ASSEMBLY COMMITTEE MINUTES

MINUTES OF THE meeting

of the

ASSEMBLY Committee on Government Affairs

Seventy-Second Session

April 4, 2003

The Committee on Government Affairswas called to order at 8:15 a.m., on Friday, April 4, 2003. Chairman Mark Manendo presided in Room 3143 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mr. Mark Manendo, Chairman

Mr. Wendell P. Williams, Vice Chairman

Mr. Kelvin Atkinson

Mr. Chad Christensen

Mr. Tom Collins

Mr. Pete Goicoechea

Mr. Tom Grady

Mr. Joe Hardy

Mr. Ron Knecht

Mrs. Ellen Koivisto

Mr. Bob McCleary

Ms. Peggy Pierce

Ms. Valerie Weber

COMMITTEE MEMBERS ABSENT:

None

GUEST LEGISLATORS PRESENT:

None

STAFF MEMBERS PRESENT:

Susan Scholley, Committee Policy Analyst

Eileen O'Grady, Committee Counsel

JoAnn Aldrich, Committee Secretary

OTHERS PRESENT:

Terry Johnson, State Labor Commissioner

Richard “Skip” Daly, Business Manager, Laborers’ Union Local No. 169

Danny Thompson, Nevada AFL-CIO

Gary Wolff, Teamsters Local No. 14, Nevada Highway Patrol Association

Dan O’Brien, Manager, State Public Works Board

Andrew List, Nevada Association of Counties (NACO)

John Milton, NACO, and Vice President, Humboldt County Commission

Scott MacKenzie, Executive Director, State of Nevada Employees’ Association (SNEA), and AFCSME Local No. 4041

Bob Romer, Representative, State of Nevada Employees’ Association (SNEA), and AFCSME Local No. 4041

Jeanne Greene, Director, Department of Personnel, State of Nevada

Kareen Masters, Personnel Officer, Department of Human Resources

Ruth Jones, Personnel Officer, Department of Employment, Training and Rehabilitation (DETR), State of Nevada

Kevin Ingram, Personnel, State Department of Corrections

Assembly Bill 458: Clarifies authority of Labor Commissioner to enforce provisions relating to payment of overtime to workmen employed on public works. (BDR 28-1304)

Assemblyman Bob McCleary, Clark County Assembly District No. 11, thanked the Committee for allowing him the opportunity to present this bill. Mr. McCleary stated that A.B. 458 arose from a presentation by Terry Johnson, State Labor Commissioner, to the Committee on February 13, 2003. Mr. McCleary stated that his intent in requesting this bill was to help people who were cheated or bullied out of their overtime pay. Although Assemblyman McCleary had heard many complaints on this issue, he learned from the State Labor Commissioner that the Nevada Revised Statutes (NRS) did not permit Mr. Johnson to enforce claims for lost overtime pay on wages of 1.5 times greater than the minimum wage, which would equal about $7.72. Persons making more than $7.72 per hour had to seek justice from the U.S. Department of Labor, when employers failed to pay overtime owed them.

Although the Labor Commissioner assisted in investigations to the best of his ability, within budget constraints, and sent findings to the U.S. Department of Labor office in Phoenix, Arizona, the responses were not speedy. Assemblyman McCleary and the Labor Commissioner shared a vision of providing Nevada residents with a one-stop enforcement option. Due to staffing and budget limitations, Mr. McCleary stated that the bill before the Committee today was just a first step in that direction.

A.B. 458 would allow the State Labor Commissioner to enforce claims for overtime associated with prevailing wages on public works projects. They felt the best place to start enforcement would be for overtime claims on Nevada projects with Nevada workers. This first step could be accomplished within the Labor Commissioner’s current budget and with his current staff. Assemblyman McCleary urged the Committee to support this first critical step in the right direction.

At the request of the Labor Commissioner, and with the agreement of Committee Counsel, Ms. O’Grady, they proposed an amendment to A.B. 458, (Exhibit C) which would amend NRS Chapter 608 to clearly state the authority of the Labor Commissioner related to this issue.

Next session, Assemblyman McCleary said he hoped to return with another bill that would take another step towards putting the Nevada Labor Commissioner in charge of enforcing all claims for overtime wages for all Nevada workers.

Chairman Manendo thanked Assemblyman McCleary for shepherding the bill.

Terry Johnson, Labor Commissioner, State of Nevada, said he fully supported A.B. 458. Pursuant to the proposed amendments (Exhibit C), he stated that the bill would clarify the circumstances under which the Labor Commissioner would assert jurisdiction over prevailing wages and overtime payments to workers on prevailing wage jobs. He said they had talked with Committee Counsel and others about the bill. They believe the amendment would fill the needs of Nevada citizens, who would benefit by being served through the State Labor Commissioner’s Office, located in Carson City and Las Vegas. Mr. Johnson offered his full support to A.B. 458, as amended.

Assemblyman Collins clarified that the enforcement would seek to capture pay for working more than 40 hours per week at 1.5 times the hourly pay rate, which would not include double-time pay. Mr. Johnson said that time-and-a-half pay was within the General Provisions and were applicable statewide. Mr. Collins also wanted to ensure that enforcement would apply to prevailing wage jobs, as well. Mr. Collins said that some trades earned double-time pay, and when another trade came in, they received double-time pay because the previous trade had received it. Mr. Collins wanted to clarify that those situations would not be enforced at this time. Mr. Johnson said that was correct.

Mr. Johnson added that there was a provision in the amendment that specified that persons covered by collective bargaining or another agreement that provided for more than time-and-a-half overtime pay would not be covered under those provisions. In other words, whatever wages were set forth in collective bargaining agreements, as long as they exceeded the stated minimums, they would not be affected. Mr. Collins stated, “So you would not be involved in those.” Mr. Johnson replied, ”No, sir.”

Assemblyman Grady asked Mr. Johnson, in a case where you agreed to work four 10-hour days instead of five 8-hour days, if that would be subject to enforcement.

Mr. Johnson said there were provisions in the statutes where employee and employer stipulated that four 10-hour days would be acceptable. He said that situation was not addressed A.B. 458.

Assemblyman Knecht said that Section 1 of the bill applied to NRS 338.015 and Section 2 applied to NRS 338.020, but the amendment did not apply to NRS 338.015. He asked if the amendment was additional to the bill text or if it would replace the bill text.

