MINUTES OF THE
SENATE Committee on Commerce and Labor
Seventy-second Session
February 7, 2003
The Senate Committee on Commerce and Laborwas called to order by Chairman Randolph J. Townsend, at 8:00 a.m., on Friday, February 7, 2003, in Room 2135 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator Randolph J. Townsend, Chairman
Senator Warren B. Hardy II, Vice Chairman
Senator Ann O'Connell
Senator Raymond C. Shaffer
Senator Joseph Neal
Senator Michael Schneider
Senator Maggie Carlton
STAFF MEMBERS PRESENT:
Scott Young, Committee Policy Analyst
Courtney Wise, Committee Policy Analyst
Kevin Powers, Committee Counsel
Makita Schichtel, Committee Secretary
OTHERS PRESENT:
Danny L. Thompson, Lobbyist, Nevada State AFL-CIO
John Wiles, Division Counsel, Legal Section, Division of Industrial Relations, Department of Business and Industry
Robert A. Ostrovsky, Lobbyist, Employers Insurance Company of Nevada
Mary Lau, Lobbyist, Retail Association of Nevada
Raymond Bacon, Lobbyist, Nevada Manufacturers Association
Donald Jayne, Lobbyist, Nevada Self-Insured Association No. 200
Roger Bremner, Administrator, Division of Industrial Relations, Department of Business and Industry
Leonard V. Nevin, Lobbyist, Former State Senator, Nevada Subcontractors Association
John E. Jeffrey, Lobbyist, Southern Nevada Building and Construction Trades Council
Daryl E. Capurro, Lobbyist, Nevada Motor Transport Association
Ann W. Nelson, Lobbyist, EICN Administrative Services
Alice A. Molasky-Arman, Commissioner, Division of Insurance, Department of Business and Industry
Jon L. Sasser, Lobbyist, Washoe Legal Services Incorporated
Jon Rapanos, Concerned Citizen
Bobbie Gang, Lobbyist, Nevada Women’s Lobby, and National Association of Social Workers - Nevada
Chairman Townsend:
We will open the hearing on Senate Bill (S.B.) 8. This bill was based on two industrial explosions occurring in 2001. One was in Douglas County and one in Clark County. Although they had different causes, both resulted in deaths and injuries. As a result of the explosions, I asked the Legislative Commission to explore these cases. I was then appointed chairman of the Legislative Commission’s Subcommittee on Industrial Explosions to discuss safety in the work environment as it related to these cases. This bill is the result of those discussions.
SENATE BILL 8: Clarifies scope of and increases penalty for certain punishable conduct by employer leading to death of employee. (BDR 53-298)
Danny L. Thompson, Lobbyist, Nevada State AFL-CIO:
We want to thank you, Mr. Chairman, for asking the commission to form an investigative committee. As we studied the Depressurized Technologies International (DTI) case, we found this employer had no workers’ compensation insurance, nor was he complying with the laws of Nevada or the U.S. Environmental Protection Agency standards. Additionally, this employer had invented the process to have aerosol cans degassed. This individual could not plead ignorance.
Every employer in the State has to pay for this claim. I heard the cost is over $600,000, and may be $1,000,000. The Legislature needs to discourage the kind of behavior that allows this to happen. It is appropriate to increase fines for those who are in violation. This is fair to the other employers who are picking up the bill. The greater tragedy was to those specific workers who were injured or killed, many who could not speak English. Based on all of this, we support this bill.
Senator O’Connell:
Was there any thought about due process for the employer?
Senate Bill 8 leaves in place the current due process issues and additionally addresses willful violation. It increases the fine of the violation, while adding a condition for which a violation can take place. This bill heightens the standard of the current statute. On page 1, line 5, the phrase “or creates a condition that causes,” holds the employer to a different standard. The committee should look at changing the standards and increasing the fines.
Senator O’Connell:
Is that going to be in Title 618 of Nevada Revised Statutes (NRS)?
Chairman Townsend:
Yes. That will not change.
Kevin Powers, Committee Counsel:
Mr. Chairman, this section actually creates a crime, so all of the constitutional protections of due process and all other constitutional protections that surround the criminal prosecution would be afforded to the defendant in the criminal prosecution.
