MINUTES OF THE meeting
of the
ASSEMBLY Committee on Commerce and Labor
Seventy-Second Session
February 26, 2003
The Committee on Commerce and Laborwas called to order at 2:08 p.m., on Wednesday, February 26, 2003. Chairman David Goldwater presided in Room 3142 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. David Goldwater, Chairman
Ms. Barbara Buckley, Vice Chairman
Mr. Morse Arberry Jr.
Mr. Bob Beers
Mr. David Brown
Mrs. Dawn Gibbons
Ms. Chris Giunchigliani
Mr. Josh Griffin
Mr. Lynn Hettrick
Mr. Ron Knecht
Ms. Sheila Leslie
Mr. John Oceguera
Mr. David Parks
Mr. Richard Perkins
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
Assemblyman Jerry Claborn
STAFF MEMBERS PRESENT:
Vance Hughey, Committee Policy Analyst
Wil Keane, Committee Counsel
Corey Fox, Committee Secretary
OTHERS PRESENT:
Lori Ashton, Southwest Regional Council of Carpenters
Jim Sala, Director of Organizing, Southwest Regional Council of Carpenters
David Kersh, Government Affairs Representative, Carpenters Contractors Cooperation Committee
Danny Thompson, Nevada State AFL-CIO
Terry Johnson, Labor Commissioner, State of Nevada
Janice Gunderson, social work intern, University of Nevada, Reno, representing the National Association of Social Workers and Nevada Women’s Lobby
John Sasser, Washoe Legal Services, Nevada Legal Services
David Howard, Southern Nevada Multiple Housing Association, Northern Nevada Apartment Association
Marshall Schultz, Founder and President, Residents Information Center
Melody Luetkehans, General Counsel for the Nevada Association of Realtors
Chairman Goldwater called the Committee to order at 2:08 p.m. and noted that all members were present. He recognized Assemblyman Claborn, District No. 19, to testify on A.B. 80.
Assembly Bill 80: Revises provision governing deemed employer and wage of apprentice or trainee for purposes of industrial insurance. (BDR 53-860)
Assemblyman Claborn thanked the Chair and the Committee for allowing him to speak in support of his bill, A.B. 80. He then informed the Committee that due to circumstances he was not ready to present his bill and asked for additional time on that bill. Chairman Goldwater said he would allow it and then he removed A.B. 80 from the agenda at Mr. Claborn’s request.
Chairman Goldwater then advised the Committee and all others present to watch the agendas that would follow in the next few weeks because several bills had come in. He stated that a week from this Friday, the Committee would hold its first work session. During that work session a number of bills already heard would be discussed, and Chairman Goldwater asked all members that attend Commerce and Labor meetings on regular basis to try and “wind up” negotiations and dealings to create the smoothest work session possible. He indicated the date would be March 7, 2003, and it would be posted on an agenda.
Chairman Goldwater stated A.B. 48 and A.B. 89 were on the agenda for that day. He said A.B. 48 would be heard first and he called Assemblywoman Chris Giunchigliani to the stand to present her bill.
Assembly Bill 48: Provides expressly that certain provisions related to labor include persons unlawfully employed. (BDR 53-601)
Assemblywoman Chris Giunchigliani, District No. 9, stated that former Assemblyman Doug Bache had requested A.B. 48 and she had picked the bill up. The bill was done by request with the Carpenters Association from Southern Nevada. She indicated that she would turn most of the testimony over to the speaker for the Carpenters Association. She said that A.B. 48 was attempting to fix a problem that had occurred, at least in the southern part of the state, and she suspected that it might be statewide. Individuals that were employed, whether the employer chose to employ them legally or not, were not paid correctly or were not paid at all. Those occurrences caused the Carpenters Union to interact with the Labor Commissioner. A.B. 48 would clarify for the Labor Commissioner the jurisdiction he had. The two main elements of the bill were to define “employee” and “workman” as noted within the legislation. She then turned the floor over to Lori Ashton.
Lori Ashton, Southwest Regional Council of Carpenters, read from prepared testimony (Exhibit C). In her testimony, she indicated her organization believed NRS Chapters 608, 607, 618, and 338 clearly did not exclude payment of wages owed to any worker regardless of their citizenship status. She explained that legal issues continued to occur. The issues involved unnecessary legal fees, court costs, and personnel time, not to mention a delay in just compensation for the affected worker. She stated the courts had continued to uphold the rights of the workers and because of continuous legal challenges, her organization believed it was necessary to clarify the intent of the existing statutes through the adoption of the language proposed in A.B. 48.
Ms. Ashton believed that adopting and passing A.B. 48 should alleviate costly litigations that arose from misinterpretation of the existing statutes. She believed that without codification in the statute, employers would continue to exploit the undocumented worker. She stated that employers had abused the statutes as a means of avoiding their financial obligation to workers. Employers claimed that undocumented workers were illegally employed in the first place, and therefore restitution could not be assessed. Thus, the employers were the only ones benefiting from their interpretations of the statutes.
Ms. Ashton expressed the importance of adopting the language that would finally prevent and penalize an employer from gaining an economic and/or other competitive advantage over responsible employers as a result of their unfair and unlawful business practices. She indicated the business practices had included but were not limited to paying cash, misclassification of workers, payment of overtime at straight time rates, piecework rates on prevailing wage projects, and soliciting and collecting monetary kickbacks as a condition of employment.
