Legislature(1997 - 1998)
03/10/1998 03:55 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 date." - 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 consideration. 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 staff.) 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 work. 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 ordered. 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.