MINUTES OF THE
ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT
Sixty-seventh Session
May 3, 1993
The Assembly Committee on Labor and Management was called to order by Chairman Christina R. Giunchigliani, at 5:30 p.m., on May 3, 1993, in Room 119 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. Lynn Hettrick
Ms. Erin Kenny
Mr. John B. Regan
Mr. Michael A. Schneider
COMMITTEE MEMBERS ABSENT:
Mr. Peter G. Ernaut, Excused
GUEST LEGISLATORS PRESENT:
None
STAFF MEMBERS PRESENT:
Mr. Donald O. Williams, Principal Research Analyst
Mr. Frank R. Krajewski, Senior Research Analyst
OTHERS PRESENT:
Mr. Claude Evans, Executive Secretary-Treasurer, Nevada State AFL-CIO
Mr. Danny Thompson, Nevada State AFL-CIO
Mr. Jerry Hepworth, Director, Environmental Services, Rayrock
Mines, Inc.
Ms. Holly Jensen, Division of Preventative Safety
Mr. Scott Young, General Counsel, The State Industrial
Insurance System (SIIS)
Mr. Roger Mowbray, State Industrial Insurance System, Loss
Control Section
Mr. David Horton, Alternative Health Care Practitioners
Mr. Tom Johnson
Mr. Art Buzby
Chairman Giunchigliani mentioned Mr. Jack Jeffrey had been released from the hospital and noted she would be passing a card around. Mr. Jeffrey had suffered a heart attack last week.
Chairman Giunchigliani called the committee's attention to memo's from Donald O. Williams, Principal Research Analyst (Exhibit C) and Frank R. Krajewski, Senior Research Analyst (Exhibit D) relating to Vocational Rehabilitation.
Chairman Giunchigliani opened the hearing on SB-316, Section 236 and Section 146.
SENATE BILL 316 -Makes various changes to provisions governing industrial insurance. (BDR 53-1764)
Mr. Claude Evans, Executive Secretary-Treasurer, Nevada State AFL-CIO, testified from prepared testimony (Exhibit E). Mr. Evans noted his support of Section 236 of SB-316 and urged the committee to enact Section 236. Mr. Evans stressed everybody lost when an accident occurred and proper safety programs were extremely important.
Chairman Giunchigliani questioned if it was true some businesses were inherently unsafe and no matter what was done there would still be problems. Mr. Evans noted he did not think it was a multi-faceted problem, and there were some employers who would just pay the fines instead of improving safety rules. He noted the majority of employers preferred to stop accidents. Mr. Evans further noted if the accidents were stopped, so would the problems with the State Industrial Insurance Systems (SIIS).
Chairman Giunchigliani questioned if the Department of Preventative Safety had ever involved employers or employees who had good safety programs. Mr. Evans noted affirmatively and stated he felt they had done a good job.
Mr. Schneider stated in the material he had read it was stated the majority of the accidents were caused by human error. Mr. Schneider questioned how this problem would be addressed.
Mr. Danny Thompson, Nevada State AFL-CIO, responded years ago he was president of the Steel Workers in Henderson and the Union represented many chemical companies at the BMI Complex. He noted there was not a more hazardous type of industry than the chemical industry. He mentioned one company which had numerous accidents where the plant manager would not cooperate and do something about enforcing safety regulations. The CEO of the international company came to town and informed the plant manager he had the worst accident record of any of the locations throughout the world, and if something was not done about it, he would lose his job. Mr. Thompson noted when a poor attitude existed at the top, "I don't care, I know that ladder is broken, but step over that rung and get the job done," then the employees followed through with the same poor attitude. After the CEO had a talk with this particular plant manager, they went from the worst accident record to the best.
Mr. Evans emphasized the employer had control over enforcing safety regulations.
Mr. Collins claimed many employers informed him they did not need safety meetings because not many injuries or accidents occurred in their places of business. He also noted conducting safety meetings in the morning might bring forth any employee who had personal problems on his mind and was not able to perform his job properly. Mr. Evans acknowledged his agreement with Mr. Collins.
Mr. Jerry Hepworth, Director, Environmental Services, Rayrock Mines, Inc., testified. Mr. Hepworth submitted prepared testimony and proposed amendments (Exhibit F).
Chairman Giunchigliani stated, "Out of 41,000 employers in the state under SIIS, 509 companies that are driving 22 percent of that and of that 22 percent, 1.7 percent of those are driving the majority of the costs." She mentioned identifying those employers and giving them an incentive to clean up their act or they would be put into a risk pool.
Mr. Collins questioned the Occupational Safety & Health Administration (OSHA) standards and were employers required to have some kind of documentation proving an employee was trained and qualified before allowing the employee to use specific equipment. Mr. Hepworth responded affirmatively, and noted under OSHA general industry, a 24-hour training session was required for newly hired, inexperienced employees.
Mr. Anderson stated in testimony it was mentioned many times accidents happened even when a good safety program was enforced. Would SB-316 lead to the conclusion the only companies to be examined were the "evil 500" and let the others go free in terms of the overall program. Mr. Hepworth responded negatively, and noted this was the logical starting point. Most employers who had good safety records were not just fortunate, but there was a reason for their good records. Mr. Anderson questioned if the vast majority of businesses would be ignored. Mr. Hepworth noted the Division of Preventative Safety with the increased funding proposed could monitor those employers more closely. A written program was only effective if it was also being implemented.
Mr. Hettrick concurred with Mr. Hepworth. He explained there could be employers out there with less than 25 employees who were a much greater risk, and if these programs were mandated, they should be directed to the employer causing the accidents and followed up on. It was a mistake to limit it to 25, but just go after the employers causing the accidents regardless of the amount of employees. Mr. Anderson noted he did not disagree with this and noted he would like to see the Occupational Safety & Health Administration (OSHA) program become more proactive than reactive.
Chairman Giunchigliani mentioned an issue dealt with last session in SB-7 and SB-410, where the 25 percent part was a problem. She noted a small business could hit the 25 percent level with only one accident. The companies having continuous problems had to be identified. She suggested providing some service to help employers with training problems and then targeting those having safety problems. Mr. Hepworth noted setting a specific percent would inevitably cause problems.
Mr. Hettrick noted legislation should be set more by the S.I.C. code rate and by the company type, not necessarily by the size. He further commented accident prevention was most important, not to wait until after the accident occurred.
Ms. Kenny questioned if Mr. Hepworth's employees were offered an incentive program in order to maintain such good safety records. Mr. Hepworth responded affirmatively. Ms. Kenny commented she was a large proponent of these programs, and felt they were extremely effective. Chairman Giunchigliani noted if an employee felt good about his place of employment he would produce better which directly affected productivity.
Mr. Carpenter noted training needed to be focused on first. Chairman Giunchigliani noted if a law was to be mandated, the government entities should be just as liable. She noted there were statutes for required training not being enforced. When a business applied for a new license, they should be offered a service to train new employees.
Ms. Ramona Ann Palasios, an injured worker, testified. Chairman Giunchigliani delivered Ms. Palasios' written statement, "Northern Nevada Center for Independent Living (NNCIL) has over 1,500 employees and all employees still think today that they are private contractors because the NNCIL has them sign an illegal paper." Chairman Giunchigliani questioned, "So you're asking that we investigate that for the last eight years there's been non-compliance with the law, for the last eight years they've been having the employees sign these documents, and for the last eight years employees have hurt themselves as you have." Chairman Giunchigliani further outlined Ms. Palasios' statement, "You're the only one in the state of Nevada, thanks to the workers comp. and Mr. Lewis, Rabbi Hecht, Barbara Greenwall, Judge Robin Wright, Judge Mills Lane and his mother Naden to assist you with easing your pain. The people here need to have NNCIL reconciliate everything that they owe you as an employee. They still owe you your vacation pay, sick leave, overtime, double-time, 100 miles a day for eight months, from Reno to Sun Valley to Stead to Sparks to Carson to Minden. You've not been on the payroll since that time, the only thing you got was workers compensation." Chairman Giunchigliani questioned how many months she was without income. Ms. Palasios noted slightly over two months. Ms. Palasios lost her house and other material items. After talking with Mr. Lewis's secretary, the workers' compensation issued a check for an award of $600. Ms. Palasios felt she was still owed additional revenue.
Chairman Giunchigliani stated basically NNCIL was doing what some businesses got caught doing a few years back, creating the employees as independent contractors rather then establishing an employee/employer relationship, which caused the employee not to have proper coverage. Ms. Palasios stated, "It starts out with vocational rehabilitation. You guys fund them over $100,000 a year, they give it to NNCIL and NNCIL in return is supposed to help the handicapped and NNCIL says they're not employers, they've never have been employers. Workmans'comp. says they've been employers for over five years and never complied with the law three years ago. They said okay, indeed I am an employee for the five by-laws, employer/employee relationships. They still haven't complied with the law. How many employees in the past eight years now have gotten hurt. Everyone of them thinks they're still private contractors. Vocational rehabilitation is pretty smart, Northern Nevada Center for Independent Living is pretty smart, because they hire basically people like me who have dyslexia, quit school, improper education to know what the employee is." Chairman Giunchigliani questioned what type of work she did at NNCIL and if she had a copy of a contract. Ms. Palasios responded she took care of several handicaps and noted she did not have a copy of a contract. She further noted they had open books.
Chairman Giunchigliani summarized Ms. Palasios was a care-giver assigned by NNCIL, and designed to work with the handicapped. Chairman Giunchigliani stated, "You were injured on the job, filed the papers, but then they said no, you were an independent contractor." Chairman Giunchigliani questioned if they had ever paid any other employees workers' compensation. Ms. Palasios stated no, only for herself. All the other employees were pushed aside, shoveled under the carpet and NNCIL had not even paid her what she was owed. Chairman Giunchigliani stated she would contact the Department of Industrial Relations (DIR) and the State Industrial Insurance System (SIIS) to find out if there was an independent contractor relationship or an employer/employee relationship and if they were paying the premium rates. She requested Ms. Palasios to leave her phone number so she could contact her.
Ms. Holly Jensen, Division of Preventative Safety, testified. Ms. Jensen submitted prepared testimony (Exhibit G). Ms. Jensen noted the Division of Preventative Safety was created in 1991. Prior to 1991 they were the training and consultation section of the division of Occupational Safety & Health Administration (OSHA). Some of the duties to satisfy the federal OSHA grant included going into a business at an employers request. A complete walk through of the facility was provided and the hazards in the facility were identified. Any additional training needed to enhance the employers occupational safety and health program was recommended and provided. Ms. Jensen noted the service her department provided at present was basically the same. In addition SB-7 of the 66th session was created, which required, "Every employer upon hiring an employee must give that employee a document specifying the rights and responsibilities of employers and employees to promote safety in the workplace." Ms. Jensen stated the program was established in 1991, but due to the state hiring freeze, the proper staffing was never employed to ensure the program worked properly. She noted if Section 236 was passed they would put on additional staff as trainers. She noted in NRS 618.315 mines were specifically exempted. Mines were regulated by the administrator of the Division of Mine Inspection. She further noted Section 236 would not apply to the mining industry.
Mr. Hettrick questioned how many more employees they would hire. Ms. Jensen noted she would do a projection for him and present it at a later date.
Chairman Giunchigliani questioned how often they were called by an employer without a safety problem to come out and work with new employees on training. Ms. Jensen noted probably 60 percent of the time spent was to provide employers with training programs. Ms. Jensen noted the majority were the smaller employers who could not afford a safety and health person full-time. The larger employers usually contacted them when they hired a safety person who needed training.
Chairman Giunchigliani questioned if other businesses who had good programs were accessed. Ms. Jensen noted they worked with the labor unions. Chairman Giunchigliani inquired if an employer was notified of their service when applying for a business license. Ms. Jensen noted they were sent a pamphlet explaining their services. She further noted out of 33,000 pamphlets sent out, only three specific requests for service were received.
Mr. Carpenter questioned how effective the program outlined in Section 236 was. Ms. Jensen noted she felt a safety program could be simple for a small employer. She noted the CEO of a business had to commit to establishing a safe workplace and if the employees had it in writing the program would be enhanced. Ms. Jensen stressed training was the most important part of the program. She also noted they could tailor a program to each specific industry, construction, hotels, finance, banking, etc. Mr. Carpenter stated he felt the most efficient way to teach employers safety programs was to put on seminars. Ms. Jensen noted her agreement with him, but further stated her agency advertised for a seminar in September, 1992 and had a very poor response. Mr. Carpenter stated it should be made mandatory for employers to attend these seminars, rather than make written programs mandatory.
Chairman Giunchigliani asked if she had ever been solicited by a state agency to do any training. Ms. Jensen responded affirmatively and the agency was state parks.
Mr. Collins asked if there was any class of worker who was not covered under Occupational Safety and Health Administration, and was job safety taught by the Department of Preventative Safety. He also questioned if CPR and first aid was included in their program. Ms. Jensen responded they did teach job safety and health, but noted the federal government stopped them from handling CPR and first aid. She mentioned they recommended the Red Cross to handle this area. Mr. Carpenter queried what industry besides mining was exempt. Ms. Jensen responded household domestic service, Department of Energy and motor vehicles operating on public highways in the state. She noted this was stated in NRS 618.315.
Mr. Scott Young, General Counsel, State Industrial Insurance System (SIIS), testified. He submitted written testimony (Exhibit H) and proposed amendments (Exhibit I). Mr. Young noted Section 146 would replace the existing provisions of NRS 616.1722, paragraphs 3 and 4.
Mr. Young pointed out in Section 236, subsection 7, the manager was given the power to impose up to a 15 percent surcharge on the premium. Mr. Young explained implementing penalties was the role of the Department of Industrial Relations (DIR) and the role of the State Industrial Insurance System (SIIS) was to educate and work with the employer. Chairman Giunchigliani noted the committee would be suggesting stronger language, rather than leaving it up to the manager. She emphasized the committee's belief was training first and then safety. Mr. Young noted Section 146 allowed SIIS to pinpoint an individual employer if they were out of line with industry, and design a premium boost just for them. Chairman Giunchigliani questioned if employers who were having problems could be identified by industry, and could employers who made an effort to bring their ratings down also be identified. Mr. Young responded they could track from year to year how many accidents a company had and how severe they were. Mr. Young emphasized when a commitment from the employer was obtained, better cost control and accident prevention could be accomplished.
Chairman Giunchigliani asked if the Department of Industrial Relations (DIR) handled self-insureds. Mr. Young responded positively.
Chairman Giunchigliani inquired if Loss Control had the ability to target employers who had not taken the initiative to improve their rating.
Mr. Roger Mowbray, State Industrial Insurance System, Loss Control Section, testified. Mr. Mowbray concurred with Chairman Giunchigliani. Chairman Giunchigliani queried if Loss Control would handle mandated training for employers and if self-insureds could be identified. Mr. Mowbray stated Loss Control's statistics only indicated claims history for the State Industrial Insurance System (SIIS), not the self-insured.
Mr. Regan questioned if there would be a conflict between subsection 5 and 6 of Section 146 if DIR was allowed to establish a penalty premium. Mr. Mowbray responded negatively. The sections established an overall rate designed to cover the necessary expenses and provide reasonable reserves which was a very global approach. Currently Loss Control had the ability to impose certain penalties through changing the experience modification factor for an individual employer. Loss Control could impose penalties and use them as a way of stabilizing the overall premiums for everyone else.
Mr. Carpenter drew attention to Section 146, page 58, line 45, "The commissioner shall review the plan adopted pursuant to this subsection." He questioned what the advantage was of this statement. Mr. Young noted the commissioner was currently responsible under NRS 616.380 for reviewing their rates. Since these programs would be a special rate, it was appropriate for the commissioner to review them. It gave the employer the opportunity to have an independent review of SIIS's action.
Mr. Hettrick referred to Exhibit H and looking at the first example, the Washoe Association for Retarded Citizens, noted in 1988 they had a premium of $28,000 and incurred losses of $182,146. In 1991 after loss control was incorporated and had this tremendous success rate, they had a 400 percent increase in their premiums and their incurred costs dropped to $6,537. He asked how long these employers would be motivated to use loss control programs if their rates were increased 400 percent, and their losses dropped to 4 percent of what they were when they started.
Mr. Mowbray explained the experience rating was put in the regulations and was a calculated formula which Loss Control was locked into. He noted it took anywhere from 3 to 5 years to see improvements or changes. Loss control had to offer alternative rating plans and make adjustments to an employers premium depending on how well they did in a particular year. There was a risk and possible reward associated with this.
Mr. Young noted one of the things SIIS could present to employers was if they had made a significant improvement in their loss experience, they could be offered a retrospective rating plan which basically was a lower premium, and if they had another good year the premium would be less immediately. On the other hand if they did not follow through with their safety then the premium would increase.
Mr. Carpenter questioned, after looking through some of the literature, if there was a duplication of effort with the office of preventive safety. Mr. Mowbray noted there might appear to be some duplication, but there really was a need for both entities. The Division of Preventative Safety has an important duty to assist employers to come into compliance with the OSHA standard. Loss Control stressed the insurance side and not necessarily the number of accidents.
Mr. David Horton, Alternative Health Care Practitioners, testified and submitted proposed amendments (Exhibit J) and a tape of KPTL Talk Radio with Dave Horton (Exhibit K) which was sent along with original minutes to the Research Library. The greatest damage to the worker under the present performance standards appeared to be the system. The increase in lost time from two weeks to 23 weeks in the last 10 years indicated the incidents of secondary complications were both debilitating and dangerous. Mr. Horton noted the tape (Exhibit K) was an interview with a physician who treated SIIS cases where the patients had been brutalized by the system. The lack of prompt and effective care was what had extended the lost time from 10 weeks to 23 weeks. Mr. Horton explained the proposed amendment (Exhibit J) favored the injured worker.
Mr. Tom Johnson testified. He stated he felt proposed amendment (Exhibit J) would free up the funds to spend on the type of programs talked about previously and SIIS premiums could be rolled back approximately 50 percent in the next three years.
Mr. Art Buzby testified via teleconference from Las Vegas. Mr. Buzby concurred with Mr. Jerry Hepworth. He noted they had a very well-placed safety program at the Horseshoe Hotel. Supervisors were spoken to on a weekly basis regarding the safety needs of their department. He noted most of the accidents which occurred at the hotel were because the employees had been careless in their duties.
Written testimony (Exhibit L) was submitted by Ms. Lynn Grandlund for the record.
There being no further business to come before committee, the meeting was adjourned at 7:30 p.m..
RESPECTFULLY SUBMITTED:
Jeanne Peyton
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Assembly Committee on Labor and Management
May 3, 1993
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