Chairman Manendo clarified that the “Proposed Amendment to A.B. 458” (Exhibit C) would replace the entire bill.

Assemblywoman Weber asked Mr. Johnson how many cases would be involved and if their workload would increase.

Mr. Johnson explained that it would be difficult to figure how the workload might increase because they currently did not accept claims outside their own jurisdiction. However, since the bill would only require enforcement of wage claims from public works projects, and since changes enacted in the last legislative session now required public bodies to be more active in assisting the Labor Commissioner’s office with enforcement, those factors would spread out enforcement efforts and would dilute the workload impact on his office. He was not concerned that he might be taking on more than the office could handle. Mr. Johnson said he was confident the workload increase could be absorbed into the current structure.

Assemblyman Goicoechea stated that he supported the legislation. He remembered last session when they passed back to local governments the requirement to monitor contracts they entered into, and now they had a local office for assistance.

Richard “Skip” Daly, Business Manager, Laborers’ Union Local No. 169, Reno, stated they were strongly in favor of this bill, and believed it was long overdue. In 2002, the Laborers’ Union Local No. 169 celebrated 100 years in business. They were chartered in 1902 with the AFL directly as hod carriers and mortar mixers from 1910. In 1902, they received the 8-hour day. Now, 101 years later he was supporting legislation that would strengthen enforcement of the 8‑hour day on construction and public works projects. The Laborers’ Union strongly supported A.B. 458.

Danny Thompson, Nevada AFL-CIO, said he had nothing to add except to thank Mr. McCleary and the Committee for proposing this bill, and to thank the Labor Commissioner for his presentation. The Nevada AFL-CIO supported this bill wholeheartedly.

Gary Wolff, Teamsters Local No. 14, stated that they stood firmly behind A.B. 458.

Chairman Manendo asked if anyone wished to testify in opposition to this bill. No one responded, so he closed the hearing on A.B. 458.

ASSEMBLYMAN COLLINS MOVED TO DO PASS A.B. 458.

ASSEMBLYMAN McCLEARY SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY.

On behalf of his diligence, Chairman Manendo assigned the bill to Assemblyman McCleary to present on the Floor of the Assembly.

Assembly Bill 534: Makes various changes concerning State Public Works Board. (BDR 28-556)

Chairman Manendo opened the hearing on A.B. 534 and called Mr. O’Brien to testify.

Daniel K. O’Brien, P.E., Manager, State Public Works Board (SPWB), stated that A.B. 534 was sponsored by the SPWB, and that he had provided a copy of his testimony for the record. The roles and authority of the SPWB were established in Chapter 341. A.B. 534 would amend several sections of that chapter to enhance the operation of the SPWB.

Mr. O’Brien then briefly discussed the seven sections to be amended (Exhibit D):

The first area was Chapter 341, Section 4, which addressed the authority to enforce building code provisions as they related to stop-work orders, sometimes referred to as “red tagging” a project. Stop-work orders were issued because of health-safety concerns or violations of building codes, laws, or regulations that were adopted by the state. Section 4 of the bill addressed the issue in its entirety. Currently, when the state building inspector found a violation of the building code provision occurring on a state construction project, the only action they could take was to issue a notice of noncompliance. They could also threaten to file breach of contract, stand back in frustration, or tell management not to authorize a pay request; but by that time, the code violation was usually set in concrete. Mr. O’Brien said that the proposed wording in Section 4 of A.B. 534 gave the SPWB the authority to issue a citation, if necessary, to enforce the stop-work order. That authority was similar to what every city or county building department in the state, or across the country, already had. He was amazed when he came to Nevada that there was no provision for stop-work orders, even though the Uniform Building Code (UBC) referred to them.

The second area would strengthen the role of the SPWB and grant the Board direct authority as the building official responsible for all buildings and structures on state property. Local jurisdictions did not have the authority to work on state property. The SPWB was the only entity that supervised state construction projects to ensure the health, safety, and welfare of the public. The term “building official” was used in the Uniform Building Code (UBC), and Section 6, page 3, line 39, as well as Section 7, page 5, line 1, related to that issue. The actual changes would be made to NRS 341.100 and NRS 341.145. Clarification in NRS 341.153(2) stated, “All construction of public buildings upon state property, or held in trust for any division of the state government, should be supervised by, and final authority for its completion and acceptance, vested in the SPWB.” That language gave the SPWB indirect authority, but direct authorization of the SPWB as the “building official” in A.B. 534 would remove any question about the intent of those provisions.

The third area related to NRS 341.145, and the section in the bill was Section 7, page 4, line 36, which addressed issuing change orders to contracts up to $10,000. Currently, the NRS limited change orders to 10 percent of the total contract price. For example, if a project were $10,000, the maximum change order would be $1,000. That was no longer a realistic amount, so a new contract often had to be reissued. A.B. 534 would allow change orders up to the same amount as the contract, to a maximum of $10,000, so that, in that case, the total contract price could not exceed $20,000, which was a very small amount in the range of public works projects.

The fourth change addressed situations where agency funds are used for a public works project. Often agencies want to channel funds to the SPWB for the purpose of construction management and payment of contractors. Those funds were usually not part of the Capital Improvement Program (CIP) in the State Legislature. The problem was that the agency was motivated to transfer the funds, but also hesitant to deposit those funds with the SPWB because any accrued interest would go to the General Fund, not to the project. Current procedures to circumvent the interest problem were time-consuming and inefficient. Amended language in Section 8, page 5, line 14, would clarify how to treat interest and any remaining principle related to agency funds, and would allow any accrued interest to benefit the project. One example of a SPWB project where an agency used mixed funding was the current construction project at the Desert Research Institute.

The fifth area addressed the need to clarify the order in which various types of funding were spent on public works projects, since many public works projects included a mix of types of funding. In Section 8, page 5, line 22, the SPWB recommended an order of precedence, which would also eliminate all ambiguity about how remaining funds should be reverted when the project was complete. The SPWB recommended that reallocated CIP funds be spent first, and then, in order, funds received from the Federal Government, funds generated by state agencies, proceeds from the issuance of General Obligation Bonds, funds from the State General Fund, and then any other sources of funding for the project.

