it
can.
Let me give you a comparison, for example, of what the
Equal Employment Opportunity Commission - the feds do.
The feds do the same thing. They have an investigation
process but, in fact, they decide whether to take the
case or not. The feds don't have, in fact, a
commission or hearing process to go to. If they want
to bring charges of discrimination under federal laws,
civil rights laws, they have to go to the federal
courts. They have to go downtown to the courthouse and
file a lawsuit. That's not the case here. But in any
case, they have the power to choose amongst the
various cases. What this bill does is it gives the
executive director the power to say no, that case
really isn't a very good case. We're not going to win
that case so we're not going to take that one forward.
We'll use our resources somewhere else. That's the
primary thing that this bill does.
MR. NORDSTRAND referred to the analysis section entitled
"Improves commission procedures" and said it contains
remedies to many small problems encountered by attorneys
over the years. First, the HRC is not authorized to
compromise claims during the conciliation process.
Therefore, if a person didn't get a job on May 1 and the
hearing is on December 1, the HRC would have no choice but
to order back pay for seven months. Under the bill, the HRC
would have the choice of ordering less back pay. The bill
also requires the HRC to follow the Administrative
Procedures Act, unless otherwise provided for in statute.
It also allows a hearing officer to grant summary judgment,
either for or against a case before him or her. Right now,
commission regulations preclude a hearing officer from
doing that. He told members that an attorney could file
every case that goes before the HRC as a lawsuit in court
and have access to more remedies, such as non-economic
damages. However, in the court system, if a case is very
bad or very good, the amount the court must hear can be
limited by a summary judgment ruling. Because that option
does not exist with the HRC, the HRC must hear every case
before it. SB 354 will address that issue.
SENATOR THERRIAULT asked why the HRC is precluded from
summary judgments now.
MR. NORDSTRAND said he believes the HRC did not want to
deal with summary judgment motions because of the workload
of the human rights advocates. However, on the flip side,
allowing those motions will potentially prevent a number of
cases from going to a hearing. He said it is his
understanding that summary judgment motions were
specifically excluded from the HRC regulations.
He then said, regarding SB 354 enhancing fairness of the
commission's procedures, in the example of an age
discrimination case, if a finding of substantial evidence
is made, the case would go forward to discovery. However,
in the past, if the problem was determined to be sex
discrimination rather than age discrimination, the HRC
could go forward with a hearing on any claims it amended
its complaint to include. He stated:
What we have found is that there are times when -
I mean that's simply sort of sidestepping the
requirement. If we're to believe that substantial
evidence should be found for every claim that
goes to hearing, then if a new issue comes up in
discovery for which there has been no finding of
substantial evidence, this simply provides that
it goes back to that process. An investigator
looks at it and determines if there's substantial
evidence before that complaint can be amended and
go forward so that the employer or the respondent
can have the benefit of the informal process of
going back through investigation, a response on
the sex discrimination case, for example, and an
opportunity to conciliate. And perhaps, in the
face of the new evidence, conciliation might
actually be more likely, who knows? But it's just
a matter of fairness that that's the door that
opens to hearing - substantial evidence. It
should be there for every claim that's asserted.
MR. NORDSTRAND then said the commission has taken the view
that it has a 10.5 percent interest rate available to it.
The bill will tie that rate to the standard interest rate
charged by other agencies.
Regarding the remedies available, MR. NORDSTRAND said AS
18.80.130(a) contains a list of possibilities the HRC can
award and says it can award any appropriate relief. In
DOL's estimation, it is simpler to list what the actual
remedies are in a system that is designed to have limited
remedies. DOL identified the injunctive relief
reinstatement, training requirements, and financial
remedies used by the HRC. The financial remedies consist of
back pay and front pay, which is from the time of the
hearing forward to remediate any difficulties in putting
that person back into the workforce at the same pay level.
DOL codified that.
