MINUTES OF THE meeting
of the
ASSEMBLY Committee on Government Affairs
Seventy-Second Session
February 13, 2003
The Committee on Government Affairswas called to order at 8:07 a.m., on Thursday, February 13, 2003. Chairman Mark Manendo presided in Room 3143 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mr. Mark Manendo, Chairman
Mr. Wendell P. Williams, Vice Chairman
Mr. Kelvin Atkinson
Mr. Chad Christensen
Mr. Tom Collins
Mr. Pete Goicoechea
Mr. Tom Grady
Mr. Joe Hardy
Mr. Ron Knecht
Mrs. Ellen Koivisto
Mr. Bob McCleary
Ms. Peggy Pierce
Ms. Valerie Weber
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
Ms. Barbara Buckley, Majority Floor Leader
STAFF MEMBERS PRESENT:
Susan Scholley, Committee Policy Analyst
Eileen O'Grady, Committee Counsel
Nancy Haywood, Committee Secretary
OTHERS PRESENT:
Mr. Terry Johnson, Nevada State Labor Commissioner
Mr. Michael Tanchek, Nevada Deputy Labor Commissioner
Ms. Mary Walker, Walker & Associates, Minden, Nevada
Chairman Manendo called the meeting to order, and the roll was taken. He directed the committee secretary to mark Vice Chairman Williams as present upon his arrival.
Chairman Manendo welcomed all visitors and presenters to the Committee on Government Affairs. First on the agenda, stated Chairman Manendo, was a presentation by Mr. Terry Johnson, Nevada Labor Commissioner. Mr. Johnson was thanked for having prepared the presentation.
Mr. Johnson expressed pleasure at being able to present to the Committee on Government Affairs and introduced Mr. Michael Tanchek, Nevada Deputy Labor Commissioner, who joined Mr. Johnson at the witness table. Mr. Johnson’s intention, he stated, was to give the Committee an overview of the Commission’s functions and responsibilities, some of the statutes it was responsible for enforcing, indicators of areas of major accomplishments in the recent past, and some of the challenges that remained for the future.
The Commissioner of Labor believed that it was fortunate to have offices in two locations in the state, Las Vegas and Carson City. There were 15 employees in Las Vegas and 5 employees in Carson City. Those included auditors, investigators, administrative staff, and others.
Mr. Johnson enumerated the Commissioner’s responsibilities in a PowerPoint presentation, also available as a printed document (Exhibit C). Initial focus was on the many areas of responsibility assigned to the Labor Commissioner in the Nevada Revised Statutes (NRS) when specific statutes applied:
If a statute focused on a labor issue but did not clearly indicate whose responsibility it was to enforce the statute, it fell upon the Labor Commissioner to accept responsibility.
Mr. Johnson spoke about particular areas of responsibility to more fully clarify them for the Committee. The Commissioner’s Office licensed and regulated all private employment agencies in the state. Child Labor Laws were enforced through that office, and there was a statutory provision in place to ensure that National Guardsmen were not unlawfully terminated as a result of being called to active duty. Mr. Johnson proudly stated that employers in Nevada, by comparison with employers in other states, had not created a single incident of unlawful termination of National Guardsmen. The section called General/Other Employment Provisions contained provisions that were found largely in NRS 613, but were not limited to that chapter. Additionally, the Labor Commissioner had very specific sets of statutes to enforce but also enforced any other existing statutes not specifically assigned to another officer or agent of the state. He stated again that those statutes not clearly identifying responsibility fell upon the Labor Commissioner for enforcement if it was a labor issue. Producers-promoters were licensed and registered by the Commissioner, and he had enforcement responsibilities over certain portions of public works and prevailing wages.
Prevailing wages, as a category of responsibility, included those situations in which persons claimed unpaid wages. Those employees, purportedly, had not been paid for the total time worked, had not been paid for overtime, or had not been paid the minimum wage. The complaints were most likely problems regarding an employee’s wages, and the employee wanted that matter adjudicated. Statutes provided for the Commissioner to take assignment and to prosecute claims for wages. If a person claimed that an employer had not paid him correctly, the Labor Commissioner would be able to take assignment of that claim for wages and prosecute that matter in court after due inquiry. What happened as a result of finding the claim justified was that the employer no longer owed the employee; the employer now owed the Labor Commissioner who had taken assignment, appeared in court on behalf of that employee, and prosecuted that matter accordingly. That also included occasions when an employer had made an unlawful deduction from the wages of an employee, had failed to make a timely payment of claims, or had failed to acquit discharged employees. All cited examples were not permissible under Nevada law, with limited exceptions. When an employee quit or had been discharged, the statutes provided a certain time period within which they must be compensated. The Commissioner’s Office staff regularly became involved when employees had not received that compensation in a timely manner. Those claims arose for different reasons. Sometimes, Mr. Johnson explained, there were external economic factors beyond the control of the employer. Other times, nonpayment was the employer’s ignorance of the law, and, in a number of instances, there were personality issues that arose between the employer and the employee that complicated wage payment issues.