Senator Hardy:
What is the legal distinction between a “violation that
causes”
or “creates a condition that causes” a
death?
Mr. Thompson:
I am also a member of the Advisory Counsel to the Division of Industrial Relations, and we discussed this subject. The council looks at uncollected workers’ compensation dollars. Insured employers end up paying money that has to be forgiven. Although I did not draft nor suggest this bill, I think the language says “creates a condition” due to the circumstances surrounding the DTI case. In this case, the employer had the same company in another state and met all the laws and standards there. But in Nevada, the employer instigated a method of degassing the aerosol cans in a storage container using a drum with a spike driven through a board. The employees would take the aerosol cans and stab them onto the spike, degassing them. This sometime volatile gas would gather around the employees’ feet. In this case, a spark hit the gas and caused an explosion. It was the employer’s design. Perhaps the bill drafter saw this design as creating a condition that caused death.
Senator O’Connell:
Who makes this determination that the employer created the circumstances?
Is it the federal Occupational Safety and Health Administration (OSHA) or the Division of Industrial Relations (DIR)?
Mr. Powers:
Mr. Chairman, I can answer that. Again, this is all predicated on a criminal offense. If the defendant, in this case the company, or the person in management of the company that violates this statute, has a right to a jury trial. Either a jury would make that determination, or if they waive their right to a jury trial,then the court would make that determination in the criminal trial. This is not an administrative penalty; it’s a criminal penalty.
Senator Hardy:
I can understand a violation that carries a presumption of due process, but “creates a condition” does not have the same standard of establishing a violation.
John Wiles, Division Counsel, Legal Section, Division of Industrial Relations, Department of Business and Industry:
The provision of the bill in section 1, line 5, is based upon discussion in the Legislative Counsel Bureau, Bulletin No. 03-8, “Legislative Commission’s Subcommittee on Industrial Explosions” (Exhibit C. Original is on file in the Research Library.) I informed the committee that, under the circumstances presented during the investigation and the citations issued to Depressurized Technologies International, Incorporated, it may have been difficult to prove that general duty violation actually caused the death of the individual involved. However, we believe the conditions the employer put in place are responsible for the death of the employee. My recommendation was to expand the scope of the policy. The language may not be the best to express this intent. I recommended the committee consider input from experienced prosecutors. Senator Hardy has focused on an important aspect of this bill.
Senator Hardy:
We might include those types of causes in the statutes that deal with violations and actually make those causes a violation. That might assure due process.
Senator O’Connell:
Is this language modeled after any other state or jurisdiction, or is this new
language to the State?
Mr. Wiles:
The existing language is drawn from the federal Occupational Health and Safety Act of 1970, the additional language may be found in other states. We can look into that.
Mr. Powers:
Mr. Chairman, I think I might be able to elaborate a little further on Senator Hardy’s concerns. This is a criminal statute, so in any prosecution there will always be due process because you are entitled to this constitutional due process protections and criminal prosecution. In addition, there always has to be a violation in order for there to be a conviction. The violation is always the predicate to the conviction. What this does is elaborate on the causation standard. Typically, a person is criminally liable only for the actions that are directly caused by their activity. Proximate cause is an expansion of that. Proximate cause establishes a standard whereby when you commit an action and those direct consequences have additional consequences, then you can also be held liable for those additional consequences. Proximate causation is usually a concept that is only recognized in the civil law, but it is a concept that courts and legislatures have found to be applicable in criminal law on certain occasions. In this case, this legislation makes it clear that the Legislature expects the causation standard to be proximate causation, so when the employer commits the violation, they are going to be criminally liable for direct consequences and any consequences that are proximately flowing from those direct consequences; additional consequences that can be connected to the original violation.
Senator O’Connell:
Would it be possible to have the explanation just given included verbatim in the minutes so employers may understand their liability?
Chairman Townsend:
Absolutely. The business community should be aware of what we are trying to accomplish. They should put this explanation in their newsletters. With DTI, it was not only a tremendous loss, but also a travesty that this employer had a legitimate business in another state, and then moved to Nevada and violated every Nevada statute. We want to make it clear there will be legal prosecution for this type of behavior.
