02/11/2015 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB81 | |
| HB9 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 81 | TELECONFERENCED | |
| *+ | HB 9 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 11, 2015
3:16 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Shelley Hughes, Vice Chair
Representative Jim Colver
Representative Gabrielle LeDoux
Representative Cathy Tilton
Representative Andy Josephson
Representative Sam Kito
MEMBERS ABSENT
Representative Mike Chenault (alternate)
COMMITTEE CALENDAR
HOUSE BILL NO. 81
"An Act relating to an exemption from the regulation of
construction contractors."
- HEARD & HELD
HOUSE BILL NO. 9
"An Act providing for the licensing and regulation of private
investigators and private investigator agencies; and providing
for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 81
SHORT TITLE: EXEMPTION: LICENSING OF CONTRACTORS
SPONSOR(s): REPRESENTATIVE(s) TILTON
01/28/15 (H) READ THE FIRST TIME - REFERRALS
01/28/15 (H) L&C
02/11/15 (H) L&C AT 3:15 PM BARNES 124
BILL: HB 9
SHORT TITLE: PRIVATE INVESTIGATORS/AGENCIES
SPONSOR(s): REPRESENTATIVE(s) HUGHES
01/21/15 (H) PREFILE RELEASED 1/9/15
01/21/15 (H) READ THE FIRST TIME - REFERRALS
01/21/15 (H) L&C, FIN
02/11/15 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
DAN BELLERIVE, Staff
Representative Cathy Tilton
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on HB 81 on behalf of the prime
sponsor, Representative Cathy Tilton.
SARA CHAMBERS, Acting Director
Division of Corporations, Business, and Professional Licensing
Department of Commerce, Community, & Economic Development (DCCED)
Juneau, Alaska
POSITION STATEMENT: Provided comments and responded to
questions on HB 81.
ALAN WILSON, Chair
Legislative Committee
Alaska State Home Building Association (ASHBA)
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 81.
ANDRE SPINELLI, Design & Development Manager
Spinell Homes, Inc.
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 81.
ROBERT YUNDT, Vice President
Mat-Su Valley Home Builders Association (MSVHBA)
Palmer, Alaska
POSITION STATEMENT: Testified in support of HB 81.
KIRK PERISICH, Member
Carpenters Local 1281
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of HB 81.
GREY MITCHELL, Director
Central Office
Division of Labor Standards & Safety
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions on HB 81.
GINGER BLAISDELL, Staff
Representative Shelley Hughes
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of the prime sponsor, presented a
section-by-section analysis of HB 9.
SARA CHAMBERS, Acting Director
Division of Corporations, Business, and Professional Licensing
Department of Commerce, Community, & Economic Development
(DCCED)
Juneau, Alaska
POSITION STATEMENT: Provided comments and responded to
questions on HB 9.
ACTION NARRATIVE
3:16:12 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:16 p.m. Representatives Colver,
Tilton, Kito, Josephson, Hughes, LeDoux, and Olson were present
at the call to order.
HB 81-EXEMPTION: LICENSING OF CONTRACTORS
3:16:55 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 81, "An Act relating to an exemption from the
regulation of construction contractors."
3:17:31 PM
REPRESENTATIVE TILTON, speaking as prime sponsor of HB 81,
stated that this bill relates to the licensing of residential
contractors. She said she introduced HB 81 after holding
discussions with members of the Mat-Su Home Builders, Inc.
Further, after speaking with contractors and realtors in other
areas of the state and some affected home buyers, it became
clear that some individuals are commonly exploiting an
unintended loophole in the existing statutory language, creating
an uneven playing field for licensed professionals who abide by
the law and potentially exposing unwitting homebuyers to
substandard construction. In short, HB 81 is really a consumer
protection bill and not a bill to restrict trade, she said. She
emphasized that HB 81 does not prevent Alaskans from building
their own homes, from selling homes they have built, or propose
any new licensure.
REPRESENTATIVE TILTON said that under current state law an
exemption for licensed contractors has allowed unlicensed
contractors to operate a substantial businesses avoiding
licensing, bonding, and insurance. By avoiding licensing,
bonding, and insurance requirements in the law, unlicensed
contractors are skirting the law and jeopardizing protections
for consumers.
REPRESENTATIVE TILTON surmised that most committee members
probably recall the first home they built and their sense of
taking financial risks in doing so. In fact, for most Alaskans,
purchasing their homes is the largest investment they will make.
This bill helps ensure that home buyers have expectations of a
uniform standard of professionalism and seek to reasonably
include all individuals engaged in home under the existing
residential contractor licensure.
3:19:50 PM
DAN BELLERIVE, Staff, Representative Cathy Tilton, Alaska State
Legislature, on behalf of the prime sponsor, stated that this
issue was initially raised by home builders in the Mat-Su
valley. A growing number of people are abusing exemptions in
state law that were intended to allow people to act as their own
general contractors; however, abuse of these exemptions have
allowed unlicensed contractors to operate substantial business
enterprises without obtaining any licensing, bonding, or
insurance, thereby creating an unfair playing field for
contractors who do follow the law. This bill, HB 81, will
address the issue by establishing a two-year timeframe in which
an owner-builder cannot sell a home after the completion of the
construction, but provides an opportunity for the owners to sell
their homes earlier if they notify the Department of Labor &
Workforce Development (DLWD).
3:20:53 PM
REPRESENTATIVE JOSEPHSON said he likes the bill; however, he
wondered whether any constitutional issues such as due process
will arise under the bill, with respect to disposition of
property, since home owners cannot sell their homes when they
want to do so.
REPRESENTATIVE TILTON answered that a few questions have been
raised, but she did not think there were any constitutional
challenges at this point.
REPRESENTATIVE LEDOUX related her understanding that contractors
can still sell homes, but they must have the appropriate
licensing to build homes.
3:22:36 PM
REPRESENTATIVE COLVER asked whether this bill was an effort to
obtain compliance from those parties building homes who have not
adhered to rules and regulations pertaining to their employees
or by obtaining contractor licenses that most contractors in the
home building industry acquire. He asked whether this is an
effort to "level the playing field" of those who have been
operating outside the regulatory environment.
REPRESENTATIVE TILTON replied the bill could be viewed in that
way; however, HB 81 does not prevent people from building or
selling their own homes, but it does allow regulators to look
for patterns of unlicensed home building, closes a loophole, and
creates an "even playing field."
3:23:58 PM
REPRESENTATIVE COLVER referred to page 2, paragraph 11, of HB 81
which read, " ... the exemption in this paragraph does not apply
if the structure under construction is advertised for sale or
sold during the period of construction or for two years after
the period of construction ends, unless the owner can
demonstrate to the department's satisfaction that the sale would
not result in circumvention of the requirements under this
chapter;". He expressed concern about what "the department's
satisfaction" might mean if owner-builders desire to sell their
homes. He wondered what hurdles the owner/builders would need
to jump over, and whether the owners will need to show cause
such as divorce or loss of job to do so. He further asked
whether owner-builders could add their spouses to the deeds.
3:25:23 PM
MR. BELLERIVE deferred to the Division of Corporations, Business
& Professional Licensing, Department of Commerce, Community, and
Economic Development (DCCED).
3:25:40 PM
SARA CHAMBERS, Acting Director, Division of Corporations,
Business, and Professional Licensing, Department of Commerce,
Community, & Economic Development (DCCED), stated that the
language "to the department's satisfaction" would be developed
through the public comment process when the department develops
its regulations. She envisioned it would be an open and
transparent process for public scrutiny, but will be codified in
regulations to ensure the process is clear.
3:26:40 PM
REPRESENTATIVE LEDOUX asked whether the parameters will be put
in regulation and if the regulations will identify the types of
exemptions or reasons the department will accept to avoid
contractors circumventing the law.
MS. CHAMBERS answered that is correct.
3:27:02 PM
REPRESENTATIVE LEDOUX asked whether there would be a "catch all"
for other circumstances that the department deemed will not
circumvent the law.
MS. CHAMBERS responded that the department will work to create a
process that is transparent and educational to the public
without being so restrictive that some qualifying circumstances
wouldn't fit within the structure. She said setting a standard
for the public must be in regulation; however, the department
will want to ensure that the process meets the intent of the
bill by closing any loopholes, yet not be unduly restrictive.
3:27:54 PM
REPRESENTATIVE LEDOUX asked for further clarification on whether
the answer is yes.
MS. CHAMBERS answered yes.
3:28:01 PM
REPRESENTATIVE COLVER asked for a general framework of the
conditions the department envisions will be in the proposed
regulations. He further asked what the department has done to
enforce contracting regulations, in particular, the requirement
that general contractors hold a residential endorsement. He
recalled the residential endorsement requires contractors must
obtain training and undergo a certification process. He asked
whether the department has worked to assist the industry in the
Mat-Su Valley to achieve compliance, the types of enforcement
actions the department employs, and the reason this bill is
needed.
MS. CHAMBERS explained that the DCCED works with the Department
of Labor & Workforce Development (DLWD) to enforce contractor
licensing throughout the state. Although the enforcement
statutes are located within the DCCED's statutes, the DLWD's
Division of Labor Standards and Safety, Wage and Hour section
conducts wage and hour inspections statewide to ensure
compliance. As an efficiency measure, the departments decided
that the DLWD will also perform licensing compliance. Thus,
rather than having two departments with separate enforcement
staff located throughout the state, the DLWD provides licensure
compliance and ultimately issues fines, cease and desist
letters, and follow-up collection of fines. She emphasized that
the DCCED's goal was to ensure compliance and to work with the
public and first-time offenders to bring them into compliance;
however, the department does have the authority to take stronger
action with repeat offenders or those blatantly skirting the
law.
3:31:22 PM
REPRESENTATIVE COLVER asked whether the department could provide
data on complaints and subsequent investigations to support the
legislative intent of non-compliance. He related his
understanding that DCCED issues and administers licenses and the
DLWD conducts the wage and hour inspections to verify whether
contractors are properly licensed.
MS. CHAMBERS related that the division lists the contractor
enforcement activity and those out of compliance on the DCCED's
website. She offered to provide the information to the
committee.
3:32:45 PM
REPRESENTATIVE HUGHES related her understanding that this issue
was brought to the sponsor's attention in the Mat-Su area. She
asked whether this problem exists in other parts of the state.
REPRESENTATIVE TILTON answered yes; that unlicensed contractor
activity also occurs in other parts of the state. She reported
that this issue is the number one legislative priority of the
Alaska State Home Builders Association (ASHBA) and although the
Mat-Su Home Builders first approached her, the ASHBA has
subsequently highlighted the problems its members have
encountered.
CHAIR OLSON added that this issue is a priority for the home
builders [Kenai Peninsula Builders Association (KPBA)] in his
district, too. He suggested unlicensed contractors might not be
as prevalent in Anchorage due to the number of building
inspectors in that area, but it is an issue in the smaller
communities.
3:33:49 PM
REPRESENTATIVE LEDOUX asked for further clarification on the
fiscal note.
REPRESENTATIVE TILTON answered that the Division of
Corporations, Business and Professional Licensing identified
costs of $2,500 in its fiscal note, but she has been working
with the department to see if these costs can be zeroed out. In
response to a question, she agreed that a similar bill was
introduced last year without any fiscal impact so she thought
there might be some leeway.
3:34:45 PM
REPRESENTATIVE LEDOUX asked whether the fiscal note costs are
limited to $2,500.
REPRESENTATIVE TILTON answered yes. She stated that contractors
pay fees and their program pays for itself; however, there are
some additional items she has been working on with respect to
the fiscal note.
3:35:48 PM
CHAIR OLSON opened public testimony on HB 81.
3:35:57 PM
ALAN WILSON, Chair, Legislative Committee, Alaska State Home
Building Association (ASHBA), stated that HB 81 is the ASHBA's
number one priority. He stated that the problems are magnified
in the Mat-Su area, but as previously mentioned, the Kenai
Peninsula and rural areas have also experienced some problems.
Although ASHBA views this bill as a consumer protection bill, it
is also a means of closing a loophole since some homeowners have
complained to the ASHBA. He offered his belief that this bill
will "level the playing field" since some people have been
operating outside of the regulations that everyone else must
abide by; however, the bigger issue is consumer protection. He
said his organization has worked extensively with Grey Mitchell,
Director, of the Division of Labor Standards & Safety,
Department of Labor & Workforce Development (DLWD) on
enforcement issues. Although significant progress has been
made, the issue has become a priority for The ASHBA, he said.
He urged members to support HB 81.
MR. WILSON added that he was surprised by the fiscal note costs;
however, licensed contractors are willing to pay extra fees, if
necessary. In response to a question, he agreed that the
"valley" is the Mat-Su Valley and not the Mendenhall Valley.
3:39:24 PM
ANDRE SPINELLI, Design & Development Manager, Spinell Homes,
Inc., testified in support of HB 81. He offered his belief that
this issue is not limited to rural Alaska or the Mat-Su Valley,
and said that unlicensed contractor activity happens in
Anchorage, even though it's a heavily-regulated building
environment. For example, someone will build a house without a
contractor's license and immediately put up a "for sale" sign.
These unlicensed contractors don't pay fees for licensure or
other fees for their employees, he said. He related his
understanding that the need for this bill arose when the
attorney general's office advised the DLWD that the law was too
vague to enforce and he envisioned that HB 81 will tighten up
existing law. For example, when owner-builders build their
homes, they are allowed to perform their own plumbing and
electrical work. If these owner/builders are acting as
unlicensed contractors, it allows them to unfairly compete with
licensed contractors. It raises consumer protection issues
since licensed plumbers and electrical contractors are not being
used in homes that are built and subsequently marketed to the
public.
3:41:53 PM
ROBERT YUNDT, Vice President, Mat-Su Valley Home Builders
Association (MSVHBA), stated his family has lived in the Mat-Su
area since the 1940s. He graduated from Wasilla High School in
1998 and has also worked as an owner-builder. Although he now
does consulting work, he has family members [who build homes].
He offered his belief that this bill was not intended to harm
anyone who wants to put sweat equity into a project. Members of
his organization and the DLWD frequently have observed "owner-
builders" in the Mat-Su Valley who build multiple homes, often
in the same subdivision. These owner-builders post real estate
signs in their yards during construction and market their homes
on Craigslist. He related a situation in which an owner-builder
did work to a home and the family died from carbon monoxide
poisoning due to inadequate air exchange. The home with [faulty
ventilation] was the only home in the subdivision he had not
built. He offered his belief that these deaths could have been
avoided if the owner-builder had hired a contractor, noting
contractors are required to have continuing education on safe
practices.
MR. YUNDT acknowledged it was difficult for contractors who
abide by rules to compete with unlicensed contractors who do
not. He offered his support for HB 81 since it will help
provide consumer protection. Although he did not think the bill
would curb owner-builders from building homes, it will probably
result in more residential contractor licensing and continuing
education.
3:45:50 PM
REPRESENTATIVE LEDOUX asked how this bill will be enforced. She
asked whether the banks will require some type of certificate.
MR. YUNDT answered that the unlicensed builders don't use Alaska
Housing Finance Corporation (AHFC), but use larger nationwide
conventional mortgages, such as Fannie Mae or Freddie Mac.
These conventional financing organizations do not require a full
set of inspections, but rely on a licensed safety inspection at
the end of construction; however, this bill will force the
unlicensed builders to get a residential endorsement, he said.
3:47:06 PM
REPRESENTATIVE LEDOUX asked for further clarification on the
provision related to owners selling a home within the two-year
period. She questioned how it would be known and whether the
purchaser could declare the home sale null and void if any
problems arose. She said she wants to put "teeth into this"
issue and not just add prohibitions. She then questioned how
this bill will stop the unlicensed builders.
MR. YUNDT related his understanding that owner-builders not
being able to openly market their homes will help curb
unlicensed activities. He suggested that from a business
standpoint, it typically takes about 4-6 months to build a house
and during this time other general contractors notice any
building activity and can monitor and report any suspected
unlicensed activity. Under the bill, anyone who has posted "for
sale" signs on their property will need to verify whether they
are licensed contractors or owner/builders. He offered that the
bill will likely force unlicensed contractors to get the
appropriate licenses so they can legitimately post their
properties, satisfy their lenders, and sell their homes.
REPRESENTATIVE LEDOUX commented that she was satisfied with his
answer.
3:50:26 PM
KIRK PERISICH, Member, Carpenters Local 1281, viewed regulation
of home builders as a good thing. He referred to paragraph 10,
of HB 81, which read, "an owner or tenant of commercial property
who uses the owner's or tenant's own employees to do
maintenance, repair, and alteration work on [UPON] that
property;" and asked whether this provision leaves a loophole
for commercial work to be done by owners and if the work will be
limited by a certain dollar threshold to alter or repair
commercial properties. He was curious why there would be a
loophole for commercial but not residential properties.
3:51:29 PM
CHAIR OLSON suggested he discuss this further with the bill
sponsor, but noted his point made sense.
MR. PERISICH remarked it might leave a loophole for the
commercial industry since some commercial owners have very large
properties so the amount of work they could do would be
substantial.
REPRESENTATIVE TILTON offered a willingness to discuss this
provision further after the hearing.
REPRESENTATIVE LEDOUX pointed out that paragraph (10) was
existing law and this bill makes a small editorial change.
3:52:51 PM
REPRESENTATIVE COLVER suggested that the intent of this
provision in existing law was to allow owners to perform
maintenance and minor alterations on their commercial property,
but it does not include major maintenance since that activity
would necessitate using a licensed contractor. He offered that
any commercial electrical work will require an electrical
administrator's approval since the standards are much higher for
commercial electrical and plumbing. He concluded that this
language refers to minimal minor maintenance rather than major
maintenance.
MR. PERISICH suggested imposing a dollar limit for minor
alterations on commercial property.
3:54:02 PM
GREY MITCHELL, Director, Central Office, Division of Labor
Standards & Safety, Department of Labor & Workforce Development
(DLWD), with respect to an earlier question on enforcement
activity, responded that investigator Al Nagel reported that
since fiscal year (FY) 2011 the department has issued 30
administrative fines for owner/builder violations and issued 16
fines in FY 11. These were violations associated with a person
building more than one structure within a two-year period, he
said, which is what the bill would address. This bill would
clarify that the department can investigate when it appears that
homes are being sold by unlicensed contractors and not by the
homeowners.
3:56:01 PM
MR. MITCHELL referred to page 2, line 10, to paragraph 10, of HB
81 which read, "(9) [(10)] a person working on that person's own
property, whether occupied by the person or not, and a person
working on that person's own residence, whether owned by the
person or not." Although this is existing law that provides an
exemption from contractor licensing, the division has had some
situations arise, he said. He stated that previous testifiers
identified instances when the attorney general reviewed
violations and found some vagueness to the law that precluded
enforcement. The department has interpreted this paragraph to
apply to people working on their own property on existing
structures, rather than "ground up" or brand new structures;
however, the language does not clearly provide the legislative
intent nor does a regulation further define it. He suggested
one remedy would be to add "existing structures" to avoid any
ongoing confusion about owner-builders building new houses
versus working on existing homes.
3:58:04 PM
REPRESENTATIVE COLVER asked for further clarification that the
aforementioned provision made the two-year restriction
unenforceable as interpreted by the attorney general's office.
If the language was tightened up by adding "existing
structures," he wondered whether it would be an enforceable
statute with the prohibition of a two-year waiting period for an
owner/builder - without adding the department's review and
consideration of the factors that led to the sale. He expressed
concern about involving more government and asked whether
compliance can be achieved by tightening up that clause in
existing statute.
MR. MITCHELL offered that clarifying the aforementioned
paragraph (9) would go a long way to resolve the loophole for
owner-builders; however, at the same time, testimony indicates
problems exist with owner-builders putting up "for sale" signs
during construction or immediately after finishing their homes.
Currently there isn't a clean way to say the owner-builders are
competing with licensed contractors. Thus he suggested the need
exists for both changes.
4:00:01 PM
REPRESENTATIVE COLVER recalled earlier testimony about carbon
monoxide in a Wasilla home that led to tragic deaths. He asked
if it would be possible to get the facts in this case. He
related his understanding that the homeowner changed something
such as the air intake in his home.
MR. MITCHELL replied that he was unsure because owner-builders
can make changes to their property, so that type of case would
not typically be something the department will investigate since
homeowners have an exemption from contractor licensing. He said
it was a tragedy when work is not performed correctly and the
department hopes that owner-builders do the work properly and
get the guidance to do so.
4:01:23 PM
REPRESENTATIVE COLVER asked whether he wrote the language with
respect to department waivers.
MR. MITCHELL answered no. He recalled his earlier question with
respect to how standards will be established and that the
Department of Commerce, Community & Economic Development (DCCED)
responded by suggesting regulations might be the way to address
the standards. A common sense approach might be to look at
whether there is any evidence to demonstrate that owner-builders
were acting as contractors, for example, a history of past
violations of contractor licensing requirements, or of acting as
owner-builders on multiple projects. Thus the department can
still conduct an investigation, but the owner-builders also have
an opportunity to provide legitimate reasons why they are
selling their homes. However, owner-builders would only need to
demonstrate proof if the department was pursuing an enforcement
action. These owner-builders could counter enforcement actions
by indicating they have reasons to sell their homes, such as
medical situations, family emergencies, divorces or lost jobs.
Certainly, if the reasons make sense, the department will accept
them. In addition, parties receiving administrative penalties
still have the ability to request hearings and supply the facts.
For example, if the home was the fourth house an owner-builder
built in the last three years, it will likely result in the type
of action to stop the owner-builder from using a homeowner
exemption and require the owner-builder to obtain the
appropriate contractor license.
4:04:17 PM
CHAIR OLSON, after first determining no one wished to testify,
closed public testimony on HB 81.
[HB 81 was held over.]
4:04:38 PM
The committee took an at-ease from 4:04 p.m. to 4:12 p.m.
HB 9-PRIVATE INVESTIGATORS/AGENCIES
4:12:02 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 9, "An Act providing for the licensing and
regulation of private investigators and private investigator
agencies; and providing for an effective date."
4:12:40 PM
REPRESENTATIVE HUGHES, speaking as prime sponsor of HB 9,
presented HB 9. She acknowledged she introduced a similar bill
to license private investigators last year when it was brought
to her attention that a felon could get a business license and
operate as a private investigator. She related a situation in
which a family lost a daughter and was approached by such an
unscrupulous individual. She emphasized that a presumption of
authority exists when someone identifies himself/herself as a
private investigator. In those instances citizens might offer
the private investigator personal information that they might
not otherwise give out. She offered her belief that this is
something that should be addressed. She described her approach
to curb this activity was not to create a costly board, but to
pattern private investigator licensing after other professions
licensed by the division. Finally, since the fiscal note for
licensing private investigators quadrupled from one the division
proposed last year, she has questions for the department about
the fiscal note, she stated.
4:14:49 PM
GINGER BLAISDELL, Staff, Representative Shelley Hughes, Alaska
State Legislature, on behalf of the prime sponsor, presented a
section-by-section analysis of HB 9. She stated that Section 1
would include private investigators as one of the specified
professions licensed under the Department of Commerce, Community
& Economic Development (DCCED) and Section 2 would require
private investigators to be licensed in the state. This
provision clearly states that person may not practice private
investigating unless licensed under this chapter or exempt from
being licensed, noting a number of exemptions exist. A person
may not use the title of or practice as a private investigator
unless the person is registered with the department or it could
result in a misdemeanor.
4:15:55 PM
MS. BLAISDELL referred to page 2, line 4, of proposed AS
08.85.110 that outlines the scope of practice for private
investigators, including investigating criminal offenses,
obtaining information from individuals, or gathering evidence to
be used in court. Private investigators working in the state
have advised the sponsor that if someone has not received
adequate training, the collection of evidence may not admissible
in court.
4:16:59 PM
MS. BLAISDELL referred to page 2, line 19, of proposed AS
08.85.120 that outlines the general requirements for a private
investigator. She related that in order to obtain a license as
a private investigator, an applicant must be a citizen, cannot
have been convicted of a felony in the prior 10 years or been
convicted of a crime of dishonesty or sexual misconduct, or have
received a dishonorable discharge from the military, or have
been determined to be mentally incompetent by a court of law.
Further an applicant cannot currently be on probation or parole,
she said.
4:17:51 PM
MS. BLAISDELL referred to page 3, line 15, of proposed AS
08.85.130, which would create two classes of license, with a
class A license being a more advanced professional level of
private investigator and a class B license an entry level
position, such as an apprentice who may need additional
experience or training to become a class A private investigator.
She directed attention to page 4, lines 21-31, through page 6,
line 12 of HB 9 to language that identifies the information for
the license application, including providing the typical
standard information, plus providing criminal history and
conviction record, employment records, and a statement that the
applicant is free from mental illness. Applicants must submit
fingerprints and fees for the criminal history record check,
letters of recommendations from three citizens without any prior
felony convictions, and the application must be notarized, she
said.
4:19:41 PM
MS. BLAISDELL referred to page 6, line 13, of proposed AS
08.85.170 that would allow the department to conduct background
investigations of applicants. She directed attention to page 6,
lines 19-28, which would create provisions for reciprocity to
allow private investigators licensed in another state, with
comparable qualifications, to become licensed in Alaska.
4:20:28 PM
CHAIR OLSON asked how many states currently license private
investigators.
MS. BLAISDELL answered that she was unsure. She recalled that
approximately 109 Alaskans have identified themselves as private
investigators and approximately 40 out-of-state investigators.
In further response, she answered that she was not sure how many
other states currently license private investigators.
MS. BLAISDELL clarified that proposed AS 08.85.200 would allow
Alaska to recognize private investigators licensed in other
states, but she wasn't certain how many states would recognize
Alaska's private investigators for reciprocity. In further
response, she related that a wide range of licensure programs
exist in other states. She recalled that four states do not
license private investigators, but some states provide municipal
oversight, although others have statewide laws.
4:21:41 PM
MS. BLAISDELL referred to page 6, lines 29-31 through page 7,
line 12, of proposed AS 08.85.210, noting the department would
issue an identification card that will list the private
investigator's license number, which must be carried while the
investigator is performing private investigator duties.