Mr. Johnson presented to the Committee a bar graph from Exhibit C, page 5, that showed the number of wage claim adjudications per year for the last three years, FY00, FY01, and FY02. There was a steady increase in the number of wage claims adjudicated over that three-year period, numbering 2,998 claims in FY00, 3,642 claims in FY01, and 3,939 claims in FY02.
In terms of dollars collected, continued Mr. Johnson, the bar graph on page 6 of Exhibit C illustrated the success of efforts to collect wages on behalf of employees in Nevada. For FY99 through FY01, the chart indicated the three‑year-average collected in wages and penalties. For FY02, which ended in June of 2002, the Commission collected just under $3 million. Those, stated Mr. Johnson, were important points to be aware of; his was a relatively small agency operating on a budget of $1.1 million that took on a responsibility and fulfilled the task of collecting nearly $3 million in wages and penalties on behalf of employees. Employees who received the wages rightfully due them had a positive economic effect in the state. Employees who had not received proper compensation, by comparison, were not able to make a mortgage payment, to make a car payment, to buy groceries, or to take care of adequate school clothes for their children.
While the Commissioner was pleased with the accomplishments of his small agency, the penalty provisions, described in NRS statutes, had not been enforced for decades. When those penalty provisions were activated, an employer who did not pay an employee who was discharged or quit within the time prescribed by the statutes learned that the employee’s salary was continued for a maximum of 30 days. When enforced, there was a significant increase in the attentiveness of employers in the state. The penalties for nonpayment or late payment were very strict and costly. Under Wage and Hour Laws, the Commissioner would hear complaints and consider claims filed against employers who had not provided time for food breaks or rest periods as prescribed under the law. Other issues arose regarding uniforms and whose responsibility it was to care for the uniforms of the workplace, the employer’s or the employee’s. Most often it was determined to be the employer’s responsibility. Other issues emerged regarding the handling of tips. Nevada law precluded an employer, or any person, from taking any or all of an employee’s tips. Under the Wage and Hour Laws, those issues were addressed by the Labor Commission.
Apprenticeship training was an opportunity to learn and earn. Those in the programs had the opportunity to acquire classroom instruction and to acquire on-the-job training. Mr. Johnson stated that, at the time of his presentation, there were 82 registered programs in Nevada, and they included opportunities for training in occupations such as dental lab assistant, childcare worker, specific construction jobs, plus others. There were 4,673 registered apprentices currently. The Labor Commissioner served as Director of the seven‑member State of Nevada Apprenticeship Council, which was comprised of members of employee and employer associations. Those representatives met once a quarter to administer the laws and statutes related to apprenticeship programs.
Mr. Johnson’s agency was also responsible to license and regulate all of the private employment agencies in Nevada. There were over 300 private employment agencies in existence at that time. Additionally, the Commissioner investigated complaints against employment agencies. The statutes limited the amount of money that could be charged to assist an individual who wished to secure their services. Occasionally, there would be a complaint of an overcharge levied by such an agency. There could also be a complaint from an existing employment agency that someone was operating without proper licensing so that the unlawful competition became a concern.
Mr. Johnson stated that Child Labor Laws were also under the jurisdiction of the Commissioner. Primarily, the regulations existed to protect minors under the age of 16 in the workplace. The Commissioner was authorized to declare certain types of work dangerous to minors and to preclude their employment in those situations. An example in recent years involved “youth peddling,” where companies would send young people out to the streets to sell anything from candy to magazines to perfumes. The Commissioner’s Office investigated that practice and determined that it posed a danger to the health and morals of those children. “Youth peddling” was prohibited for those under the age of 16 years. Exceptions to that ruling included minors who sold items for non-profit organizations such as the Boy Scouts and Girl Scouts, and who made collections for newspaper delivery.
The Commissioner’s Office was also responsible for the licensing and regulating of the Producers/promoters in Nevada. Persons who produced or promoted stage shows, concerts, trade shows, exhibitions, conventions, or sporting events were under the jurisdiction of the Commissioner. The overall purpose was to ensure that proper payments of the salaries and wages due the employees were made. Several years ago, sponsors would come to Nevada to set up those events mentioned above, and, when the events ended, the sponsors left town without properly compensating the employees who, at that time, had little recourse. Now the promoter and producers would provide bonds to ensure that there would be relief for those employees if they were improperly paid.
Under the category of General/Other Provisions, one would find concerns such as the use of lie detector tests and employees’ rights to obtain copies of their own employment records. Occasionally, the Commissioner’s Office was called upon to enforce the provisions of the statutes that required employers to give certain records to employees. Similarly, there were statutes that provided for unlawful blacklisting of employees. As a reminder, Mr. Johnson reminded the Committee that, when statutes were not specifically assigned to another officer or agency, they, by default, fell under the jurisdiction of the Labor Commissioner.
The last areas Mr. Johnson chose to examine were public works and prevailing wages, large and important areas of enforcement responsibilities for the Commissioner and his staff. Public works projects were taxpayer-financed projects for public buildings, roads, highways, jails, prisons, utilities, water mains, sewers, parks, playgrounds, public convention facilities, and all other publicly owned works and property that exceeded $20,000.