MR. NORDSTRAND indicated the controversial part is the cap
on the front pay. DOL's original cap in the bill was set at
two years of wages. The Senate State Affairs Committee
lowered that cap to one year. He pointed out the bill
contains a standard of what a complainant must prove to be
eligible for front pay [bottom of page 4]. He noted that
DOL discussed this bill with the HRC and found the
commission to be in agreement with the proposed changes
with the exception of the front pay issue. DOL believes
that in order to divine what economic damages are in an
employment case, one has to determine how much the employee
would have earned if he or she had not been discriminated
against. The amount that person earned in alternative
income is then subtracted. Front pay is a different animal,
in that no one knows what income he or she will earn in the
future and how far out into the future that money should be
awarded.
AN UNIDENTIFIED SPEAKER asked how that number is
determined.
MR. NORDSTRAND said the compromise was to cap that amount.
DOL believes this system was designed to provide limited
remedies by the government, rather than taking a case to
court. He pointed out the language in the current version
of the bill doesn't necessarily support an award of front
pay. The HRC has interpreted that language to mean that
front pay is available but that point could be argued.
SENATOR THERRIAULT asked Mr. Nordstrand for that citation.
MR. NORDSTRAND pointed to Section 6(a)(1).
SENATOR FRENCH referenced the word change in Sec. 18.80.100
and asked the difference between "practice" and "conduct."
MR. NORDSTRAND said that word change was made for the sake
of consistency. He believes "practice" is the better word
because the word "conduct" could be interpreted to mean an
action. He noted the HRC did not object to that change.
SENATOR FRENCH responded that his "first blush" response is
that a "conduct" is something a person does once, while a
"practice" is something that is done more than once.
8:30 a.m.
SENATOR OGAN agreed with Senator French's interpretation.
MR. NORDSTRAND maintained that DOL was making no attempt to
change the scope of what the HRC or act does; that change
was simply an attempt to use better language.
SENATOR FRENCH asked if the EEOC does summary judgment
motions and dismissals.
MR. NORDSTRAND replied, "Well certainly the EEOC, when they
go to court, are subject to all of the federal rules of
civil procedure."
SENATOR FRENCH asked if the EEOC has an in-house type of
system, similar to the HRC.
MR. NORDSTRAND explained:
No, the EEOC itself doesn't - with rare
exception. There are some very rare exceptions
that involve political appointees where the EEOC
has a hearing officer system that is then subject
to appeal, I believe, to the Circuit Court. It's
an odd system designed to take the political
issues out of the local courts I think. Other
than that, they don't have a commission that sits
like the Human Rights Commission as an
adjudicator that can award relief. They have to
go downtown to the courthouse and so when they
get there, they would have the full benefit of
Civil Rule 56 for summary judgment.
CHAIR SEEKINS asked Ms. Fitzpatrick to testify.
MS. LISA FITZPATRICK, chair of the HRC, told members the
HRC consists of seven individuals. She noted, in response
to a statement made by Mr. Nordstrand about remedies
available to the HRC, the HRC believes that Section 6(a)(1)
will not provide enough relief to make the complainant
"whole." The HRC is involved in ongoing discussions with
the Governor about its concerns and is hopeful that they
can agree on language that addresses those concerns. The
HRC believes the existing language is not comprehensive
enough and would prefer to use a "catch-all" phrase or to
use an enumerated list of remedies.
CHAIR SEEKINS asked if the HRC has a guideline for
appropriate remedies.
MS. FITZPATRICK said the guidelines are set to allow the
HRC to provide "whole" relief. The HRC has never awarded
any non-economic damages, however, if an employee is ill,
loses his job and medical insurance and incurs huge medical
costs, the language in the bill would prevent the HRC from
requiring that individual to be compensated for those
medical costs.
MR. NORDSTRAND informed members that DOL met with the HRC
and presented the bill. The HRC provided written comments,
from which DOL made significant changes to the bill, for
example removal of a provision that would allow payment of
attorney's fees to the prevailing employer. Other changes
were made in regard to mitigation of damages and amending
complaints. The HRC asked for four specific changes and the
only change DOL and the HRC could not agree on was front
pay. He said he was unaware that the HRC met and decided to
challenge the remedy section of the bill. His understanding
was that the only issue that remained was that of front pay
and the HRC's vote to cap front pay at two years failed
with 4 against and 3 in favor.
