MINUTES OF THE ASSEMBLY COMMITTEE ON LABOR AND MANAGEMENT Sixty-eighth Session March 7, 1995 The Committee on Labor and Management was called to order at 3:30 p.m., on Tuesday, March 7, 1995, Chairman Saundra Krenzer presiding in Room 321 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Ms. Saundra (Sandi) Krenzer, Chairman Mr. Dennis Nolan, Chairman Mr. David Goldwater, Vice Chairman Mr. Lynn Hettrick, Vice Chairman Mr. Bernie Anderson Mr. Douglas A. Bache Mr. John C. Carpenter Mr. Pete Ernaut Mr. Mark Manendo Mr. Brian Sandoval STAFF MEMBERS PRESENT: Mr. Vance A. Hughey, Senior Research Analyst Mr. Fred W. Welden, Chief Deputy Research Director OTHERS PRESENT: Mr. Ben Graham, Clark County District Attorney's Office and Nevada District Attorney's Assn. Mr. Charles Paine, Chief Deputy District Attorney Mr. F. T. MacDonald, Labor Commissioner Ms. Barbara King, Southern Nevada Foundation for Fair Contracting Mr. Louis Ling, Deputy Attorney General Mr. Mark Habersack, Nevada Self-Insurers Association Ms. Gerry Meier, Workers' Compensation Administrator Ms. Trudith Stubbs, Benefits Specialist, Reynolds Electrical & Engineering Co., Inc. Mr. Richard Tetreault, Assistant General Counsel, Southwest Gas Corp. Mr. Sam McMullen, Nevada Self-Insurers Association Mr. Raymond O'Donnell, Director, Workers' Compensation & Occupational Health, Clark County School District Mr. Kevin Chadwick, Safety Officer, Washoe County Mr. Doug Sever, Business and Financial Services Administrator, Washoe County School District Mr. Ted Farrell, Risk Manager, L.V. Metropolitan Police Department After roll was called, Chairman Krenzer opened the hearing on Assembly Bill No. 58. ASSEMBLY BILL NO. 58 - Makes various changes to provisions governing enforcement of claims for wages, commissions or other demands of person financially unable to employ counsel. Mr. Ben Graham, Clark County District Attorney's Office and Nevada District Attorney's Association, began his presentation by stating the main issue concerns a transfer of authority from the district attorney's office to the attorney general's office. Earlier, the attorney general's office was much more limited in scope and in territorial covering so the Legislature put the obligation to file civil claims in the District Attorney's office. However, due to the growth in population and agencies, the attorney general's office now has state wide coverage. With the concurrence of the labor commissioner and the attorney general's office, A.B. 58, as presented, would transfer the civil collection process to the attorney general's office. The criminal provisions which would require the district attorney to prosecute the people criminally would remain with the district attorney's office. Mr. Graham expressed his concerns for A.B. 58. First, he stated Frankie Sue del Papa, Attorney General, has expressed a willingness for her agency to assume this responsibility but additional funding would be asked for. If the funding was not available there would be a problem with processing this bill. Second, Mr. Graham requested that in order for A.B. 58 to move forward, the provision which makes it mandatory for the attorney general to investigate and proceed against the district attorney if they fail to prosecute a claim for wages be repealed. Lastly, he would require the appellate process to be changed. As it stands now, after a determination has been made that claims are owed there is an appellate procedure which requires a whole new trial in court, a trial de novo, costing the taxpayers more money. Mr. Graham requested a work session be held in order to review his proposed amendments and invited questions from the committee. Assemblyman Carpenter asked for clarification regarding the path a claim follows, specifically when does it go to court. Mr. Graham deferred to Mr. Charles Paine, Chief Deputy District Attorney. Mr. Paine explained an administrative hearing is held in front of the deputy labor commissioner. He renders finding, facts and conclusions and sends them to the employer requesting payment of the wages if it is upheld. If they do not pay within thirty days the case is then forwarded to the district attorney's office. He stated he waits for 30 days to go by so he does not get trapped in the trial de novo and then he files a complaint either in justice court or district court to get a judgement against the employer for the wages due. Mr. Carpenter expressed his concern that it is his right as a citizen to be able to take this claim before a court. Mr. Paine explained he has the option of doing that. One can sue the employer himself or he can assign his claim for wages not paid to the labor commissioner in which the labor commissioner would then prosecute the claim for free. Mr. Carpenter asked for further clarification concerning the criminal claim and the role of the district attorney. Mr. Paine replied the failure to pay wages is a crime and a civil matter at the same time. If the wages are not recovered it is then forwarded to the district attorney to file a civil suit as well as a criminal complaint, a misdemeanor. With the passage of A.B. 58 the responsibility of the civil complaint would be placed with the attorney general's office. The reason for this proposed change being the attorney general's office now represents all state's agencies with the exception of the labor commissioner. Chairman Krenzer inquired what percent of criminal charges are filed and prosecuted in comparison with civil charges. Mr. F. T. MacDonald, Labor Commissioner, stated that in southern Nevada they turned over 46 civil actions and 8 criminal actions in 1993. In 1994, they turned over 40 civil actions and 15 criminal actions. Chairman Krenzer reminded the committee that if passage is recommended A.B. 58 will be re-referred to Committee on Ways and Means. Assemblyman Anderson pointed out the passage of A.B. 58 would allow the attorney general to decide for themselves if the matter warrants prosecution. They would not be required to proceed. Under the old rules the district attorney was required to move on the recommendation of the labor commission. Mr. Graham replied that is correct. Mr. Graham concluded his presentation by stating the passage of A.B. 58, transferring the prosecutorial responsibility from a civil stand point from the counties to the state, will speed the process up, making it easier for an employer to establish a fraudulent claim and make it more efficient for an employee to obtain a judgement and be recompensed. He thanked the committee for their time. Chairman Krenzer asked if there was any further testimony on A.B. 58. She recognized Barbara King, consultant for the Southern Nevada Foundation for Fair Contracting. Ms. King expressed her opposition to A.B. 58 documented in her prepared statement. See (Exhibit C). She pointed out under the proposed amendment, the labor commissioner "may" present the relevant facts to the "enforcing attorney" but is not required to and there is no basis for this referral. This allows the labor commissioner, for little or no reason, to decline presenting the facts to the enforcing attorney. Ms. King stated her foundation believes this language may lead to arbitrary and capricious referrals. Second, her organization maintains there is no reason for denying the right to counsel to a prevailing wage claimant merely because his wage claim arises out of a "public works project". She maintains that under Nevada Revised Statutes (NRS) 607.160 the private right to counsel which attaches under that section should also apply in the context of the "public works" statute under NRS 338.015. Assemblyman Anderson inquired how long Ms. King's organization had been in existence. Ms. King replied since 1991. Mr. Anderson queried how her foundation would be impacted by the passage of A.B. 58. Ms. King stated that previously when her office has presented wage claims to the labor commissioner and has hired private counsel to pursue these wage claims the district attorney has taken the position that his office should solely maintain and pursue these claims. The district attorney will pursue the claim and/or review it with the labor commissioner and his staff, but frequently he will not pursue it beyond trying to settle the case with the ex-employer usually at an amount below the perceived claims total worth. Mr. Graham interjected that Ms. King's testimony does not apply to A.B. 58. He suggested that a subcommittee would help solve any confusions concerning the issues addressed by A.B. 58 and referred to Mr. Louis Ling, Deputy Attorney General representing the labor commissioner, for any further comments. Mr. Ling stated he would attempt to eliminate the confusion. A.B. 58 addresses standard wage claims in the labor commissioner's office, basically any employee who has not been paid his wages and the transfer of prosecution authority from the district attorney's office to the attorney general's office. The prevailing wage cases are a completely different component of the labor commissioner's responsibilities under a different section, Chapter 338. Mr. Ling expressed there is no private right of action under the prevailing wage laws, following most states or federal jurisdiction's precedents. The person who enforces that is the labor commissioner. He reiterated this issue has no tie nor will it be affected by A.B. 58. To clarify, Chairman Krenzer interjected NRS 607.160 does not address prevailing wage. Mr. Ling answered in the affirmative. Ms. King reiterated there is a correlation between NRS 607 and 338. Again, she referred to her prepared testimony specifically in regards to the private right of counsel being extended to a "public works" claimant. The Chair thanked the witnesses and asked Mr. Goldwater and Mr. Sandoval to address this in a subcommittee meeting reporting back to the committee whether or not Ms. King's claims truly address A.B. 58. Assemblyman Bache inquired of Ms. King if eliminating the word "may" in line 13, page 2 of A.B. 58 and returning to the word "shall" would address her argument. She responded yes, it would address part of it. Mr. Bache also inquired if she takes a position on which office has the prosecutorial authority. Ms. King stated her foundation does not. Lastly, Mr. Bache clarified that Ms. King would like NRS 338 amended to provide for a private attorney to act as allowed in NRS 607. Ms. King replied affirmatively. Assemblyman Ernaut suggested the committee not deal with the prevailing wage aspect in A.B. 58 stating it is a separate ideological argument in need of a separate bill draft. Chairman Krenzer closed the hearing on A.B. 58 and invited the representatives from the Nevada Self-Insured Association to come forward. She asked that they refrain from presenting background history on S.B. 316 commenting only on its impact from inception to the present. Mark Habersack, President of the Nevada Self-Insurers Association, introduced Gerry Meier, Workers' Compensation Administrator for the city of Las Vegas. Ms. Meier summarized the major effects of S.B. 316 in claims administration. She expressed support for allowing insurers to contract with Managed Care Organizations, the enacting of legislation holding down the cost of temporary total disability and permanent partial disability benefits, changes in how insurers accept industrial claims, reopening rights, rehabilitation and determining fraud stating these were good and necessary changes. Using these changes together with the city's early intervention program the injured workers of Las Vegas are informed of their rights and responsibilities which has resulted in a reduction of workers' compensation costs. This has saved tax payer's dollars and enabled the city to provide the best of care and assistance to its injured workers. Trudith Stubbs, Benefits Specialist, Reynolds Electrical & Engineering Co., Inc., testified. She reiterated Ms. Meier's testimony adding that experience has proven that claims management is the cornerstone to any workers' compensation claim. Ms. Stubbs recommended the committee lean on and pull from the knowledge and experience of the self-insurers. Mr. Habersack remarked that all of those who took part in workers' compensation reform last session "have done what nature takes centuries to do and that is create the diamond." He suggested this session has the opportunity to refine and polish "the diamond". Mr. Habersack proceeded to review what is working and what is not in regards to S.B. 316. See (Exhibit D & E). Richard Tetreault, Assistant General Counsel for Southwest Gas Corporation, testified. His remarks focused on permanent partial disability and he submitted (Exhibit F), a copy of his prepared remarks for the record. Concluding his presentation, he pointed out there are proposals coming before the committee regarding lump sum benefits, evaluations of rating physicians and apportionment factors. He encouraged the committee to consider these proposed changes when presented. Assemblyman Hettrick, referring to (Exhibit F,) asked what Mr. Tetreault estimated he paid in premiums per $100 of wages in the three states. Mr. Tetreault pointed out because they are self-insured there is no premium. His costs are relatively the same. Per claim they are within $25 in all three states with the exception of permanent partial disability. Mr. Hettrick apologized stating he was trying to compare the cost because he constantly hears about the cost in relation to the award. Mr. Hettrick also inquired if the figures in (Exhibit F,) page 2, represent the total claims filed. Mr. Tetreault responded these are claims that had awards. Mr. Hettrick clarified this figure is the total in awards and Nevada has a higher award figure even though it is only 25 percent of the business compared to 65 percent in Arizona. Mr. Carpenter asked if they had ever taken their total claims they had to pay on, all the expenses, just like SIIS does or is supposed to do, and compared what the premium would be if they had to pay it out as a premium rather than a self-insured. Mr. Tetreault responded they have looked at most of their costs and they know their expenses are down but he could not precisely tell him what the level of savings is at this point. Ms. Meier commented the only people who could tell us are the people who have recently left the state system because we have been out over 10 years. She stated she did not know what the premium rate is or what they would charge as a premium. For purpose of clarification, Chairman Krenzer stated in SIIS terms, the committee used a premium to loss ratio. She felt self-insureds' expenses could not be compared to premiums at SIIS as that is comparing apples to oranges. However, there is a valid comparison between thier costs to loss ratio and a premium to loss ratio with SIIS's average premium to loss ratio. Mr. Sam McMullen, Nevada Self-Insurers Association, interjected if the issue is what the total costs are of our programs now as compared to what the costs would be if we were still in the system, the figures are difficult to pinpoint. Secondly, Mr. McMullen stated self-insurers look at their program as a total program. There are costs throughout the mechanism that they consider part of the whole program and consequently while they believe they are able to do a better job and have probably saved dollars through the self-insurance mechanism they have traded these costs for other responsibilities such as trying to prevent the accident before it occurs. The issue is how much to allocate to these preventative measures. Mr. McMullen further explained it has to do with what the work force is and the risk factor of the employees which you can reduce through your own internal programs. It is difficult to get a real clear dollar for dollar comparison. Mr. Carpenter remarked they seem to be doing a great job and therefore asked what they are doing that SIIS is not. Chairman Krenzer interjected that is the reason they are here. She continued, with the committee's indulgence, to say the primary focus with the self-insured is they have some fixed costs but they manage the claims. Fixed costs are generally about 15 percent of the problem, claims are 85 percent of the costs. What they are trying to focus on is claims management. Mr. Habersack proceeded with his presentation on what is working and what is not in regards to S.B. 316. He emphasized one of the things they have done as self- insurers is they made a serious commitment to their employees because they are held accountable for what goes on. When you lose an injured worker the costs and loss to that injured worker is phenomenal to begin with but the company itself suffers with a lot of hidden costs such as retraining and faltering customer service. It does not do anybody any good to have a person out on a work related injury. He stressed they treat their workers' compensation programs as a benefit. When they have listened to testimony of injured workers the biggest issue has been communication. They publicize to their employees in packets of information, they give them phone numbers and contact persons. They train their supervisors and management personnel to be responsive to the needs of the injured worker. Mr. Habersack further emphasized the need of early intervention with safety programs, safety committees, property inspections and work site inspections to try to insure they have the safest possible work place. It has reduced injuries throughout the years. These are things they have been doing not just since 1993 but for years and they continually add to and enhance the programs. Mr. Habersack expressed his interest in further analyzing the drug statute, stays, and injury notification. Chairman Krenzer stated these issues will be addressed by the Senate and if they are not perhaps the committee will consider introductions. Chairman Krenzer invited representatives of public self-insurers to speak asking for testimony to be limited to three minutes. Mr. Raymond O'Donnell, Director of Workers' Compensation & Occupational Health for Clark County School District, testified in opposition to any legislation which would force self-insured public employers to return to SIIS. He submitted (Exhibit G,) a copy of the testimony he read into the record. Mr. Kevin Chadwick, Safety Officer, Washoe County, testified. He pointed out they have been self-insured for over 14 years. He also expressed concern for any legislation requiring a return to SIIS. He stated if his program was required to return to SIIS it would cost not only his program but the taxpayers an enormous amount of money. Mr. Chadwick reiterated the earlier testimony of the self- insured's association stating S.B. 316 benefited his program considerably. Mr. Doug Sever, Business and Financial Services Administrator for Washoe County School District, also testified in opposition to BDR 53-1731. He explained with the help of Thomas Marshall, Risk Manager, they were able to calculate their loss if having stayed with SIIS. They would have lost $1.8 million to SIIS premiums over eight and a half years. See (Exhibit H). Conversely, this figure can be looked at as money they are now able to put back into the classroom. Further, Mr. Sever commented the flexibility of being self-insured allows him discretion over the rates they charge. He controls his costs, as done in Washoe County School District, in the form of claims administration in loss control programs. Assemblyman Goldwater inquired if when Mr. Sever and Mr. Marshall made this comparison they looked solely at the disparity in rates or did they also look at the time value of money involved in things such as capitalizations, reserves, and administrative costs and also if the $1.8 million was a reflection of all the costs of being self-insured. Mr. Sever answered they included all their costs. Chairman Krenzer reminded the committee BDR 53-1731 would be heard at a later date. Mr. Anderson questioned the date on (Exhibit G.) Mr. O'Donnell stated that was indeed a mistake. Mr. Ted Farrell, Risk Manager, Las Vegas Metropolitan Police Department, stated only recently have they been self-insured. In 1992, their actual premium for SIIS was approximately $3 million. The projected increase based on the proposed establishment of a maximum salary up to $36,000 would have driven their workers' compensation costs to $5 million. Since that time they have added 200 employees and at the $36,000 rate which will be effective soon would have driven the premium to the system up to $6 million. Mr. Farrell stated originally, when they switched to self-insured the focus was on cost but this quickly changed to reducing injuries and illnesses among employees. He reiterated the opposition to any legislation forcing a return to the system. Chairman Krenzer thanked Sam McMullen for gathering these witnesses to testify and again stated this bill would be heard in the future. She stated the committee had further business to address. Chairman Krenzer called for a motion to introduce Bill Draft Request 53-1760. ASSEMBLYMAN ANDERSON MOVED FOR COMMITTEE INTRODUCTION OF THE ABOVE BILL DRAFT REQUEST. ASSEMBLYMAN GOLDWATER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. The next order of business was a motion to rescind A.B. 62. ASSEMBLY BILL NO. 62 - Revises requirements for establishing quorum of occupational safety and health review board. Assemblyman Nolan remarked his request to rescind A.B. 62 relating to the occupational safety and health review board and which changed the compromise of the quorum is based upon two premises: (1) additional information was not discussed and (2) proposed text amendments which he would like to present. ASSEMBLYMAN ERNAUT MOVED TO RESCIND A.B. 62. ASSEMBLYMAN CARPENTER SECONDED THE MOTION. THE MOTION CARRIED. ASSEMBLYMAN ANDERSON VOTED NO. Chairman Krenzer stated the committee would reschedule a hearing for this bill. She then asked for Mr. Goldwater to present the subcommittee's suggestion on A.B. 60. ASSEMBLY BILL NO. 60 - Makes various changes to provisions governing reporting and investigation of certain accidents occurring in course of employment. Mr. Goldwater pointed out the changes suggested by the subcommittee were approved unanimously. See (Exhibit I). 1) Page 1, Line 4: Delete the phrase "results in or is likely to result in the fatality of" and replace it with the phrase "which is fatal to". 2) Page 1, Line 5: After the phrase "one or more employees" insert the phrase "or which results in the hospitalization of three or more employees". 3) Page 1, Line 17: After the phrase "available for questioning" insert the phrase "in a reasonable amount of time". 4) Page 2, Line 3: After line 3, insert a new subsection 5 to state "The division must initiate an onsite investigation within 8 hours of receiving a report as required by NRS 618.378. Upon receiving a report of an accident pursuant to NRS 618.378, the division shall notify the employer of the investigator's estimated time of arrival at the site of the accident." 5) Page 2, Line 7: Delete the phrase "or in writing". 6) Page 2, Line 8: Delete the phrase "after the accident has occurred" and replace it with the phrase "of the time the incident is reported to any agent or employee of the employer." Chairman Krenzer inquired if there were any questions. There were none and she asked for a motion on A.B. 60. ASSEMBLYMAN GOLDWATER MOVED TO AMEND AND DO PASS ON A.B. 60. ASSEMBLYMAN NOLAN SECONDED THE MOTION. Mr. Bache asked for clarification in regards to the proposed amendment on page 2, line 3. He queried what does "receiving a report" signify. Mr. Goldwater responded there is an 800 number attached to an investigator's beeper at all times. If there is a fatality or a hospitalization of 3 or more people, the investigator has 8 hours to report. Mr. Goldwater stated 8 hours was agreed upon as a realistic interval of time. THE MOTION PASSED. Mr. Goldwater emphasized the report is to be oral. A written report would not suffice because that could include faxes in which case no one would be there to respond. Assemblyman Hettrick stated his concern would be if it states oral report would we have a conflict with other statutes which might require a written notice. Mr. Goldwater replied the 8 hour report conforms with the Code of Federal Regulations. He clarified this report is in regards to notification of an incidence only. He recognized there would be violations of statutes and OSHA guidelines by failing to file other required reports. Mr. Hettrick reiterated Mr. Goldwater's statements. Mr. Nolan pointed out under federal law a form, OSHA 200, would need to be filled out and kept on their log. Mr. Anderson expressed concern that A.B. 60 succeeded based on the federal regulations remaining constant and he felt that might be improper. Mr. Goldwater stressed that is not the committee's line of reasoning. He believes it builds conformity. There being no further business Chairman Krenzer adjourned the meeting at 5:15 p.m. RESPECTFULLY SUBMITTED: Jennifer Carnahan, Committee Secretary APPROVED BY: Assemblyman Saundra Krenzer, Chairman Assemblyman Dennis Nolan, Chairman Assembly Committee on Labor and Management March 7, 199