Prevailing wages were required to be paid to workmen employed on public works projects. The Labor Commissioner annually published the “prevailing wage rates” and the corresponding job classifications for use on the public works projects. Public agencies that awarded public works contracts were required to include prevailing wage rates as terms of the contract. The contractors engaged on public works projects would be required to pay that wage rate as determined by the Labor Commissioner’s Office.
To determine the prevailing wage rate, the Commissioner’s Office sent out surveys to licensed contractors that asked for a report of wages paid over the previous year. Based on information gleaned in that way, the rate paid the majority of the time to a particular class of workers in a particular county was deemed “prevailing.” When a mathematical determination was not possible to determine a wage rate paid the majority of the time, the next largest group of wage earners with a similar classification, such as sheet metal workers or carpenters, was used for that determination. As long as that alternative group’s wage rate was representative of at least 40 percent of the workers in that alternative occupational classification, that wage became the prevailing wage. When there was still no prevailing wage based on the majority or based on the 40 percent of the workers in a related field, the Commissioner defaulted to the average of all wages paid. Those provisions that established responsibility for calculating prevailing wage rates, how often the rates were to be calculated, and when the rates were to be made public were found in Chapter 338 of the Nevada Administrative Code.
If the wage deemed “prevailing” was derived from a collective bargaining agreement, what existed was a provision that allowed the Labor Commissioner to consider wage adjustments set forth in the collective bargaining agreement. If the wage rate, for example, was not a collectively bargained rate, the Commissioner would not consider the collectively bargained agreement in the process of determining the prevailing wage rates. If there were no wage data recorded in a given county, the wage data in the nearest and most similar county would be considered. Mr. Johnson explained that, if there were no data available in survey returns for a mechanical insulator in Humboldt County, for example, wage data collected from the nearest similar county reporting wages for a mechanical insulator would be considered to determine the prevailing wage rate. If no data were available statewide, then no prevailing wage rate would be published in that category.
Final wage determinations were to be published on October 1 of each year and would remain in place until September 30 of the following year. At the time of expiration, the process would be repeated. Mr. Johnson asked Committee members to remember that, under the statutes in NRS 338.030, persons who believed that a prevailing wage rate was in error still had recourse. If those individuals also believed that the information filed by the Labor Commissioner was not reflective of wages paid in their community, they were able to submit data to the Labor Commission for reconsideration based on the given data. Some individuals, stated Mr. Johnson, would have people believe that the prevailing wage rate was a topic that received quite a bit of attention, primarily negative. The Commissioner had received perhaps two dozen requests for reconsideration of prevailing wage rates, which he considered to be quite a small number of requests. The Commissioner also shared with the Committee that more hearings on prevailing wage rates had been conducted during his tenure than had been conducted by all predecessors combined. When evidence merited a hearing, a hearing would be scheduled.
There had been accusations that the process for determination of the prevailing wage rate was a controlled one and that there was undue influence in the survey process. Mr. Johnson assured the Committee that was not the case. Every contractor received a survey based on the Nevada State Contractors Board database. The agreement with that Board was to send surveys to all contractors regardless of their trades. Press releases were also sent out, and the surveys were posted on the Commissioner’s Web site. If it were reported that a contractor did not receive a survey, one would be sent or e-mailed immediately. The Commissioner’s Office had taken steps over the past several years to increase participation. There had been success in accomplishing that goal. The process was open, he reiterated, and all contractors were encouraged to participate. Afterwards, all persons, whether contractors, public agencies, employees, or labor associations, were able to file an objection to a wage determination and would submit evidence that what had been published as “prevailing” was not “prevailing” after all. Mr. Johnson stated that he had been Labor Commissioner for 3½ years, since his appointment in 1999 by Governor Kenny Guinn. In that time, he had received one objection from a public agency in a rural county, the data collected was examined, the information was deemed valid, and the wage rate was adjusted. The process, he again stated, would remain open because it worked as set forth in the statutes.
Public works was a big industry in the state of Nevada. Mr. Johnson stated that the state could not be the fastest growing state over the last 15 years without having had tremendous infrastructure needs: public buildings, public schools, roadways, highways, and “spaghetti bowl” expansion in the north as well as in the south, plus many others. Because of those needs, the prevailing wage determination was critical to contractors and workers in the construction industry. The Labor Commissioner’s staff sent out over 13,500 surveys annually. The surveys, which would be made available to Committee members in several days, were sorted so that no contractors, even those with multiple licenses, would receive more than one. The prevailing wage rate would be published in all 17 counties with 1,067 prevailing wage determinations filed annually, and, while the rates would be published on October 1, the process would actually be ongoing. Staff members in the Commissioner’s Office were constantly reviewing submitted data, job classifications, collective bargaining agreements, and, logistically, it was a very involved and resource-intensive process. The staff coordinated the mailings, the surveys, the envelopes, the postage, and the printing to send out the surveys. When returned, all were entered into a database developed by the Commissioner’s staff specifically for that purpose.