Robert A. Ostrovsky, Lobbyist, Employers Insurance Company of Nevada:
We agree with the increase of the fines. We do question the phrasing of “or creates a condition that causes.” The Occupational Safety and Health Act of 1970 states the employers have a general duty to provide a safe workplace. The act also defines thousands of specific standards an employer must meet. During an OSHA inspection, if a business is found to be in violation of a standard, the inspector will cite which specific standard has been violated. If the OSHA inspector believes a business has provided an unsafe workplace, but cannot find a violation listed, then it will be fined under the General Duty Clause. The employer may not know they have violated a General Duty Clause until an inspector tells them. The problem in prosecuting the DTI case, because it fell under General Duty Clause, the court had a much more difficult time citing charges. Specific violations are more easily identified.
This additional language in S.B. 8 allows employers to be subject to more penalties for violation under the General Duty Clause. We are talking about a limited number of cases that fall under the conditions of willful violation resulting in death. The committee attempted to lower the standard for general duty violation. There is no problem with direct violations covered by the current wording. I would like to hear more about this definition, perhaps by a high-risk industry such as mining.
Mr. Wiles:
Mr. Ostrovsky makes a very good point. That is the thinking behind this additional language. The general duty violations are problematic. That is why I suggested the Legislative Commission’s Subcommittee on Industrial Explosions look at this issue to allow a case such as DTI be prosecuted under this statute with a reasonable degree of success.
Chairman Townsend:
The Legislative Commission’s Subcommittee on Industrial Explosions heard some very compelling testimony. Our response as a committee was to focus on “willful” and “death” as standards in this criminal process. These conditions must exist for the punishment to apply.
Mary F. Lau, Lobbyist, Retail Association of Nevada:
This committee has spent considerable time considering workplace safety issues. It is unfortunate what occurred at DTI, and that we even have to address S.B. 8. We are looking at “willful” as a condition and at the noninsured population. There is no excuse for an employer not to have coverage. This committee has been clear in safety standards and a lack of insurance is inexcusable. The self-insured group for workers’ compensation supports the raising of fines. It has been proven in other states that noninsured employers faced with large fines find a way to purchase workers’ compensation insurance. We have questions also on “creates a condition.” The Retail Association of Nevada supports raising fines. We also support penalizing willful noninsured employers.
Raymond Bacon, Lobbyist, Nevada Manufacturers Association:
We cannot support the broad language of the additional phrase “that causes.” For example, a power company accidentally reactivates a line that is being worked on; the company is causing the condition. All the safety precautions in the world may miss some of those situations. The cause must be something purposely done over an extended period of time, not an individual incident. The DTI situation involved a condition created by the employer that had been in place for an extended period of time. The vague wording of this bill opens us up to litigation.
Chairman Townsend:
There must be a willful act and then a death before this issue is triggered. I respect your concern. If we water down a definition, we are open to litigation and fail to help employees. Our goal is to not increase litigation, but to solve problems.
Donald Jayne, Lobbyist, Nevada Self-Insured Association No. 200:
We also have concerns about the general nature of the clause “or that creates a condition that causes.” I look forward to Mr. Powers’ printed comments to read with attorneys. I think his comments help clarify who is targeted. I agree with the committee that a willful violation resulting in a death is a narrow scope. These criminal offenses must be taken seriously. We have no problem with the increase in fines. Our concern as employers is to understand how the additional wording “or creates a condition that causes” would be applied. Mr. Wiles pointed out how DTI conducted business was a cause, so the very opening of a business could be cause. We want to be more clear on this wording.
Senator O’Connell:
At what point in time would a business be shut down when such violations occur?
Mr. Jayne:
I am not in a position to answer your question. Representatives from the DIR may be better equipped to answer. If we find a business is uninsured, the regulators will shut down that business. In this process I am not sure when that would happen.
Roger Bremner, Administrator, Division of Industrial Relations, Department of Business and Industry:
When a business does not have workers’ compensation insurance, we usually shut them down right away and send the employees home. If they were in imminent danger, OSHA would shut them down right away. With DTI, it was not known the business was in operation or existence. They had no workers’ compensation insurance, Employment Security Division account, Department of Taxation account, and no business license.
Senator O’Connell:
I wonder how an employee ever found DTI to apply for a job.