CHAIR SEEKINS asked if the HRC pays all attorneys fees for
the complainant.
MR. NORDSTRAND said it does.
CHAIR SEEKINS asked if the employer cannot recover any
damages if the employer prevails.
MR. NORDSTRAND said that is not specifically precluded. A
provision at the end of the act says the HRC can award
attorneys fees, however, the HRC does not do that. He
explained:
In other words, if you go through a whole hearing
and at the end there's a question should the
commission award attorneys' fees, well they're
not going to award attorneys' fees. They could
theoretically seek attorneys' fees to cover their
costs - I mean they have a human rights advocate
who is proceeding. I don't know that they do
that. And if they were to award, say if the
employer were to win the case, the only party
against whom they could award attorneys' fees
would be the commission. In other words, they'd
be awarding fees against themselves essentially
because the control of the case going through
hearing is with the executive director. It's not
with the individual, the employee, per se, and
they don't actually represent the employee in
these hearings. They represent their interests.
So, there's power in the statute to award
attorneys' fees but they don't do it, so an
employer gets nothing if they win.
CHAIR SEEKINS asked if the case was in court, the parties
would be subject to Rule 82.
MR. NORDSTRAND said that is correct. If an attorney brought
the case to court and the employer were to prevail, partial
attorneys' fees would be awarded under Rule 82.
CHAIR SEEKINS asked Ms. DeYoung to address Senator French's
concern about the word change from "conduct" to "practice."
MS. JAN DeYOUNG, Assistant Attorney General, DOL, said her
recollection is that no one had a problem with the word
"conduct," but several phrases were used throughout the
bill so the purpose was to provide consistency. She said
she had a particular concern with using the word
"discrimination" by itself because only unlawful
discrimination is problematic. Many differences are
recognized in the law as valid discrimination. She said her
point is that no one was concerned that the word "conduct"
was bad; the concern was with inconsistency throughout the
statutes.
MR. NORDSTRAND said AS 18.80.110, the original substantial
evidence language, says if the investigator determines that
the allegations are supported by substantial evidence, the
investigator shall immediately try to eliminate the
discrimination. He explained that parts of the act speak
just to discrimination, yet people act discriminatorily all
of the time and those acts may or may not be illegal. DOL
was attempting to make the language more precise.
SENATOR FRENCH asked, for the record, if Mr. Nordstrand is
saying it is his belief that nothing about that word change
would prevent a person from bringing a complaint before the
HRC based on a single act.
MR. NORDSTRAND responded, "Absolutely not, that is a
practice."
MS. FITZPATRICK clarified, regarding the HRC's concern
about the relief provision, the HRC did not pay sufficient
attention to that provision during the first go-around and
did not appreciate the gravity of it. Upon closer scrutiny,
the HRC realized it will create a significant problem and
decided to meet. The six commissioners present felt it
needed to be addressed.
CHAIR SEEKINS asked if the HRC discussed that provision
after it met with DOL.
MS. FITZPATRICK said it did. She furthered that Mr.
Nordstrand was out of town at the time so she ended up
speaking with Mr. Tibbles about the problem.
CHAIR SEEKINS announced that with no further participants,
public testimony was closed.
SENATOR FRENCH asked Chair Seekins if it was his intent to
move the bill from committee today or whether he planned to
give the two parties time to work on the disputed topic.
CHAIR SEEKINS asked Mr. Nordstrand if DOL wished to have
additional time to talk to the HRC.
MR. NORDSTRAND believed it was safe to say that DOL has
agreed to disagree with the HRC on that issue. He explained
that the general concept is that the bill will either
contain a specific list of remedies that identify what can
and cannot be done or it will have open-ended relief
language, and that is precisely the issue that DOL is
trying to solve. DOL believes that people who participate
in a government-funded process should expect limited
remedies from that process. He noted that unfettered
remedies permit interesting settlement negotiations. For
example, he learned in DOL's discussions with the HRC, that
front pay has settlement implications because it can be
calculated at any number and be used as a negotiating tool.