Additional facts about public works and prevailing wages in Nevada were presented to the Committee. The Commissioner and his staff calculated that $1.2 billion in public works projects were awarded by the state of Nevada and its political subdivisions in FY02 through the use of their own acquired data. What the statutes required was the reporting of the public works contracts to the Labor Commission by the public agency that awarded the contracts. The Commission then would assign an identifying number to each contract which would be used on the project from its beginning to its end. Based on the reported data, the expenditures for FY02 were determined. Although in FY01, $1.8 billion was spent on public works projects, in FY02, it was slightly lower. Mr. Johnson postulated that the decline of monies spent between FY01 and FY02 would have been due to the tragedy of September 11, 2001. As a result, many government agencies seemed to have placed expansion projects on hold. The average, however, was still considerably greater than $1 billion spent on public works over the past several years. The Commissioner maintained that Nevada ranked quite high in the amount of per capita expenditures on public works. When Nevada’s population was compared to the amount of monies spent on public works projects, Mr. Johnson remained convinced that the state would rank among the top five states in the nation. Public works contracting had steadily increased over the past decade. In the past 9 fiscal years, the number of contracts and subcontracts awarded increased from 2,350 to 4,690 as noted in Exhibit C. That steady increase, according to Mr. Johnson, would likely continue for the next several years.
Mr. Johnson summarized by again listing the many areas of responsibility set forth in the NRS for the Labor Commissioner and his staff. The Commissioner reported that the fiscal effect of some of that oversight of the monies spent on public works projects plus the collection of $3 million in back wages and penalties on behalf of employees in the state, and the return of those monies to employees for what they were owed, were “enormous” accomplishments. When he was first appointed Commissioner, there was a backlog of about 2,700 claims dating back 3 or 4 years. Fortunately, he stated, the staff had brought that backlog down to less than 500. That was done with the current staff who enforced the statutes as written, revised the administrative processes and regulations, and were pleased to report that today, employees were no longer waiting three and four years for their final paychecks, their unlawfully withheld wages, overtime payments, and other fees owed to them. Two of every 3 employees who filed claims for unpaid wages had their claims adjudicated within 60 days or less.
Mr. Johnson thanked the Committee and Chairman Manendo for giving him the opportunity to appear and to share the role and function of the Labor Commissioner. Mr. Tanchek and he would welcome any questions at that time, he stated.
Chairman Manendo responded to Mr. Johnson’s offer by announcing that the Committee members had many questions. First, however, the Chair apologized for leaving the Committee meeting briefly during Mr. Johnson’s testimony as Assemblywoman Barbara Buckley, Majority Leader of the Assembly, had summoned him. Chairman Manendo thanked Mr. Johnson for his presentation and asked that copies of the PowerPoint presentation be made available to the Committee for the Committee’s record as soon as possible. Mr. Johnson agreed to provide those copies within 24 hours. Chairman Manendo also expressed his gratitude for the less-than-60 day response time for adjudicating 2 of 3 claims and questioned how legislators would be able to make the settlement of claims a 3-for-3 process.
Mr. Johnson responded to the Chair with information about items that would be brought to the legislature during the session; he hoped that those items would further streamline and expedite the process and protect the rights of employees still waiting for salary issues to be settled. The Commissioner wished to have sufficient deterrents in place for those employers who lacked knowledge about or disregarded the process. While the Commissioner and his staff were willing to educate employers, those who willfully violated their employees by not paying sufficient wages needed a deterrent sufficient to influence their behavior. The Commissioner planned to come before the Legislature to request those deterrents to positively influence employer behavior.
The Chair asked if the backlog that existed when Mr. Johnson accepted the position of Labor Commissioner was the reason for the two-out-of-three adjudicated claims within the six-month period of time.
Mr. Johnson stated that there was a current backlog of 189 cases pending resolution, a number down from the approximately 2,700 when the current administration began a few years ago.
Chairman Manendo interjected, “Are you understaffed?”
The Commissioner believed so and stated that a number of state agencies had not kept up with demands and growth rates in Nevada and his agency was no exception. He confirmed that with additional staff and additional funds, the three-out-of-three settlement goal would be achievable.
Chairman Manendo questioned Mr. Johnson again as to how many staff members were needed within the agency to adequately service the citizens of the state.
Mr. Johnson suggested that, if an additional three to four investigators/auditors were added, the staff would be helped to improve dramatically the turnaround time of adjudicated claims for employees. Administrative support and secretarial assistance would be necessary at the same time. The results of increased staff would be a faster turnaround time, and also would allow the Commissioner’s Office to be proactive by holding an increased number of workshops for business owners on proper labor laws, employer requirements, and employer responsibilities. That would also help in determining the prevailing wage rates. In any other state, public works and prevailing wages, at the magnitude that existed in Nevada, would require the focus of the entire 20‑person staff, without the additional responsibilities outlined previously. The 20 staff members would easily compromise the entire staff for public works spending and prevailing wage determination in any comparable state, he contended. Public works deserved ongoing attention. Whenever there was talk of project overruns, delayed projects, defective workmanship on government buildings or public roadways, he believed there would be a correlation between wages and labor law compliance and how the taxpayer-funded projects were being handled. If an employer did not take care of his/her employees, they were not taking care of the project the taxpayers had financed, Mr. Johnson claimed. Additional staffing would assist in the monitoring and remedying of some of those difficulties.
