Legislature(1993 - 1994)

04/30/1994 11:45 AM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 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           
 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.                                

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