Any good lawyer would have an economist try to maximize the
front pay number. If the economist determined the front pay
to be $50,000 for 5 years, another $250,000 would be on the
negotiating table. DOL is saying that some level of
certainty, in this case one year of front pay, is a fair
balance and will create more certainty of outcome and
encourage settlement. It will also give reasonable
expectations to the claimants. He repeated that DOL simply
disagrees that an appropriate list is limiting.
CHAIR SEEKINS asked, using Ms. Fitzpatrick's example of an
employee who lost a job with medical benefits and incurred
huge medical costs, whether an employer would be required
to pay back pay and the loss of benefits.
MR. NORDSTRAND said, in general, part of the compensation
package would be the benefit package. However, there is an
ongoing debate about whether the employer would be liable
for the cost of insurance versus the consequential damages.
DOL falls on the side of the employer's benefits being the
defining term. He noted that although consequential things
can happen, many of those things are within the employee's
control. He said there are people who have no job and not
enough money to buy medical insurance and incur medical
costs. If those costs are so consequential to that case,
for example if a catastrophic medical injury occurs, then
the case should be in court. He said his friends in the
plaintiffs' employment bar often monitor the HRC's cases
and take the good cases to court. He continued, "There is a
limit. Yes. And in this case, we would not be funding a
million dollars of medical costs that were uninsured. We
would be funding, and our understanding would be, the
benefit cost."
CHAIR SEEKINS asked if the [HRC] would be making the
determination on whether the practice that caused the
person to lose his job was discriminatory but the court
system would determine the damages that resulted from the
lost job because the HRC is not the proper venue for that
kind of a claim.
MR. NORDSTRAND replied, "Any more than punitive damages is
because they don't have the authority to award those
damages."
SENATOR FRENCH thought the HRC exists because many cases
are for perhaps $5,000 and, although that amount might be a
crushing amount for the plaintiff, it is not worth an
attorney's time.
MR. NORDSTRAND said that is certainly true and the small
cases are the business of the HRC to some degree, but the
director will be given discretion. He noted there is a
point where one has to consider whether the cost of
litigating such a case is worth the HRC's time to go
through the entire proceeding. He said the EEOC is very
good at getting the big cases where it tackles class action
suits or cases that will set things right for a lot of
employees. But the HRC has been bogged down with a lot of
cases that perhaps shouldn't go to hearing and it would be
more advantageous to use its resources for investigations.
He offered that a person with $5,000 in medical costs could
also file a claim in small claims court.
CHAIR SEEKINS agreed that small claims court is very
effective and efficient but expressed concern that the
financial limit for that court is too low.
SENATOR THERRIAULT asked if a plaintiff could take the
HRC's determination as fact before the court.
MR. NORDSTRAND said that is an interesting question. He
commented:
It would be subject to review, like any
administrative agency finding, but it would go up
through that process and, for example, if you -
theoretically, I haven't seen it done but
theoretically, if you had a finding here of
discriminatory conduct, you might be able to go
forward in court and seek other remedies too.
SENATOR THERRIAULT said a person without the money to go to
court who went through the HRC process first and was
successful would be getting something of tremendous value
without going to court.
MR. NORDSTRAND said DOL discussed whether to include an
opt-out provision so that a person who went through the HRC
process would be opting out [of court].
MS. DEYOUNG stated that provision was not included in the
bill.
TAPE 04-46, SIDE B
CHAIR SEEKINS said his concern was that this bill would not
give a person who was collaterally damaged recourse within
the system but his concern has been addressed.
MS. DEYOUNG informed members that regarding the
substitution of the word "practice" for "conduct,"
discriminatory practices are defined in the human rights
law, which is why the word "practice" was chosen.
CHAIR SEEKINS noted he saw no reason to hold the bill in
committee.
SENATOR THERRIAULT moved SB 354 from committee with
individual recommendations and its zero fiscal note.
CHAIR SEEKINS announced that with no objection, the motion
carried. He then announced a 5-minute recess.
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