SB 35-DELIVERY NETWORK COMPANIES  2:12:39 PM CHAIR BJORKMAN reconvened the meeting and announced the consideration of SENATE BILL NO. 35 "An Act relating to transportation network and delivery network companies." 2:13:20 PM SAVAYA BIEBER, Staff, Senator Jesse Bjorkman, Alaska State Legislature, Juneau, Alaska, presented the summary and sectional analysis for SB 35. She read the following: [Original punctuation provided.] SB 35 amends statutes related to workers compensation. This will align individuals who provide delivery services through delivery network companies with individuals who provide services through Transportation Network Companies. The legislation will define these workers as independent contractors provided they meet statutory criteria. Currently, delivery network companies are not defined in statute, which has led to confusion and litigation across the country, threatening these services that customers value and depend on. Services provided by delivery network companies can include food, grocery, and prescription deliveries. Roughly 90 percent of digital network drivers work less than 10 hours per week. These drivers usually provide delivery services to supplement their income, so they can work their full- time job, or go to school during the day, et cetera. Most drivers prefer to remain working as independent contractors so they can have the ability to work as much or as little as they want. 2:14:34 PM MS. BIEBER read the sectional analysis for SB 35: [Original punctuation provided.] Version A Sectional Analysis  Section 1: Amends AS 23.30.230(a) by adding a delivery network company courier that provides delivery services or is logged onto the digital network of a delivery network company under AS 28.23.080 to the list of individuals who are not covered by the Alaska Workers' Compensation Act. Section 2: Amends AS 28.23.080(a) to establish that delivery network companies are not an employer of transportation network drivers or delivery network couriers under AS 23.10.699, AS 23.20.520, or AS 23.30.395. It further clarifies that an independent contractor for all purposes is not an employee of the company if the company does not propose specific working hours, does not impose restrictions on the ability of the driver to use the digital network of other companies, does not restrict a driver from engaging in any other occupation, or if the company enters into a written agreement with the driver or courier stating that the driver is an independent contractor for the company. 2:15:19 PM MS. BIEBER continued the sectional analysis for SB 35: Section 3: Amends AS 28.23.180(1) by adding to the definition of "digital network" to include use by delivery network companies to facilitate offers for delivery services Section 4: Adds definitions to AS 28.23.180, to define "company", "delivery network company", "delivery network company courier" or "courier", "delivery services", and "offer". 2:15:47 PM SENATOR GRAY-JACKSON requested clarification that SB 35 would not reclassify drivers as employees. 2:16:05 PM MS. BIEBER answered yes. 2:16:11 PM SENATOR GRAY-JACKSON asked how DoorDash drivers are classified. 2:16:20 PM MS. BIEBER replied that DoorDash drivers are not defined in statute. 2:16:35 PM CHAIR BJORKMAN announced invited testimony on SB 35. 2:16:46 PM JOHN FINLEY, Public Policy Member, Uber Eats, San Francisco, California, testified by invitation on SB 35 as follows: [Original punctuation provided.] SB 35 updates the current law to affirm that app-based delivery workers are independent contractors just like TNC driversensuring consistency and protecting the independence of our workforce. 2:17:07 PM MR. FINLEY continued his testimony on SB 35: The absence of clear statutory guidance creates legal uncertainty, which could impact the app-based delivery services that many Alaskans depend on. Since Uber Eats launched in Anchorage in June 2020, it has helped drive local economic growth, empower small businesses, and make life a little easier for community members by making food and everyday essentials more accessible. Whether it's a sandwich from your favorite neighborhood deli, groceries to restock the fridge for the week, everyday essentials like shampoo and diapers or medical prescriptions delivered through the help of our partners our platform helps deliver what Alaskans need, when they need it to make life a little easier for everyone. We've also made it possible for lower-income households, seniors, and people with disabilities to use their food benefits to order groceries and get them delivered. More than 90 percent of Americans have