SENATE LABOR AND COMMERCE COMMITTEE May 2, 1995 1:40 P.M. MEMBERS PRESENT Senator Tim Kelly, Chairman Senator John Torgerson, Vice Chairman Senator Mike Miller Senator Jim Duncan Senator Judy Salo MEMBERS ABSENT All Members Present COMMITTEE CALENDAR SENATE BILL NO. 160 "An Act excluding certain employment by students from the definition of 'employment' in the state employment security laws." HOUSE BILL NO. 180 "An Act relating to liquor licenses issued to a hotel, motel, resort, or similar establishment; and providing for an effective date." CS FOR HOUSE BILL NO. 237(JUD) am "An Act relating to workers' compensation insurance rate filings; to second independent medical evaluations for workers' compensation claims; to confidentiality of workers' compensation medical and rehabilitation information; to immunity for third-party design professionals from civil actions by recipients of workers' compensation benefits; to workers' compensation death benefits; to computation of workers' compensation benefits; to penalties for fraudulent acts related to workers' compensation; to immunity for employer workplace safety inspections related to workers' compensation insurance; and providing for an effective date." SENATE BILL NO. 158 "An Act relating to pharmacists and pharmacies." PREVIOUS SENATE COMMITTEE ACTION SB 160 - No previous action to record. HB 180 - See Community & Regional Affairs minutes dated 4/12/95. HB 237 - No previous action to record. SB 158 - See Labor and Commerce minutes dated 4/25/95. WITNESS REGISTER Dwight Perkins, Special Assistant Department of Labor P.O. Box 21149 Juneau, AK 99802-1149 POSITION STATEMENT: Opposed SB 160. Barbara Cotting, Legislative Aide Representative Jeannette James State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of HB 180. Patrick Sharrock, Director Alcoholic Beverage Control Board 550 W 7th, Ste. 350 Anchorage, AK 99501 POSITION STATEMENT: Supported HB 180. Mike Kible, owner McLaren River Lodge Denali Highway, Alaska POSITION STATEMENT: Supported HB 180. Tim Sullivan, Legislative Aide Representative Eldon Mulder State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of HB 237. Paul Grossi Department of Labor P.O. Box 21149 Juneau, AK 99802 POSITION STATEMENT: Supported HB 237. Willy Von Hemert, Management Representative Ad Hoc Committee 1633 W 15th Anchorage, AK 99501 POSITION STATEMENT: Supported HB 237 and amendments. Kevin Dougherty Ad Hoc Committee 2501 Commercial Dr. Anchorage, AK 99501 POSITION STATEMENT: Supported HB 237 and amendments. Sherman Ernouf, Legislative Aide Senator Tim Kelly State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Commented on SB 158. Catherine Reardon, Director Division of Occupational Licensing Department of Commerce P.O. Box 110806 Juneau, AK 99811-0806 POSITION STATEMENT: Commented on SB 158. ACTION NARRATIVE TAPE 95-20, SIDE A Number 001 SB 160 EXCLUSIONS FROM UNEMPLOYMENT COVERAGE  CHAIRMAN KELLY called the Senate Labor and Commerce Committee meeting to order at 1:40 p.m. and announced SB 160 to be up for consideration. DWIGHT PERKINS, Department of Labor, was not able to testify, but submitted this statement: The Department of Labor opposed SB 160, for the following reasons: 1. The Employment Security Act already goes far enough in excluding employment of children by their parents and excluding employemnt of students by educational institutions. Coverage of student workers should not be further eroded. AS 23.20.526 (d)(5)- (6) excludes service by a regularly enrolled student, or a student enrolled in a work study program for a school, college, or university. AS 23.20.526(a)(4) excludes service for a parent by a minor. The bill would go much further. It would exclude service for any employer whatsoever, by a worker of any age, so long as the employer is a parent and the worker is a student between terms. For example, a thirty-five year old worker with a family, who happened to be working in a parent-operated business, could be excluded from coverage shortly after entering training to improve his or her skills. The worker would be denied UI protection if the training were interrupted, or the new occupation did not materialize, or the current employment came to an end. There is no reason to subject these employees to greater risk than others, just because they happen to be working for their parents and going to school when the wage credits are earned. 2. The bill would also create a conflict with federal coverage provisions. It would exempt students of any age. However Section 330(c)(5) Federal Unemployment Tax Act (FUTA) does not exempt service of a worker age 21 or older (student or otherwise) in the employee of his or her parents. An employer would, therefore, still be liable for the full FUTA tax on affected employees who are 21 or older. Employers are eligible for a credit against the FUTA tax if the FUTA taxable service is covered under state law, but the credit would not be available on this particular service, since the employer would not be paying state taxes on the service under an approved state law. If reducing the tax burden is an object of the legislation, very little will be gained by removing the state tax liability and replacing it with the full federal FUTA liability. 3. The tax burden on the affected students is minimal and the number of such students is very small. A full-time employee will pay maximum of $119.50 in UI contributions for the entire calendar year 1995. A student employed between school terms would pay much less. The bill addresses only students employed by their parents, a tiny fraction of the work force. 4. The bill would create an unjustifiable disparate impact on student workers. It would not affect other similarly situated workers who happen not to be employed by their parents. The Department firmly believes that expanding the exemption to these other students is an even worse idea, but there is no sound policy reason for targeting a subset of workers on the basis of family relationship. 5. The terms of the exclusion are vague and there is no feasible way to base tax liability on a worker's "intention" to remain in school. Would coverage be retroactive if the worker did not return to school? Would employer be allowed to certify to the worker's intentions? The provision would be difficult to enforce and easy to abuse. SENATOR TORGERSON explained that SB 160 is just a relief for mom and pop buisnesses that have the burden of paperwork slapped on them by undue regulations. It exempts parents from paying unemployment tax when a child is in college and comes back and goes to work for them. SENATOR KELLY said he supported this bill. SENATOR TORGERSON moved to pass SB 160 from committee with individual recommendations. There were no objections and it was so ordered. HB 180 LIQUOR LICENSES FOR RESORT/LODGES  SENATOR KELLY announced HB 180 to be up for consideration. BARBARA COTTING, Aide to Representative Jeannette James, said this bill was requested by lodge owners in very remote areas of organized boroughs and the Alcohol Beverage Control Board to correct an inequity. Right now a person in a very remote area with a large population has to have 40 rental rooms in order to have a full service liquor license. Those licenses are quite important for lodge owners to be able to stay in business. SENATOR SALO said she knows of remote lodges that don't have 40 rooms and do serve liquor and asked if there was a waiver process already. PATRICK SHARROCK, Director, Alcoholic Beverage Control Board, said there aren't waivers currently under the statute. He is under the impression that some guests bring their own alcohol. SENATOR KELLY asked if there was a difference in the organized and unorganized borough. MR. SHARROCK said there was a difference in the way licenses are issued in the organized and the unorganized borough. The proposed legislation does not address the unorganized borough, because there are separate divisions of law for that. MR. SHARROCK said the number of room required in the Kenai and Mat- Su borough is 40, because of the population within those boroughs excluding the population in cities. SENATOR SALO asked if this meant 40 rooms or 40 beds. MR. SHARROCK answered 40 rooms. The McLaren River Lodge, the particular one this bill addresses, is on the Denali Highway between Paxson and Healy. It, of course, would allow other business people within boroughs and unified municipalities to meet the new requirement law. This is supported by the Board. SENATOR TORGERSON asked if these licenses are like a beer and wine license. MR. SHARROCK explained this is a full service license and cannot be transferred to another location. Number 120 SENATOR SALO asked if a place didn't have 40 rooms would they be able to sell liquor with food currently. MR. SHARROCK said they could if they have a minimum of 10 rooms (unorganized borough). SENATOR KELLY said in the Board's opinion this would not proliferate the number of beverage dispensing licenses available. MR. SHARROCK said that was one of the Board's main concerns and they found clearly that it would not, because of the limiting factor of having to be on a road that isn't open any less than two months out of the year. The Board thinks this legislation is simply addressing an inequity. SENATOR TORGERSON asked if section 3 of this bill applies to the Kenai Borough. MR. SHARROCK said, yes, that applies to the Kenai Borough. Number 176 MIKE TIBLE, owner of McLaren River Lodge, supported SB 160. He said he just about single handedly opened up the Denali Highway to winter recreation and tourism and he is flanked on both sides by lodges that have full liquor licenses. Economically, it doesn't make a lot of sense just because he's a mile and a half inside the Mat-Su Borough. He said this bill would allow the promotion of tourism in the state by small entrepreneurs, like himself. SENATOR TORGERSON moved to pass HB 180 with individual recommendations. There were no objections and it was so ordered. HB 237 WORKERS' COMPENSATION AMENDMENTS  SENATOR KELLY announced HB 237 to be up for consideration. TIM SULLIVAN, Staff to Representative Eldon Mulder, said HB 237 was introduced at the request of Alaska Labor Management Ad Hoc Committee on Worker's Compensation, a committee formed from several members from both labor and management. He gave a brief sectional analysis. PAUL GROSSI, Department of Labor, said they support the bill although there is a technical problem with section 5 which his amendment will address. Section 5 originally was for the release of information from medical and rehab providers to obtain information to be submitted into a file. The amendment on the floor makes it unclear about whether they have right to the information contained in their own file. The other problem is that they can't conduct public hearings and can't issue decisions without that information. SENATOR KELLY said it was the intention of section 5 to not allow public release to this type of medical information. He was concerned that it didn't allow release to the Division of Worker's Compensation. MR. GROSSI said that was right. SHERMAN ERNOUF, Legislative Aide to Senator Kelly, noted that change was embodied in the proposed CS to HB 237. WILLY VON HEMERT, Management Representative of the Ad Hoc Committee, supported HB 237 and the two amendments regarding confidentiality of records and the language dealing with seasonal and temporary workers. KEVIN DOUGHERTY, Ad Hoc Committee, said they fully support the bill as a combined labor management body along with the amendments. Number 320 SENATOR TORGERSON moved to adopt CS marked K to HB 237. There were no objections and it was so ordered. SENATOR TORGERSON moved to pass SCS HB 237(L&C) from committee with individual recommendations. There were no objections and it was so ordered. SB 158 PHARMACISTS AND PHARMACIES  SENATOR KELLY announced SB 158 to be up for consideration. He asked his aide, Sherman Ernouf, to explain the proposed committee substitute. MR. ERNOUF said he had worked with many people to solve many of the issues embodied in this bill. One change he highlighted was in section 2, page 2, line 8, the liberally construed "to carry out these objectives and purposes" section, because in general everyone thought the bill was too broad. The powers and duties of the Board were altered and the embargo powers were deleted, he added. At the request of Occupational Licensing, the requirement that the secretary give 30 days written notice to all members was deleted and added that the meetings could be held telephonically. The executive secretary position was deleted from the bill giving it a $0 fiscal note. The removal of Board members for cause was returned to its previous form. Old section 13, reciprocity and license transfer, was rewritten because of the administrative problems of trying to compare qualifications in different states from 10 years ago. Licensing of facilities has two new sections that leaves out existing drug facilities. Another section was added to insure that physicians physicians' assistants, advanced nurse practitioners, dispensing opticians, and optometrists will not have to license their facilities as do pharmacies. SENATOR KELLY noted that these folks are the ones they have already given the ability previously in law to dispense drugs. MR. ERNOUF said that was correct and that they are regulated. Number 484 SENATOR SALO asked about dentists. MR. ERNOUF explained that they would be added in the committee substitute. He said that the "controlled substance" clause was added back into the statute, and although it may be redundant with federal legend drugs which includes narcotics and controlled substances, but the thought was that it was a good idea to have the language in statute, also. Old section 20, which is on page 11, line 13, he said, has one sentence added about when the Board places a drug under seal when a pharmacist has had his license suspended or revoked. He said the Board of Pharmacy can stamp a seal, but can't actually confine an area. The Department of Health already has that authority and a sentence has been added saying the Board of Pharmacy shall notify the Department of Health and Social Services to let them know so the enforcement mechanism can come in. Both departments support this issue. Old section 24, on page 12, line 19, exempts physicians' assistants, nurse practitioners, dispensing opticians, optometrists, and dentists (because they are the only ones who are licensed to dole out drugs) from this whole act. Old section 25 has been deleted, because it was imposing on others the record keeping and standard requirements for handling drugs which they are already subject to. SENATOR SALO asked if it was legal in the State of Alaska for a physician to own a pharmacy or to partly own a pharmacy to whom he is recommending his patients and writing prescriptions. CATHERINE REARDON, Director, Division of Occupational Licensing, said it is not currently against the law to own a testing lab, pharmacy, or other facility to which you might be referring patients. The medical statute does have a clause saying that a doctor can be disciplined for violation of "any code of ethics adopted by regulations by the Board" which has not adopted any code of ethics, she said. MS. REARDON informed the committee that the Board members were under review prior to the most recent issue that came up relating to the editorials. The administration is putting quite a bit of time into considering the current members and other possible appointees. She thought they would see decisions coming up quickly on that. She said the issue of record keeping by physicians and other health care practitioners would probably be coming up in the next legislative sessions. There are currently no statutes or regulations which require them to maintain records, with the exception of nurses who have adopted a regulation regarding record keeping. Number 515 SENATOR KELLY asked if the Medical Board served "for cause" or "at the pleasure of." MS. REARDON answered, "at the pleasure of." SENATOR MILLER moved to add "dentist" in the two appropriate places. There were no objections and it was so ordered. SENATOR KELLY moved to adopt the committee substitute to SB 158. There were no objections and it was so ordered. SENATOR SALO moved to pass CSSB 158(L&C) from committee with individual recommendations. There were no objections and it was so ordered. SENATOR KELLY adjourned the meeting at 2:12 p.m. SENATOR KELLY reopened the meeting to review confirmations on the Board of Nursing: Bellee L. Cunningham, Kathleen Kloster, and Joe Senungetuk. SENATOR KELLY adjourned the meeting, again, at 2:13 p.m.