ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 19, 2015
1:31 p.m.
MEMBERS PRESENT
Senator Mia Costello, Chair
Senator Cathy Giessel, Vice Chair
Senator Kevin Meyer
Senator Gary Stevens
Senator Johnny Ellis
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CONFIRMATION HEARINGS
Board of Public Accountancy
JEFFRY L. JOHNSON
CONFIRMATION ADVANCED 4/7/15
Board of Marital & Family Therapy
LEON T. WEBBER
CONFIRMATION ADVANCED 4/7/15
SENATE BILL NO. 58
"An Act relating to workers' compensation and transportation
network companies; and providing for an effective date."
- HEARD AND HELD
SENATE BILL NO. 2
"An Act relating to a voluntary preference for veterans and for
spouses and domestic partners of veterans by private employers."
- HEARD AND HELD
SENATE BILL NO. 71
"An Act relating to the practice of pharmacy; and relating to
the administration of vaccines and related emergency
medications."
- MOVED SB 71 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 58
SHORT TITLE: TRANSPORT NETWORK SVES. & WORKERS COMP
SPONSOR(s): STATE AFFAIRS BY REQUEST
02/20/15 (S) READ THE FIRST TIME - REFERRALS
02/20/15 (S) L&C, STA
03/19/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 2
SHORT TITLE: EMPLOYMENT PREFERENCE: VETERAN & SPOUSES
SPONSOR(s): WIELECHOWSKI
01/21/15 (S) PREFILE RELEASED 1/9/15
01/21/15 (S) READ THE FIRST TIME - REFERRALS
01/21/15 (S) L&C, STA
03/19/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 71
SHORT TITLE: VACCINE CERTIFICATION FOR PHARMACISTS
SPONSOR(s): SENATOR(s) GIESSEL BY REQUEST
03/11/15 (S) READ THE FIRST TIME - REFERRALS
03/11/15 (S) L&C
03/17/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/17/15 (S) Heard & Held
03/17/15 (S) MINUTE(L&C)
03/19/15 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
JEFFRY L. JOHNSON, Appointee
Alaska State Board of Public Accountancy
POSITION STATEMENT: Testified as appointee to the Alaska State
Board of Public Accountancy
LEON T. WEBBER, Appointee
Board of Marital & Family Therapy
POSITION STATEMENT: Testified as appointee to the Board of
Marital & Family Therapy.
SENATOR BILL STOLTZE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced SB 58 on behalf of the Senate
State Affairs Committee.
MICHAEL MONAGLE, Director
Division of Workers' Compensation
Department of Labor and Workforce Development (DOLWD)
Juneau, Alaska
POSITION STATEMENT: Testified in opposition to SB 58.
MARTY HESTER, Director
Division of Insurance
Department of Commerce, Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Testified that the Division of Insurance is
tracking SB 58 to ensure that there is insurance provided during
all phases of the operation of TNCs.
BRYCE EDWARDS, Operations Manager
Uber in the Northwest
POSITION STATEMENT: Testified in support of SB 58.
SHELDON WINTERS. Lobbyist
State Farm Insurance
Juneau, Alaska
POSITION STATEMENT: Raised concerns about the definition of
TNCs in SB 58.
ARMAND SELICIANO
Property Casualty Insurers Association of America
POSITION STATEMENT: Expressed deep concerns with SB 58 because
it does not address liability insurance.
SENATOR BILL WIELECHOWSKI
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 2.
KALYSSA MAILE, Staff
Senator Bill Wielechowski
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided supporting information related to
SB 2 on behalf of the sponsor.
MARK SANSOUCE, Regional Representative
U.S. Department of Defense
Tacoma, Washington
POSITION STATEMENT: Testified in support of SB 2.
ACTION NARRATIVE
1:31:03 PM
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing
Committee meeting to order at 1:31 p.m. Present at the call to
order were Senators Stevens, Giessel, Meyer, Ellis, and Chair
Costello.
^Confirmation Hearings
Confirmation Hearings
Board of Public Accountancy
1:32:07 PM
CHAIR COSTELLO announced the first order of business would be
confirmation hearings. She asked Mr. Webber to offer some brief
remarks regarding his interest in serving on the Alaska State
Board of Public Accountancy.