access to Uber Eats, helping more people access fresh, healthy groceries. We help local businesses reach new customers, compete, and grow without taking on big overhead costs. According to our most recent Merchant Impact Report, 85 percent of restaurants say Uber Eats provides opportunities for delivery that they wouldn't have been able to support without it. In 2023 alone, our platform powered billions of dollars in orders, directly fueling local economies and driving growth for small and minority-owned businesses. Post-pandemic, delivery remains a critical part of how people live, especially for geographically mobile professionals who incorporate delivery services into their lifestyle. 2:18:39 PM MR. FINLEY continued his testimony on SB 35: We ask you to protect and support the continuance of the independent, flexible work model that has benefited Alaskans.whether you're one of the More than 15,000 Alaskan couriers, restaurants, or customers utilize Uber Eats monthly. We ask for your support for economic opportunities and innovation in Alaska. SB35 is necessary to keep Alaska's laws on pace with the evolving world of work and continue to enable the benefits Uber Eats brings to Alaskans every day. 2:19:31 PM JESSICA LYNAM, Government Affairs Manager, Instacart, San Francisco, California, testified by invitation on SB 35 and read the following testimony: [Original punctuation provided.] On behalf of Instacart, I am writing to express our support for Senate Bill 35, which would preserve access to the independence and flexibility that shoppers on the Instacart platform and other app-based delivery workers consistently say they want and need, and that rideshare drivers are already provided within the State of Alaska. Instacart is the leading grocery technology company in North America, and we are proud to offer access to flexible earning opportunities for the more than 1,600 Alaskans. Shoppers the individuals who pick, pack, and deliver orders are often caretakers, parents, students, or retirees seeking alternatives to traditional employment or ways to supplement other income. In fact, over 80 percent of shoppers say they choose to shop on Instacart because of the independence it provides. Nationally, the vast majority of people who earn through our platform including in Alaska shop less than 10 hours a week on average1. They have the freedom to choose when, where, and for how long they work, without any set schedule, minimum commitment, or obligation. 2:20:48 PM MS. LYNAM continued her testimony on SB 35: In Alaska, Instacart partners with more than 25 retail banners in more than 130 stores, with almost half of those locations accepting EBT SNAP. By supporting these retailers, Instacart has helped add over 100 brick-and-mortar grocery jobs from cashiers to store managers across Alaska and approximately $5.1 million in additional revenue for Alaska's grocers2. Moreover, Instacart is happy to serve tens of thousands across the Frontier state. Senate Bill 35 meets the needs of a modern and independent workforce by clarifying that individuals delivering essential goods on app-based platforms are properly classified as independent contractors, provided they meet the same specific criteria applied to rideshare drivers. This workforce enjoys unprecedented flexibility, and many may choose to operate on multiple platforms across delivery and rideshare. This clarity will preserve parity for these workers whether they are driving on a rideshare platform or delivering food, prescriptions or other essential goods and put an end to needless uncertainty, which can undermine the flexibility and freedom that shoppers want and deserve. I respectfully urge the Senate State Affairs committee to support Senate Bill 35. By doing so, we can ensure a fair and equitable environment for the growing app- based workforce across Alaska. 2:22:13 PM SENATOR GRAY-JACKSON asked how Instacart drivers are compensated, besides receiving tips. 2:22:38 PM MS. LYNAM replied that Instacart shoppers are paid based on the size of the batch they select, with compensation varying by the number of items. She said the driver receives 100 percent of their tips. 2:23:11 PM SENATOR GRAY-JACKSON asked for more details on how drivers get paid. 2:23:20 PM MS. LYNAM replied that she would provide a written document conveying, on how drivers get paid. 2:23:37 PM SENATOR GRAY-JACKSON asked for an example of how Instacart disperses compensation to drivers. 2:23:58 PM MR. FINLEY replied that couriers on platforms like Uber and similar delivery services can choose when to work by accepting delivery offers. When a customer places an order, the driver receives a notification to pick up and deliver it. After completing the delivery, the courier earns both the customer's tip and a payment from the company. That company payment varies for each order depending on several factors, including the distance traveled, the type of order, and other delivery conditions. In this way, drivers' total income combines company provided compensation with direct tips from customers. 2:24:55 PM SENATOR GRAY-JACKSON requested to see a more detailed explanation of how a driver is paid. 2:25:16 PM SENATOR DUNBAR asked what percentage of drivers work 40 hours or more in a week. 2:25:44 PM MS. LYNAM replied that currently Instacart drivers work an average of 10 hours per week. She added that she will provide data on Alaska drivers that work 40 hours per week or more. 2:25:58 PM SENATOR DUNBAR asked for written data on the number of drivers that work 40 hours or more and are on SNAP benefits or Medicaid. 2:26:51 PM ANNA POWELL, Senior Manager, Government Relations, DoorDash, Seattle, Washington, testified by invitation on SB 35 and read the following testimony: [Original punctuation provided.] My name is Anna Powell and I am the Senior Manager of Government Relations for DoorDash in the Northwest. We are a technology company that empowers the local economy by connecting consumers with their favorite local businesses. In this state alone, we partner with more than 700 merchants and more than 14,000 couriers or, as we call them, "Dashers" who chose to earn supplemental income by delivering food, groceries, and other goods throughout their communities. DoorDash stands with the Dasher community who overwhelmingly prefer to remain independent contractors and offers the following comments in support of SB 35. 2:27:42 PM MS. POWELL continued her testimony of SB 35: Dashers and the Importance of Independence and  Flexibility  Alaska Dashers value the independence and flexibility that dashing provides. A Dasher never needs to commit to a schedule to be online, is free to decline any offer for work they are sent, and can leave the platform for weeks or months at a time and come back whenever a new need arises. Time and time again, Dashers tell us that the top motivation for using platforms like DoorDash is the ability to create their own schedule and work as much or as little as they want. Why? Because most Dashers do relatively little work on the platform: in 2023, on average, Dashers in Alaska only spent five hours per week on delivery, and almost 90 percent delivered less than 10 hours per week. The vast majority have other primary sources of income or responsibilities and only use the platform for supplemental work. In a survey last year, 82 percent of Dasher respondents say they have a full-or part-time job, are self-employed, students, stay-at-home caregivers or retired. SB 35 Protects App-Based Delivery Worker Independence The flexibility and independence that Dashers highly value is incompatible with traditional employment. That's why in a survey last year, more than 90 percent of Dasher respondents said they preferred to remain independent contractors. 2:29:08 PM MS. POWELL continued her testimony of SB 35: SB 35 would protect the independence of Dashers and other app-based delivery workers. Many existing worker classification standards were not created with app- based work and workers in mind. SB 35 would establish a classification test for app-based delivery workers that recognizes the unique nature of this work. This standard is already used in Alaska for rideshare drivers and is similar to standards for app-based workers that have been adopted in numerous states including Arizona, California, Florida, Indiana, Iowa, Kentucky, Tennessee, and Utah. DoorDash strongly supports SB 35 that would protect the flexibility this type of work provides to the thousands of Alaskan Dashers who choose it. Thank you for your time and consideration and please do not hesitate to reach out with any questions. MS. POWELL added that DoorDash drivers (Dashers) work about 4 hours a week and earn an average of $27 an hour while driving. 