Legislature(2005 - 2006)BELTZ 211
03/08/2005 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB102 || HB102 | |
| SB124 | |
| SB130 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 130 | TELECONFERENCED | |
| + | HB 102 | TELECONFERENCED | |
| *+ | SB 124 | TELECONFERENCED | |
SB 124-FISHERIES BUSINESS LICENSE; BOND
CHAIR BUNDE announced SB 124 to be up for consideration.
SENATOR SEEKINS moved to adopt CSSB 124, version G.
SENATOR ELLIS objected for an explanation.
CHUCK HARLAMERT, Juneau Section Chief, Department of Revenue,
said the changes in the CS are technical corrections and
eliminate redundant language.
SENATOR ELLIS removed his objection and CSSB 124(L&C), version
24-GS1013\G, was adopted.
MR. HARLAMERT explained that CSSB 124(L&C) seeks to improve the
protections the state affords employees of fish processors and
primary fish buyers and to impose some increase accountability
for processors' taxes and assessments that support the industry.
Section 1 adds seafood marketing assessments levied under AS
16.51, contributions imposed under AS 23.20 (Alaska Employment
Security Act) and any administrative penalties assessed under AS
18.60.093 for a violation of a provision of AS 18.60.010 -
18.60.105 to the existing taxes in Title 43 that must be paid in
order to obtain a license (OSHA fines levied by the (DOLWD).
1:56:27 PM
Section 2 repeals and reenacts the bonding requirements. The
basic now is a $10,000 labor bond that is required of every
processor or primary fish buyer who buys fish and/or has
employees. The bond is used to protect employees and fishermen
for unpaid claims. The changes proposed by the bill will
restrict use of real property in lieu of a bond to taxpayers who
do not have a history of non-payment of any of these
obligations. A claim on the bond is sufficient to trigger an
increase in the bond level. It also allows Department of Labor
and Workforce Development to reach the bond without obtaining a
formal judgment in a court.
1:58:27 PM
CHAIR BUNDE asked if the essence is that someone has an
arrearage and a judgment against him, his bond goes up and he
has to pay the state in order to keep doing business in Alaska.
MR. HARLAMERT replied the current rule is that basic bond level
is $10,000. If a claim is made against the bond and it's not
enough to cover it, the bond is automatically increased to
either $50,000 or $100,000. The requirement is that the bond
actually be used to pay the judgment. The processor could pay
directly and avoid that consequence.
What this bill does instead of requiring that the bond
be actually used to pay that obligation, it simply
requires that there be a judgment in excess of
$10,000. It considers that a sufficient [indisc.] of
risk and increases the bond level accordingly.
1:59:52 PM
SENATOR ELLIS asked if the bill preserves the existing statutory
priority for use of the bond to pay fishermen and employees
first and does the CS modify that priority in any way.
MR. HARLAMERT replied that that priority is not modified and
actually strengthened under this bill, because while the
threshold is lowered for the DOLWD to go after the bond, if
subsequent to that, a fisherman or an employee achieves a
judgment against that bond and it is insufficient, the
department is obligated to "cough up" whatever they have
collected to cover that claim.
So, you could actually have a taxpayer, for example,
who had say $5,000 in ESU claims, take from the bond;
they replace their bond. A fisherman comes along with
a $15,000 claim and under current law, they would be
limited to $10,000 bond for recovery. Under this bill,
they could actually get the whole $15,000.
2:01:28 PM
SENATOR BEN STEVENS asked if the $5,000 comes from the
Department of Labor.
MR. HARLAMERT replied:
Yes, under this bill, labor, in order to preserve the
preference given to employees and fishermen over
labor's claims against the bond, while at the same
time allowing labor to get at that bond through a more
efficient process, we've built in basically a kickback
provision that says if necessary, labor has to repay
that money - put it back in the pool to pay the claims
of fishermen and employees in the event that their
subsequent claims are not satisfied from the bond.
SENATOR BEN STEVENS said the confusing part is where he says it
comes from labor to pay labor. "It comes to the department to
pay labor."
CHAIR BUNDE pointed out a zero fiscal note.
2:02:42 PM
SENATOR BEN STEVENS asked on page 5, lines 3-11, if the
commissioner finds the processor is not in compliance and he has
the ability to raise the bond, does he still issue the bond.
MR. HARLAMERT replied:
We don't actually issue the bond. We require them of
the processor. So, you actually do have dual
protections for labor. We can pay out of the bond a
claim for ESC from labor at which point the processor
has to immediately replenish that bond. If that
doesn't happen and they are still delinquent with the
Department of Labor, we can revoke their license for
failure to be current on their ESC.... The bond could
be in the form of a bond with an insurance company; it
could be in the form of cash residing with us - but it
is always provided by the taxpayer.
2:05:13 PM
SENATOR BEN STEVENS asked:
If we know there's an entity in violation... and we
keep issuing the license and the bond - you know there
are people that do that - does this help you in that
in efforts to deter that, then?
MR. HARLAMERT replied:
It absolutely does. Presently there is no requirement
for the processor to be current with their ESC and
they can and do go unpaid and continue to be licensed
by us under current law. We don't have a choice. If
they meet our requirements, we license them. Whether
they are being responsible with other agencies is
irrelevant - under current law. Labor, under current
law, has to obtain a court judgment to get at that
bond and that would be the only instance in the
current law where labor for an ESC claim would affect
their license ability. In current law, what happens if
they ever get a judgment and that judgment used up
that bond and the taxpayer failed to replenish it
immediately, we could revoke their license. But if
they did replenish it immediately, we would have to
maintain their license, yes.
GRAY MITCHELL, Director, Labor Standards and Safety, explained
that the bill allows department to stop fish processing
companies that are in violation of health and occupational
standards and have been issued a penalty and failed to pay it.
It is a penalty that has been affirmed through the Occupational
Safety and Health Review Board or was not appealed. In the past,
companies that did have fines on the books were given licenses
and continued to operate and this caused huge problems. For
instance, in Egegik, employees, fishermen and companies are owed
hundreds of thousands of dollars because a company was basically
on its last leg.
Had this bill been in place last year, they wouldn't
have been able to get a license without paying these
fines. Then they would be subject to some other issues
on their bonding.
2:10:11 PM
CHAIR BUNDE asked how the worker who is having the problem is
going to get $5,000 from the Department of Labor and how does
the department recoups its money.
MR. MITCHELL answered that was a general example and he didn't
know where the $5,000 came from.
But if a worker is owed $5,000 and at the same time
the Employment Security Tax people come in and they
seize the $10,000 processor bond for unpaid
Unemployment Insurance Taxes, that worker could then
get a judgment and within a certain timeframe be able
to trump the Department of Labor's tax collection on
that bond and the Department of Labor would
essentially have to give $5,000 of that back to
Revenue and then Revenue would get that money to the
worker.
CHAIR BUNDE said, "Assuming you're not getting blood out of a
turnip, the department would go after the processor?"
MR. MITCHELL replied, "Right."
2:11:24 PM
PAT SHIRE, Deputy Director, Employment Security Division, DOLWD,
supported SB 124. He remarked:
If the department can provide a mechanism to at least
clean the slate before the next season, we're far, far
ahead of where we were last year when we had fish
sitting on docks and workers standing there with the
dilemma of how we're going to make sure that these
obligations are met....
2:12:25 PM
CHAIR BUNDE asked if this would prevent licensure of people who
are not in compliance.
MR. SHIRE replied yes.
CHAIR BUNDE announced that CSSB 124(L&C) would be set aside for
another hearing.
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