The sixth area addressed poor wording in NRS 341.148(1), Section 9, line 4, page 6, which currently stated that the SPWB could accept bids and issue contracts “when the construction project was in the best interest of the lowest responsible and responsive bidder.” A.B. 534 would change that phrase to, “when the construction project was in the best interest of the state.” The SPWB would not segment a project, or make any other modification, solely for the benefit of the bidder, because it might not be in the best interest of the state of Nevada.

The last area related to NRS 341.153(2), which set forth that the SPWB would supervise and ensure proper completion of construction projects that involve “public buildings” built on state property. A question arose about the meaning of a “public building.” Currently, privately owned buildings were sometimes built on state property by way of a lease arrangement. Since local government did not have authority over state property, there was a void as to who was the responsible building official and who inspected the work.

Mr. O’Brien explained the possibilities:

If a privately owned building on state land were ever abandoned, it would become the property of the state and the state would take over the building. In addition, there may be liability issues if a privately owned building on state land suffered problems because of improper construction. Section 10, page 6, relates to this issue and the SPWB believes that this issue would be resolved by indicating in statute that the SPWB has jurisdiction over all buildings on state lands (Exhibit D).

In NRS 341.201, the Legislature had made an implication that “state buildings” and “public buildings” were different. Removing the phrase “public building” and leaving it just a “building” in Section 10, would remove the confusion.

In conclusion, Mr. O’Brien emphasized that the most important part of A.B. 534 was to empower the SPWB to issue stop-work orders. The importance of authorizing the SPWB to be the building official became clear during recent problems with a library project and a veterans’ home project. Those problems would have been corrected if the state had had the authority to stop the work until the issues were resolved.

Assemblyman Knecht asked a question about the third area, top of page 2 of Exhibit D. Mr. Knecht asked if the change would mean that, if there were a $10,000 contract in place, the SPWB could authorize a change order up to $10,000 without additional bids. In addition to the contract amount, that would increase the total contract price to $20,000. Mr. O’Brien said that was correct.

Assemblyman Collins asked Mr. O’Brien to clarify that the SPWB could currently award any job up to $25,000 without a bid, and therefore, could award a $10,000 contract with no extra work. In order to change that job price, however, the change order cap was $1,000.

Mr. O’Brien said, “A cap of 10 percent. Yes.” Mr. Collins asked if the purpose of this was to prevent writing additional unnecessary contracts.

Mr. O’Brien explained that currently the state provision required a minimum of two quotes on any project over $5,000. They would get two quotes and take the lowest bid. On a project of not more than $10,000, once a contractor was chosen, the bill would allow them to issue a change order. The highest amount possible would be a $10,000 change order, but he did not see that that was likely to occur.

Assemblyman Collins added that he wanted to know about Boulder City, whether the local official already had building codes there and could issue a stop-work order for the SPWB. Mr. O’Brien answered no, because they do not have authority on state land.

Assemblyman Knecht asked a question about taking the lower of two quotes, under $5,000, and then increasing the amount of the contract by 100 percent. He wanted to know if someone “not as principled as Mr. O’Brien” could arrange a low bid for $9,000 on a $12,000 job, and then change order it up to $18,000. He wanted to know what would prevent that kind of scenario, other than people’s good conscience.

Mr. O’Brien said that collusion was against the law, and he did not know how to prevent it. You would have to look at the reason for doing it. They were allowed to solicit two bids for every contract up to $25,000, and then they went to a formal bid process. If they agreed to a $10,000 contact and had a change order for $10,000, which would make the total contract $20,000, they would still be within the limitations of the two bid process.

On the other hand, they had the authority to issue a contract for up to $25,000, or could have agreed to specific unit prices with a not-to-exceed cap of $24,999. Mr. O’Brien said it had more to do with wanting better business, less paperwork, and less labor. They did not want to continue to process unnecessary contracts in order to raise the spending limit of a contract.

Assemblyman Knecht said he understood the complaints, having been on both sides of public contracting. He wanted to give the SPWB the tools to improve the process. What made him more comfortable was that the SPWB had a full internal management review of change orders, which was important because they were not subject to competition. At least two levels of review above the contractor would make him even more comfortable.

Richard Daly, Laborers’ Union Local No.169, had one question for clarification. In the proposed changes to Section 9, pages 5-6, where it said that the lowest responsive bidder would result in savings to the state, he was concerned that that language would allow the SPWB to segment the projects into several contracts under $25,000 to benefit from not triggering prevailing wage laws. He did not believe that was the intent, but wanted confirmation. His understanding was that those projects would remain subject to bidding laws under NRS 338.143, which did not allow subdividing projects to circumvent prevailing wage rates.

Mr. O’Brien said that was a good question. He had dealt with that problem throughout his career. He said that circumvention of the law to escape prevailing wage rates was clearly against the law. SPWB management did not allow it, and it was not their intent to take that direction. In addition, all contracts were reviewed by the Attorney General’s Office. Although the SPWB had segmented projects, they would state up front in the bid documents that the total project cost would be over $100,000 and that local prevailing wage rates would apply.

Mr. Daly said his concern was answered, and he thanked Mr. O’Brien for the clarification.

Assemblyman Collins said that existing language allowed projects to be broken up. Allowing the state to break up a project for bidding purposes, and then directing enforcement by the state, he said, was the reason for the question. However, as long as the intent was on record stating that the purpose was not to circumvent the law, he felt there were grounds to return to if there was a problem in the future.

Chairman Manendo asked if there were more testimony on A.B. 534. Hearing none, he closed the hearing on the bill.

ASSEMBLYMAN GOICOECHEA MOVED TO DO PASS A.B. 534.

ASSEMBLYWOMAN KOIVISTO SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

Chairman Manendo assigned Assemblyman Goicoechea to present the bill on the Floor.

Assembly Bill 539: Clarifies types of contracts into which members of certain governing bodies may enter with governing body. (BDR 27-169)

Chairman Manendo opened the hearing on A.B. 539.

Andrew List, representing Nevada Association of Counties (NACO), said NACO had sponsored A.B. 539 in order to allow a board of commissioners to contract with an individual commissioner under certain situations that arose on a regular basis, especially in the smaller counties. NACO had researched the legality of the issue (Exhibit E), and found there was a great deal of confusion on the subject: For example, four provisions of the NRS said those contracts were legal, and one provision of the NRS said the contracts were illegal. One attorney general’s opinion stated the contracts were illegal, and an opinion by the Commission on Ethics that found that they were legal.