Chairman Manendo stated that each Committee member probably had some constituents who were in need of assistance by the Labor Commission, whether they were aware of them or not. With the tight budget restraints and the discussions on priorities, the Chair noted that serving those whom the legislators represented was critical. He called upon all legislators to stand firm in support of those who assisted the citizens of Nevada. The ability to better understand the Labor Commissioner’s role and its needs in helping constituents was appreciated. The Chair recognized Mr. Collins.
Assemblyman Collins thanked Mr. Johnson and complimented him for so ably assuming the many responsibilities outlined. In the past, Mr. Collins had visited the Labor Commissioner’s Office in Las Vegas, and he had seen boxes upon boxes piled on tables filled with backlogged cases. He deserved gratitude from all for the changes he had made. Mr. Collins remained puzzled, however, about the apprenticeship programs. It was Mr. Collins’ belief that those who went through a regulated and overseen apprenticeship program graduated with no journeyman employment opportunities available to them. He found it ironic that no journeyman licensing mechanisms were in place; there appeared to be no licensing mechanisms or recognition mechanisms other than the stated graduation from an apprenticeship program. Another of Mr. Collins’ concerns was time spent policing public works projects and wages. He asked if the wages and overtime claims that the Commissioner’s staff enforced were against any employer in the state who promised to pay a given amount but paid less in actuality. He asked if the Commissioner’s Office was correcting those inequities, and if was the Commissioner’s staff was only correcting prevailing wage rates and inadequate overtime pay per state law.
Mr. Johnson clarified that the jurisdiction for overtime was split between the state and the U. S. Department of Labor (USDOL). The general overtime provisions provided that the Nevada State Labor Commissioner would enforce claims for overtime for those earning $7.73 per hour or less. The USDOL had jurisdiction to enforce claims above that rate of pay. Public works prevailing wages were considerably higher in all categories than the $7.73 per hour, so that became the responsibility of the USDOL. The Commissioner’s staff believed that the issue of proper payment for work done was their responsibility also. No line was drawn at the $7.73 point. The Commissioner reserved the right to make a referral to the USDOL if there were findings that indicated federal law violations. He hoped there would be no separation of an individual’s claim resulting in one portion of the complaint being filed with the state’s Commissioner and the other portion with the U.S. Secretary of Labor. He cited an example of an individual driving to the USDOL regional office in Phoenix, Arizona, in an attempt to handle such a split in jurisdiction. The Commissioner believed that made little sense. Because the Labor Commissioner oversaw public works projects, the Commissioner needed to take an active interest in the adherence to all laws associated with the project. If the USDOL believed their jurisdiction precluded the Commissioner from doing so, there needed to be some preliminary findings that would be forwarded to the USDOL by the Commissioner for follow-through by USDOL. The Commissioner prided himself that his agency had never sent people away empty-handed. Nor would they say, “We just can’t help you.”
Mr. Collins questioned Mr. Johnson again about journeyman status after an individual had graduated for the apprenticeship program.
A certificate of completion was tendered to the individual upon completion of the apprenticeship program, according to Mr. Johnson, on behalf of the Nevada Apprenticeship Council, a body created by the Legislature, with its own set of regulations and statutes. The certificates were awarded and the Commissioner’s staff would provide information to any potential employer that spoke of the number of hours of training received and the number of on-the-job training hours conducted. There were no provisions, however, for testing competencies in those areas. Mr. Johnson felt it would be debatable as to whose jurisdiction the testing of competencies would fall.
In response to Mr. Collins’ next question regarding piecework, Mr. Johnson replied that workers were occasionally paid for the specific number of tasks accomplished. The Commissioner would examine the rate the contractor paid the worker, would check the number of hours worked by the worker, and, given that information, would calculate the rate of pay, which would equal or exceed the prevailing wage rate.
Mr. Collins’ final question concerned incidents he had witnessed on construction sites on payday. According to Mr. Collins, some contractors placed a paper close to the payroll spot and required workers to sign the paper before they received a check. The paper was the worker’s agreement that the wage paid was appropriate for the number of hours worked. Too often the number of hours worked represented only 40 hours per week and was not the true number of hours actually worked, 40 hours plus overtime hours. It was also a statement that claimed that the employee had not been hurt on the job.
Mr. Collins asked if there were provisions in the law that would allow the Commissioner to protect the workers forced to sign an untrue statement before receiving their wages. He also asked if that was within the Commissioner’s general duties.
The Commissioner stated that the scenario put forth by Mr. Collins did indeed occur. If the worker decided at some later time that he was not paid the proper wages, the Commissioner would accept the claim, investigate, and enforce proper wage payment. A statutory provision in the public work laws stated that a contractor and an employee could not contract for a wage rate different from the prevailing wage rate. The Commissioner would not consider nor care what the signed acknowledgment said. Recently, the Commissioner took a similar case to the Nevada Supreme Court. There was an issue of a signed acknowledgment by a worker with his employer. In court, the worker testified he was told that if he did not sign the acknowledgment, he would not receive his pay and/or would be terminated from employment. The Commissioner had ruled that the agreement was a contradiction of public policy. The previous week, the Commissioner and his staff had received confirmation that the Supreme Court upheld the Commissioner’s position.
Mr. Collins then addressed the self-funding of the Nevada State Contractors Board and compared it with the funding as existed for the Labor Commissioner’s Office. He asked if it would be beneficial to the Commissioner to be self-funded in a like manner rather than dependent on the state’s General Fund as overseen by the Legislature and if it had been discussed.
Mr. Johnson told the Committee that there had been some informal discussions, mostly within the agency, about adopting a provision similar to what existed in Washington or Oregon. One of those states had provisions whereby contractors on public works projects supported the enforcement of the regulations. The Labor Commissioner’s Office was one of the few state entities that derived virtually nothing from the industry that it regulated. That was in contrast with other agencies within the areas of business and industry, such as banking and realtors, who funded themselves partly on fees paid by those they regulated. Public works, especially, received little to support the enormous costs of enforcement of regulations. There had been no public formulation of a plan, only speculation and general discussions.
Mr. Collins asked about contractors who ran “double books.” Mr. Collins held firmly that those contractors needed to be dealt with as harshly as possible within the limits of the law.
Mr. Johnson asked the Chair and Committee members to recall that in the 2001 session of the Legislature the Commissioner had brought forth a strong bill, Senate Bill 560 of the 71st Legislative Session, increasing the penalties and the qualification period. He thanked the Committee on Government Affairs for passing the bill out of committee. Since that time, the number of contractors who had been disqualified from public works contracting had increased by 375 percent. When the penalties that were assessed were examined, the degree of compliance had changed considerably. In the past, when a contractor was cited, a call was placed, and the contractor was able to come in, pay the fine, and no further action was taken. Currently, if caught underpaying $25,000 in wages, there would be a required repayment of the $25,000 plus $25,000 paid in penalties. An additional forfeiture of penalties would be paid back to the public agency. Gradually the message got out, and contractors no longer attempted to underpay. The staff of 20 workers in the agency faced a mountain of contractors who worked on public works projects. With the help of the awarding entities who had taken a more active role in monitoring their own projects to ensure the contractors complied with the law, there had been a great deal of success in ending the underpayment of employees.
Mr. McCleary believed that one of his questions had been asked and answered by Mr. Collins. He did have experience, he explained, working for some employers who had not obeyed the labor laws. Out of ignorance, he explained, he did not know that he had had recourse. Workers needed to be educated better in that regard. He asked what the penalties were for employers who were found out of compliance with labor laws.
The Commissioner reiterated that there were still many areas of enforcement that needed to be made stronger. Regarding nonpayment of wages, there were statutory provisions that stated that the person who was not paid on time continued to accrue wages and/or salary for up to 30 days or until payment was made, whichever was sooner. If, however, the violation was noncompliance with mandated rest periods, uniforms, or ignored mealtimes, the violation would be considered a misdemeanor, and there would not be resources enough to prosecute that level of violation. While important, the sheer number of violations would be impossible to prosecute given the resources that existed. Limiting misconduct to the status of a misdemeanor, Mr. Johnson believed, did more harm than good. The Commission would look for an avenue through which a penalty could be levied on matters of labor law violations outside of wages. For all matters beyond wages, imposing administrative penalties would be extremely helpful. That would allow Mr. Johnson, Mr. Tanchek, or others on their behalf, to conduct hearings as needed. Prosecution in court would be deemed unnecessary when the Commissioner’s staff itself would levy the penalties for misconduct. His hope would be to expand the authority to impose administrative penalties in those areas.
Mr. McCleary asked if administrative penalties were the same as fines.
Mr. Johnson stated that they were the same.
Mr. Knecht extended his gratitude, as had the Chair and Mr. Collins, for a thorough and succinct presentation, and noted that Mr. Johnson’s answers had been very responsive to the questions. Mr. Knecht then asked to return to the subject of “assignment.” Mr. Knecht restated his understanding that the department took control of the claim. He asked if the employee, at that time, received any of the compensation due from the department provisionally.
Mr. Johnson replied affirmatively that the department did take assignment of claims for employees who did not have the means to employ their own legal counsel, although that option remained open to them. When the department had the assignment, it would accept payment from the employer, deposit said monies in a pre-established trust fund, and payment would be made back to the employee. Occasionally, the employer and the employee would come together in agreement without a court hearing. The department then established a settlement conference, a check would be written to the employee, and the matter was informally resolved in that way.
Mr. Knecht then requested information as to the frequency of incidents when the employee received payment before there was a clear determination of eligibility.
Mr. Johnson believed that such incidents would be very isolated. There might be incidents in which an employee received more reimbursement than he actually had coming, but that would be very rare. Because the staff audited the payroll and examined the timecards, the amount owed would be made fairly clear. It would be nearly impossible for an employee to claim an excessive amount of reimbursement and justify it. Every effort would be made to diligently investigate each claim. While a mistake could happen, it would seem unlikely.
Mr. Knecht asked about user fee funding and whether a fine could be levied on an employer, in addition to monies owed, for the cost of the agency’s enforcement of the claim.
Mr. Johnson explained that regarding a recovery of investigative expenses, a public works statutory provision existed. The Labor Commissioner could recover certain investigative costs incurred as part of an enforcement matter in public works. Within the private sector, Mr. Johnson believed it could also be done, but that there were legal issues that would need to be thoroughly reviewed. In the past the courts had not looked favorably on instances where a regulatory body had assessed a penalty or fine which would be subsequently recycled back into the operating account of that regulatory body. He believed that with the proper precautions, it would seem feasible to do.
Mr. Knecht encouraged Mr. Johnson to bring proposals for the recovery of investigative costs and offered to work with him to amend existing statutes or to create bill draft requests for that session or following sessions. The “user fee” approach appeared, to Mr. Knecht, to be a positive one for private as well as public contractors. In respect to Mr. Johnson’s budget of $1.1 million budget with 20 employees, Mr. Knecht presumed that figure represented the agency’s total budget, which Mr. Johnson indicated was correct. Mr. Knecht asked if the assignment fund for claims paid by the agency was part of the $1.1 million budget.
Mr. Johnson explained that the $1.1million was split over all areas: personnel, travel, operating costs, supplies, computer equipment, information technology, as well as the assignment fund referred to by Mr. Knecht.
Mr. Knecht followed up by comparing that $1.1 million total budget to the $3 million dollar recovery. The agency had actually understated its effectiveness from Mr. Knecht’s point of view. There was a less than $1.1 million effort, which resulted in the $3 million recovery. In closing, Mr. Knecht requested, on behalf of the members of the Committee, that hard copies of the PowerPoint presentation be made available.
Assemblywoman Weber echoed the sentiments of her fellow Committee members and stated that she had had opportunities to work with Mr. Johnson and his staff. She noted that his department informed the public in a timely manner whenever needed and was well run. Her questions were about the prevailing wage rate:
Mr. Johnson responded to Ms. Weber’s concerns. The convenience of returning surveys was such a concern to the agency that data had been collected for the past several years. An increase in the number returned had been noted. Impediments would include a contractor’s opinion that his survey would not be of value, the system operated in antithesis to the contractor, there would be no personal benefit for the contractor to return the survey, and related issues such as those. The agency had worked hard to dispel those ideas by advertising that every survey counted. The form itself was examined to be certain that it was simple, user friendly, and straightforward. They considered the survey from the perspective of the busy contractor who had to meet a payroll, work with project managers, and be involved on the job site, as well as how much time that person was able to commit to complete the survey. To the Commissioner’s staff, it seemed streamlined and very easy to use. The survey consisted of two foldout pages to assess job classifications, wage data, and demographic information. During the survey period, it was posted on the Commissioner’s Web site. Many contractors had gone so far as to merge the survey with the payroll database and submitted that compiled data. Others typed in the data before returning them. The staff also engaged many of the contractors’ associations, submitted articles for the newsletters of those various associations, and held workshops on completing the surveys. All of those efforts led to an increased return. The hope was that there would be an increase of confidence by the public that the data would be handled properly, and, that the compilation of wage rates was consistent with the statutes. Data was currently being collected on employers who participated in public works bidding and contracting but did not participate in the wage survey. At a billion dollars per year, the state of Nevada had a compelling interest to insure that wage data was collected from every possible source, he said. Out of the 13,000 plus surveys sent, stated the Commissioner, the agency received back about 2,000 surveys at the most. Of that number returned, probably half would contain usable data. Some responses by the contractors indicated they had done no projects or had no employees over the past year rendering their surveys unusable. There was considerable room for improvement, he maintained, but felt the agency had recognized many associated problems with surveys and had been responsive to those problems. One way to increase participation would be to legislate mandatory participation. The agency’s staff, however, was examining another possibility, deriving wage data from existing sources within the state. As an aside, Mr. Johnson recalled his work in the post office immediately after high school graduation. He said that people would write notes and make comments to the Internal Revenue Service on the outside of their tax envelopes. Similarly, wage surveys that were returned occasionally had questions on the outside of their envelopes. Two of the more common questions on the envelopes were, “Why are you asking me this?” and “Don’t you already have this information?” Those questions underscored the point that, somewhere in the state, wage data was already being collected, either through the Department of Taxation with their business activity tax assessments or through the Department of Employment, Training and Rehabilitation as they assessed unemployment insurance premiums. Recently, the Commissioner met with the Employment Security Division to talk about that possibility. They would try to locate those sources and then utilize their information. It was, however, the staff’s responsibility to continue to search for a means to make participation in the survey process more urgent to contractors.
Chairman Manendo asked Mr. Johnson if he was also Chairman of the Public Employees’ Benefits Program. When given an affirmative response, the Chair asked how Mr. Johnson had come to that position.
Mr. Johnson responded with humor to reiterate his understanding that the presentation to the Committee would be limited to the Labor Commissioner’s responsibilities.
Mr. Johnson stated however that his function as Chairman of the Board of the Public Employees’ Benefits Program was entirely separate from his position as the Labor Commissioner. He acknowledged that he would certainly return to the Committee frequently during the legislative session, as there were many issues to be discussed in that area. He looked forward to helping the Committee in both of his capacities to work through issues and concerns.
Chairman Manendo asked for additional information as to Mr. Johnson’s background.
Mr. Johnson said he had lived in Nevada half of his life, and he attended and graduated from the University of Nevada, Las Vegas. Past work experience included working for the state of Nevada in the Office of Business Finance and Planning, mainly with small and medium-sized businesses, concerned about business startup and relocation. Mr. Johnson stated firmly that that experience framed how the Commissioner’s staff approached its regulatory functions, as there was no desire to be overbearing on businesses while providing a firm and fair regulatory climate. The effort was to allow businesses to compete with each other in a lawful manner without being undercut by unscrupulous competitors. That was the experience he brought with him when appointed Labor Commissioner.
Chairman Manendo explained his request for further personal information by stating that the Committee regarded Mr. Johnson with great respect. He thanked Mr. Johnson for his presentation and for responding to questions so thoroughly.
The Chair asked Mr. Collins if he had any questions, as the Assemblyman had been very quiet. Mr. Collins indicated that he had none.
Mr. Johnson offered his business cards to the members of the Committee and was thanked again.
Chairman Manendo opened the floor to the general public for comments. There were none.
Chairman Manendo brought to the attention of the Committee an invitation to attend and participate in a tour of local government services put together by Mary Walker, lobbyist for Carson City, Douglas, and Lyon Counties. The tour date was scheduled for Saturday, February 22, and was to begin at 9:00 a.m. It would include Carson City services such as animal control facilities, the sewage treatment plant, the airport, and redevelopment efforts downtown. The tour would then go to Douglas County to view the restored courthouse and to meet many officials. China Springs Youth Camp had invited the Committee for lunch and a tour. Lyon County overviews would be presented and the tour would return to the Legislative Building by 3:00 p.m. He thanked Ms. Walker for putting the tour together. Her letter of invitation (Exhibit D) would be made available to Committee members for their consideration. Although the Chair did not ask for an immediate commitment, he did request feedback so that a thoughtful decision would be made in a timely manner. Committee members questioned whether other dates were available, as February 22 was already scheduled for several legislators. Chairman Manendo invited Ms. Walker back to speak to the Committee.
Ms. Walker declared that any day for the tour would be possible; it was entirely dependent on the Committee’s preference. The intent of the tour was to expose the functions of local government and the types of services provided to the public so that the Committee would be better informed. She invited other local governments, and the Nevada Association of Counties and the League of Cities, to join the Committee. The date for the tour was exceedingly flexible.
Committee members asked if a weekday would be considered. Chairman Manendo stated that it would not be possible to take that much time out of a weekday. He then asked Committee members to discuss possible alternative dates.
Mr. Collins supported the tour as very valuable for legislators. He was somewhat displeased by the need to give up weekend time, however, for such an event noting that, prior to the implementation of the public mandate for limiting the legislative session to 120 days, such events could be held Monday through Friday rather than on weekends.
Chairman Manendo reminded Mr. Collins that the 120-day session included weekends and was not limited to the days of the workweek as defined by most citizens. The Chair expressed concern about the 120 calendar days stating that the intent may well have been for legislators to work seven days a week until their business was finished. The Chair then asked Committee members to consider March 15 as an alternative date for the tour. As this seemed agreeable to most of the Committee members, Chairman Manendo posed that date to Ms. Walker who stated that would be quite acceptable. The letter of invitation for the tour was then distributed to the Committee members who were asked to respond to the Chair by Monday, February 17. The staff, too, was invited.
Chairman Manendo entertained motions to vote on committee introductions for the following Bill Draft Requests (BDRs):
ASSEMBLYMAN COLLINS MOVED FOR COMMITTEE INTRODUCTION OF BDR 27-485.
ASSEMBLYWOMAN KOIVISTO SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Williams was not present for the vote.)
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ASSEMBLYMAN ATKINSON MOVED FOR COMMITTEE INTRODUCTION OF BDR 20-1020.
ASSEMBLYMAN KNECHT SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Williams was not present for the vote.)
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ASSEMBLYMAN KNECHT MOVED FOR COMMITTEE INTRODUCTION OF BDR S-264.
ASSEMBLYMAN GRADY SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. Williams was not present for the vote.)
Chairman Manendo reminded Committee members that the following day’s session was scheduled to begin at 8:00 a.m. with a Floor session at 11:00 a.m. He then asked if there was any further business before the Committee. Hearing none, Chairman Manendo adjourned the meeting at 9:20 a.m.
Nancy Haywood
Committee Secretary
APPROVED BY:
Assemblyman Mark Manendo, Chairman
DATE: