MINUTES OF THE

      ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT

 

      Sixty-seventh Session

      March 4, 1993

 

 

 

The Assembly Committee on Labor and Management was called to order by Chairman Christina R. Giunchigliani, at 3:42 p.m., on Thursday, March 4, 1993, in Room 321 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Meeting Agenda.  Exhibit B is the Attendance Roster.

 

 

COMMITTEE MEMBERS PRESENT:

 

      Ms. Christina R. Giunchigliani, Chairman

      Mr. Bernie Anderson, Vice Chairman

      Mr. Douglas A. Bache

      Mr. John C. Bonaventura

      Mr. John C. Carpenter  

      Mr. Tom Collins, Jr.

      Mr. Peter G. Ernaut

      Ms. Lynn Hettrick

      Ms. Erin Kenny

      Mr. John B. Regan

      Mr. Michael A. Schneider

 

 

COMMITTEE MEMBERS ABSENT:

 

      None

 

 

STAFF MEMBERS PRESENT:

 

      Don Williams, Legislative Counsel Bureau Research

 

 

OTHERS PRESENT:

 

      Scott Young, General Counsel, State Industrial

        Insurance System

      David Going, Dept. of Industrial Relations

      John McGlamery, Attorney, Dept. of Industrial Relations

      Jack Jeffrey, Southern Nevada Building and

        Construction Trades Council

      Don Jayne, General Manager, State Industrial

        Insurance System

      Dallas Coonrod, Managing Director, Associated General   

        Contractors

 

 

Following roll call, Vice Chairman Anderson opened the hearing on AB 165.

 

ASSEMBLY BILL 165 -     Eliminates exemption from provisions of industrial insurance law for certain employers and their employees who are hired outside this state for temporary work in this state.

 

The prime sponsor of the bill, Assemblyman Tom Collins, Clark County Assembly District No. 1, explained employers in Southern Nevada were unable to compete in bidding contracts against out-of-state employers who paid lower workers' compensation rates in another state and then worked in Nevada.  Additionally, if an employee from one of these out-of-state employers was hurt, there was an added cost burden to the state because Nevada provided the treatment and care for that worker.

 

The basic intent of the bill was to eliminate the reciprocity agreement between Nevada and other states.  Thus, anyone bidding, working or having an office in Nevada would be required to pay Nevada rates.  Although some exclusions to this would exist, such as long-haul truck drivers, Mr. Collins said he simply wanted to see the reciprocity of SIIS eliminated.

 

Mr. Anderson asked if the removal of the reciprocity agreement would harm Nevada if a Nevada contractor moved to do business in another state.  Mr. Collins replied in discussions with the people most affected he had been told since Nevada's workers' compensation rate was more expensive than that of any neighboring state with a reciprocity agreement, it would benefit any Nevada contractor to buy the lower workers' compensation insurance in another state.  Ultimately, Mr. Collins thought it was altogether a win/win situation for the State of Nevada.

 

Ms. Giunchigliani noted the problem was more severe in the southern part of the state.  However, the language, "An employer is not required to pay premiums to the system for an employee who has been hired out of state. . ."  benefitted the contractors but did not penalize them or prevent them from doing jobs as a Nevada contractor in another state, it just made it equal for Nevada contractors who chose to do business in Nevada. 

Mr. Collins agreed the problem of reciprocity was more noticeable in southern Nevada.  He indicated there were Nevada contractors who had established their license in another state in order to pay lower workers' compensation. 

 

Mr. Schneider questioned what happened in the case of a long-haul driver injured in the State of Nevada if this bill did not apply to that type of occupation.  Was Nevada responsible for that?  Ms. Giunchigliani called on Scott Young, Counsel for the State Industrial Insurance System, to answer this question.

 

Mr. Collins opined this bill would be exempted by federal law for interstate commerce.  Mr. Young explained if a driver was hired who generally worked out of another state and was just passing through Nevada, Nevada workers' compensation was not usually responsible.  Truckers, he acknowledged, posed very special workers' compensation problems because of their mobility, especially if the person was hired in Nevada and headquartered out of Nevada.

 

Continuing, Mr. Schneider acknowledged the long-haul driver just passing through the state would not be covered by Nevada workers' compensation unless the company was headquartered in Nevada; however, what happened if the driver did not pass directly through the state but rather stopped to unload goods.  Mr. Young agreed this posed a problem.  He said, "If those drivers routinely come into Nevada . . . they can potentially file a claim here because they can allege they work in Nevada on a regular basis.  Sometimes what dictates the choice of where the claim is filed is which state has the highest benefits.  Potentially, an out-of-state driver performing work (as opposed to driving straight through) in Nevada could file in either the headquarter state or Nevada and then it would be up to an administrative judge to decide which state was the most appropriate state to draw the coverage from." 

