CS FOR HOUSE BILL NO. 409(L&C) "An Act relating to excluding qualified real estate licensees from workers' compensation coverage." This was the first hearing for this bill in the Senate Finance Committee. 10:09:12 AM REPRESENTATIVE BOB LYNN, the bill's sponsor, disclosed being a licensed real estate agent in the State. "Workers Compensation is the means through which injured workers are compensated for injury sustained on the job or as a result of their job." State and federal laws require "most companies to purchase workers compensation insurance for their employees". To that point, he noted that 99 percent of real estate licensees in the State are considered independent contractors rather than employees. Representative Lynn communicated that in Alaska, real estate licensees "typically sign an independent contractor agreement" with their real estate broker and "pay for their own services". The broker does not pay them a wage/salary or benefits. Any payment they receive is "tied directly to the sales" or service they provide rather than hours worked. The real estate licensees themselves are required to pay quarterly federal income taxes and the social security tax that an employer would normally pay for an employee. In addition, they are responsible for their business expenses, including their licensing fees, continuing education expenses, advertising, office equipment, websites and long distance phone calls. They could be likened to "a business within a business". The real estate broker has no control over how the real estate licensee under contract with them conducts their business, provided it is within the boundaries of the law. The federal Internal Revenue Service (IRS) also recognizes them as independent contractors. This bill would affirm there to be a written contract between the broker and the real estate licensee which states that the licensee would not be treated as an employee for IRS or workers' compensation purposes. It would also clarify that the real estate licensee would be paid only for what they produced rather than for the number of hours they might work. Representative Lynn asked the Committee to favorably consider the legislation. 10:12:05 AM PEGGY ANN MCCONNOCHIE, Licensed Real Estate Broker and Representative, Alaska Association of Realtors, spoke in support of the bill. She appreciated the work that Representative Lynn had conducted in its regard. The bill would provide "clear direction" to a question that has plagued the industry for quite some time. 10:13:01 AM Co-Chair Wilken asked regarding Governor Frank Murkowski Administration's position on the bill. Ms. McConnochie responded that the bill is supported by both the Division of Insurance in the Department of Commerce, Community and Economic Development and the Division of Workers' Compensation in the Department of Labor and Workforce Development. 10:13:32 AM To that point, Co-Chair Green noted members' bill packets contain a copy of a letter [copy on file] dated February 7, 2006 from Department of Labor and Workforce Development Commissioner Greg O'Claray addressed to Representative Tom Anderson, Chair, House Labor and Commerce Committee. Co-Chair Wilken asked whether the Department of Labor and Workforce Development "was neutral, for, or against the Legislation". 10:14:01 AM PAUL LISANKIE, Director, Division of Workers' Compensation, Department of Labor and Workforce Development, communicated that the letter conveyed Commissioner Greg O'Claray's support of the bill. 10:14:32 AM Co-Chair Wilken moved to report the bill from Committee with individual recommendations and accompanying fiscal notes. There being no objection, CS HB 409 (L&C) was REPORTED from Committee with two previous zero fiscal notes: fiscal note #1 dated February 24, 2006 from the Department of Commerce, Community and Economic Development and fiscal note #2 dated February 23, 2006 from the Department of Labor and Workforce Development. 10:14:54 AM