2:30:19 PM SENATOR GRAY-JACKSON requested clarification on how many hours a week DoorDash drivers work and their average pay per hour. 2:30:34 PM MS. POWELL answered that in Alaska, Dashers averaged four hours of delivery work per week in the fourth quarter of 2024, with 88 percent working fewer than 10 hours. She said Dashers earned an average of $27 per hour. 2:31:09 PM SENATOR DUNBAR asked whether the $27 per hour is gross or net pay. 2:31:21 PM MS. POWELL answered the $27 per hour is gross pay with tips. 2:31:24 PM SENATOR DUNBAR what percentage of the additional revenue generated by "door dash" remains in Alaska, and recalled that during the pandemic, many Anchorage restaurants struggled because delivery services like DoorDash absorbed much of the revenue, leaving restaurants unable to maintain their own delivery staff. He asked what percentage of the delivery fees remained in Alaska and how the fee structure contributed to the financial strain that led some businesses to seek additional CARES Act support. 2:33:00 PM MS. POWELL replied that since 2020, DoorDash has restructured its merchant fee system, offering at least three service contract levels with varying benefits such as lower delivery fees and increased advertising. She offered to share a fact sheet showing $130 million in 2024 in Alaska and partnerships with over 700 restaurants. 2:34:14 PM SENATOR DUNBAR stated that many small Alaska restaurants cannot afford to develop or maintain their own delivery apps. He asked what percentage of deliveries in the state go through DoorDash, what is their market share, and if local businesses can offer independent delivery services. 2:35:19 PM MS. POWELL replied that DoorDash has top competitors in the food delivery service, namely, Instacart and Uber. 2:35:43 PM SENATOR DUNBAR asked what percentage of the market share for deliveries does DoorDash control and are there small businesses in Alaska that compete with DoorDash delivery. 2:36:03 PM MS. POWELL answered that she is not aware of any local delivery operators in Alaska and does not know the market share of existing competitors. She offered to investigate and provide data. 2:36:39 PM CHAIR BJORKMAN stated that many people are still adjusting to the culture around delivery network companies and said SB 35 focuses on workers' compensation coverage for delivery workers. He requested verbal and written comments to the committee on the questions he asked. He asked what benefits are provided to workers in Alaska who are injured on the job and unable to continue working. 2:37:53 PM MS. POWELL replied that DoorDash provides occupational accident insurance for Dashers injured while delivering, offering up to $1 million in medical and disability benefits automatically, with no enrollment, deductibles, copays, or premiums required. 2:38:37 PM MS. LYNAM replied that Instacart provides $1 million in occupational incident insurance at no cost, automatically covering shoppers while they are actively working on a batch. CHAIR BJORKMAN asked whether there is wage replacement if a worker is injured or misses work. MS. LYNAM replied that the policy covers full-service shoppers for medical expenses, disability, and death, and noted there is some wage replacement coverage, and will provide additional information to the committee. 2:39:47 PM MR. FINLEY replied that Uber Eats doesn't have an occupational accident insurance policy in Alaska. 2:40:05 PM CHAIR BJORKMAN asked what coverage is available to protect drivers if they are involved in a car accident while working, including damage to their vehicle, others, or property. 2:40:45 PM MR. FINLEY replied that aligning delivery drivers' status with Transportation Network Company (TNC) drivers is important because rideshare drivers in Alaska have comprehensive and collision coverage for accidents they cause or experience, protections that currently do not exist for delivery drivers. He said the committee needs to pass SB 35 to formalize similar coverage for delivery drivers. 2:41:50 PM CHAIR BJORKMAN asked why Alaska law would need to change for Uber Eats to provide insurance coverage for food delivery drivers. 2:42:06 PM MR. FINLEY answered that while rideshare drivers have insurance coverage when carrying passengers, delivery drivers do not have equivalent coverage when making deliveries. Aligning their independent contractor status is important to ensure similar protection. 2:42:54 PM CHAIR BJORKMAN asked what coverage is available to protect drivers if they are involved in a car accident while working, including damage to their vehicle, others, or property. 2:43:06 PM MS. LYNAM replied that occupational injury insurance covers the worker's personal injuries, while any vehicle damage would be covered under the driver's or shopper's personal auto insurance. 2:43:38 PM MS. POWELL replied that DoorDash provides $1 million in auto liability insurance for Dashers who cause an accident while delivering, with coverage automatic and at no cost to the driver. 2:44:11 PM CHAIR BJORKMAN requested written responses to the questions that were answered verbally during the hearing. 2:44:27 PM SENATOR DUNBAR asked to direct his question to Director Chuck Collins. 2:45:00 PM SENATOR DUNBAR asked for an explanation of the practical differences between occupational accident insurance and workers' compensation, specifically how an injured worker's experience would differ under each. 2:45:22 PM CHARLES COLLINS, Director, Workers Compensation Division, Department of Labor and Workforce Development (DOLWD), Juneau, Alaska, answered questions on SB 35. He answered that the key differences are that workers' compensation is no-faultcovering injuries regardless of who is at faultand has no coverage limits, unlike typical disability or occupational accident insurance, which may have caps. 2:46:26 PM SENATOR DUNBAR asked how delivery drivers in Alaska who work 40, 50, or 60 hours per week are currently classified and treated. 2:47:01 PM MR. COLLINS replied that several delivery network companies have temporarily provided workers' compensation coverage through stipulations until a law clarifying their status is passed. These agreements are nearing expiration, making it urgent to establish legal direction, though the companies have been cooperative in ensuring their contractors are protected. 2:48:24 PM SENATOR DUNBAR asked what the current policies or agreements with these companies specify. 2:48:34 PM MR. COLLINS replied that companies that purchased workers' compensation obtained standard coverage, while one agreement simply paused enforcement, allowing time for legislation to clarify that couriers transporting goods could be covered as independent contractors. 2:49:25 PM SENATOR DUNBAR asked whether the current agreements require companies to purchase workers' compensation insurance under the agreement rather than by law, and whether this is different from occupational accident insurance. He also asked whether passing this law would result in any employees in Alaska losing their workers' compensation insurance. 2:49:49 PM MR. COLLINS answered that for companies recognizing drivers as employees, workers' compensation policies are annual and could be canceled if the law changes. With SB 35, drivers would be classified as independent contractors under Alaska law, who are not required to have workers' compensation and can choose whether to be covered. 2:51:15 PM SENATOR DUNBAR noted that a key difference between workers' compensation and occupational accident insurance is that workers' compensation is no-fault, meaning employees are compensated for on-the-job injuries regardless of how they occur. He asked how the occupational accident insurance process works in practicewhether workers must file their own claims, how often claims are denied, and whether the company or the insurer handles those claims. 2:52:16 PM MR. FINLEY replied that Alaska Uber eats does not have occupational accident insurance and wont be able to answer the question. 2:52:37 PM MS. LYNAM replied that for Instacart, shoppers can file claims directly through the app. She said the company reports a low number of claims and will provide Alaska-specific data. 2:53:12 PM MS. POWELL stated her belief that drivers can file a claim but would follow up with committee. 2:53:29 PM SENATOR DUNBAR stated that he wants written information on the percentage of filed claims that are paid out, not the share of workers who file claims. He also asked whether companies screen or block claims before submission and how burdensome the claims process is for workers, noting that workers' compensation is generally a simpler, no-fault system. 2:55:00 PM SENATOR GRAY-JACKSON asked for confirmation that Instacart and DoorDash offer occupational injury insurance. CHAIR BJORKMAN indicated yes by nodding in the affirmative. SENATOR GRAY-JACKSON asked for confirmation that Uber Eats is looking into getting occupation injury insurance. CHAIR BJORKMAN answered that's what he heard. SENATOR GRAY-JACKSON asked Mr. Finley how soon occupational injury insurance would become available for Uber Eats drivers working in Alaska. 2:55:32 PM MR. FINLEY replied that the company is actively exploring the option for Alaska. 2:56:07 PM CHAIR BJORKMAN said he recognizes the challenges SB 35 faces and wants to ensure companies like Uber Eats, Instacart, and DoorDash can continue operating in Alaska while workers feel adequately protected. He emphasized the need to balance worker freedom and protection, find common ground, and reach a resolution that allows Alaskans to keep benefiting from these services. 2:58:29 PM [CHAIR BJORKMAN held SB 35 in committee.]