 

Would AB 165 affect this in any way, Mr. Schneider asked?  Mr. Young answered the provisions in AB 165 would affect this because of the total elimination of reciprocity.  California was, indeed, one of the states Nevada still had reciprocity with.  He added there was no reciprocity with Arizona, New Mexico, Colorado, and it was limited with Oregon.  If AB 165 was enacted as presently written, anyone from California who had someone working in Nevada would have to cover them in Nevada; and that posed a potential problem of "who" should cover it.  Mr. Young recognized the confusing nature of this problem.

 

Ms. Giunchigliani asked if AB 165 created a problem or if there was a way to write language dealing with the legitimate point Mr. Schneider had raised.  Mr. Young said AB 165 did not create the problem -- it existed even with reciprocity. 

 

Continuing the explanation, Mr. Young described a situation in which a California based worker, routinely working part of his time in California and part of the time in Nevada, was injured in Nevada.  Theoretically, the claim would be filed in California; however, because Nevada's benefits were higher, the worker might try to file the claim in Nevada.  Mr. Young told the committee John McGlamery, Department counsel for the Department of Industrial Relations, had suggested language which Mr. Young thought might cure the problem.  Generally, Mr. Young thought AB 165 was a good concept.

 

Mr. Hettrick asked about the Nevada employer who bid elsewhere and opted to buy his workers' compensation insurance in another state because Nevada's rates were higher.  Was there an impact on SIIS if this was done?  Mr. Collins stated this was being done already.  SIIS was, indeed, sustaining losses because Nevada employers were setting up out of state in order to avoid Nevada's high workers' compensation rates. 

 

Mr. Ernaut questioned the language on page 2, lines 6 through 9, as compared to the language on page 3, lines 35 through 40.  He believed it was contradictory.  Ms. Giunchigliani suggested Mr. Williams could study this while the committee continued taking questions.

 

Coming forward, John McGlamery told the committee the Department of Industrial Relations' main interest in AB 165 was the way it affected the uninsured employers' claim fund in sections 2 and 4.  He said their biggest problem was that surrounding the issue posed by Mr. Schneider.  Mr. McGlamery said removing the language as proposed would increase and broaden the problem.  Alternatively, he suggested language which would result in Nevada paying for Nevada injured workers and the other states accepting uninsured claims for their injured workers.  Mr. McGlamery suggested such language be inserted in section 2 between lines 17 and 18, as follows:  "If an employee suffers an accident or injury while working in Nevada, arising out of and in the course of his employment. . ."  Additionally, the same language should be inserted in section 4.  Thus, regardless of where the employee was hired or how long he was in Nevada, if he was working and injured in Nevada, he could file a Nevada claim.  Alternatively, if he was hired in Nevada and worked elsewhere, the state he was working in would have to pick up that claim on the uninsured employers' fund.

 

Ms. Giunchigliani asked if the statutes defined "reciprocity" and "regularly employed."  Mr. Young replied "regularly employed" was not specifically defined, but "reciprocity," was a term generally well understood.  The major problem was in defining "temporarily" because many reciprocity statutes turned on that word.  Ms. Giunchigliani thought there was some merit in having these terms defined statutorily and Mr. Young agreed.  She asked Mr. McGlamery to submit a written amendment for the committee which would delineate his proposed language.

 

Testimony was then taken from Jack Jeffrey, Southern Nevada Building and Construction Trades Council.  He said he had no problem with the concept stated by Mr. McGlamery, but he was concerned with the job contracts which stretched across state lines.  As an example, Mr. Jeffrey described the worker hired out of a Nevada hiring hall, who worked on a gas pipeline and was injured in Utah.   Ultimately, Mr. Jeffrey wanted to see Nevada workers covered by Nevada law.  If this was limited to the "uninsured" fund, Mr. Jeffrey thought it might be more acceptable.

 

Addressing Mr. Hettrick's reference to the fiscal impact, Mr. Young said a fiscal note had been prepared.  An amendment to NRS 616.260 had essentially eliminated reciprocity in construction except for contracts below $250,000.  Most contractors coming into Nevada were required to have Nevada insurance.  Thus, most of the fiscal impact had been absorbed when the prior amendment forced those contractors to have Nevada coverage.  AB 165 would simply close the remaining loophole.  In closing the loophole, the fiscal note had indicated approximately an additional $7 million would be collected in premiums by the system.  However, there would be a requirement to pick up the claims, and there was a possibility if the claims exceeded the premiums the whole proposal might present a wash. 

 

There was further discussion regarding whether to limit AB 165 to construction and leave reciprocity agreements in other trades.  Citing an example, Mr. Young described the case of a carpet installer employed by a Nevada employer who then sent the employee temporarily into California to install carpet.  In such an instance the Nevada employer might want to maintain its Nevada policy to cover the installer while in California.  Under the proposal to eliminate reciprocity in AB 165 a California policy would have to be obtained when the carpet installer was sent into California.  Thus, Nevada businesses might want to see AB 165 restricted to just construction.

 

Mr. Ernaut reiterated his concern with the contradictory nature of the language.  Discussion followed.

 

Mr. Ernaut was also concerned regarding the lack of definition for the word "temporary."  Mr. Young agreed there should be a definition for the word.  The lack of definition had also created a problem in deciding whether reciprocity should apply or whether the time period had expired.

 

Mr. Hettrick reported a constituent had suggested language which would tie a Social Security number to anyone covered by SIIS in the State of Nevada.  If this was done, there would be no need to remove reciprocity.  Mr. Young agreed this was the method employed in the Employment Security Department; however, SIIS records did not do this.  The employer simply reported a total payroll, without a trace to an individual.  If SIIS required the same system as the Employment Security Department, they could then go to a job site and match the Social Security numbers of those workers and compare them to reports submitted by the employer.

 

"Would this not handle the reciprocity problem?" Mr. Hettrick asked.  A listing by Social Security number and individual would not necessarily affect reciprocity, Mr. Young opined.  This was further discussed.  If SIIS was able to identify a worker by individual name and Social Security number, the worker could be assigned to his home state rather than being picked up in Nevada, Mr. Young stated.

 

After a short discussion, Mr. Anderson opened the hearing on AB 205.

 

ASSEMBLY BILL 205 -     Eliminates exemption of certain contractors from provisions of industrial insurance law for employees who are hired outside this state for temporary work in this state.

 

The prime sponsor, Assemblyman Douglas Bache, Assembly District 11 Clark County, explained he had submitted the bill draft partially at the request of Jack Jeffrey.  He asked Mr. Jeffrey, Southern Nevada Building and Construction Trades Council representative, to join in explaining the bill.  Mr. Bache told committee members AB 205 was designed to deal with the problem of inequities posed by the exemption on contractors.  By eliminating the language on page 2, line 6, "on a project whose cost as a whole exceeds $250,000," Nevada contractors would have a more level playing field.

 

Mr. Bache said there had been a number of contractors from out of state, particularly from Utah where SIIS rates were lower, who were able to underbid Nevada contractors by the amount of the difference in SIIS cost.  When he had questioned representatives of the Department of Industrial Relations what group of employees this most affected, he had been told this was mainly from the uninsured employees in the construction trades.  Although there might be a certificate of insurance from another state, this was not always valid.

 

Adding background, Mr. Jeffrey told the committee they had contractors, particularly in the high-hazard occupations, i.e., structural steel and painters on structural steel, who were unable to compete with out-of-state contractors using lower out-of-state workers' compensation rates.  In fact, Mr. Jeffrey said, there were some Las Vegas contractors who had moved out of Nevada in order to take advantage of the lower rates in another state.  In an earlier session of the Legislature the $250,000 cap had been placed in language because it was thought small remodel contractors such as those in the Lake Tahoe area should not be affected.  Somehow there were contractors slipping through the $250,000 cap.  This, Mr. Jeffrey allowed, was probably a matter of enforcement rather than anything else.  Mr. Jeffrey maintained it would be less confusing, easier to enforce and easier for the general contractor if every contractor in the state had to carry Nevada workers' compensation coverage.  Some contractors with a base rate of $50 premium per $100 of payroll were having to bid against contractors whose base rate was $15 premium per $100 of payroll in Arizona.  A disparity existed and a level playing field was needed to protect Nevada contractors. 

Mr. Ernaut questioned just how the word "temporarily" on page 1, line 4 was being defined.  Mr. Jeffrey said it depended much on the kind of job.  However, his main concern was that Nevada workers be covered when they were working temporarily out of Nevada.  He was not as concerned with the out-of-state contractor coming in.  If reciprocity was eliminated for construction only or if it was expanded, the exemption in subsection 3 would have to be changed.  The way the bill was drafted was workable, Mr. Jeffrey maintained.  The only question was how "temporary" was to be defined.  Although Mr. Ernaut remained adamant the word should be defined, Mr. Jeffrey said he was not particularly comfortable in pinning it down without further discussion.

 

Mr. Hettrick suggested the word "temporarily" be removed entirely and language added to page 1, line 6 which would tie it to a Social Security number and name.  Mr. Jeffrey said this would not solve the problem he was seeking to address.  If construction was still dealt with differently he would have no problem, but if the change was made as Mr. Hettrick suggested, they were encouraging people to use out-of-state coverage.  This was further discussed.  Mr. Jeffrey opined Mr. Hettrick's suggestion would result in a vast number of now unforeseen complications. 

 

The question of whether "temporary" should be defined as six months was discussed between Chairman Giunchigliani, Mr. Ernaut and Mr. Jeffrey.  There was general agreement "reciprocity" should be eliminated entirely.

 

      ASSEMBLYMAN COLLINS MOVED TO DO PASS ASSEMBLY BILL 205.

 

      ASSEMBLYMAN CARPENTER SECONDED THE MOTION.

 

Chairman Giunchigliani said Pam Miller, representing the Association of General Contractors, had indicated her support of both AB 165 and AB 205.

 

Coming forward to testify, Dallas Coonrod, Las Vegas Managing Director of Associated General Contractors, indicated agreement with testimony offered by Mr. Jeffrey.  Mr. Ernaut asked how Mr. Coonrod would want to define the word "temporary."  Facetiously, Mr. Coonrod said this should be one or two days.  The major problem was competing with contractors from Arizona and Utah.  Moving employees from out of state into the state during a work week represented a big savings for the out-of-state contractor.  During the past six years, Mr. Coonrod testified there were steel fabrication plants which had been moved to Utah because they could save more in the difference in workers' compensation rates than it cost them to ship material back.

 

Responding to Mr. Hettrick's theory regarding the use of Social Security numbers, Mr. Coonrod stated he did not know how this could be incorporated into AB 205, but opined it could be incorporated into AB 165 with everyone using the same form.  Mr. Coonrod stated the focus should be on the use of Social Security numbers not only in the area of workers' compensation but in Contractors' Board as well.  Ms. Giunchigliani agreed and informed everyone she had a bill draft submitted to aid in performing state cross-matches.

 

Mr. Hettrick questioned Mr. Coonrod's opinion of a definition for "temporary."  Responding seriously, Mr. Coonrod said this should probably be about ten days.  Six months, he opined, was much too long.  Mr. Jeffrey clarified AB 205 would eliminate reciprocity for construction workers after one hour.  After that the individual would need SIIS coverage. 

 

Ms. Giunchigliani said the issue before the committee was to statutorily define "temporary."  If they took action on AB 205 now could they then ask for a bill draft to define "temporary."

 

Mr. Anderson suggested AB 205 be passed as presently written and the committee could later address the concern with the definitions. 

 

      THE MOTION TO DO PASS AB 205 CARRIED UNANIMOUSLY.

 

Chairman Giunchigliani asked Mr. Williams to research the statutes to determine how the term "temporarily" was presently being dealt with.

 

Further discussion ensued regarding the use of Social Security numbers and tracking an individual in other jurisdictions.  Mr. Young told Mr. Anderson the ability to be able to track by Social Security number would be helpful, but presently NRS 616.192 required all workers' compensation claimant records be kept confidential.  Thus, Nevada could not subscribe to any cross-state indexes.  The broad issue was whether the protection of confidentiality was more important than opening the records and having a better shot at combating fraud.

 

Mr. Hettrick asked if other workers' compensation systems were employing the use of Social Security numbers.  Mr. Young said he was not aware of any, but he would not be surprised if other states used this method.  Likewise, if the Employment Security Department could use Social Security numbers for tracking, surely SIIS could also use this method.  The cross-state indexing would work fine unless an individual used a different Social Security number, and assuming the records were made available.

 

Don Jayne, General Manager of the State Industrial Insurance System, said he was personally not aware of any state now capturing the Social Security number, but he volunteered to research this.

 

 

Ms. Giunchigliani noted AB 287 would be heard the following week.  She told the committee members if they would submit their ideas or suggestions she would have them compiled and ready to discuss when the bill was heard.

 

There being no further business, the meeting was adjourned at 4:54 p.m.

 

 

                                          RESPECTFULLY SUBMITTED:

 

 

                                                                 

                                          Iris Bellinger

                                          Committee Secretary

 

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Assembly Committee on Labor and Management

Date:  March 4, 1993

Page:  1