A.B.539 would amend five sections of the NRS to clarify the legality of contracts between board members and boards of commissioners. Mr. List said that the effect of A.B. 539 would be to eliminate the confusion and make it clear that these contracts were legal if seven particular requirements were met (Exhibit E). In addition, the bill would tie together all relevant provisions with cross-references and clarifying language. The seven criteria in the bill that would make contracts between boards of commissioners and individual members legal were as follows:

Board member must clearly disclose his or her pecuniary interest in the contract per NRS 281.501.
The contracting process must be controlled by the rules of open, competitive bidding, if applicable, per NRS 281.230 and NRS 281.505, which is the Nevada Ethics in Government Act.
The sources of supply must be limited, per NRS 281.505.
The commissioner must not have taken part in developing the contract plans or specifications, per NRS 281.505.
The interested board member must not be personally involved in the opening, considering, or accepting of offers, per NRS 281.505.
A two-thirds vote in the affirmative must be made by the board NRS 281.555.
The public notice of that particular meeting must specifically mention that such a purchase or contract will be made per NRS 281.555, NRS 245.075, and NRS 268.384.

Mr. List stated that A.B. 539 would amend the following statutes:

· Section 1 of the bill amended the Local Government Purchasing Act, NRS 332.155, to allow such contracts if all the preceding seven requirements were met by cross-referencing the Nevada Ethics in Government Act. The Local Government Purchasing Act currently prohibited such contracts.

· Sections 2 and 3 of the bill amend provisions related to county officers and employees, NRS 245.075, and the powers of cities, NRS 268.384, to allow such contracts only if all of the preceding requirements were met. Those provisions currently allowed such contracts via cross-referencing to NRS 281.555, but only the last two of the preceding seven elements were required.

· Sections 4 and 5 of the bill amend provisions of the Nevada Ethics in Government Act, NRS 281.230 and NRS 281.505, which currently allows such contracts if the second through fifth elements were met, to clarify that full disclosure, the first of the preceding seven elements, was also required by the law.

Mr. List said the goal of the proposed legislation was to amend all relevant NRS sections to ensure that the seven requirements must be satisfied before such contracts were legal. NACO believed that A.B. 539 would strengthen the Nevada Ethics in Government Act and would ensure that an elected official could continue to earn a living in his or her chosen profession, while engaging in public service.

John Milton, First Vice President, NACO, and Vice Chairman, Humboldt County Commission, stated that A.B. 539 was first brought forward by Lincoln County. He entered into the record a letter from Spencer W. Hafen, Lincoln County Commissioner (Exhibit F). Mr. Milton said that since the bill began to come together, he had become “ the poster child” for the issue.

Mr. Milton said he was a Humboldt County Commissioner, as well as the only professional land surveyor between Elko and Fernley. If the County Commission wanted to hire a professional land surveyor, they had to go to Elko, Fernley, Reno, or Fallon. Recently, when the Humboldt County Commission needed a land surveyor, they had to hire a man from Elko to go to a small town about 40 miles north of Winnemucca to conduct the survey. The cost of the survey was over $3,000. Mr. Milton’s firm, which had been in business in Winnemucca for 26 years, could have done the same job for about $1,500. Most of the cost differential was in travel time and research in the county courthouse.

Mr. Milton said passage of A.B. 539 would be very helpful to Humboldt County. Another example was that, in the past, a county commissioner had a sole source contract for spraying for noxious weeds. Recently, the Commission had to pay more for that service because they were unable to award him the contract, and had to hire outside the county. Mr. Milton said this bill would help the county in controlling costs, especially in light of current fiscal concerns.

Chairman Manendo clarified for the record that the letter from Lincoln County Commissioner Spencer W. Hafen of Owens Surveying Outfit, Inc. referred erroneously to “S.B. 539,” and that the actual assembly bill number was A.B. 539. Mr. List apologized for the wrong bill number on that letter.

Assemblyman Collins asked if they had in-house county employees that were surveyors. Mr. Milton said no, they did not have an engineering or surveying department in Lincoln County.

Andrew List read Mr. Hafen’s letter into the record:

My name is Spencer Hafen. I am a self-employed land surveyor in Lincoln County. I am also a County Commissioner. I moved to Lincoln County in 1996 and opened a surveying office in Pioche. Before I was elected County Commissioner in 2000, I contracted with Lincoln County to perform surveying services. Upon being elected to that position, I found that I would no longer be able to contract with the County for those services. This has caused me to have to look outside of Lincoln County for work to support my family and keep my business running. There have been several jobs that my firm has not had the opportunity to bid on because of current NRS. As a result, these jobs were given to companies that reside outside of Lincoln County. Chairman Manendo and members of the Committee, I would ask for your support in recommending S.B. 539 [sic] for passage. It would help members of rural communities that serve as elected officials continue to make a living in their full time occupations. I thank you for your considerations and help.

To summarize, Mr. List stated that A.B. 539 would clarify and tie together the relevant sections of the NRS to allow contracts between boards of commissioners and a board member in some situations, providing that the seven criteria were met. The bill would strengthen the Nevada Ethics in Government Act and would allow public officials to serve and to keep their full-time jobs.

Assemblyman Hardy stated that legally it was a “Chinese wall,” and that he had lost patience with the issue. However, it was an excellent bill and would help county commissioners. Some counties had three commissioners, and hopefully, no one commissioner worked for another commissioner, or the problem would return.

Being from a rural area, Assemblyman Grady said he applauded NACO for bringing the bill forward. In Yerington, he had similar problems, and he hoped this bill would clear up some of the confusion.

Assemblyman Hardy thought they might want to amend the bill to include the word “city.”

Assemblyman Goicoechea said he also supported the bill and had experienced problems with this issue previously. He would like to see the “not to exceed $300” amended to a higher number, to prevent travel out of town to purchase items available locally.

Mr. List said that the $300 limit had been in statute since 1975. It would be a friendly amendment to raise the number higher, and he would suggest at least double that amount.

Chairman Manendo asked why this was not addressed earlier. Mr. List said they had focused on the contracting process and the disclosure process.

Assemblyman Goicoechea said he would definitely support a figure not to exceed $1,000 because there may be only one service provider in the community.

Mr. List said that would help keep businesses open in rural communities. He had not indexed the number to the Consumer Price Index (CPI), but offered to do that.

Assemblyman Collins said he supported an amount between $1,000 and $1,500, and did not have a problem with the amendment.

Mr. List suggested that the $300 limit might not be necessary if there was full disclosure, but the Committee could make that decision.

Chairman Manendo asked if the range of the bill was limited to rural counties.

Mr. List said it was limited to rural counties not by population, but by the way the bill was written: It had to be a sole source purchase or contract. He could not imagine the larger counties having a sole source situation.

Assemblyman Goicoechea said that rural communities already had a narrow candidate slate. He added, “If you are a good businessman, you would not take a job paying $1,000 per month that would cut you out of $5,000 per month of business.”

Assemblyman Collins said since it would only apply to sole source situations, the cap should be lifted.

Chairman Manendo asked if anyone else wished to testify. No one came forward, and the Chairman closed the hearing on A.B. 539. He said the Committee should think about the number as homework. He asked Mr. List to index the $300 for inflation and bring that figure back to Committee.

Assembly Bill 537: Revises provisions regarding state personnel. (BDR 23‑1155)

Chairman Manendo opened the hearing on A.B. 537.

Scott MacKenzie, Executive Director, State of Nevada Employees’ Association (SNEA), and AFCSME Local No. 4041, said he came forward to represent state employees who did not have collective bargaining, and to present their case for consideration. A.B. 537 was actually a combination of three resolutions that resulted from the last meeting of the General Council, the governing body of SNEA. He said they would like the Committee to consider the whole package, but if it turned out that was not possible, they would appreciate passage of one-third or two-thirds of the bill, since they were actually three separate bills rolled into one. The three subjects were:

1. Holiday pay for those working alternative schedules.

2. Transfer of 50 percent of unused sick leave into a catastrophic leave fund on retirement.

3. Allow an arbitration option to process grievances.

Mr. MacKenzie stated that, in the first provision, the state allowed 8 hours of holiday pay, but some employees worked a variable or alternate workweek schedule. If they had a regular workday fall on a holiday and were told to take the day off, the state required that they use their personal leave or leave without pay to cover their 40-hour workweek.

For example, an employee worked four 10-hour shifts, Monday through Thursday. The holiday fell on a Monday, and the employee was told to take the day off. In order to receive 40 hours of pay for the week, the employee was required to use 2 hours of personal leave time or be docked two hours of leave without pay. This would also apply to employees who worked other variable shifts, such as 12-hour shifts worked by nurses and correctional officers. In summary, SNEA asked that employees who were assigned to shifts of more than 8 hours, receive an equal number of holiday hours, whether on or off duty in order to preserve their weekly pay status.

Mr. MacKenzie then read a portion of the actual language of A.B. 537. He said that his understanding from discussion with employees around the state was that this provision existed in most collective bargaining agreements. He had reviewed several contracts in researching the issue: the City of West Wendover contract, and four or five Carson City employees’ collective bargaining agreements. All of those contracts included that provision.

Assemblyman Hardy said that in Section 12(b), line 20, page 3, it said, “If the regularly scheduled workday of the employee is more than 8 hours.” He asked if that should read “equal to or more than 8 hours.” Mr. MacKenzie said that would be correct.

Mr. Hardy asked if the intent was that the employee was not on vacation in Section 12 (c), line 22. Mr. MacKenzie said that if the employee were on a leave of absence, he would not be entitled to holiday pay. On vacation, they would be entitled to holiday pay.

Assemblyman Goicoechea asked if this provision would only relate to full-time employees, and that part-time employees would not receive holiday pay. Mr. MacKenzie said that it was intended to cover only full-time employees.

The second provision related to unused sick leave remaining at retirement. Currently, 100 percent of accumulated sick leave was lost by retiring employees. The proposal would allow employees to deposit 50 percent of their unused sick leave at retirement into the Catastrophic Leave Fund. The Catastrophic Leave Fund was not a statewide fund, but was created division by division. Employees did not appreciate having their unused leave disappear, and would like to donate to a catastrophic fund for other employees whose sick leave was used up due to circumstances beyond their control. Mr. MacKenzie read the proposed provision.

Assemblyman Grady clarified that the employee would be paid for so many hours of sick leave, and then the fund would receive 50 percent of the remaining amount. Mr. MacKenzie said that was correct. They would like to be able to deposit up to 120 hours of sick leave into the Catastrophic Leave Fund at retirement.

Assemblyman Hardy asked if the interest on that account would grow in the name of the employee, or if the interest would go into the Catastrophic Leave Fund. Mr. MacKenzie said that the intent was that the interest would go into the Catastrophic Leave Fund, not to the employee.

Assemblyman Knecht asked what the cash-out provision was for retiring employees regarding sick leave. Mr. MacKenzie asked Bob Romer, Senior Employee Representative, SNEA/AFCSME Local No. 4041, to answer that question. Mr. Romer stated that under the NRS, you were allowed to collect so many dollars of sick leave according to the number of years you worked. If you had enough years, and after a mandatory deduction of 240 hours or 30 sick days, Mr. Romer said that the maximum collectable amount would be $8,000. Once that was received, any other hours left over currently went into thin air and disappeared.

Assemblyman Knecht asked if the current proposal referred to the hours above the amount of hours being cashed out. Mr. MacKenzie said that was correct.

Mr. MacKenzie then addressed the third provision that would allow arbitration for employee grievances. He read the amended language from the proposed bill, starting with Section 4(4), which began:

If a grievance was submitted to an arbitrator, the arbitrator shall assess the cost to the losing party unless the arbitrator determines that a different assessment of cost is more equitable, and each party shall pay its own cost of the preparation and presentation of its case.

Mr. MacKenzie continued in Section 4(6):

The Commission shall appoint an arbitration panel whose members are authorized to make final decisions on grievances submitted to an arbitrator pursuant to this section. To appoint such a panel, the Commission shall request from the American Arbitration Association or from the Federal Mediation and Conciliation Service a list of seven potential arbitrators. If the Commission and the organization staff and state employees in this state are unable to agree upon which arbitration service to be used, the Federal Mediation and Conciliation Service must be used. The Commission shall hold a hearing at which the Commission shall hear objections to any of the seven potential arbitrators. At the conclusion of the hearing, the Commission shall appoint three arbitrators to serve as members of an arbitration panel for terms of one year, and one alternative arbitrator to serve on the panel if a vacancy arises. An arbitration panel must be reappointed in the same manner as specified in subsections 6 and 7 for original appointments. If a grievance is submitted to the arbitration panel, the employee who submitted the grievance and the appointing authority of the employee shall select an arbitrator who would hear the grievance. The parties shall select the arbitrator from the panel by alternatively striking one name until the name of only one arbitrator remains. The remaining arbitrator shall hear the grievance in question. The employee shall strike the first name. A hearing held pursuant to this section must be held in the county in which the employee resides, unless the employee agrees to a different location.

Mr. MacKenzie said that basically described how the arbitration process would work, and then he continued with his personal observations of the current system:

Under the current system, an employee would file a grievance and would go through a series of meetings with management for second and third step grievances. Our experience with this is that it is currently a rubber stamp. There is no incentive for managers to deal with these grievances. More often than not they end up in the Employee Management Committee (EMC), made up of 3 from management and 3 from employee associations. [Voting] ties on the EMC go to the state.

Furthermore, there is no case law involved in those decisions. I think of it like a “what side of the bed did you wake up on” committee. The resulting decisions are inconsistent, which, to me, is arbitrary and capricious and punitive in nature, as opposed to corrective. If you talk to many of the people on the EMC they will tell you that they do not understand why many of these cases are coming to the committee. The answer is that management is not held accountable for trying to resolve these issues.

If it goes out of the EMC, then it goes to a hearing officer. While the hearing officer also is not required to be involved in case law, the decisions that were coming out of those cases are also inconsistent, and quite frankly, the hearing officer in the south [southern Nevada] refused to hold hearings. So there is no standard throughout the system that makes any sense to me at all, as someone who comes from collective bargaining in the private sector. I find it not corrective, but a punitive system. I also think it could be the subject of a federal lawsuit, because if you look at the decisions, you will find there is no consistency, and inconsistency is a punitive measure. That is the heartburn we have with the system that the state has now.

Mr. MacKenzie said that his personal experience with arbitration was as the Chief Executive Officer with a culinary union in northern Nevada, representing casinos in Reno. In ten years they had two arbitrations. They had to seek resolution because they did not want to go to arbitration. The arbitrations cost about $2,500 each. Both cases that went to arbitration were national issues that were being debated in the courts all over the country. The issues could not be resolved because the issues were in flux nationally. One issue was sexual harassment, and the other was call-in policy.

Mr. MacKenzie said that people were saying arbitration was expensive, but they had invested in a state lawsuit that had cost over $45,000 so far. He was told that the average cost to a state involved in a federal lawsuit was over $40,000, and the cost of an average lawsuit at the state level was over $20,000. In his experience, arbitration cost $2,500. He said that there were many misconceptions about arbitration by folks with no experience with it. All it involved was a neutral party listening to both sides, reviewing case law, and coming up with a decision that made sense. There was no incentive for workers or labor organizations to go to arbitration if they had a losing case. Yet, without arbitration, the remedy right now was lawsuits.

He said that the average taxpayer would be appalled if they knew how much was being spent legally on state workers, not to mention the damage being done in the workplace when workers left discussions with feelings of unfairness, that nothing had been achieved, and that they had been punished. Often no learning took place at all. He did not understand why the state supported their state employees feeling that way.

Mr. MacKenzie said he realized that there was a great deal of opposition to arbitration, but he urged people to look into it because his experience was just the opposite of what he had heard in the legislative building. He did not understand where the negativity came from.

Assemblyman Hardy said that this was a good bill and he would be honored to sign on.

Assemblyman Grady asked about the hearing officer who refused to hold grievance hearings in the south [southern Nevada]. Mr. Grady asked Mr. MacKenzie to whom that official reported.

Mr. MacKenzie said that the person had a contract with the Department of Personnel that was not renewed in the last round of appointments but added that it went on for some time. He said it was very disillusioning to those with good cases. Mr. Grady said he was glad to hear the man’s contract was not renewed.

Assemblywoman Koivisto asked, on page 4, line 28, why the sick leave transfer must be made in the name of the retiring employee. Mr. MacKenzie said that was not significant and was just an acknowledgement that the employee was making that donation.

Gary Wolff, representing the Teamsters Local 14 and the Nevada Highway Patrol Association, stated that he did not think he could make the case for this legislation any better than Mr. MacKenzie. Mr. Wolff said that he had worked for the state and with the Department of Personnel for many years, and had been involved with labor most of his career. He said that the current administration had been very helpful on many matters, but many of those were typical management-labor issues. He said he would not belabor arbitration, except to say that fiscal notes on these types of issues were very subjective. “Having been a bean counter for the highway patrol for many years,” he said, “any time we put something out there, we gave the worst-case scenario.”

Regarding sick leave, Mr. Wolff said he wanted to make a clarification. Last session the Committee passed a bill changing how sick leave was paid out at retirement. He said that state employees did receive more than $8,000 if they reached the maximum accrual, and that it was figured by a formula. He referred questions on those calculations to Jeanne Greene, who would testify next. He said that the Committee and the Legislature had approved a huge benefit increase when they passed that bill last session. It had grossly increased their payout, and again referred the Committee to Jeanne Greene for details. Mr. Wolff said that the legislation had accomplished the legislative intent, which was to reward employees that actually worked their years of service. He said in one case it amounted to one person receiving over $40,000 when they left state employment.

Mr. Wolff described his disappointment several years ago when he could not donate unused sick leave upon retiring from state government. He had wanted to donate his hundreds of hours of unused leave to two women, both Department of Public Safety employees with families, who were also cancer patients and needed the income. Mr. Wolff said, in his opinion, employees should be able to donate all sick leave, not just 50 percent, because it was the humane thing to do and would not cost the state a dime.

Regarding variable and alternative work shifts, like the Nevada Highway Patrol, Mr. Wolff said that if you’re off on a holiday, you can only get paid for 8 hours of holiday pay, which means that employees had to make up the difference if they worked a variable shift. He said that it was not a big issue with any department except the Department of Corrections. He asked the Committee to consider this issue.

Jeanne Greene, State Personnel Director, testified in opposition to A.B. 537. Ms. Greene said that Section 1 of the proposed bill had been discussed before the State Personnel Commission in several recent public hearings. After hearing extensive testimony from all parties involved, the Personnel Commission had declined to adopt that measure, based on issues of equity, as well as cost to the state. Employees were not required to work innovative work schedules, rather the employee must request, and be approved to work, any schedule of more than 8 hours per day.

As an example, Ms. Greene said that some employees had elected to work four 10-hour days per week, giving them 3 days off per week. She said that innovative work schedules could benefit employees, the agency, and the citizens served. However, innovative work schedules were not always possible or appropriate, and the majority of state employees continued to work five 8-hour days. Currently, all employees not scheduled to work on a holiday were paid for an 8-hour holiday. If their regular shift was more than 8 hours, the employee must contribute annual leave or comp time to make up the difference.

Ms. Greene then directed the Committee’s attention to Handout A (Exhibit G), which illustrated the inequity of the proposed amendment to A.B. 537. Ms. Greene then described and discussed the three examples on Handout A, which compared the total holiday pay which would be received by an employee working an 8-hour day, an employee working a 10-hour day, and an employee working a 12-hour day. All three cases were entitled to 11 paid holidays per year.

According to Handout A, if the proposed amendment passed, the first employee would be entitled to holiday pay for a total of 88 hours per year, the second employee would be entitled to holiday pay totaling 110 hours per year, and the third employee would be entitled to holiday pay totaling 132 hours per year.

Ms. Greene then turned to Handout B (Exhibit H), which extended the example to illustrate how many actual hours per week each employee would work in a holiday week. The first employee would work 32 hours in a holiday week, the second employee, 30 hours, and the third employee, 28 hours.

In conclusion, Ms. Greene pointed out that those employees in the second and third examples, who were working variable or alternative schedules, would be working fewer hours and receiving greater benefits than employees working 8‑hour days. She said that this additional benefit was perceived as an inequity by many employees and managers, as well as members of the Personnel Commission. She added that the estimated fiscal impact would be about $460,000 annually.

Ms. Greene moved to Sections 2 and 3, and said that they were not opposed to augmenting the availability of catastrophic leave, but the fiscal note showed that these two amendments would cost the state approximately $393,000 annually.

Section 4 would permit arbitration for grievances in lieu of the EMC process. She said that the Personnel Commission declined to approve this measure because they felt it would be costly and unnecessary. In response to concerns brought forth in the last legislative session, the Governor had appointed new members to the EMC. In addition, as part of the Department of Personnel’s proposed budget for the upcoming biennium, they requested funding to send the chairman and vice chairman of the EMC to the National Judicial College for training. That would ensure that the EMC adhered to judicial standards at the hearings and operated with greater efficiency. Ms. Greene urged the Committee to give the new committee a chance to demonstrate its effectiveness in adjudicating employee grievances.

Assemblyman Collins said that he had worked under several alternative schedules, and did not know of any employer who would allow alternative schedules if it was not to their benefit. He felt that variable schedules were usually to the employers’ benefit or they would not allow them.

Ms. Greene said that it was a benefit to both employee and to employer, although in most of the cases, the employees had requested the change and the state accommodated their requests.

Assemblyman Collins reiterated that if it did not benefit the employer, the employer would not have approved the work schedule. Mr. Collins felt that more holiday time equaled less sick leave, which was a cost saving to the employer, and more to the employers’ benefit that to the employees’ benefit. He said he agreed with Ms. Greene’s examples figuring pay differentials because he had negotiated those contracts.

Most employers calculated a cost per employee benefit package that included coverage for sick leave, based on using a portion of the sick leave allocated. Although he said most of his experience was with employers that had a “use it or lose it” policy, Mr. Collins did not think that the state should oppose the ability for employees to utilize or shift allocated sick leave to others, because the sick leave was a legitimate part of their guaranteed benefit package. He said he watched a man nearly dead walk back to work for two weeks with cancer, so he would not be terminated and could extend his benefits for another two or three months. He said he did not understand why the state would not support shifting unused sick leave to others in catastrophic situations, when it was to the benefit of all citizens of the state.

Ms. Greene clarified that what she said was that the state did not oppose it conceptually, but she wanted to bring the associated costs to the attention of the Committee.

Mr. Collins argued that the cost had already been actuarially figured into the benefit package.

Ms. Greene disagreed because the way employees were paid when they retired was that they had to forfeit the first 240 hours on the books, by statute. This bill would change the statute so that of the 240 hours, 120 hours would go to the Catastrophic Leave Bank.

Regarding arbitration, Assemblyman Collins said there were benefits to the state by recognizing arbitration as opposed to trying to train someone. He said in session and out of session they continually heard about the inconsistencies of the current process. He felt that Nevada needed to move into the twenty-first century and accept that arbitration was standard practice.

Ms. Greene said she would like to clarify a statement that Mr. MacKenzie made regarding the hearing officers. She said that the hearing officers did not hear grievances. They heard suspensions, terminations, and demotions, and were a separate body from the EMC, which heard grievances. The arbitration provision was directed only towards the EMC.

Ms. Greene also wanted to clarify a question asked by Assemblyman Goicoechea on part-time employees and holiday pay. She said that they did receive holiday pay proportional to the number of hours they worked.

Assemblywoman Pierce asked Mr. Greene about Handout A (Exhibit G). She pointed out that if the first employee was scheduled to work on 11 holidays, because they worked five days per week, then the chances of the second employee being scheduled to work on 11 holidays would go down, because they were scheduled to work fewer total days. Ms. Green said that was correct, but they had figured the worst-case scenario, which was if employees were scheduled on every holiday.

Ms. Pierce said it was not just the worst-case scenario, but also almost a mathematical impossibility. Ms. Greene was not sure how the actual numbers would come out, but guessed that they might be scheduled to work 8 of the 11 holidays. Ms. Pierce asked if the $400,000 figure was based on this idea.

Ms. Greene said no. They had about 3,000 employees working nonstandard workweeks, and the figures were based on the hours those employees had to use to make up the difference over the last year.

Ms. Pierce said she agreed with Assemblyman Collins, that if it were not good for the state to have alternative work shifts, they would not be working them. This was not a favor to employees. Ms. Greene agreed that it was a win-win situation.

Mr. Atkinson wanted to know if the alternative work schedule was similar to his experience, in that the employer did not go to the employees and ask them to go to an alternative schedule, but instead there was a provision where employees could request to work a different schedule. In some cases, they were denied, and in other cases, they were approved. He wanted to clarify who initiated the request.

Ms. Greene said that that was usually the case. They did have situations where a group of employees determined that they wanted to work a variable or alternative schedule, or sometimes one individual wanted to work an innovative schedule. However, the employee made the formal request.

Assemblyman Hardy asked how many “state employee days” were worked on any given holiday. Ms. Greene said she would get that information for him, and asked if he wanted to know how many employees were working on a holiday on any given holiday. Mr. Hardy said that was correct, and added that he wanted to know the statistics for those who did not have an option, but were required to work on a holiday. In order to comprehend the fiscal note, he thought they needed to know how many state employee days the full range of “employees A, B, and C” were actually working now. Mr. Hardy said he agreed with Ms. Pierce, that not all employees would work all 11 holidays and said he would be surprised if they worked 8 holidays.

Assemblywoman Koivisto asked Ms. Greene, when the budget was calculated for the year, if sick leave days were included as part of the benefit package. If so, she said there should not be a fiscal note for donation of the unused sick leave because the money had already been budgeted.

Ms. Greene said that payoff of sick leave was not budgeted, but there was a statute that allowed an agency to pull from a contingency fund if they did not have enough to cover sick leave.

Kareen Masters, Personnel Officer, Department of Human Resources, stated that the Department of Human Resources opposed Section 1, subsection 12, of A.B. 537 concerning holiday pay because it was inherently inequitable. The subsection, if adopted, would confer a differential benefit to selected employees. The Human Resources Department also had concerns regarding Section 4, which would establish an arbitration panel as another forum for grievances, in addition to the Employee Management Committee. Operating two dispute resolution systems at the same time would increase the potential for inconsistent decisions. There would be no incentives to ensure that arbitrators’ decisions were consistent with decisions of the Employee Management Committee. In addition, there would be additional costs to the Human Resources Department if the agency were assessed for arbitration fees. No funding was provided in the bill for those costs (Exhibit I).

Ruth Jones, Personnel Officer, Nevada Department of Employment, Training and Rehabilitation (DETR), said that they strongly opposed Sections 1 and 4 of A.B. 537 because of the inequity of alternative pay schedules. Sections 2 and 3 would cost the DETR money, but they did not oppose the augmentation of the Catastrophic Leave Fund accounts. They also opposed the arbitration provision because of the potential for inconsistent decision-making, and because it created an additional grievance process.

Assemblywoman Pierce asked how many employees were on the EMC. Ms. Masters said there were 6 members total, 3 representing management, and 3 representing employees. Ms. Pierce asked who chose the employee representatives. Ms. Masters said that she thought employee associations recommended nominations and that committee members were appointed by the Governor.

Assemblywoman Pierce asked Ms. Jones for clarification of the 8-hour versus 10-hour working holiday week. Ms. Jones said that employees would only be paid if they worked a holiday that fell on a day within their regular schedule. Ms. Pierce did not see the inequity.

Ms. Greene said that regarding the makeup of the EMC, individuals were recommended by various unions within the state, and then the Governor made the selections.

Assemblywoman Pierce said she was from a unionized industry that utilized the arbitration process. Her experience was that arbitrators were judges and were trained and looked at precedence and case law. Their decisions were not arbitrary or inconsistent. It was a good system that was rarely used because things were decided at a lower level.

Kevin Ingram, Personnel Officer, State Department of Corrections, said he wanted to go on record that the Department was in opposition to Sections 1 and 4 of A.B. 537 because of the inequities and fiscal impacts, which had been previously discussed.

Scott MacKenzie, Executive Director, State of Nevada Employees’ Association (SNEA), and AFCSME Local No. 4041, stated that he wanted to respond to some of the opposition statements.

First, he believed that the Commission missed an offset in discussion of annual and sick leave, which would result in a savings to the state because if someone working a four 10-hour day schedule took a day off, they would be taking 10 hours off, and the same thing with annual leave. So calculating the costs would not be productive without also calculating the savings.

Second, the EMC was chaired by two Management Committee persons, who were from the same agency. The Management Committee appointments were made before the recommendations by the unions were accepted, which indicated some inequality in the appointment process.

Finally, he thought that there was no comparison to an arbitrator’s experience and use of case law, compared to decisions made by the EMC. He urged the Committee to talk to the EMC members.

Gary Wolff, Teamsters Local No. 14, Nevada Highway Patrol Association, also wanted to counter some of the opposition testimony. He said one member of the Committee asked how many people actually worked the holidays. Mr. Wolff said that those folks were mostly public safety and highway patrol.

Chairman Manendo asked if there was any more testimony on A.B. 537. Hearing none, he closed the hearing on that bill. He said that staff would like to reconsider the fiscal note, so the Committee would revisit the bill later next week.

The Chairman apologized for directing some folks to make their comments as brief as possible because he anticipated adjourning this meeting at 10:00 a.m. Currently, they expected the Floor Session to begin at 10:30 a.m.

Chairman Manendo reopened the hearing on A.B. 539 and called Mr. List to the witness table to present the indexing of the $300 figure.

Mr. List, Nevada Association of Counties (NACO), stated that $300 in 1975 would have the same buying power as $1,021 today. He said they would be happy with $1,000, or with $1,500, since the figure had not been adjusted for 28 years. If the number would be left alone for another 28 years, they would like to support the higher figure, suggested by Assemblyman Collins.

Chairman Manendo thanked Mr. List for getting the calculations back to the Committee so quickly. Chairman Manendo wondered why it had taken so long to be adjusted, and Assemblywoman Weber asked if there was a way to automatically index the figure. There was no response.

Assemblyman McCleary commented that the Committee should accept the $1,500 figure.

ASSEMBLYMAN GOICOECHEA MOTIONED TO AMEND AND DO PASS A.B. 539, CHANGING THE $300 AT LINE 6 TO $1,500.

ASSEMBLYMAN GRADY SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

Chairman Manendo assigned the bill to Mr. Grady to present on the Floor.

The Chairman reminded the Committee of the time change Sunday evening, and of the Subcommittee meeting at 6:30 a.m. on Monday. He thanked both Committee and staff, wished everyone a good weekend, and adjourned the meeting at 10:27 a.m.

RESPECTFULLY SUBMITTED:

JoAnn Aldrich

Committee Secretary

APPROVED BY:

Assemblyman Mark Manendo, Chairman

DATE: