Legislature(1997 - 1998)

03/10/1998 03:55 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
         SENATE LABOR AND COMMERCE COMMITTEE                                   
                    March 10, 1998                                             
                      3:55 P.M.                                                
MEMBERS PRESENT                                                                
Senator Loren Leman, Chairman                                                  
Senator Jerry Mackie, Vice Chairman                                            
Senator Tim Kelly                                                              
Senator Mike Miller                                                            
Senator Lyman Hoffman                                                          
MEMBERS ABSENT                                                                 
All members present                                                            
COMMITTEE CALENDAR                                                             
SENATE BILL NO. 319                                                            
"An Act relating to arbitration; amending Rules 57(a) and 77(g),               
Alaska Rules of Civil Procedure; and providing for an effective                
     - HEARD AND HELD                                                          
SENATE BILL NO. 245                                                            
"An Act repealing the termination date of the state training and               
employment program; and providing for an effective date."                      
     - PASSED CSSB 245(L&C) OUT OF COMMITTEE                                   
SENATE BILL NO. 305                                                            
"An Act relating to rehabilitation of injured workers."                        
     - PASSED CSSB 305(L&C) OUT OF COMMITTEE                                   
PREVIOUS SENATE COMMITTEE ACTION                                               
SB 319 - No previous action to be considered.                                  
SB 245 - No previous action to be considered.                                  
SB 305 - No previous action to be considered.                                  
WITNESS REGISTER                                                               
Ms. Steve Devries, Assistant Attorney General                                  
Department of Law                                                              
1031 W 4th, Suite 200                                                          
Anchorage, AK 99501-1994                                                       
POSITION STATEMENT: Commented on SB 319.                                       
Mr. Bill McNall, Attorney                                                      
Anchorage, AK                                                                  
(907) 276-2535                                                                 
POSITION STATEMENT: Supported SB 319.                                          
Mr. Mike Andrews                                                               
Anchorage, AK                                                                  
(907) 269-7490                                                                 
POSITION STATEMENT: Supported SB 245                                           
Mr. Dwight Perkins, Special Assistant                                          
Department of Labor                                                            
P.O. Box 21149                                                                 
Juneau, AK 99802-1149                                                          
POSITION STATEMENT: Supported SB 245.                                          
Ms. Arbe Williams, Director                                                    
Division of Administrative Services                                            
Department of Labor                                                            
P.O. Box 21149                                                                 
Juneau, AK 99802-1149                                                          
POSITION STATEMENT: Supported SB 245.                                          
Ms. Yvonne Chase, Director                                                     
Division of Community and Rural Development                                    
Department of Community And Regional Affairs                                   
333 W 4th Ave., Ste 220                                                        
Anchorage, AK 99501                                                            
POSITION STATEMENT: Supported SB 245.                                          
Ms. Mary Shields                                                               
Northwest Technical Services                                                   
3330 Arctic Blvd.                                                              
Anchorage, AK                                                                  
POSITION STATEMENT: Supported SB 245.                                          
Ms. Sandy Burd, Staff                                                          
Senator Jim Duncan                                                             
State Capitol Bldg.                                                            
Juneau, AK 99802-1182                                                          
POSITION STATEMENT: Commented on SB 305 for sponsor.                           
Mr. Paul Grossi, Director                                                      
Division of Worker's Compensation                                              
Department of Labor                                                            
P.O. Box 25512                                                                 
Juneau, AK 99802-5512                                                          
POSITION STATEMENT: Supported SB 305.                                          
ACTION NARRATIVE                                                               
TAPE 98-13, SIDE A                                                             
Number 001                                                                     
                       SB 319 - ARBITRATION                                    
CHAIRMAN LEMAN called the Senate Labor and Commerce Committee                  
meeting to order at 3:55 p.m. and announced SB 319 to be up for                
MR. JERRY BURNETT, Staff to Representative Randy Phillips,                     
explained that last year the legislature directed the Judicial                 
Council to propose a program for alternative dispute resolution for            
arbitration which is now being used as a standard procedure in                 
contracts.  One of the most common uses where it affects a number              
of people is in real estate contracts where people don't fully                 
realize the implications of arbitration.  There are no guidelines              
currently established anywhere governing many aspects of an                    
arbitration proceeding.  There are no provisions that arbitration              
be preceded by mediation.  The arbitrator doesn't have a state law             
or any other law in making a decision and there is no limit on the             
amount of money requested by a party to arbitration by another and             
no limit on the time in which an arbitration can be pursued after              
a contract is signed.                                                          
SB 319 requires language in a contract subject to arbitration                  
stating clearly that a party to arbitration may be limiting or                 
waiving rights to other remedies, including appeal of an                       
arbitrators decision to a court of law, and limits the amount that             
can be arbitrated to $5,000.                                                   
MR. BURNETT pointed out that Section 11 refers to Section Five and             
it should refer to Section Six and needs to be amended.                        
CHAIRMAN LEMAN said he didn't know why they chose $5,000 as the                
limit instead of the $7,500 limit for small claims court.  (This               
technical error was corrected in a later hearing - committee                   
Number 86                                                                      
MR. STEVE DEVRIES, Department of Law, said he had two minor                    
problems with the proposed bill in Section Three,(b))(4)                       
determination of whether a dispute under the contract is                       
arbitrable, seems to be at odds with existing Supreme Court                    
precedent, and (b)(9), waiving your right to recover punitive                  
damages, would only exist in law if there was an express                       
prohibition on recovery of punitive damages in the underlying                  
contract.  This was in a decision that came down from a U.S.                   
Supreme Court in 1995.                                                         
CHAIRMAN LEMAN asked him to provide suggested language that would              
correct the problems.                                                          
MR. BILL MCNALL, said he was representing no one in particular, but            
he has clients he represents in arbitration who are real estate                
agents as well as just plain folks.  It is obvious in the                      
arbitration process that the lack of guidelines was going to be a              
real hindrance and the lack of knowledge on behalf of both the real            
estate professional and the consuming public about what arbitration            
was vastly different than what they expected.  Everyone thought                
that it would be easier and less expensive than litigation.  The               
truth is that it can be more complex, expensive, and take longer               
than litigation, because of the lack of rules.                                 
He explained the reason for the $5,000 limit is because there is a             
trouble/damage section in the seller's disclosure law and if it                
turns out that someone intentionally  doesn't disclose something,              
they can be liable for up to $15,000.  As a result, it was felt if             
the treble damage amount was low enough, arbitration might still be            
an effective way to deal with it.                                              
He said this bill is trying to help the consuming public by giving             
them some advance notice of what it means to go to arbitration.                
SENATOR KELLY thought they should consider repealing what they did             
last year, rather than try to go forward and fix a broken system.              
MR. MCNALL said it seems to him that a lot of the small dollar                 
amounts could be handled in small claims court a whole lot more                
efficiently than in the arbitration process.  The only way to fix              
it is to make arbitration available only to matters that are above             
the small claims limit.                                                        
CHAIRMAN LEMAN said the Committee would hold the bill for further              
        SB 245 - EXTEND STATE TRAINING AND EMPLOYMENT PROG                     
CHAIRMAN LEMAN announced SB 245 to be up for consideration.                    
MR. MIKE ANDREWS testified in 1996 when the Legislature                        
reauthorized the State Training Employment Program (STEP), it gave             
the Alaska Human Resources Investment Council more authority for               
oversight and mandated that they monitor the program to do several             
things: to track eight cost categories for spending, to reduce the             
amount of money recaptured by the Unemployment Trust, so that more             
money could be used for the job seekers, and hold administrative               
costs to below 20 percent.  The Committee should have a final                  
assessment report for FY  97 that was prepared by the Alaska Human             
Resources Investment Council in their packets indicating that the              
legislative mandates were met, he said.  They were able to serve               
443 more customers this year with about the same funds they had                
last year, reducing the costs per client from about $2,000 to                  
$1,500.  They have also held the costs for administration to below             
20 percent.  The STEP program is the only State-funded job training            
program under AHRIC oversight.  Of their 17 programs, 16 are                   
federally funded.  This was the only State-funded one and it comes             
from the worker's contribution to the Unemployment Trust.  For                 
clients it has reduced the amount of unemployment insurance claims,            
has lengthened their annual salary, their weeks of work and is a               
very efficient and effective job training program for the State.               
He urged continued support of the STEP program.                                
Number 240                                                                     
MR. DWIGHT PERKINS, Special Assistant, Department of Labor, said               
the STEP was enacted in 1989 as a temporary two-year pilot program.            
Its success led the legislature to extend it three more times.  The            
last extension in 1996 made the STEP permanent, but subject to                 
sunset provision.  Since the last extension, STEP has made great               
strides in addressing legislative concerns with the program.                   
MS. ARBE WILLIAMS, Director, Administrative Services, Department of            
Labor, said that one tenth of one percent of an employee's wage is             
deposited to the STEP account.  The STEP status report shows that              
more of these funds are getting out on the street than ever before.            
Less than $307,000, at most, will be returned to the U.I. Trust                
Fund for FY  97.  She said the report is based on actual payments              
made and has been reconciled to financial information by State                 
delivery area, program elements listed in the legislation, and                 
includes better detail.                                                        
Number 290                                                                     
MS. YVONNE CHASE, Director, Division of Community and Rural                    
Development, said there are a number of ways they measure the                  
success of the STEP program: the reduction in claims filed against             
the U.I. Fund (down to 345 from 538 in the year after the                      
participants completed the STEP), the reductions in the benefits               
paid out of the Fund as a result of that decrease (in FY  95 from              
$1.6 million prior to the client's entering STEP to a little over              
$800,000 after they left the program), and the increase in new                 
business created in Alaska as a result of having a trained work                
force.  They measure that by looking at the STEP participants who              
complete the program and enter newly created jobs.  Statistics of              
newly created jobs are fairly phenomenal, 251 (about 29 percent)               
actually entered newly created jobs in FY  95.  In FY  96 that                 
number jumped to 48 percent (353).                                             
Number 338                                                                     
CHAIRMAN LEMAN asked why they didn't just extend the sunset date               
instead of removing the clause.                                                
MR. PERKINS answered that since 1989 it was a pilot program, but               
has proved itself to be such a worthwhile program that could be                
made permanent by removing the sunset provision.                               
CHAIRMAN LEMAN said he didn't really agree with that.                          
SENATOR MACKIE said he thought this was a good program and that he             
wanted to support it.  He thought that the way they treat the other            
programs that are also critical is with a sunset, so it can be                 
reviewed.  He thought there might be more problems being repealed              
than extending the sunset date.                                                
MR. PERKINS said they could accommodate a four-year sunset.  He                
pointed out again that they had stayed within the financial and                
administrative limits the legislature gave them two years ago.                 
SENATOR MACKIE made a conceptual amendment to delete Sections One              
and Two and insert standard language extending the program until               
June 30, 2002.  There were no objections and it was so ordered.  He            
said it was his intent to have the title redrafted according to the            
standard extension date language.                                              
SENATOR KELLY said he thought because there really aren't any                  
federal regulations guiding the use of this money, it would be easy            
for it to be used inappropriately.  But since it's such a good                 
program, it should continue as long as the legislature could keep              
an eye on it.  Senator Torgerson had questioned whether they had               
really reached their targeted 20 percent reduction, he added.                  
Number 424                                                                     
MS. MARY SHIELDS, Northwest Employment Service, said she is                    
extremely pleased that they are all up to speed on this program.               
SENATOR MACKIE moved to pass CSSB 245 (L&C) from Committee with                
individual recommendations.  There were no objections and it was so            
           SB 305 - IMPLEMENTATION OF WORK COMP EDITION                        
CHAIRMAN LEMAN announced SB 305 to be up for consideration.                    
MS. SANDY BURD, Staff to Senator Duncan, sponsor, said it was                  
discovered in February that selected characteristics defined in the            
Dictionary of Occupational Title were the 1993 version which hadn't            
been adopted.  This meant they were using the 1981 version.                    
Originally this bill corrected that.  This morning she found,                  
however, that the U.S Department of Labor is working on a new                  
system and there is an amendment to change it so that if the new               
system comes on-line, the Occupational Information Network can be              
adopted as a replacement.                                                      
SENATOR MACKIE moved to adopt Amendment One.  There were no                    
objections and it was so ordered.                                              
SENATOR KELLY moved a conceptual amendment to tighten the title to             
what is being dealt with in the bill.  There were no objections and            
it was so ordered.                                                             
Number 471                                                                     
MR. PAUL GROSSI, Director, Division of Worker's Compensation, said             
the Department supported this bill and the amendments.  He said it             
allows them to use the most current data available from the U.S.               
Department of Labor regarding job characteristics, so                          
determinations can be made regarding retraining benefits.                      
CHAIRMAN LEMAN asked if Ms. Tatlow had any comments.                           
MS. SHIELDS indicated that Ms. Janice Tatlow wanted to support SB
245, but had left when the Committee passed it.                                
SENATOR MACKIE moved to pass CSSB 305(L&C) with individual                     
recommendations.  There were no objections and it was so ordered.              
CHAIRMAN LEMAN adjourned the meeting at 4:35 p.m.                              

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