Chairman Townsend:
We are looking into that. There is no fault for those agencies that did not know the business existed.
Senator Neal:
A person who “willfully violates” means that person has knowledge of the situation.I do not understand the objection to this wording.A drunk driver who kills is responsible for that crime.That is a willful violation.
Mr. Jayne:
I am not against the provisions.I am seeking clarification of the new clause.Once I get a chance to research Mr. Powers’ comments, I may no longer be concerned about the wording.
Senator Neal:
How could we word it better?A willful violation calls for an understanding of safety standards.Take an example of a man working on a telephone pole without his safety gear. If he feels like he may fall and requests to come down, but his supervisor tells him to remain and work, who is responsible when that employee falls? Would it be the person who fell or the supervisor?
Mr. Jayne:
We are dealing with the clarification of a clause.The existing law is understood. We just want to review Mr. Powers’ explanation to the new wording.I am not sure we have a problem with it, but we need to understand what it means when it is time to execute that clause.
Mr. Powers:
Mr. Chairman, if I may offer a suggestion. I believe the concern is on the phrase “creates a condition,” and that phrase has the potential for being construed broadly.It is possible to change the language to where the violation is the proximate cause of the death of any employee.If we use the term “proximate cause,” we are adopting this legal standard that’s been recognized for centuries and has a definite meaning involved.I believe it captures the intent of the language here.
Senator Neal:
Does the phrase “that causes” following “or creates a condition” modify that language?
Mr. Powers:
Well, I believe the suggested language, Senator, would read after the comma “where the violation is the proximate cause of the death of any employee.” We eliminate the phrase “creates a condition” and replace it with just one phrase, “where the violation is the proximate cause of the death of any employee.”
Senator Neal:
Would you not be creating a tort condition rather than a criminal one?
Mr. Powers:
“This would still be a criminal violation if the Legislature decides to make proximate cause the causation standard in criminal violation, the legislature has the power to do that.”
Mr. Wiles:
Our position is the existing language, which is tried and true, since the passage of the Occupational Safety and Health Act of 1970, remains in place. It is up to the Legislature whether or not to expand that definition. I understand Mr. Powers’ point; however, that introduces a unique set of facts in Nevada in terms of the proximate cause standard. The additional language may be less subject to challenge than changing the legal standard already in place. This wording was a suggestion I offered at the subcommittee meeting as a way to address what might be a potential issue. We do not require the proposed wording. Our goal was to point out the difficulty in potential prosecution of these matters. It may be important to hear from criminal prosecutors who are more experienced with criminal standards and terms of defining what is prohibited under criminal statutes.
Senator Neal:
Would the additional language hamper conducting an investigation of an accident?
Mr. Jayne:
No.
Leonard V. Nevin, Lobbyist, Former State Senator, Nevada Subcontracting Association:
We have a concern with the vague wording. In the construction business, if we have a four-story building and place a worker on the top floor to work, would we be creating a condition if he falls off and dies?
A second concern is when supervisors try to take a shortcut. An employee might be sent into a situation that is unsafe. As employers we cannot know what every employee is doing every minute. Is the foreman or supervisor who sends that employee into the situation responsible, or is the owner of the company?
Senator Neal:
I do not believe this piece of legislation is difficult to understand. First, an investigative report must take place. If an employer objects to that report and is given an OSHA fine, and goes to court, then argues before the court whether the condition caused the death. That argument then becomes a jury or judge’s decision. That prevailing report, unless there is a settlement, would result in a court case. I fail to see the objection unless you do not want the employer to be found in willful violation.
Mr. Nevin:
That is not my concern. Some attorneys might say that would not have happened if you had not sent the employee to the fourth floor, so you created the situation for that person to be injured. When we get an OSHA citation, and the second violation is willful, then it becomes serious. The procedure is established. It is not the foreman, supervisor, or employee who pays that fine, but the company. Would an employer be fined and go to jail for the action of a supervisor employed by him?
Senator Hardy:
Mr. Powers, will the legal standard you suggested address Mr. Nevin’s concern?
Mr. Powers:
I believe that it does. I cannot say conclusively without a specific set of facts, but the idea of proximate causation is that the person is going to be liable either criminally or civilly under the concept of proximate causation. Only if the person’s actions are the direct cause and in addition are the natural and foreseeable consequence of the injuries. The idea is that the injury has to be a natural and foreseeable consequence of the violation of the OSHA requirements.
Senator Hardy:
What does it do legally if we leave the existing language where it says “where the violation causes or,” and then add “proximate causation.”
Mr. Powers:
You certainly could draft language where the violation causes or is the proximate cause of the death. But, if you just simply say where the violation is the proximate cause of the death, you’ve covered all elements of causation. You’ve established the causation standard.
Chairman Townsend:
I think we have a consensus on the increased-fine issue. I suggest Mr. Wiles, Mr. Powers, and any other parties with insight meet and find commonality for our subcommittee. We can process the fine issue in the meantime.
John E. Jeffrey, Lobbyist, Southern Nevada Building and Construction Trades Council:
I do not think S.B. 8 should apply to only uninsured employers. If there is a willful safety violation that causes death, the punishment should be the same to anyone.
Daryl E. Capurro, Lobbyist, Nevada Motor Transport Association:
We support the increase of fines. In answer to Mr. Jeffrey’s comments, this statute does apply to all employers. The DTI company had problems far more serious than not carrying workers’ compensation insurance. We have some concern about how the additional wording will be interpreted by the courts. I believe Mr. Wiles said he is comfortable with the statute as currently written, which is clear, concise, and court tested.
Chairman Townsend:
Mr. Wiles, will you bring your findings to our next meeting?
Mr. Ostrovsky:
This particular employer was successfully prosecuted under the current criminal laws. The standard was met. Under the old language there was successful prosecution.
Chairman Townsend:
Is that correct, Mr. Wiles?
Mr. Wiles:
There was a plea-bargain agreement entered; there was no trial.
Chairman Townsend:
That was done at the district court level?
Mr. Wiles:
Yes, it was heard in Douglas County by the district attorney’s office. I do not believe the court of jurisdiction was the district court. I believe it went before justice court.
Chairman Townsend:
Mr. Wiles, will you research why it was heard in justice court and plea bargained? It seems it would have been a summary judgment.
Mr. Wiles:
Yes.I would like to point out it was successfully prosecuted before the Occupational Safety and Health Review Board, in terms of our administrative process.
Chairman Townsend:
I close the hearing on S.B. 8 and open the hearing on S.B. 9.
SENATE BILL 9: Revises provisions governing exclusivity of certain rights and remedies under industrial insurance. (BDR 53-632)
Chairman Townsend:
This bill is a substantial change from current workers’ compensation law. Our subcommittee reviewed this wording as a result of DTI. The DTI violation was so monstrous we brought this issue to the Legislature. It addresses an injured person or the person’s remaining family, in the case of death of the employee, going against an employer when that employer’s willful misconduct caused injury or death.
Exclusive remedy is the foundation of workers’ compensation insurance. This is a substantial change. In the case of DTI, if I were an attorney, I would go to court and overturn the exclusive remedy law. These employees may have been undocumented workers who did not speak English.This employer sought these people. My concern is the exclusive remedy could be overthrown in the Nevada Supreme Court based on these types of incidents. I believe workers need to have recourse other than on the backs of other employers who are abiding by the law. This bill is meant to discuss an OSHA violation, but I am not sure the wording clarifies that.I do believe a similar case could come before the Nevada Supreme Court, and that court would make the determination rather than the Legislature.
Chairman Townsend:
That is a good point. Again, we are addressing people who willfully violate laws in the State of Nevada resulting in death. This case cost more than $600,000. We are all picking up that tab. I am impressed with the labor groups and employers who came to the subcommittee meetings and agreed to focus on the uninsured-employer issue. How do we find these uninsured people? This was one challenge faced in the DTI case. Mr. Thompson brings up another point. There may be a case such as DTI that is so upsetting that the courts decide to make a change in exclusive remedy/workers’ compensation laws. Was the DTI case heard at the district court level?
Mr. Powers:
The case was in justice court because subsection 1 of …NRS 618.685 is a misdemeanor and justice court only has jurisdiction over misdemeanors.They do not have jurisdiction over gross misdemeanors.Justice court has jurisdiction over misdemeanors and that is why it exercised its jurisdiction in that case.
Senator Hardy:
Mr. Chairman, in reading the subcommittee report, it looks like the discussion regarding this bill covered those who do not have workers’ compensation insurance.Exclusive remedy is not specifically addressed if you do not have workers’ compensation insurance.
Chairman Townsend:
The issue addressed those who willfully violate our law. Is not obtaining workers’ compensation a willful violation? The goal was to penalize companies not abiding by Nevada laws. We were not trying to pierce the exclusivity remedy. The bill was not drafted in the way the interim report suggested.
Mr. Ostrovsky:
I believe noncomplying employers are currently being sued for damages. Just because they do not have a policy, they cannot hide under the exclusive remedy clause. If you want to strengthen those penalties for noncomplying employers in a statute, we agree.
As a review, in 49 states, including Nevada, workers’ compensation dictates employers assume liability without fault and are relieved of a large jury verdict. Texas is the exemption and does not require an employer to carry workers’ compensation. Two states allow a willful misconduct exception. In California compensation is increased by 50 percent for the claimant. It is not a right to sue, but an administrative remedy.The other state is Massachusetts which doubles the benefits.Willful misconduct is a very low standard compared to an intentional tort, which is a deliberate attempt certain to result in injury or death. Intentional tort is higher than gross negligence, which is a strong probability of injury. There are various standards to compare, but willful misconduct is a very low standard. Exclusive remedy has been pierced in certain cases. In Texas if a death occurs, you can sue, but when “willful” is involved, the benefit level increases. We do not support any change in the exclusive remedy provision for covered employers. The system works well.There are always cases that do not fare well in comparison, but thousands of cases exist with the no-fault situation. The other side of a no-fault situation involves an employee who willfully violates a known safety standard. He is still entitled to workers’ compensation benefits. We do not use this as a defense in workers’ compensation benefits under Title 616 or 617of NRS.
Senator Neal:
Willful violation is addressed in NRS 618.685. Would that language carry over to NRS 616A.020 regarding an employer’s conduct being willful?
Mr. Ostrovsky:
You are referring to the OSHA standard, Title 618 of NRS.The two have never been tied together. The OSHA determines a violation and decides penalties.It has been held as a separate entity from Title 616 and 617 of NRS, which is what happens to the employee. You can have a violation without an injury. I am not sure how the two would relate if we changed the law to add a definition to match OSHA.I would have to consider that.
Senator Neal:
If an employer could be charged in one section of our statute with willful violation, would that charge apply across the board involving employees?
Mr. Ostrovsky:
If the committee was willing to adopt the same standard for employees who willfully violate a standard, that might create a different type of workers’ compensation program in this State.
Mr. Bacon:
We are in support of penalizing the uninsured. What happens if an employer paid his premiums and the agent failed to execute the policy? Should the agent be held responsible?
Chairman Townsend:
That becomes an administrative issue.But if someone is hurt, and the employer did his part to pay for insurance, he can expect that premium to be covered.That is a point we need to consider.
Mr. Jayne:
You have addressed our concerns. We support withholding benefits of exclusive remedies for uninsured employers.
Ann W. Nelson, Lobbyist, EICN Administrative Services:
Our concern with S.B. 9 deals with the distinction between employers who do and do not maintain workers’ compensation insurance. Let us look at those who do maintain workers’ compensation insurance. Under this bill, an employee who is injured in the workplace could apply for workers’ compensation coverage for that injury and also sue his employer in tort. If the violation were found not to be willful, that suit would not succeed.There is nothing to prohibit an employee from bringing suit. The insurance carrier would be defending that employee under part B of the employer’s workers’ compensation coverage. Workers’ compensation insurance costs to large and small businesses will increase statewide. If we can limit this to uninsured employers, that concern is alleviated.
Chairman Townsend:
Mr. Bacon addressed the subcommittee’s goal.If the bills are not tough enough on uninsured employers, we want to find ways to strengthen them.Mr. Young, Senator Neal, Senator Carlton, and I will continue to address bills focused on maintaining a safe work environment.Also, we need a functional workers’ compensation system in Nevada.Lastly, we want to come down on those who are not playing by the rules. We will have a subcommittee hearing at which time we will make resolution on this bill and bring that back to the full committee.