JEFFRY L. JOHNSON, Appointee, Alaska State Board of Public
Accountancy, said he is applying for a second and final term on
the board. He has been a practicing CPA for 40 years. The board
is tasked with licensing CPAs who issue reports on private,
government, and nonprofit. He said he enjoys working for the
profession trying to ensure quality.
CHAIR COSTELLO found no public testimony and thanked Mr. Johnson
for being willing to serve.
Board of Marital & Family Therapy
CHAIR COSTELLO asked Mr. Webber to tell the committee about his
interest in serving on the Board of Marital & Family Therapy.
1:34:39 PM
LEON T. WEBBER, Appointee, Board of Marital & Family Therapy,
said he has been a practicing marriage and family therapist in
Alaska since 1973. He is honored to serve as chair and be
nominated for a second term. He discussed some of the
challenging issues he addresses as chair including tele-therapy
and tele-supervision. This opportunity is a privilege and a
responsibility to protect consumers and ensure that licensees
carry out their responsibilities.
CHAIR COSTELLO stated that the committee will be forwarding the
names for confirmation in one batch.
SB 58-TRANSPORT NETWORK SVES. & WORKERS COMP
1:36:31 PM
CHAIR COSTELLO announced the consideration of SB 58. "An Act
relating to workers' compensation and transportation network
companies; and providing for an effective date."
1:37:10 PM
SENATOR BILL STOLTZE, speaking as chair of the Senate State
Affairs Committee, said he introduced SB 58 by request. He spoke
to the following sponsor statement:
Senate Bill 58 establishes a workers' compensation
exemption for individuals who operate a motor vehicle
under a service agreement with a transportation
network company.
Recently emerging in Alaska, transportation network
companies provide services by connecting passengers to
drivers through a digital network, commonly in the
form of a mobile device application.
Currently, taxi companies are allowed an exemption
from the Workers' Compensation Act, which creates an
unfair advantage over transportation network
companies. Senate Bill 58 is intended to provide equal
treatment between taxis and transportation network
companies.
The communities of Chugiak and Eagle River have
desperately sought transportation options without
success. Hopefully, this small piece of the solution
will allow municipalities, including Anchorage, the
ability to facilitate unmet transportation needs for
all Alaskans.
SENATOR STOLTZE related that horse carriage drivers are
disadvantaged by current law and he'd like that to be added to
the bill.
1:42:47 PM
CHAIR COSTELLO noted the supporting letter in the packets from
legislators in the greater Anchorage area.
SENATOR GIESSEL asked him to comment on the lack of
transportation services in other areas of the municipality. She
said Eagle River and Girdwood come to mine.
SENATOR STOLTZE confirmed that there is an issue in Girdwood.
People are willing to pay for transportation services but the
industry isn't responsive. This is an effort to remove some of
the obstacles.
SENATOR MEYER agreed there is need for additional transportation
services city wide. He asked if this is an insurance or workers'
compensation bill.
SENATOR STOLTZE described it as an insurance bill that relates
to a potential industry.
1:46:26 PM
SENATOR MEYER asked how this bill compares to the way other
states have dealt with transportation issues.
SENATOR STOLTZE said he didn't know; he was relying on input
from the municipality and trying to remove a barrier.
SENATOR MEYER said he appreciates that the legislation was
introduced because he has heard it is a problem in many areas.
1:48:47 PM
MICHAEL MONAGLE, Director, Division of Workers' Compensation,
Department of Labor and Workforce Development (DOLWD), testified
in opposition to SB 58. He said the department doesn't have a
problem with the concept if the transportation network company
is defined similar to a taxicab business, but the application
could be broader than that because of the wording. A tour
company could use this model and be exempt from workers'
compensation insurance, for example. If the bill was strictly
limited to taxicabs and limousine type services the department
wouldn't have as much concern.
He raised concern with the language in subparagraph (C) on page
2, line 25. It says a person is exempted once they take on a
passenger and that concludes when the passenger exits. He
questioned what happens with insurance in between the time the
network driver drops off one passenger and picks up another. He
also raised concern with Sections 3 and 4 on page 3 that apply
the legislation retroactively. If a driver currently had a
workers' compensation claim or the division had a proceeding
before the Workers' Compensation Board, those claims or
proceedings or claims would be set aside by the retroactive
clause. If the bill moves forward, the department would prefer
that provision be deleted.