MS. BLAISDELL directed attention to page 7, lines 12-31 through
page 8, line 15 of proposed AS 08.85.220, to the requirement for
a private investigator agency certificate, noting the department
will issue a private investigator agency certificate if the
primary employee meets the requirements of possessing a class A
license and the agency is insured and bonded. She referred to
page 8, 1ines 16-31 through page 9, line 2, of proposed AS
08.85.230 related to license renewal and nontransferability of
licenses. She related that a private investigator license is
not transferable, but can be renewed as long as the
qualification criteria is still valid; however, approximately
every five years a licensee must submit to an additional
background check.
4:22:43 PM
MS. BLAISDELL directed attention to page 9, lines 3-11, of
proposed AS 08.85.240, which pertains to firearms training. She
explained this provision was added to ensure that people
entering into high risk situations would have successfully
completed firearms training.
MS. BLAISDELL directed attention to page 9, lines 12-17, which
provides confidentiality of licensees' personal identifying
information. Under proposed AS 08.85.260, prohibited practices,
licensees cannot collect information for illegal purposes. This
provision also prevents people from impersonating a private
investigator by carrying a badge or uniform, or display flashing
vehicle lights.
4:24:20 PM
MS. BLAISDELL, referring to page 10, line 24 of proposed AS
08.85.270, explained that this basically states that an action
may not be brought against a person who files a complaint in
good faith against a licensee. She surmised that private
investigators may encounter some people who might wish to
complain about the legitimate activities of a licensed private
investigator. Thus a private investigator can't be sued for
damages because he/she located the person he was hired to find.
She next referred to page 10, lines 27-28, noting that the
regulations will be conducted by administrative procedures by
the department.
MS. BLAISDELL directed attention to the exemptions beginning on
page 10, lines 29-31 through page 12, line 13, that lists the
types of people who are exempt from private investigator
licensure, including people who perform professional
investigative services in their normal course of business, such
as attorneys, law enforcement officers, insurance agents, bank
employees, forensic scientists, fire investigators, and
paralegals, while acting within the scope of their employment.
She characterized these exemptions include a number of
professions that do not require additional licensure as a
private investigator.
4:26:12 PM
MS. BLAISDELL stated the bill contains a few definitions, and
transitional provisions that allow someone who has met the
requirements of this chapter who is operating as a private
investigator to continue to do so until the business license
renewal. She related that the effective date of the bill is
July 2015, although the department would like to postpone the
effective date to allow time to adopt regulations.
4:26:50 PM
REPRESENTATIVE HUGHES emphasized that private investigators
cannot wear any type of badge that attempts to portray them as
law enforcement officers or some type of state or federal
officials.
4:27:37 PM
CHAIR OLSON asked for clarification on the fiscal note.
MS. BLAISDELL deferred to the department to discuss the fiscal
note; however, she pointed out the fiscal note in members'
packets refers to House Bill 253, which was a bill introduced
last legislature to license private investigators, which did not
pass. She included a fiscal note for the aforementioned bill
since it provides a basis for discussion for the fiscal note for
HB 9.
4:28:25 PM
REPRESENTATIVE LEDOUX referred to page 3, lines 13-14, to
subsection (c), which seems overly vague for a conflict of
interest. She suggested it may give the department unfettered
authority to establish a conflict of interest as opposed to
specifying circumstances.
MS. BLAISDELL stated that this bill was patterned after Colorado
law. She said that the applicant may not be currently employed
in a position the department determines to represent a conflict
of interest for the prospective licensee. The provision
specifically restricts licensees from being currently employed
as a peace officer or federal, state or local government in the
capacity of law enforcement. She suggested that a person might
be employed in a profession that could create a conflict of
interest, such as someone who is a human resource officer who
has access to more information. She suggested there will always
be odd circumstances and questions as to whether the department
should have the discretion.
4:31:02 PM
REPRESENTATIVE LEDOUX interjected that she feels uncomfortable
with [the department determining any conflict of interest].
REPRESENTATIVE HUGHES welcomed suggestions in improving that
provision.
4:31:27 PM
REPRESENTATIVE JOSEPHSON referred to page 2 of HB 9 to the scope
of practice for investigators. He wondered whether proposed AS
08.85.110 would cover all the activities of a private
investigator and if the activities listed were based on a model
bill.
MS. BLAISDELL explained that the private investigator licensing
bill used Colorado's law, which was tweaked by Legislative Legal
to comport with other statutory provisions.
REPRESENTATIVE HUGHES reminded members that the previous bill
had input and review from private investigators so she thought
the private investigators would have pointed out any
investigative activities that were missing.
4:33:32 PM
REPRESENTATIVE JOSEPHSON referred to page 7, to subparagraph (A)
to errors and omissions insurance. He asked what is known about
private investigator negligence. He stated that private
investigators could be liable for errors and he wondered if
private investigators can obtain insurance. He said he has
never heard of any insurance being offered, but wondered whether
private investigators could be sued for such things as reporting
that adultery occurred when it actually didn't occur.
MS. BLAISDELL answered that the bill requires surety bonds and
errors and omissions insurance, which was set at $100,000 at the
recommendation of a private investigator. She reported that the
surety bond is standard practice, that the City of Fairbanks
requires licensing for private investigators, as well as
requiring a surety bond of $10,000, or $20,000 if the private
investigators are licensed in two or more states. She was
unsure about the errors and omissions insurance, but offered to
research this for the committee.
4:35:41 PM
REPRESENTATIVE JOSEPHSON referred to the concealed handgun
provisions and asked whether any second amendment constitutional
issues exist.
MS. BLAISDELL replied that she asked for clarification from
Legislative Legal Services in terms of the permit to carry a
concealed handgun. She reported the legislative legal drafters
advised that Alaska law does not prohibit anyone 21 years of age
or older who may legally possess a firearm from carrying a
concealed weapon. Thus, anyone can carry a concealed firearm
without a special permit or training. Further, Alaska provides
that a person may obtain permit to carry a concealed handgun,
with the primary reason to obtain an Alaska concealed handgun
permit is to be able to carry a concealed handgun in other
states. She stated that in order to obtain a concealed handgun
permit, a person is required to successfully complete an
approved handgun course under AS 18.65.715, typically conducted
by the Alaska State Troopers or by several private entities.
Last year during discussions on the previous bill, it was deemed
important that if private investigators were to carry any
weapons while encountering higher-risk situations, that some
type of training should be required.
4:38:15 PM
REPRESENTATIVE JOSEPHSON asked whether the penalties for failure
to comply with the investigator certificates [under proposed AS
08.85.220 (e)] was consistent with violations of other
professions, for example, if someone calls themselves a nurse,
but he/she is not one, whether the person is subject to a class
A misdemeanor. He pointed out some of the violations are
technical such as in [subsection (c), paragraph (5)] that
requires notifying the department within 30 days of any change
in the agency's officers, directors, or partners.
REPRESENTATIVE LEDOUX referred to the extensive list of 18
exemptions and wondered why so many exemptions were allowed if
horrendous things can happen with unlicensed private
investigators. She asked why the bill was only concerned about
people conducting investigations with their own individual
business, but not for those working for an attorney or an
insurance agent.
REPRESENTATIVE HUGHES stated that in many of the exemptions, the
professionals conduct investigations as part of their duties and
they have some oversight, whereas private investigators are sole
practitioners. She suggested that some of the other professions
require their own licensing.
4:41:25 PM
REPRESENTATIVE LEDOUX referred to page 10, line 31 through page
11, line 2, which read, "(1), a person who is employed
exclusively or regularly by one employer that is not a private
investigator agency and who performs investigations solely in
connection with the affairs of that employer." She offered her
belief that could be someone working for an insurance company.
She offered her belief that if licensing is going to be required
for investigators, that it should cover everyone.
MS. BLAISDELL responded that the business license classification
for investigations was very broad, and the types of
investigators who seek licensure tend to be the ones who are in
business for themselves with broad access to database
information. Typically, insurance adjusters work for insurance
agencies, and if someone has a concern, he/she could contact the
employer.
4:44:33 PM
REPRESENTATIVE LEDOUX argued that these investigators could be
hired by an insurance company or an attorney seeking
information. She expressed concern that the investigators might
misidentify themselves just to obtain the information, but the
employers might not be concerned since their goal is to hire
investigators to find out.
REPRESENTATIVE HUGHES suggested that it isn't necessary to
license everyone who puts on Band-Aids as licensed practical
nurses, that there must be a limit. She explained that people
working under these exemptions have employers. Although she
understood the concern, she suggested there must be a limit as
to who needs licensure. She maintained that the exemptions are
for people who work for employers so they have oversight and
likely work under a set of requirements in their professions
that may address the concerns.
4:45:48 PM
REPRESENTATIVE LEDOUX agreed the employers might have
requirements, but she is not sure that they do, which is her
concern.
REPRESENTATIVE HUGHES suggested that the division might be able
to provide a response on the exemptions for professions covered
by licensure.
CHAIR OLSON asked to discuss the fiscal note.
4:46:26 PM
SARA CHAMBERS, Acting Director, Division of Corporations,
Business, and Professional Licensing, Department of Commerce,
Community, & Economic Development (DCCED), said the fiscal note
reflects the level of staffing and costs to start a new program,
for licensure costs and enforcement. The licensing examiner
would need to compile information and determine eligibility and
the division's investigators would need to review the
information to determine if it is true and accurate and the
applicant was not withholding information that will keep them
from meeting the threshold for licensure. Certainly, the
division would not expect 100 percent of the licensing examiner
or investigator's time to be charged back to the private
investigator licensing program. Last year the division received
three new licensing programs as well as a significant expansion
of a program, but failed to ask for additional support within
the division. This resulted in the division not being able to
absorb the costs, therefore; the division will request the
minimum staff it needs for any new programs. She related her
understanding that a portion of the licensing staff might be
charged to other licensing programs.
4:50:00 PM
REPRESENTATIVE JOSEPHSON said it sounds like the division will
be shifting some of the burden of the private investigator
licensing program to some of the other new programs. However,
it doesn't seem fair for the private investigators to absorb the
2014 new licensing program costs. He wondered if the division
must explain to the other programs why their fees will be
increased or whether he is missing the point.
MS. CHAMBERS explained that the division puts forth a certain
level of service regardless of the number of staff, which
depends on the length of the lag time to process new licenses,
for example, if applicants must wait three weeks, six weeks, or
a year for licensure. Thus the volume doesn't reflect the
activity, but the level of service can be provided. She did not
necessarily think there will be additional costs for a specific
program, but the division desires to provide a high level of
service to the state. For example, the Alaska State Medical
Board just completed its renewal period at a time when the
division experienced an influx of applications. Having
additional staff available allows the division to temporarily
assign licensing examiners to programs that need seasonal help,
in this instance, to assist the medical board license doctors to
ensure that hospitals were fully staffed and able to function.
In fact, Alaskans have a high expectation for service and the
division can experience a need for help in any of its licensing
programs, she said.
4:52:41 PM
REPRESENTATIVE HUGHES expressed concern that the fiscal note was
nearly quadruple of the fiscal note on a similar bill last
legislative session. She recalled during the presentation for
the Division of Corporations, Business & Professional Licensing,
that Ms. Chambers reported the range for license fees was a
minimum of $50 for some professions to $1,700 for midwives.
However, she reported that page 3 of the fiscal note for HB 9,
lists an estimated license fee of $2,900 for private
investigators. She questioned the figures since the fiscal note
to license private investigators last year was $60,000 total
instead of $230,000. She wondered why private investigators
were being asked to help cover the expenses for the error of
licensing costs for three new professions last year. She
explained that it was not her intent to create a bureaucracy.
She further questioned the need for 1.5 licensing examiners to
license a potentially 140 private investigators in the state.
She stated that this program was patterned after some processes
in place for other professions, including fingerprinting. She
expressed concerned about the proposed costs to license private
investigators as well as their proposed biennial fees.
MS. CHAMBERS replied that she did not anticipate the 1.5 staff
positions proposed for the program to charge all of their time
to the private investigator program. It's possible the proposed
private investigator licensing program might need a fulltime
investigator for a month, or 80 percent of an investigator's
time for three months, or perhaps 60 percent for six months.
After the initial licensure period, the investigator's ongoing
commitment could be reduced to 30 percent, she said, noting that
the fiscal note anticipated the absolute worst case scenario,
and took into account the number of exemptions that must be
considered as well as potential complaints. However, at this
point the division doesn't know how many private investigators
will apply for licensure. She described the fee setting process
as being very dynamic, one that depends a number of factors
outside the division's control. It is more likely that private
investigators will pay fees closer to those of midwives, but the
projected $2,900 in biennial fees were based on the information
the division has today. Any portion of staff time not used for
the private investigator program will be charged to another
program. For example, if the licensing examiner assigned to the
private investigator program was temporarily assigned to help
medical board process applications or license renewals, the
examiner's time will be charged to that program, she said.
4:57:10 PM
REPRESENTATIVE HUGHES questioned the ratio of 1.5 staff for this
program. She asked for further clarification on the number of
staff assigned to other non-board professions of similar size -
with 150 licensees - since 1.5 staff seems very high.
MS. CHAMBERS answered that it depends on the program. She
explained that some programs with under 100 licensees are
assigned one fulltime staff; however, other programs may have
several thousand licensees but their profession requires minimal
requirements for licensure, with little need for investigations.
Thus, those professions may be assigned one-half or one fulltime
licensing examiner. Certainly, at times the division may assign
multiple investigators to work on one investigation. However,
for this program, the division envisions that investigating
licensees and reviewing the allowable exemptions will initially
require quite a bit of "hands on" effort. It seemed highly
unlikely the private investigator licensees would be charged
$2,900 in biennial fees or that it would take 1.5 staff to
maintain the program. The division will employ the practice of
positive timekeeping. She emphasized that the division cannot
absorb these program costs so it anticipated the costs for the
proposed program.
4:59:59 PM
REPRESENTATIVE HUGHES maintained her concern over the
"quadrupled" fees reflected in the fiscal note. She said she
did not wish to have the fiscal note reiterated, but she
expressed concern that the bill will not pass with the current
fiscal note attached. In fact, she said she will pull the bill
rather than add to the bureaucracy in the division.
[HB 9 was held over].
5:00:50 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:01 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB81 ver A.pdf |
HL&C 2/11/2015 3:15:00 PM |
HB 81 |
| HB81 Sponsor Statement.pdf |
HL&C 2/11/2015 3:15:00 PM |
HB 81 |
| HB81 Fiscal Note-DCCED-CBPL-02-06-15.pdf |
HL&C 2/11/2015 3:15:00 PM |
HB 81 |
| HB81 Fiscal Note-DOLWD-MI-02-06-15.pdf |
HL&C 2/11/2015 3:15:00 PM |
HB 81 |
| HB81 Supporting Documents-Letter Jess Hall 2-10-2015.pdf |
HL&C 2/11/2015 3:15:00 PM |
HB 81 |
| HB9 ver A.pdf |
HL&C 2/11/2015 3:15:00 PM |
HB 9 |
| HB9 Sponsor Statement.pdf |
HL&C 2/11/2015 3:15:00 PM |
HB 9 |
| HB9 Sectional Analysis.pdf |
HL&C 2/11/2015 3:15:00 PM |
HB 9 |
| HB9 Fiscal Note-DCCED-CBPL-02-06-15.pdf |
HL&C 2/11/2015 3:15:00 PM |
HB 9 |
| HB9 Supporting Document-Email Habeger 09-09-2013.pdf |
HL&C 2/11/2015 3:15:00 PM |
HB 9 |
| FOR REFERENCE ONLY-HB253 Fiscal Note-DCCED-CBPL-03-21-2014.pdf |
HL&C 2/11/2015 3:15:00 PM |
HB 9 |
| HB9 Opposing Documents-Letter Frank Wake 2-07-2015.pdf |
HL&C 2/11/2015 3:15:00 PM |
HB 9 |