Ms. Ashton pointed out that through the business practices significant revenue to the state had been lost when employers failed to pay the employee state tax, as well as industrial contributions on those workers. Ms. Ashton respectfully asked the Committee to pass A.B. 48 and indicated her willingness to answer any questions.
Jim Sala, Director of Organizing, Southwest Regional Council of Carpenters, indicated that this bill was an attempt to clarify a statute that was intended to cover all workers. Employers continued to use their first violation of the law, which was hiring somebody ineligible for employment, as an excuse for why they should not be held accountable for their second violation of the law. These violations consisted of not paying worker’s compensation, not paying wages, not paying the prevailing rate, and not complying with the Occupational Safety and Health Administration (OSHA). He expressed that it was a travesty and an injustice, and he believed that it was not the intent of the Legislature for this to have happened. Mr. Sala gave two examples of this: First, his organization had an instance in which four Latino immigrants worked on residential tract housing for a drywall subcontractor in Clark County. They had worked from three to five weeks without pay. When they finally pushed the employer to pay them, he refused to pay because they were Latino immigrants and they did not have any rights. These workers notified Mr. Sala’s organization as their only recourse. The Carpenters Council had filed a lien against the general contractor and the developer, who ultimately paid the penalty. The general contractor then charged it back to the subcontractor. The workers, however, felt they had no standing with a regulatory agency for enforcement.
The second area Mr. Sala believed this legislation would benefit was for agencies that tried to enforce the existing statutes and regulations. The Labor Commissioner spent a great deal of his time trying to litigate cases in which employers were found guilty of not paying overtime, wages or prevailing wages. Employers then challenged and tried to use the fact that the worker was an undocumented citizen as a reason for not paying the state wage, minimum wage, prevailing wage, or worker’s compensation premiums on those individuals. It was Mr. Sala’s and the Labor Commissioner’s desire to close that loophole.
Mr. Sala gave an example of a worker who was part of a concrete crew working on a public works project in Henderson. Six of the workers were classified as laborers. Many of them had between $5,000 and $6,000 owed to them. The workers filed a complaint and in turn were deposed and interrogated. The Labor Commissioner did his best for the laborer, but at the hearing, one of the worker’s identities was challenged. Thus, in the settlement, even though all the workers only ended up getting 50 cents on the dollar, the one worker whose identity had been challenged was excluded from the settlement. His wage claim would have been for $5,000. It was Mr. Sala’s belief that the only reason he was excluded from the settlement was because of the potential legal challenge. The employer got to keep 50 percent of all the money on that project from the six workers, and he kept all of the money from that particular worker. Mr. Sala reiterated his desire to close that loophole and he urged the Committee to pass A.B. 48. He added all contractor associations that the Carpenters council worked with, including the American Building Contractors Association, were in support of A.B. 48.
Assemblyman Brown wondered if there was any discussion to terminate the language after page 2, Section 2, line 4. He noted it would eliminate some very sensitive and direct language that dealt with lawful and unlawful employment. He believed it served the same purpose as if those individuals had gone forward and said they had a contract, whether expressed or implied, oral or written. If they were on a project, people would have seen them and it would have been established that they had some sort of an employment agreement. He noted that it would have had the same impact if it were limited to that wording. Mr. Brown explained that Nevada was not a state that embraced or reinforced illegal employment. Nevada also did not want to send the message that employment in Nevada, whether it “said” it was legal or not, was legal, and undocumented workers had enforceable rights. He believed it had the same effect, and as a state and legislative body, Nevada should not make a formal declaration that illegal employment did not matter and Nevada would still give illegal immigrants those rights.
Assemblywoman Giunchigliani asked if Mr. Brown had suggested ending the wording after “written” and then picking it up at “without limitations, aliens to the extent,” or had he suggested adding a period at that point. Ms. Giunchigliani believed the real issue was still that the employers were hiring individuals and they were not always asking for identification from them. She said that burden should not be on the individual. The individuals should be paid for the work that had been rendered. She stated this concerned her about ending it there. She then suggested ending it after “whether lawfully or unlawfully employed” because the legislation was not meant to encourage individuals to work in Nevada, but she said she could guarantee the Committee that there would not be a single house built in southern Nevada if it were not for Hispanic labor in Clark County. She explained that many were legal but unfortunately not all of them were and employers should never have employed them in the first place. Ms. Giunchigliani urged that if they were employed then it was essential that they were paid and the employer should pay the state for the compensation that was due to them.
Chairman Goldwater asked Wil Keane, Committee Counsel, to clarify the language that had come from the workman’s compensation statutes and had been tested. Mr. Keane explained that in drafting the bill they used the language already in existence in NRS 616A.105, which had been reviewed by the Nevada Supreme Court with regard to workman’s compensation benefits. The Court said that benefits were payable to those employees even if they were illegal aliens. Assemblyman Brown asked Mr. Keane if that was the duplicate language in its entirety and Mr. Keane stated that the Court reviewed the “lawfully or unlawfully employed” portion of the wording. Mr. Brown then asked if it did not include the words “and includes, without limitation, aliens to the extent...” Mr. Keane followed up and stated that the language was not exactly the same. It did say aliens and minors, but it did not use that exact language. Chairman Goldwater asked Mr. Brown if that had answered his question and he replied in the affirmative but then stated he was unhappy with the language approved by the Supreme Court.