SENATOR STEVENS asked why taxicab companies are exempted from
workers' compensation.
MR. MONAGLE said he didn't know the history of the exemption,
but there are specific limitations to that exemption. There has
to be a written contract between the business owner and its
drivers and under the labor law there are restrictions on how
the person can accept payment.
1:53:25 PM
SENATOR STEVENS questioned the rationale for exempting taxicabs
in the first place.
MR. MONAGLE said the broader question is whether a person is an
employee or an independent contractor. The legislature concluded
that a taxicab driver is an independent contractor. This
legislation provides a similar exemption under that same
analysis.
CHAIR COSTELLO asked who, other than taxicab drivers, is exempt
from workers' compensation.
MR. MONAGLE read the list found under AS 23.30.230. He added
that there is a "relative nature of the work" test to determine
whether there is an employee employer relationship in the event
of an accident.
CHAIR COSTELLO asked if the department's concerns can be
addressed through an amendment.
MR. MONAGLE answered yes and highlighted the concern about
whether there is sufficient insurance in the event of an
accident.
1:59:33 PM
CHAIR COSTELLO asked Mr. Hester if he wanted to comment on the
legislation.
1:59:52 PM
MARTY HESTER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development (DCCED), said SB 58
does not affect Title 21, the insurance statute, but the
division is monitoring the bill to ensure that there is
insurance provided during all phases of the operation of these
vehicles.
2:01:04 PM
BRYCE EDWARDS, Operations Manager, Uber in the Northwest,
explained that Uber is a technology platform that connects
riders and drivers. The system is cashless and brings in an
unprecedented level of accountability. SB 58 solely focuses on
workers' compensation and whether the people that partner on the
system are small businesses or employees. He explained the
process for becoming a driver on the Uber platform. Once someone
becomes a driver they have the flexibility to log on and log off
the application as they see fit. Drivers average 20 hours a
month, are not dispatched, take 80 percent of the fare, and
receive a 1099 at the end of the year.
MR. EDWARDS advised that Uber is working with the city of
Anchorage to address transportation network companies.
2:07:28 PM
SENATOR MEYER asked how a passenger knows what the rate will be
and whether the Uber driver is taking the correct route.
MR. EDWARDS explained that a rider can open the application and
click on the rates. This shows costs per mile and per minute as
well as the base charge. The rider can enter the final
destination and receive an estimate for the trip. To determine
the best route the rider can enter the final destination and
push the navigate button to get step-by-step instructions. The
rider can rate the driver at the end of the trip on a five star
scale. A three star or below is an indication to Uber that
follow up is needed.
SENATOR MEYER asked if there is an opportunity for a third party
to track the rider.
MR. EDWARDS confirmed that is possible if the rider chooses to
share the information.
SENATOR MEYER asked if Uber encourages drivers to put up a
Plexiglas barrier behind the front seat as a safety measure.
MR. EDWARDS said Uber drivers feel very safe; they are not
carrying cash and they have the option of turning down a
passenger. He hasn't seen the Plexiglas shield.
SENATOR STEVENS asked him to address Mr. Monagle's concerns and
if some common ground could be found.
MR. EDWARDS addressed the concern about opening the door for
other types of operators. He said the bill has a standard
definition of what a transportation network company (TNC) does.
It clearly states that the partners in the system pick a
passenger up and carry them from A to B. The issue of a package
provider was mentioned but Uber doesn't own or lease any
vehicles. He said that Uber prefers that Sections 3 and 4
relating to retroactivity remain in the bill because Uber has
been giving many of free rides in Anchorage.
CHAIR COSTELLO asked how other states have addressed the issue
of employee versus independent contractor.
MR. EDWARDS said it is being addressed in a number of states and
Arkansas and Florida are the farthest along.
CHAIR COSTELLO asked if they're moving toward identifying
drivers as independent contractors.
MR. EDWARDS replied it is shifting in that direction in Arkansas
and Florida.
CHAIR COSTELLO asked if there has been litigation on the issue.
MR. EDWARDS said he isn't familiar with any outside the piece in
Alaska.
2:16:36 PM
SENATOR ELLIS asked what insurance is affected other than
workers' compensation. He noted there could be some interplay.
MR. EDWARDS offered to distribute a handout showing Uber's
insurance information.
2:17:16 PM
At ease
2:18:54 PM
CHAIR COSTELLO reconvened the meeting.
MR. EDWARDS explained that the insurance for TNCs bridges the
gap between what is typically a commercial and personal
insurance industry. From the time the driver accepts a passenger
through the application to the time that the rider leaves the
vehicle, there is $1 million primary insurance coverage. That
extends to underinsured and uninsured motorist coverage as well
as comprehensive coverage. When the application is on but before
the ride has been accepted, there is contingent insurance that
would cover in the case of any issues with the driver's personal
insurance. This is referred to as period 1. No transaction is
occurring and the driver's personal insurance is primary.
CHAIR COSTELLO opened public testimony.
2:21:28 PM
SHELDON WINTERS retained counsel, State Farm Insurance, stated
that State Farm has no position on whether or not TNCs should be
exempt from workers' compensation insurance, but has concerns
about the narrow definition of TNCs in SB 58. As currently
drafted it may have unintended but dire consequences for
insurance coverage liability issues. He referenced the consumer
warning on the Division of Insurance website which has joined 22
other states by issuing warnings about the risks of ride
sharing/vehicle sharing programs. The key point is that personal
auto insurance is not intended to cover people who use their
vehicles for commercial purposes and coverage in the event of an
accident in those cases is unlikely.
MR. WINTERS maintained that commercial activities by a TNC
driver that are not covered by a personal policy do not just
begin and end with picking up a passenger and dropping them off.
Commercial activities include the moment the TNC driver turns on
the application and is open for business, similar to the taxicab
driver that turns on their "for hire" light.
Reiterating the concern about the narrow definition of TNCs, he
directed attention to the language on page 3, line 6 and
suggested that the language should be broadened to include all
aspects of T&Cs. He discussed problems that occurred in other
states after an accident and warned that if the bill passes in
its current form it could be used to preclude an injured party's
recovery from the TNC. He noted that State Farm submitted
broader language to the sponsor of SB 58 and the sponsor of
companion legislation.
SENATOR STEVENS assumed that commercial insurance is more
expensive than private insurance. He asked him to discuss the
insurance requirements for taxicabs.
MR. WINTERS confirmed that a commercial insurance policy is more
expensive than a personal policy and advised that taxicab
insurance requirements are set through municipal code.
SENATOR STEVENS asked if a taxicab has to carry commercial
insurance 24 hours a day with no switching back to a personal
policy.
MR. WINTERS said that is probably true, but State Farm does not
insure taxicabs. He clarified that insurance companies do not
accommodate switching back and forth and it's a problem that TNC
drivers are under the mistaken impression that their personal
policy will cover them.
2:31:54 PM
ARMAND SELICIANO, Property Casualty Insurers Association (PCIA)
of America, stated that PCIA has deep concerns with SB 58
because it does not address liability insurance. Nothing in
Alaska law addresses the liability aspect in the event of an
accident involving a TNC. The bill provides two definitions of
TNC services but neither covers the roaming period. Under the
language in SB 58 Uber could argue that a driver who is roaming
and gets in an accident is not covered by the commercial
insurance. He cited a case in California with that fact pattern
and Uber made that argument. He suggested amending the bill to
include the roaming period and keeping an eye on the litigation
in California where Uber drivers filed suit claiming they are
employees, not independent contractors.
2:36:39 PM
CHAIR COSTELLO announced that she would hold SB 58 in committee
with public testimony open.
2:37:11 PM
At ease
SB 71-VACCINE CERTIFICATION FOR PHARMACISTS
2:39:45 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 71. "An Act relating to the practice of
pharmacy; and relating to the administration of vaccines and
related emergency medications." She found no testifiers and
closed public testimony.
2:40:20 PM
SENATOR GIESSEL motioned to report SB 71, labeled 29-LS0591\W,
from committee with individual recommendations and attached zero
fiscal note.
CHAIR COSTELLO announced that without objection SB 71 is
reported from the Senate Labor and Commerce Standing Committee.