We will close the hearing on S.B. 9 and open S.B. 11.
SENATE BILL 11: Revises provisions governing extraordinary dividends or distributions of certain insurers. (BDR 57-95)
Alice A. Molasky-Arman, Commissioner, Division of Insurance, Department of Business and Industry:
The Division of Insurance has been pursuing accreditation by the National Association of Insurance Commissioners for 8 years. The accreditation team found there was one error that kept us from becoming accredited. The provision in NRS 692C.380 precluded our accreditation for a year.We asked the leadership of the Legislature to consider accrediting us on a provisional basis until the law could be changed.I received that support from our Legislature. The accreditation team for the National Association of Insurance Commissioners was impressed the State of Nevada gained that support, they did grant us provisional accreditation last March. The accreditation team will return May 2003.I hope this bill will be in place by then. Subsection 2 in NRS 692C.380 states extraordinary dividends cannot be based on realized gains.The statute reads “unrealized gains.” The effect of that would allow insurance companies to pay dividends out of money they have not yet received. It was an error that went unnoticed until our visit by the accreditation team. I appreciate your support and passage of this bill.
SENATOR O’CONNELL MOVED TO DO PASS S.B. 11.
SENATOR NEAL SECONDED THE MOTION.
Chairman Townsend:
Did you have an answer to the question regarding who would be at fault if a company paid their premium, and the insurance employee failed to issue that policy?
Mrs. Molasky–Arman:
The insurance company is obligated by the acts of the agent. If the agent who has binding authority neglects to issue a policy, the insurance company is responsible for issuing that policy. There are cases where the producer may be a broker.In that case, the employer would make a claim against the broker. It would be considered on a case-by-case basis.
Chairman Townsend:
As a hypothetical case, what happens to a person who calls their carrier to add additional coverage and is quoted a price by the person who speaks to them over the phone.The customer pays the premium based on that conversation and is sent a bill asking for additional monies.The person answering the phone may not be the agent or even a licensed person.Who is responsible then?
Mrs. Molasky-Arman:
The agent is responsible for the conduct of their employees, so the agent would be held responsible.
THE MOTION CARRIED. (SENATOR SCHNEIDER WAS ABSENT FOR THE VOTE.)
*****
Chairman Townsend:
We open the hearing on Senator Neal’s bill S.B. 22.
SENATE BILL 22: Broadens applicability of laws relating to unlawful employment practices. (BDR 53-132)
Senator Neal:
Senate Bill 22 is a result of a Nevada Supreme Court case, Chavez v. Sievers. Mr. Chavez filed suit based on an act of discrimination. He could prove discrimination, but because Nevada has a limited definition of an employer as having 15 or more employees, the court would not consider the case. The Nevada Supreme Court said this Legislature could determine whether these laws could apply to employers with less than 15 employees.
This bill does not conflict with the congressional case involving the same limitation. The congressional act states that the states have the authority to increase the standards in this area more than the federal government. We propose to move from 15 to 5 employees to stop practices as demonstrated in the Chavez case. Copies of Chavez v. Sievers have been handed out (Exhibit D. Original is on file in the Research Library.) which includes the case based on U.S. Code, Title 42, The Public Health and Welfare; Chapter 21, Civil Rights.
Mr. Thompson:
We support this bill. We do not believe in discrimination in any form. We want to commend Senator Neal for bringing the bill forward.
Chairman Townsend:
Are there jurisdictions throughout the country that choose a cut-off point? Do you have an idea?
Mr. Thompson:
No, I do not. I can only relate to our contracts that in standard language disallow any form of discrimination for any reason.
Senator Neal:
This was derived from the Civil Rights Act of 1964, which placed the limitation of 15 employees as the standard for which an employee could file discrimination. It did not prevent the State from limiting that number. Again, states can pass more stringent standards regarding discrimination than currently exist under federal law.
Jon L. Sasser, Lobbyist, Washoe Legal Services Incorporated:
We support S.B. 22. There are a number of different Federal laws; Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964, and age discrimination. Each has numbers ranging from 15 to 25. Only Congress has the power to regulate issues that touch on interstate commerce, so businesses need a large enough number of employees to fall into their jurisdiction.