Assemblywoman Gibbons stated a concern she had in hiring undocumented workers; she wanted to make sure those workers were not taking job opportunities from lawful citizens. She believed that if the federal government hired someone who was not a U.S. citizen, they had to advertise the position in the paper for what she believed was six weeks, so that they were not trying to pay them what she felt they should be paying an American citizen. She wanted to make sure that those people were not taken advantage of.
Ms. Giunchigliani referred the question to Mr. Sala, who said he believed what Ms. Gibbons was referring to was the federal provision that said if there were not workers available for some “very specific” categories to work, that immigrants could fill those positions once they were advertised. Mr. Sala’s intent for A.B. 48 concerned a person who was already in the United States and who was already employed in a normal everyday job. Employers, to that point, were using the existing statutes to exploit undocumented workers. The employers were undermining the hiring of legal workers because they knew they could exploit undocumented workers. His organization was trying to make sure that anybody that wanted to work in Nevada was afforded the same level of protection. At that time, employers were making a profit at the expense of those undocumented workers and of documented workers that should have had those jobs. Mr. Sala’s organization did not want to get into employers’ hiring practices; they just wanted to make sure that if employers hired undocumented workers, then they were aware that they were responsible for paying the employed. The employers were responsible for abiding by the laws. Assemblywoman Giunchigliani added that the language was probably there regarding the federal law infringement, so that if there was a case that was not a common job then the employer would have had to comply with that portion of the law.
Assemblyman Hettrick referred back to Assemblyman Brown’s question and illustrated that upon revising the wording, minors had been left out. This made him think that by some rule of exclusion, the law now expressed it was okay not to pay minors. Assemblyman Beers stated that NRS Chapter 609 included employment of minors and Mr. Hettrick asked if that applied to the same things as A.B. 48 in terms of all the payments of all the benefits. Chairman Goldwater then asked Mr. Keane to respond.
Mr. Keane stated that the Legal Division had looked for definitions of “employee” and that was where they added amendments. He stated he would go back and look again, but he believed the reason NRS Chapter 609 was not included was because there was no specific definition of “employee” for them to augment.
Mr. Brown asked how employers should be dealt with that infringed or exploited undocumented employees. Mr. Sala stated as an example for prevailing wage, the penalty was to pay back the money not paid to an undocumented worker. In some cases, the Labor Commissioner or the awarding body had the ability to levy fines based on the regulatory statutes, which sometimes could have been up to 50 percent. He used $5000 as an example of back wages owed and explained that they could assess $1000 to $2000. Most of that money would, in turn, go to the employee. Mr. Sala further explained that penalties were not severe for those violations. Mr. Brown stated he was familiar with the 338 prevailing wage and he wondered if there was anything in addition to that in terms of penalties that could be dealt with. Mr. Sala was not aware of anything other then federal penalties. Mr. Brown then indicated his desire to make changes to that particular area of legislation.
Assemblywoman Giunchigliani agreed with Mr. Brown and added that employers should not be rewarded for exploiting their employees. This committee might look at the federal law, Ms. Giunchigliani opined, to learn what the penalties were and possibly make legislation that paralleled those laws.
Ms. Ashton added that there would be another bill, A.B. 190, which dealt with strengthening and cleaning up of the contractor’s board. The bill would deal with those contractors that were in violation. It did not specifically address the previous issues, but it talked about the falsification of information that was in the prevailing wage sector and allowed them to penalize those contractors more severely. Ms. Ashton then added that in most cases, if an undocumented employee were lucky, the contractor paid back only 50 percent of the money owed to them.
David Kersh, Government Affairs Representative, Carpenters Contractors Cooperation Committee, a joint-labor non-profit organization dedicated to maintaining high industry standards in the construction industry, began his testimony. He expressed his support for A.B. 48 and emphasized this legislation was needed to clarify the pre-existing statute. He gave an example to illustrate the need for this language modification. One of the activities that his organization did was to monitor public works projects and to talk to workers about their rights. In those situations when the workers needed to file a complaint, his organization would help them. In one instance, a complaint filed by his office in 1998 against City Plan Development in the Fire Station 26 project in Las Vegas, 18 workers had been paid incorrectly. The workers were working in 116-degree weather and were only paid as little as $3.62 per hour. The workers were hesitant to file complaints at first, but then realized it would be necessary. Mr. Kersh stated that the Labor Commissioner had investigated the complaint and in June 2000 issued a favorable position for the workers against the contractor. The contractor in turn was debarred and the workers were paid their back wages. In response, the contractor appealed and the case went to court in February 2002. The Labor Commissioner ordered the workers be paid, which amounted to $26,000 in wages and penalties and a two-year debarment for the contractor. The Labor Commissioner, in an article, stated that,
When viewed as a whole, the record in this matter, particularly the testimony of the claimants, paint an unflattering picture of a company. It can be seen that City Plan implemented an elaborate scheme whereby workers were cheated of wages they deserved and fellow contractors of the community were unfairly undercut by such activities.
Mr. Kersh explained that the workers were required to sign a blank sheet and then the supervisor of their company manipulated it. The City Plan’s attorney tried to shift the focus from the contractor to the workers in the hearing.
Mr. Kersh then read another statement by the Labor Commissioner that stated “City Plan had an obligation to pay workers the applicable prevailing wage rates as required under Nevada law, regardless of their residency status. To allow otherwise would enable City Plan to be unjustly enriched at the expense of its workers and fellow competing contractors in the community.” Mr. Kersh illustrated that again the company appealed the case and in their defense they used the Hoffman Plastic Supreme Court decision, which stated that undocumented workers could not make a claim for wages if they had been fired for having no work. Mr. Kersh illustrated the difference between this and wages not paid for work that had been performed. The district attorney in turn ruled in favor of the Labor Commissioner, Mr. Kersh said, and it had not made a difference. It was the contractor that was responsible for paying workers. At the present time, the City Plan contractors were once again appealing the decision and the case would most likely go to the Supreme Court, Mr. Kersh stated.
Chairman Goldwater asked Mr. Kersh if this bill would affect any current litigation and Mr. Kersh replied that to his knowledge it would only clarify the situation. Mr. Kersh articulated that although the workers were not owed a lot of money, they were not getting the money owed to them. Another issue, he explained, was that it cost the state money.
Danny Thompson, Nevada State AFL-CIO, gave his support for A.B. 48. He guaranteed the Committee that the abuses brought up in earlier testimony were still occurring. He stated the prevalence of the issue and it was not only costing those undocumented workers, but also everyone else in the state of Nevada. He explained that Depressurized Technologies Inc. (DTI) in Gardnerville, Nevada, employed five undocumented workers that were tasked with degassing aerosol cans. The owner of the company had a patent on the machine that would degas the cans properly in California and he did the operation in northern Nevada in a storage bin using a barrel with a board across it with a nail driven through it; the workers would drive the aerosol cans down to let the gas go and an explosion occurred. Mr. Thompson indicated that one or two of those people and some others were badly burned. As a result, Mr. Thompson stated, the employer tried to keep not only this information secret, but also the fact that they had been running the company without worker’s compensation insurance. Every employer in the state now, Mr. Thompson said, must pick up the cost of those claims. He explained the Department of Industrial Relations (DIR) had already paid out over $600,000, and it would potentially go over $1 million. Because of the uninsured fund, into which every employer paid, those workers would be taken care of, Mr. Thompson relayed. His point was that it was not just undocumented employees’ salaries that were affected. He mentioned how Senator Townsend had gone to the Commission and asked to be put in charge of a committee on industrial explosions. He stated there were two bills that dealt with that in Mr. Townsend’s Senate Commerce and Labor Committee, one of which, Mr. Thompson believed, would make that kind of activity a felony. The owner of DTI was criminally prosecuted for the explosion. Mr. Thompson explained that the DIR had no way of knowing this activity was going on because there was no requirement for a business license, and they could not inspect the place because they did not even know it existed.
Assemblyman Hettrick stated that he agreed with most of what Mr. Thompson had said and added one comment. He stated the Nevada Division of Environmental Protection (NDEP) had inspected DTI on a complaint ten days before the explosion. One of the failures in the state law, he explained, was that when NDEP went in for inspection they did not check to see if the owner had a worker’s compensation form on the wall, nor did they check if the company had any coverage at all. Mr. Hettrick explained that he did not place blame on the NDEP, as there was no mandate that required them to do so. He then suggested that if a state representative was sent into a business, all legal documents should be checked when they were there. Had that been done, the accident would not have occurred because it would have been discovered the owner did not have worker’s compensation and the business would have been closed down within 24 hours by state order. A red tag would have been placed on the owner’s door, Mr. Hettrick stated, and he would have needed to buy worker’s compensation. The owner would not have received coverage based on the practices used at his workplace. Mr. Hettrick concluded by restating that he agreed with Mr. Thompson. He then explained NDEP originally went in and inspected DTI because of a complaint of odors submitted by somebody else.
Mr. Thompson then thanked Mr. Hettrick for the information because he was unaware of it and then suggested the Committee might look into some change in the law to enforce that there must be notification because the explosion case would go on for a long time.
Chairman Goldwater stated that was a common sense state government situation and mentioned that a joint audit had been attempted in a previous session that had not turned out as well as expected. He then said that in a common sense situation the communication between government agencies was nothing the Nevada Legislature could legislate, but he hoped that it was an issue the Committee might shed some light upon.
Terry Johnson, Labor Commissioner, State of Nevada, wanted to offer testimony on behalf of A.B. 48 and to answer any questions that concerned any operations performed by his office. Mr. Johnson also wanted to add to some of the testimony heard previously. Regarding contractors being required to pay back what they were originally required to pay, he wanted to clarify that under the current administration he knew of no instances where a person was required to simply repay what they originally owed. His office had been very aggressive in assessing penalties to employers who had violated laws to the degree that his office had collected a record $3 million the last fiscal year in back wages and penalties. Mr. Johnson explained that there was some pending litigation that might be affected by A.B. 48. It was one of his earlier concerns about this bill and he urged the Committee to research it further because his agency had invested a lot of time and expense in pending litigation. His agency also did not want to see that jeopardized. To the degree that A.B. 48 verified existing law, his office supported that. He believed that if the Committee saw it as a new position or policy statement, then it could compromise some pending litigation or claims. It was his view, however, that the law as it was written did not exclude workers that were undocumented from recovering wages that were due to them. Mr. Johnson stated they would like to see a statement to the effect that A.B. 48 was clarifying existing law, because until the Labor Commissioners office was told differently they would continue to operate under the assumption that the current law already spoke to that issue.
Chairman Goldwater asked Mr. Johnson to clarify his point about the pending case and how A.B. 48 would affect that. Mr. Johnson explained that if this bill were to pass both the Assembly and the Senate, some might argue that at the time the litigation was initiated it must not have uncovered undocumented workers or the Legislature would not have seen the need to go back and uncover undocumented workers. Chairman Goldwater thanked Mr. Johnson and stated his input was very helpful. He then asked if the Committee should act on this bill, and would a statement from the Committee be sufficient to address that or should a statement be made on the Floor. Assemblywoman Buckley suggested the Committee make the statement on the Floor.
Chairman Goldwater stated that because there was no effective date, the bill would take effect in October if the bill were signed into law. Chairman Goldwater asked Mr. Keane if this were correct, and Mr. Keane explained that the bill would be effective on the default date of October 1, 2003. Regarding the comment about clarifying existing law, Mr. Keane added, the Legal Division had specifically looked at that point and they were concerned about it. They had decided not to take a position on whether A.B. 48 was clarifying or not, so he pointed out that in the title they had added “providing expressly” so that the title would not expressly indicate that they were amending existing law or expressly indicate they were just clarifying existing law. He then asked the Committee if they wished him to amend that. Chairman Goldwater stated that he did not wish to hurt the state’s position regarding any lawsuit. Terry Johnson thanked Chairman Goldwater and said that he appreciated the help. He then discussed a bill from the previous session, S.B. 560 of the 71st Legislative Session, which talked about the duties of public bodies to investigate wage violations. That bill originally implied that it was a new responsibility for those public agencies, and his agency requested that S.B. 560 of the 71st Legislative Session be characterized accurately as a clarification of those public bodies because that responsibility had been there since 1937. Mr. Johnson asked that the bill clarify what his agency believed was existing law. Chairman Goldwater indicated that the Committee would direct legal counsel, as well as staff, be aware of that when making amending titles on Floor statements.
Assemblywoman Giunchigliani suggested the Committee amend the bill with the “clarifying” language and also make the bill effective upon passage and approval rather then waiting until the October date. She suggested that during the work session, the Committee might make that change and have staff work up the language “clarifying” rather then using the term “expressly.” Chairman Goldwater replied that whatever the Committee needed to do would be done.
Mr. Johnson explained that previous testimony had helped in clarifying because his agency was unclear on the language. He added that in Section 1, it stated that “the Labor Commission shall enforce that provisions of Chapters 338 and 609 of NRS,” and he believed from earlier testimony that was an effort to mirror the language in the worker’s compensation statute regarding aliens and minors. He thought at first it might have been a typographical error, but the other point that concerned him was that if NRS Chapters 338 and 609 were specifically mentioned, would it exclude other chapters. Mr. Johnson explained that the Labor Commissioner enforced all or parts of approximately nine different chapters of NRS. He believed that if there were specific references to two chapters, parties might go forward and say that if the Legislature intended A.B. 48 to apply to other chapters, then they would have included them. He thought that was something to be mindful of and should be given further consideration. Chairman Goldwater agreed with Mr. Johnson and asked that Mr. Keane comment on Mr. Johnson’s statement.
Mr. Keane indicated that “609” was a typo he had noticed earlier in that morning and it should have read “338 and 608.” He further explained that the only reason those two chapters were included was because the bill’s intent was to address wage issues, and the legal division did not believe the language implied the Labor Commissioner did not enforce other chapters that way and further added the Legal Division could add other chapters if Mr. Johnson desired them to do so. The reason they were not already there was because they were specifically looking through NRS chapters that dealt with wages, Mr. Keane elaborated. He then noted that NRS Chapter 618 was referenced in A.B. 48, which had been added to the end of the bill. The original focus, Mr. Keane advised, was about wage issues. Chairman Goldwater then took note of that issue to discuss in the work session to follow.
Mr. Johnson concluded with a comment about the last paragraph of A.B. 48, Section 15, which dealt with the definition of a workman. He stated that this affected public works and prevailing wages, and he saw a tendency to move away from limiting prevailing wages to contractors and subcontractors employed on public works job sites. He explained that use of the term “employer” in this bill might be inappropriately broad. The bulk of the regulatory scheme pertaining to prevailing wages applied to specific employers, those being contractors and subcontractors. One could be an employer on a public works job who provided security for the facility at night and was not subject to prevailing wages. Mr. Johnson wanted to caution the Committee to be sure that if they passed this legislation, the bill would not broaden the application of prevailing wages. Mr. Johnson viewed the purpose of prevailing wages as intent to address contractors who bid on those jobs, were awarded those jobs, and employed workers on those jobs. He stated that stretching the regulatory scheme to address employers in general might place a burden upon the agency, administratively. Broadening the definition of “employer” would stretch their already limited resources. Mr. Johnson stated he had no further comments and he would be more than happy to answer any questions with regard to the office of the Labor Commissioner and A.B. 48. Chairman Goldwater asked if anyone had any questions for the Labor Commissioner and no Committee members had any. He then called anyone else who wanted to testify on behalf of A.B. 48.
Janice Gunderson, social work intern, University of Nevada, Reno, representing the National Association of Social Workers and Nevada Women’s Lobby, read from prepared testimony (Exhibit D). She stated that she was also the vice president of the Reno chapter of LULAC, The League of United Latin American Citizens. Ms. Gunderson stated that the organizations she represented were in favor of this bill. Ms. Gunderson said her position was that to deny benefits to workers based on their immigrant status was another form of discrimination. She strongly believed that hiring a worker did not entitle an employer to abuse workers or their rights. Ms. Gunderson said she hoped that the Committee would support A.B. 48.
Chairman Goldwater asked if there were any questions for her. Assemblywoman Gibbons expressed her support for what Ms. Gunderson had said and wanted to make sure, especially with her earlier comments, that the Committee wanted to ensure an employer did not hire undocumented workers and pay them less. Ms. Gunderson indicated that the organization she represented held the same position. She further explained that many employers hired workers knowing they were illegal and later refused to pay them. Ms. Gunderson said that the illegal workers then feared taking legal action because of their undocumented status. She explained that her organization recognized and understood that fully. Ms. Gunderson explained that when illegal workers felt they did not have any recourse when they did not receive their wages, they could not feed their families. She further explained that it led to other social issues and that was why her organizations backed A.B. 48.
Chairman Goldwater asked if there were any questions, then asked if there was any testimony against A.B. 48 and there was none. He then closed the hearing on A.B. 48 and indicated the bill would be discussed in the work session the next Friday. Chairman Goldwater stated the Committee would ask legal counsel to research the concerns Mr. Johnson had discussed, including the final comment of the definition of contractor versus employer and any unintended broadening of prevailing wage application.
Chairman Goldwater then moved to open the hearing on A.B. 89 and called on Assemblywoman Leslie to introduce her bill.
Assembly Bill 89: Removes exemption for landlords who own and personally manage four or fewer residential dwellings from provisions relating to landlords and tenants. (BDR 10-952)
Assemblywoman Leslie, District No. 27, stated she was there to give an overview of A.B. 89, and she indicated that others were present to help in answering any difficult questions. She explained that A.B. 89 cured a long-standing inequity in Nevada’s landlord and tenant laws. At that time, NRS 118A.180(2)(c) exempted landlords who owned and personally managed four units or fewer from all but a few requirements of Nevada’s Residential Landlord and Tenant Act. Ms. Leslie explained that the exemption became law in 1977 and had been narrowed twice. She believed it was time to get rid of the law altogether, and she indicated it was unfair to allow a smaller landlord in the business of renting property to play by a different set of rules then all other landlords. Ms. Leslie gave an example of how the law recognized that landlords with fewer than four tenants must supply heat and hot water, essential services required by NRS 118A.380, to tenants. She then indicated that those landlords were exempt from the Warranty of Habitability in NRS 118A.290, which required that a landlord supply equally important items, such as a roof and a floor. She did not understand why smaller landlords were able to illegally lock out a tenant, shut off a tenant’s utilities, retaliate against a tenant for calling the building and safety department or refuse to return a tenant’s security deposit.
She believed those fundamental rules of behavior should apply to all landlords. Ms. Leslie indicated that having two sets of rules created great confusion among tenants, landlords, and the courts. Some courts refused to apply the exemption in some circumstances, Ms. Leslie explained, while others applied it across the board. She stated that A.B. 89 would enforce law even-handedly throughout the different courts in the state of Nevada. Ms. Leslie understood that the landlords, realtors, and developers had all reviewed the bill and none were opposed to the bill at that time. She then asked Jon Sasser to review the legislative history of this bill.
Jon Sasser, Washoe Legal Services, Nevada Legal Services, and Washoe County Senior Law Project, stated he was there to testify in favor of A.B. 89. The legal services programs that Mr. Sasser represented provided for free assistance to low-income tenants due to a shortage of attorneys in the field. Mr. Sasser explained that it typically did not mean going to court with a tenant but simply meant sitting down with a tenant and giving counseling and brief advice. His organization also supplied help through pamphlets and self-help forms that taught tenants how to deal with landlord tenant problems.
Mr. Sasser explained that Nevada first passed a Uniform Landlord and Tenant Act in 1977, and then he read from prepared testimony (Exhibit E) in which he outlined the history of the landlord and tenant bill and the impact of eliminating “small landlord” exemptions. He explained that at that time, the model act on which the law was based and the original draft of the bill did not contain any exemption regarding smaller landlords. In the first reprint in the Assembly, an exemption was proposed for three people who owned houses and who had not used a professional real estate agent in the rental of those houses. The Assembly, then, had amended it to up to six houses, which was further amended in the Senate to, ultimately, less than seven dwelling units at the proposal of the Apartment Owners Association and their attorney. Mr. Sasser said that the issue was later revisited in 1983. Shelly Berkeley, Assemblywoman from Las Vegas at that time, had introduced a bill, co‑sponsored after many sessions between the apartment owners and the tenants. It included the elimination of the small landlord exemption. It passed the Assembly in the final days of the session but was never heard on the Senate side. Mr. Sasser said that in 1985, the same bill was once again raised, and when the bill went in front of the Assembly Judiciary Committee, concern was expressed by the Southern Nevada Builders Association because there was a large market for four-plexes in Las Vegas by senior citizens from California, buying a four-plex, living in one unit and renting out the other three, and they were afraid that applying the landlord and tenant laws to those prospective buyers might hurt the market for the sale of such types of real estate. A compromise was reached in the 1985 session where the current language was established that stated the law applied to everyone, except for owners of four units or fewer who personally managed their property. Finally, the bill was last visited in 1999, sponsored by Chairman Goldwater. In that bill, tenants were given the rights to withhold rent if landlords were not supplying essential services. That new provision also applied to the small landlords.
About a year ago, Marshall Schultz, who ran a tenant hotline in Reno, had gone to Mr. Sasser and stated he had received a lot of complaints about small landlords not following the warrant of habitability. He wondered if anything could be done about it. Mr. Sasser agreed to go back to the Southern Builders Association to see if they still had the same concerns about the market discussed in 1985. They no longer had a problem with it and would not be present to oppose the bill. He then went to Assemblywoman Leslie and she agreed to sponsor A.B. 89. Mr. Sasser indicated that the impact of the bill would ensure that small landlords complied with six different provisions of NRS Chapter 118A. They must conform to the same standard revisions that everyone else did for a written rental agreement. They must provide a 45-day advance notice prior to a rent increase. They must allow an elderly surviving spouse to get out of a lease if the spouse died. They must supply essential services, and finally, when the units were abandoned or personal property was abandoned, the same rules applied to small landlords. However, all of the rest of the provisions of NRS Chapter 118A, including the more important revisions, did not apply. For example, rules governing security deposits did not apply to small landlords. If one was a regular landlord and took a security deposit, the law limited how much one could get if one were to move and a dispute arose over whether the apartment had been damaged. A procedure was set out in the law, in which the landlords could withhold a tenant’s deposit, but the landlord must give an itemization of those damages. Those rules did not apply to small landlords. The biggest problem was warrant of habitability. Legal services saw a lot of people complaining about needed repairs: leaks in the roof, holes in the wall, and similar damage. First of all, it was hard to figure out if it was a small landlord or a large landlord. If it were unclear that they owned four or more complexes, it would be unclear what remedy the tenant had. If one were a large landlord, for example, they would get a 14-day written notice saying, “please fix the following items.” If the items were not fixed within 14 days, if it were a small item, the tenant could do what was called a “repair and deduct,” which meant paying for it out of their own pocket and deducting the amount from the rent. Mr. Sasser explained that if all failed, the tenant could go to court and sue for actual damages. His company was not able to go to court to advise that tenant as to what they were supposed to do, because they did not know whether they had a large or small landlord. If one were a small landlord, it was unclear as to what law applied. In those jurisdictions that had building and safety departments that were active, it was not as big of a problem. However, when one went out into rural Nevada, it was a huge problem, because there was nowhere else to go, other than the remedies under NRS Chapter 118A. Mr. Sasser hoped that gave the Committee an explanation of the purposes of this bill. He asked for the support of the Committee, and said he would be glad to answer any questions.
Assemblywoman Giunchigliani noticed the bill would take effect in October, and she asked Assemblywoman Leslie if that effective date was in order to give notice to landlord and tenants. Ms. Leslie stated she had thought about the effective date and believed it was a good idea to wait until October in order to get the word out.
Assemblyman Hettrick commented on the bill and disclosed that he was a one-unit landlord. He then expressed his concern that a tenant might inspect the unit, move in, and request extraordinary upgrades. Mr. Hettrick explained that if that were the case, it would not be economically feasible for a landlord with only a few units. If the landlord did not make the repairs and the tenants left, then there was zero rent money received by the landlord. In another circumstance, Mr. Hettrick explained that if the unit was occupied and the tenant wanted the landlord to fix it, then the landlord was stuck with fixing it at any expense. Mr. Hettrick wanted to know how a landlord might deal with those situations.
Mr. Sasser explained that often these situations were just a matter of factual dispute as to what type of condition the unit was in when the tenant moved in. Mr. Sasser’s organization advised tenants that if they had any immediate problems to put those in writing to the landlord. He then explained that the Nevada Warranty of Habitability did not say landlords had to keep their rental properties up to current code. They simply had to supply a property that met code at the time it was built and had been reasonably maintained since that time.
Assemblyman Hettrick stated that he understood Mr. Sasser’s point, but then expressed that if a landlord had a single tenant who was not happy with the maintenance of the unit and the tenant moved out, then the landlord had zero rent. Mr. Hettrick explained the difference of having one unhappy tenant in an apartment building of a hundred tenants. If only one tenant complained of the maintenance of the unit, the landlord would still have 99 other tenants, allowing the landlord to pay the mortgage. He indicated there was no standard that protected a single-unit landlord from spending a great deal of money in maintaining the unit. He explained that it might essentially force the landlord to close the unit down and not rent it. Mr. Hettrick believed that had been the argument brought up in nearly all of the previous sessions and he believed there was a point of no return. If this bill passed, it would no longer be economically feasible for a one-unit landlord to operate.
Assemblywoman Buckley offered to answer Mr. Hettrick’s question and affirmed that NRS 118A.290 governed habitability. She explained that habitability was very specific and included very specific requirements which included waterproofing, meaning it could not leak; plumbing, meaning it had to have water; heat, electricity, and garbage removal; it must be free from vermin; things could not be falling apart; and the unit had to have ventilating and air conditioning units. Ms. Buckley then indicated that the unit only needed basic requirements and did not necessarily need to be painted or be in perfect condition. Ms. Buckley thought that responsible landlords of a one-unit apartment would not rent if their units did not meet the basic standards. She then expressed that in response to Mr. Hettrick, a landlord would not rent if the unit were not up to standard.
Marshall Schultz interjected and asked Assemblyman Hettrick if he personally did a walk-through with a tenant upon entry, so that both he and the tenant knew the condition of the unit when it was rented, and then once again when the unit was vacated. Mr. Hettrick indicated that he did not and Mr. Schultz suggested that he do that. Mr. Schultz then stated that he would send Mr. Hettrick a “move-in, move-out” form from his company that was specifically designed for that purpose.
Assemblyman Griffin disclosed that he was a landlord who owned and personally managed four or fewer dwellings.
David Howard, Southern Nevada Multiple Housing Association and Northern Nevada Apartment Association, stated that the two organizations he represented were Nevada’s two largest apartment owner-and-operator associations. Mr. Howard expressed his support for the bill because he and the organizations that he represented felt that all landlords should abide by the same rules. He explained that he had attended an eviction class the previous day because he felt he needed to “brush up on that part of the law.” He indicated there were over 50 people in attendance that represented various sizes of ownership, from 500 down to ten units. All members in attendance supported the bill and some pointed out that the provisions under NRS 118A.190 were acceptable. He then urged the support for A.B. 89.
Marshall Schultz, Founder and President, Residents Information Center, a non-profit corporation, started his testimony and read from prepared testimony (Exhibit F). He explained that his company sponsored Nevada Renters Hotline, to which many state and local governments referred callers; including the Governors Office and the Attorney General’s Office. He explained that his company was the only office in the state that he knew of that collected and collated data on rental problems from all over Nevada. He explained that his company received no money from the government and they did not receive money from any funding organization. They were entirely a grassroots organization that was supported by donations from people who called. Mr. Schultz stated that his company was proud that their program was created in the best tradition of American entrepreneurial self-help and self-reliance. His company believed that even the most devout conservatives and those who advocate less government must respect that approach to solving society’s problems. He indicated that their hotline provided free information to all involved in residential rentals, which included tenants and landlords. It also included, sometimes, property managers and apartment managers. He stated that they did not give legal advice and they did not have attorneys. Chairman Goldwater interjected and asked that Mr. Schultz direct his comments toward the bill. Mr. Schultz stated that he just wanted to add one thing. When his company did receive a phone call, and he mentioned to the caller that his landlord was exempt under the statute discussed because of being a small landlord, very often, the tenant would not know that. He explained that was the impression of a lot of people in the United States. Mr. Schultz explained that NRS Chapter 118A had been covered thoroughly by Mr. Sasser. He did not believe that needed to be reviewed except to reiterate that very little of the statute had been revised since 1977. His company believed that the statute was out of date and unfair to tenants that rightly expected fairness in the laws, if not in the rental agreement. He explained that 20 percent of his company’s clients were small landlords and they unanimously agreed that the small landlord exemption should have been eliminated.
Mr. Schultz said that Mr. Sasser had mentioned several items among the most egregious problems born of the exemption. Those were: unconscionability, Section 230 of the statute; refunds of security deposit, Section 242; habitability issues, Section 290; landlord’s access, Section 330; and retaliation, Section 510 of NRS Chapter 118A. He explained that the previous sections provided for the major portion of tenant protections in the statutes. Small landlords were exempt from all of them, Mr. Schultz stated; tenants were without a remedy on those and many other issues. Landlords were not required to have roofs that did not leak, windows and doors that closed and sealed the weather out, furnaces that worked, available hot water, floors that held up under the weight of a child, wiring that was up to code, etc., Mr. Schultz explained. There was no recourse for the tenant but to move for the sake of family health, and then the landlord would just turn around and rent to a new tenant. He then said that the tenant that moved out or was evicted under retaliatory conduct did not necessarily get his deposit refunded, if the tenant was exempt. So, there was no remedy and no recourse, Mr. Schultz explained, for most tenants in those conditions.
Mr. Schultz read from his testimony and stated that,
In essence, the rental agreement is like any other business transaction. Each party gives something of value to the other party. It is no different from buying a loaf of bread, except that the bread purchase is a one-time transaction each time, whereas a rental is an ongoing relationship. A.B. 89 merely provides equal protection under the law to both parties in the rental agreement. As it now stands, that statute doesn’t provide that to the tenant.
Mr. Schultz suggested that all legitimate businesses should treat their customers fairly and opined that both parties in the rental agreement should enjoy equal fairness under the law. Mr. Schultz explained that no state agency oversaw NRS Chapter 118A, and except for a few jurisdictions where there were code enforcement agencies, no local agencies, particularly in the outlying counties, had any authority regarding NRS Chapter 118A. Tenants needed and deserved a fair return for their rental money and a means to take an abusive landlord to justice, Mr. Schultz stated. He further opined that all legitimate businesses should treat their customers fairly and reiterated his support for A.B. 89. He then asked that the Committee make this bill effective as soon as possible. He thanked John Sasser and Assemblywoman Leslie for their help in bringing the bill forward and indicated he would answer any questions if there were any.
Melody Luetkehans, General Counsel for the Nevada Association of Realtors, began her testimony and stated that a hard copy (Exhibit G) lay in front of each Committee member. She indicated she would not repeat it but wanted to urge her company’s strong support for the bill. She recognized that the passage needed time to get out there in the field and asked that the October date be held for the effective date.
Chairman Goldwater asked if there were any other witnesses for the bill and then asked if there were any witnesses who wished to testify against the bill. There were none. He then closed the hearing on A.B. 89 and reiterated that there would be a work session the following Friday. With no further business, Chairman Goldwater adjourned the meeting at 3:22 p.m.
RESPECTFULLY SUBMITTED:
Corey Fox
Committee Secretary
APPROVED BY:
Assemblyman David Goldwater, Chairman