SB 323 WORKERS COMPENSATION AND CONTRACTORS  CHAIR SEEKINS announced SB 323 to be up for consideration and informed the committee of a proposed CS, version\H. SENATOR OGAN asked to have the changes explained before a motion is made. CHAIR SEEKINS explained the changes are in language to make it clear that if a subcontractor does not carry workmen's compensation insurance, the contractor is liable for it. If the contractor does not carry workers compensation insurance then the project owner would be responsible. The next part clarifies who is a contractor and who is a project owner. He says we do have statutes that require contractors to be registered with the state. He states the intent of the bill is very clear. MS. PAMELA LABOLLE said the Chamber of Commerce suggested the amendments that are contained in this committee substitute for the purpose of clarification. Discussions with many parties identified that the language caused confusion, which is now clarified. She says they want to make certain that all interested parties in a project will assure their employees are covered. She cited instances where injured employees received worker's compensation and then later under tort law and filed suits against other interested parties who were not clearly covered under the worker's compensation umbrella. I think no one intended the worker's compensation law to be used this way. The idea is the worker be covered for their work-related losses. It's also important for the safety factor because the only way the project owner could stay out of the issue was if they were not actively involved. They could not assess or assure that the contractor and subcontractor had good safety practices because, in so doing, they became an involved person or involved party and they were then able to be sued because they did not directly have compensation coverage or had not assured that the other parties all had coverage. And so that was the purpose of the bill is to make sure that everybody in the chain was involved and insured. And secondly to eliminate the ability for them to go back and double dip and collect payments from two sources, from both the worker's compensation law and the courts for tort. CHAIR SEEKINS asked for questions. SENATOR FRENCH said: I go back to a letter we got from Mr. Jack Miller a month or so ago regarding how this bill would change the obligation of parties to procure workman's compensation coverage and in his letter he said, 'The bill would have no effect on the obligation of parties to procure workman's compensation coverage. As you know with very few exceptions, current law requires all employees...' Tape 04-33 Side A   SENATOR FRENCH continued and said you're required to carry worker's compensation and that requirement is not affected by SB 323. He wondered whether something in the CS has changed the obligation of the parties to get worker's compensation coverage. CHAIR SEEKINS said, "Mr. Miller is online but I don't think so." MS. LABOLLE said no it does not change that. The employers have to have worker's compensation coverage. SENATOR FRENCH said he has difficulty with the bill in that you get no more coverage but the worker is giving up his ability to sue project owners who may or may not be covering him with worker's compensation. He said what the worker is getting is no more coverage in exchange for giving up his right to sue in tort. CHAIR SEEKINS said absolutely not. SENATOR FRENCH said it strikes him that the worker is giving up his right to sue in tort in exchange for no more coverage. He doesn't see how a worker gains anything with this bill. CHAIR SEEKINS stated that he has seen a number of instances that would relate to this bill, such as cases where someone claims to be a sole proprietor and then later claims to be an employee. He goes on to say that the project owner who hires a contractor or a contractor who hires a subcontractor will have to make sure that workmen's compensation exists because if they do not, the project owner has to provide it. CHAIR SEEKINS asked for Mr. Miller online. MR. JACK MILLER, attorney for the State Chamber of Commerce, said that even though state law requires everyone to have worker's compensation doesn't mean they all do. By extending the obligation to provide workmen's compensation coverage all the way up the project line to the project owner does enhance the benefits to the employees who suffer injuries. Under current law because of tort claim potential, project owners and contractors all refuse to take an integrated approach to project safety. He thinks the law is important because it gives an incentive for all parties involved in the project to integrate their safety practices and reduce work related injuries. CHAIR SEEKINS announced the need to do some housekeeping and asked for a motion to consider the proposed CS, labeled version H, before the committee. SENATOR THERRIAULT moved to adopt version H, dated 4/1/04, as the working document before the committee. CHAIR SEEKINS heard no objections. He responded to Mr. Miller's announcement that he does not have a copy of version H by offering to get him a copy. He asked Mr. Miller to respond to Senator French's question regarding what is an employee getting by not being able to sue someone up the line. MR. MILLER said they are getting two things: 1) if their employer does not have worker's comp coverage that obligation is transferred to the contractor and the project owner. Says there are situations where this has happened before and current law does not address that; 2) this is an opportunity to get rid of the disincentive for project owners, contractors, and sub- contractors to alienate themselves as far as state work practices go. This allows participants to coordinate safety activities. He believes this is an important opportunity to dramatically reduce work related injuries. SENATOR OGAN asked how this affects a homeowner building his own house who has a sub-contractor do a few things. MR. MILLER said it excludes anyone who is a project owner who is not engaged in business. A homeowner is not liable under this statute. MS. EDEN LARSON identified herself as President and CEO of the Associated Builders and Contractors, an association with over 160 member companies who employ approximately 5000 employees throughout the state. She supports SB 323 and adds further comment on Ms. LaBolle's statements. What happens to a contractor when an employee receives a workman's compensation claim and then pursues tort remedies thru the project owner, the project owner in most cases today has included in his contract with the contractor an indemnification agreement. What happens is that if the tort claim is successful the contractor is then liable to the project owner to reimburse and indemnify the project owner for the cost of that tort settlement. The contractor is then consistently caught paying both the compensation costs as well as the court costs. And this is a remedy to that problem the situation that occurs regularly for construction today. Chair Seekins asked for any further testimony. He said they are not going to move this bill at this time. Having no other witnesses, Chair Seekins announced they will carry the bill over and adjourned the judiciary committee.