Whether a business is a small or large employer, costs are not prohibitive. In Nevada, the maximum damage under State law is 2 years’ back pay. In contrast, the federal court doles out punitive damages. A small business should still be able to function if sued successfully under this law. I have provided a copy of my testimony (Exhibit E).
Chairman Townsend:
Are you saying if we change this provision to 5 years, those people we would be bringing in would only be subject to Nevada law, which allows a maximum penalty of up to 2 years’ back pay?
Mr. Powers:
Mr. Chairman, I would have to do further research into the issue, but I believe the limitation with regard to 2 years’ back pay involves the powers of the Nevada Equal Rights Commission in an administrative proceeding. They cannot work more than 2 years’ worth of back pay. Once you take the case to district court, I don’t believe that limitation applies, but I need to research that more.
Chairman Townsend:
We need to research all ramifications of current law. This committee has taken a strong position on safety. We had many debates about the little guys versus the larger employers. We determined if a law is good for a large employer, it is good for a small employer. We want to be sensitive to our smaller employers. However, it seems as if different standards would be wrong when it comes to discrimination.
Senator O’Connell:
My concern is the broadening benefit provision of the pregnancy leave. I checked with the chamber to see how many employers belong to the chamber that have between 5 and 15 employees. They estimate around 1200 in the Las Vegas Chamber of Commerce. I would have thought under the Equal Rights Act that race would have been covered.
Jon Rapanos, Concerned Citizen:
I do not support this bill because of the renovation costs for Americans with Disabilities Act compliance and other restrictions. I am presenting my written testimony (Exhibit F).
Senator Neal:
Do you think it is appropriate to discriminate, as long as your business does well?
Mr. Rapanos:
No sir. There are some reasonable accommodations that can be made to facilitate disabled persons.
Senator Neal:
Let me tell you why this bill is necessary. We may be going to war. The military who will be fighting that war is 30 percent black. If these returning black soldiers seek employment after defending this nation, are you going to discriminate as long as you have less than 15 employees?
Mr. Rapanos:
No sir. I am not discriminating. I just feel, with the economy of our State, major changes should not be made at this time.
Senator Neal:
You do not discriminate due to race, creed, or color. Employers of 15 or more have to follow that standard. Why would you be affected?
Mr. Sasser:
I believe Mr. Rapanos’ concerns are unfounded in that he will have to make physical modifications to his business. There are two titles to the ADA, employment discrimination and public accommodations. I do not believe the bill proposed by Senator Neal would have anything to do with the physical changes, only with the hiring discrimination standards. I will give a report on this prior to your work session.
Chairman Townsend:
I believe Mr. Rapanos has a legitimate concern on behalf of all small employers affected who might have to make additional capital investments. The way this seems to be printed leads one to believe the disability section captures all other accommodation issues. The chamber sent us a paper on this same concern (Exhibit G). I think Senator Neal is saying ethnicity is not a legal discrimination for hiring or firing, no matter the size of the company. Mr. Powers, please research for our work session and examine that case as we explore our statutes.
Mr. Sasser:
That was my point. I am not sure, as the bill is drafted, it would bring in the aspect of accommodations. If there is a concern that it does, we can more narrowly define the bill.
Chairman Townsend:
The federal mandate is different. It is a policy from the ADA debate with regard to smaller employers and disabled employees. This bill is not addressing that. Why should a person across the street with 14 employees have a different standard for discrimination for termination purposes than his neighbor with 15 employees? Mr. Rapanos and the chamber are questioning whether physical accommodations are a part of this bill.
Bobbie Gang, Lobbyist, Nevada Women’s Lobby, and National Association of Social Workers-Nevada:
Both of my organizations would like to be on record to show support of this bill. We do care about small businesses, many of which are owned by women. We would like to see clarification of this bill.
Chairman Townsend:
My wife is a small business owner. When she wanted to acquire accommodations for her business, she considered if the facility met those standards. It was not easy to find a building with ramps and all needed facilities for disabled employees.
We will take these bills up in work session. We close S.B. 22. This meeting is adjourned at 10:04 a.m.
RESPECTFULLY SUBMITTED:
Makita Schichtel,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE: