MINUTES OF THE SENATE COMMITTEE ON COMMERCE AND LABOR Sixty-eighth Session June 23, 1995 The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 6:00 p.m., on Friday, June 23, 1995, in Room 227 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Randolph J. Townsend, Chairman Senator Ann O'Connell, Vice Chairman Senator Kathy M. Augustine Senator Raymond C. Shaffer Senator John B. (Jack) Regan Senator Joseph M. Neal, Jr. COMMITTEE MEMBERS ABSENT: Senator Sue Lowden (Excused) STAFF MEMBERS PRESENT: Allison Combs, Senior Research Analyst Molly Dondero, Committee Secretary OTHERS PRESENT: Scott Walshaw, Commissioner, Division of Financial Institutions Leland Sullivan, Acting Chief, Child Support Enforcement, Welfare Division, Department of Human Resources John Gibbons, Investigator, Real Estate Divison, Department of Business and Industry Len Nevin, Lobbyist, Baker Drake Yellow Cab, Whittlesea Bell Donald L. Drake, President, Baker Drake Yellow Cab Lenard Ormsby, General Counsel, State Industrial Insurance System (SIIS) J. Thomas Susich, Chief Legal Counsel, Employment Security Division Daryl Capurro, Lobbyist, Nevada Motor Transport Association Jack Jeffrey, Lobbyist, Southern Nevada Building Trades Council, Southern Nevada Central Labor Council Scott Walshaw, Commissioner, Division of Financial Institutions, discussed Assembly Bill (A.B.) 440. ASSEMBLY BILL 440: Revises provisions governing escrow agents, agencies and officers. Mr. Walshaw presented Exhibit C. Senator Neal questioned the meaning of line 3, page 1 of the bill. Mr. Walshaw stated the language refers to what is legally required for a certificate of deposit. He commented the language was selected by the bill drafters and he does not know why it is necessary to include the language in the bill. He stated the funds cannot be released unless authorized by the division. Senator Neal asked why the reference to a waiver in section 6, subsection 3 is necessary. Mr. Walshaw stated the section allows reciprocity between chapter 692A of Nevada Revised Statutes (NRS) and chapter 645A of NRS. He stated the law gives people licensed by the Division of Insurance the ability to do similar functions as licensed escrow agents. He stated the bill allows him to use the license requirements of the Division of Insurance to waive background checks on someone requesting licensing as an escrow agent. He commented the bill allows the two divisions to exchange information on background checks already conducted on individuals which will save money for the agencies. He pointed out the waiver would be given to persons already licensed. Senator Augustine asked why a branch office is charged $100 for the initial license and the escrow agent will have to pay an additional $100. Mr. Walshaw stated there are two licenses issued in this chapter. He stated one is for an escrow agent "C" and the other is for an escrow agent's license. He commented the bill gives the agency statutory ability to continue charging these fees. The hearing was closed on A.B. 440 and opened on A.B. 504. ASSEMBLY BILL 504: Makes various changes relating to collection agencies. Mr. Walshaw discussed A.B. 504. Senator Neal asked why line 19 is being deleted from the bill. Mr. Walshaw stated the way the statute is constructed it has been up to his office to determine whether or not a collection agency should be entering into a market rather than the collection agency doing its own feasibility study and business plan. He stated he does not think that is the job of his office. He stated the burden of proof should be on the collection agency to prove they are needed in an area. Leland Sullivan, Acting Chief, Child Support Enforcement, Welfare Division, Department of Human Resources, stated the Nevada state Welfare Division is neutral on A.B. 504. He expressed his concern for the requirement for a collection agency to maintain one or more offices in Nevada for the transaction of business. He stated that the Nevada state Welfare Division has a 2-year contract with GC Services to collect delinquent child support. He stated GC Services has offices throughout the United States and the Nevada cases are being processed in GC Service's Atlanta office. He stated if the bill is passed, he doubts GC Services will open an office in Nevada. He stated passage of the bill will result in the termination of the their contract with the state. He stated Nevada selected GC Services because of their 35 years of experience and their demonstration of success in collecting child support. Mr. Walshaw stated it is his understanding that an amendment has been discussed in the Assembly which would eliminate the residence requirement for the collection agency. He stated other collection agencies have offices in the state, however, and it is fair to expect them to function on an equal basis. He expressed his opposition to the proposed amendment and feels the residency is appropriate. He stated it is possible to exclude the definition of child support from the definition of "claim." There were objections in the Assembly to the redefinition. He stated an amendment was added to the bill which was recommended by the attorney general's office. Mr. Sullivan stated the Welfare Division's deputy attorney general would like the words added "except for child support." Mr. Walshaw stated the Assembly did not like the proposed amendment. Senator Townsend directed the testifiers to have their deputy attorney generals discuss the problem with the Assembly. Mr. Walshaw stated that has been done already, but no agreement was reached. He commented his office is willing to work with GC Services to assist them in establishing an office. He stated under the current language of the bill, they will be required to establish an office in Nevada to continue work for the Welfare Division. He suggested GC Services has the option of establishing a link with an existing collection agency in the state, since the primary function is that of correspondent with the parent who owes back child support. Senator Regan pointed out GC Services has not collected very much money for the state during the 9 months they have had the contract. He suggested there may be others in the state who can do a better job. Mr. Sullivan stated they have collected $20,000 in the past 2 months. He said it is a new program. He stated only three companies submitted proposals to the state. Senator O'Connell asked about the fee structure. Mr. Sullivan stated the collection agency receives a 20 percent fee of what they collect. Exhibit D was submitted for information. The work session was closed on A.B. 504 and opened on A.B. 667. ASSEMBLY BILL 667: Revises certain provisions regarding regulation of sellers and appraisers of real estate and requires verification of registration of qualified intermediaries in certain real estate transactions. John Gibbons, Investigator, Real Estate Divison, Department of Business and Industry, discussed the new language proposed in the bill. Senator Augustine asked why the language in section 2, subsection 2 (a) is permissive. Mr. Gibbons pointed out subsection 2 (b) gives the division the authority to deny a license. Mr. Gibbons pointed out section 6 applies to the appraisers' licensing law. Senator Augustine asked for an explanation of the fees listed. Mr. Gibbons explained the fees are reflective of the costs incurred by the divison. The testing service charges fees and those fees are passed through to the applicant with no additional charges. The work session was closed on A.B. 667 and voting was held on the three previously heard bills. SENATOR REGAN MOVED TO DO PASS A.B. 440. SENATOR O'CONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.) ***** SENATOR O'CONNELL MOVED TO DO PASS A.B. 504. SENATOR REGAN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.) ***** SENATOR SHAFFER MOVED TO DO PASS A.B. 667. SENATOR REGAN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR LOWDEN WAS ABSENT FOR THE VOTE.) ***** The hearing was opened on Senate Bill (S.B.) 384. SENATE BILL 384: Revises provisions governing unemployment compensation and industrial insurance for certain subcontractors and independent contractors. Len Nevin, Lobbyist, Baker Drake Yellow Cab, Whittlesea Bell, discussed Exhibit E. He stated section 2 of Exhibit E is language suggested by the State Industrial Insurance System (SIIS) and it is permissive. He indicated many of the sections have been removed from the bill. Donald L. Drake, President, Baker Drake Yellow Cab, stated the bill will assure SIIS will receive all money due to them. He stated the bill will reduce abuse in the claims system. Senator Townsend commented there have been so many things removed from the bill, he is uncertain what the bill now does. Senator Neal pointed out it makes taxicab drivers independent contractors. Senator Townsend clarified the cab company becomes the collector of the premium and the subcontractor is now the independent contractor. Mr. Drake agreed. Mr. Drake stated the premium will be paid to the system by the driver and the cab company will oversee the payment. He stated the lease funds cover the premium for the basic deemed wage. He stated the coverage will be the same, but the cab company is, now, assuring SIIS will receive the payment. Mr. Drake stated if the cab driver does not pay a premium, the cab company will pay it. He stated the bill will tighten the cab company's standing with the internal revenue service (IRS). He stated the bill will affect drivers outside of Clark County, only. He assured the committee that the coverage will remain the same for the driver. Senator Townsend expressed his confusion with the provisions of the bill. Lenard Ormsby, General Counsel, State Industrial Insurance System (SIIS), discussed the bill. Exhibit F was presented to the committee. He explained SIIS is in litigation with a cab company over the status of its drivers. He stated the company claimed the drivers were independent; the system disagrees. He stated SIIS's position is that leasee drivers are employees. He stated SIIS does not recognize the contract which states they are independent contractors. He stated he disagrees with the language in the bill. He stated there are public policy decisions in the language of the bill. He stated deemed wage determines what an injured driver receives monthly. He said the language will clarify some of the current problems with the determination of a deemed wage. He stated SIIS is currently paying a great deal of money to drivers who have been injured, had paid minimum premiums for a deemed wage, but who, once they were injured, claimed they earned more. The appeals officers have agreed with the claimants and have required SIIS to make the higher payments. J. Thomas Susich, Chief Legal Counsel, Employment Security Division, commented that Mr. Nevin has indicated everyone has been eliminated from the bill except SIIS. Mr. Susich indicated this is not true. He stated his agency is affected by the terms of section 1. He expressed his concerns that the bill will affect the requirements of the Department of Labor concerning the certification of the program and the possible effect of creating an additional federal tax being imposed on all Nevada employers as a result of this legislation. It would increase the tax from .8 percent to 6.2 percent. Daryl Capurro, Lobbyist, Nevada Motor Transport Association, expressed his support of the concept of the bill. He stated under the amended version of the bill, the driver will not be an employee of the cab company for purposes of workmen's compensation and unemployment compensation. He indicated interpretation of who is an employee is an ongoing problem with the federal government. Senator Augustine asked, if a cab driver is in an automobile accident, do they have medical insurance as part of their automobile insurance. She asked if SIIS covers the expense of an assault. She asked if drivers are considered independent contractors, how do they differ from realtors who are no longer required to carry SIIS coverage. Mr. Drake commented in an accident, usually automobile insurance will cover medical expenses. He commented there is no difference between a realtor and a taxi driver for SIIS purposes. He stated the Division of Employment Security has determined that Baker Drake drivers are independent contractors. He stated he has asked SIIS to accept the quarterly IRS reports as proof of wage, and SIIS has refused to do that. He stated if the IRS report is taken into consideration, it will end a lot of controversy as to what are the true wages of the driver. Mr. Ormsby stated if Mr. Baker wishes his drivers to use their actual wages, they will have to be employees. He stated that has always been SIIS's position. He stated if they are independent contractors, they have two choices of deemed wages, $300 and $1800. He stated there is no middle ground and actual wages do not come into consideration. Jack Jeffrey, Lobbyist, Southern Nevada Building Trades Council, Southern Nevada Central Labor Council, indicated there is the same problem with the deemed wage in the building industry. He stated a sole business owner has no choice but to be covered under deemed wage requirements. He can only be covered as an employee if it is a corporation and he is an employee of a corporation. He commented the bill only affects transportation, but it will still affect contractors because they transport "goods." He explained he feels this bill is a method for an operator to avoid paying premiums. He stated the bill is a dangerous precedent. There being no further discussion, the hearing was closed at 7:30 p.m. RESPECTFULLY SUBMITTED: Molly Dondero, Committee Secretary APPROVED BY: Senator Randolph J. Townsend, Chairman DATE: Senate Committee on Commerce and Labor June 23, 1995 Page