Legislature(1993 - 1994)
04/30/1994 11:45 AM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATOR TAYLOR introduced CSHB 277(JUD) (INDEMNIFICATION OF PUBLIC C EMPLOYEES) as the next order of business. REPRESENTATIVE BRIAN PORTER, prime sponsor of HB 277, spoke to a problem brought to his attention by an individual and a group from a utility company in Anchorage that is owned by the city. One of the managers of the utility company tried to purchase a house and found that on his credit rating was a lawsuit that was filed against the utility. Because the municipality had a policy but not a law that provided that he would be indemnified, the individual had difficulty in obtaining credit sufficient enough to purchase the house because of the lawsuit. HB 277 codifies state policy and the policy of the Municipality of Anchorage, as well as many other municipalities, that the municipality will indemnify the actions or omissions of an employee who was nothing more than negligent when performing within the scope of his duty as an employee and as an employee during that period of time. It would not indemnify a person for gross negligence and it would not indemnify an individual against punitive damages. Number 565 SENATOR TAYLOR questioned that if, in fact, there was negligence on the part of the employee, does the employee also bear some responsibility. He said this will set in statute a policy that we are going to absolve our employees of their responsibility because we are going to indemnify them. REPRESENTATIVE PORTER agreed that the bill, in effect, is codifying common law as well as common policy for the state and the majority of the municipalities. He related that the Alaska Municipal League does not ever endorse any statute proposal that is a "mandate" on municipalities or boroughs, but they have submitted a letter of no objection to HB 277. He also pointed out that the bill contains a provision that the employer may reserve their right to dispute their obligation to indemnify or defend. Further, the bill excludes the university and school districts because this is already provided in statute to its employees. TAPE 94-44 Number 015 SENATOR HALFORD asked if in the case of a little municipality with no assets, is this indemnifying the individual who represented that municipality, or is this just guaranteeing a defense. REPRESENTATIVE PORTER responded that this would be indemnifying the individual, and within that is the somewhat presumed interest to defend if that is the position that the municipality or the public employer is in. SENATOR TAYLOR added that it appears to him that the legislation only impacts the relationship between the employer and the employee, and the victim would still have the right to go after either or both. SENATOR HALFORD observed that if the victim sues both the employer and employee, if the employer has got the money, he pays; if the employee has got the money, he pays; and if the city goes bankrupt the victim still recovers, but the person who can't recover is the employee against his own employer because the employer (the city) is bankrupt. Number 075 JEFF BUSH, a Juneau attorney, said this issue is something that he is intimately familiar with due to some litigation that he has been involved in during the last four to five months. In Haines, the borough was sued for action that the borough school board took and the individual assembly members were also sued as individuals. By the time the case was dismissed, the makeup of the assembly had entirely switched, politically speaking, and, therefore, it became a political issue on whether or not these people were going to be reimbursed for their attorneys fees. Mr. Bush said the legislation would essentially say that it is at least the responsibility of the borough to indemnify these people provided they did not act with gross negligence or wilful conduct. He added that this is not an uncommon situation. What makes it uncommon is the fact that the borough is hesitant to do so after the fact. He noted that individual state employees get sued frequently, and the state, as a general practice, has always picked up the tab on their legal fees with a clarification that if there is punitive damages assessed against the individual or intentional conduct, then they are going to have to pay. Number 135 SENATOR HALFORD asked if an employee can be fired for simple negligence. REPRESENTATIVE PORTER responded that an employee can be fired for negligence in performing their job, but the bill would not allow an individual being terminated so as to avoid the indemnification that they otherwise are by law or policy required to provide. SENATOR HALFORD asked if language could be added to the bill that specifically says the employer may fire the employee if they are found liable for the negligence of the employee, although they still have to defend the employee. REPRESENTATIVE PORTER answered that he couldn't see any reason why not, but he questioned if it should be qualified to the extent of not conflicting with a prior union agreement. SENATOR LITTLE said she would be in favor of something like that if it was intentional and gross negligence, but for simple negligence she is reluctant to provide that ability to the employer. SENATOR JACKO commented that if that language were put in, it would be an incentive for both the employer and employee for a settlement versus a judgement. After further discussion, SENATOR TAYLOR stated an amendment relating to Senator Halford's suggestion that an employee may be fired for simple negligence would be drafted and before the committee for its consideration the following Monday. SENATOR LITTLE stated her opposition to the amendment.