2:40:41 PM
At ease
SB 2-EMPLOYMENT PREFERENCE: VETERAN & SPOUSES
2:42:14 PM
CHAIR COSTELLO reconvened the meeting and announced the
consideration of SB 2. "An Act relating to a voluntary
preference for veterans and for spouses and domestic partners of
veterans by private employers."
2:42:47 PM
SENATOR BILL WIELECHOWSKI, Sponsor of SB 2, introduced SB 2
speaking to the following sponsor statement:
Our country is emerging from a decade of war and
reducing the total number of combat forces. In an
already challenging economic climate, these men and
women who have honorable served must now make their
case that the skills acquired in the military
translate into civilian employment.
Senate Bill 2 permits private sector employers to
extend a hiring preference to veterans, and their
spouse or domestic partner, without violating Alaska
Human Rights Law. It is a Department of Defense
priority and a policy the State of Alaska already
permits in public sector hiring.
This bill expands opportunities for veterans and aims
to help bring down the unacceptably high unemployment
rate among them. It also gives private employers
greater flexibility in choosing to hire veterans.
As the number of veterans in the American workforce
has increased dramatically, supporting these brave men
and women is of the utmost importance. I hope that you
will join me in helping to make the transition back
into civilian life a smooth one for our military
families.
SENATOR WIELECHOWSKI said he is unaware of any lawsuits that
have occurred over this hiring preference. Alaska has a long
history of being friendly to veterans and SB 2 is another step
to show appreciation for the service of veterans.
He highlighted that, based on recent legal advice, he is
suggesting several changes to the legislation and submitted a
proposed committee substitute that encompasses those changes.
CHAIR COSTELLO asked how many veteran are in Alaska and how many
are unemployed.
2:45:32 PM
KALYSSA MAILE, Staff, Senator Bill Wielechowski, reported that
in Alaska about one person in 10 is a veteran, which is among
the highest rate in the nation. The latest national rates show
that 18 to 24 year old veterans have an 18.7 percent
unemployment rate as compared to 11.6 percent for non-veterans
in the same age cohort. Twenty-five to 34 year old veterans have
a 7.4 percent unemployment rate versus a 5.7 percent rate for
non-veterans. Across the whole population, the unemployment rate
for veterans is 5.7 percent versus 5.3 percent for non-veterans.
SENATOR STEVENS asked why the bill includes spouses and domestic
partners.
SENATOR WIELECHOWSKI replied the proposed CS removes both
spouses and domestic partners.
CHAIR COSTELLO asked what groups have stated or submitted
written support for the legislation.
MS. MAILE said the U.S. Department of Defense has said this is a
priority and other folks have stated informal support. She
offered to reach out more and provide the letters of support as
they come in.
2:48:13 PM
MARK SANSOUCE, Regional Representative, U.S. Department of
Defense (DOD), Tacoma, Washington, testified in support of SB 2.
He said he didn't want to be redundant, but wanted to clarify
that this is a voluntary effort. Private sector companies want
to hire veterans because of their unique skill sets and
reliability, but are hesitant out of fear of being sued under
Title 7 of the Civil Rights Act of 1964. This is an attempt to
alleviate that fear. He said that since the public sector in all
50 states has accepted practices for veteran preference in
hiring, the language in SB 2 will allow the private sector to
have those policies. He noted that while this is a new issue for
DOD, it is not a new issue for the National Conference of State
Legislatures (NCSL). At the instigation of NCSL, 13 states have
passed similar legislation. He referenced the statistics Ms.
Maile reported and highlighted that last year over 2,000 people
separated from the active reserve and National Guard components
and returned to call Alaska home.
CHAIR COSTELLO opened public testimony for SB 2.
2:51:43 PM
SENATOR MEYER asked what version is before the committee.
2:51:53 PM
At ease
2:52:47 PM
CHAIR COSTELLO reconvened the meeting and stated that the
committee would work with the sponsor on the CS. Finding no
testifiers she closed public testimony.
SENATOR STEVENS asked if the Coast Guard is included.
MS. MAILE said that has been discussed and could be included in
the CS.
CHAIR COSTELLO stated that she would hold SB 2 in committee for
further consideration and forthcoming CS.
2:54:21 PM
There being no further business to come before the committee,
Chair Costello adjourned the Senate Labor and Commerce Standing
Committee meeting at 2:54 p.m.