CSHB 409(L&C)-NO WORKERS' COMP. FOR REAL EST. LICENSEE  CHAIR BUNDE announced CSHB 409(L&C) to be up for consideration. REPRESENTATIVE BOB LYNN, sponsor of HB 409, introduced his staff, Nancy Manly, and disclosed that he is a licensed real estate broker acting in the capacity of broker associate in Alaska. REPRESENTATIVE LYNN said that every state has laws that require most companies to purchase workers' compensation insurance for their employees. However, most real estate agents are considered independent contractors and not employees. The question is what is the difference. REPRESENTATIVE LYNN explained that first of all, a real estate licensee signs an independent contractor agreement with a broker and pays for his own services. He doesn't receive a wage, salary or benefits. He receives payment for services directly related to his sales and other output. He is required to pay estimated quarterly income tax, his own social security taxes and the portion of social security tax that an employer would normally pay for an employee. He pays for all his business expenses including licensing fees, continuing education classes, advertising, mailing, supplies, long distance phone calls, design and implementation of a personal website - everything. "They are in fact a business within a business." The broker has no control over the hours spent or how the licensee conducts the business so long as it is within the boundaries of the law. The IRS considers qualified real estate licensees as independent contractors. The purpose of this bill is for the state to recognize these people as independent contractors and not employees - the same as the IRS. CHAIR BUNDE clarified that if this bill passes, the independent contractor has to buy his own insurance and would not be able to avail himself of the state system of workers' compensation - and it might be more expensive. REPRESENTATIVE LYNN responded that was about right; real estate is a risky business. SENATOR SEEKINS said he understood that under current workers' compensation law, realtors would be exempt from having to provide any insurance for themselves. NANCY MANLY, staff to Representative Lynn, replied that was correct as long as the realtor didn't have employees. CHAIR BUNDE remarked that if he were working for a business with workers' compensation, he couldn't sue the business if he got injured. If he were working for a business that didn't have worker's compensation, he could sue the owner of the business - whether the suit had merit or not. 2:00:25 PM PEGGY ANN MCCHONNICHIE, Alaska Association of Realtors, heartily supported HB 409 saying it would clear up a problem that Alaskan realtors had been dealing with for a long time. According to the Internal Revenue Service (IRS), realtors have been independent contractors since the early 70s. The State Department of Labor sees realtors as independent businesses, but the Division of Insurance doesn't know for sure. So, this lack of continuity in business status has caused some problems. HB 409 clarifies that realtors have a contract with their broker and don't need workers' compensation insurance. 2:02:15 PM SENATOR SEEKINS disclosed that Ms. McChonnichie's father was a long-time good friend of his. He then moved to report CSHB 409(L&C) from committee with individual recommendations and attached fiscal note. Senators Ellis, Seekins, Davis, Ben Stevens and Chair Bunde voted yea; so CSHB 409(L&C) moved from committee.