Legislature(2015 - 2016)BARNES 124

03/20/2015 03:15 PM House LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Moved CSHB 58(L&C) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
         HB 120-TRANSPORT NETWORK SVES. & WORKERS COMP                                                                      
3:50:09 PM                                                                                                                    
VICE CHAIR  HUGHES announced the  next order of business  would be                                                              
HOUSE  BILL NO.  120, "An  Act relating  to workers'  compensation                                                              
and  transportation  network  companies;   and  providing  for  an                                                              
effective date."                                                                                                                
3:51:08 PM                                                                                                                    
REPRESENTATIVE  DAN SADDLER,  Alaska  State Legislature,  speaking                                                              
as the  sponsor of HB  120, stated that  Chugiak-Eagle River  is a                                                              
growing community  of approximately  35,000 people about  10 miles                                                              
north  of  the  core  of  the  Municipality  of  Anchorage  (MOA).                                                              
Although Chugiak-Eagle  River is a thriving community,  it has had                                                              
ongoing challenges  in obtaining transportation services  with its                                                              
municipal bus system  and local taxicab industry.   Apparently the                                                              
community lies too  far from the MOA's core to  receive consistent                                                              
and timely  taxi service.   It requires  scheduling in  advance or                                                              
waiting 30  minutes or longer  for a cab,  plus it can  be costly.                                                              
The  municipal bus  system has  continually  been threatened  with                                                              
reduced hours, routes, and service.                                                                                             
REPRESENTATIVE   SADDLER  said   that   the  Chugiak-Eagle   River                                                              
community  hopes  to  get  some  relief  from  the  transportation                                                              
issues  by the  new technology  trends,  such as  Uber, Lyft,  and                                                              
Sidecar,  which are  known as  "transportation network  companies"                                                              
or TNCs.   The transportation  network companies (TNCs)  use smart                                                              
phone  applications and  software  to connect  people  who want  a                                                              
ride with  available drivers willing  to provide the service  in a                                                              
relatively short amount of time.                                                                                                
REPRESENTATIVE  SADDLER explained  that drivers connected  through                                                              
"transportation  network companies"  are independent  contractors.                                                              
They  obtain  business  licenses,   operate  their  own  vehicles,                                                              
establish operating  hours, and  decide for themselves  whether to                                                              
accept  or decline  an available  ride  request.   He stated  that                                                              
Uber   entered  the   Anchorage   market  in   2014  and   created                                                              
transportation options  for his community and for  Girdwood, south                                                              
of Anchorage.   He stated that  Uber was currently in  the process                                                              
of  negotiating  with  the  MOA  on  how  to  operate  inside  the                                                              
municipality.   This bill would  address several issues  that will                                                              
help his  community.   He said  that HB  120 would essentially  do                                                              
two  things.   First,  it  would  define  "transportation  network                                                              
company"  and   "transportation   network  company  services."   A                                                              
"transportation  network company" would  mean an entity  that uses                                                              
a digital  network or software  application to connect  passengers                                                              
to  drivers.    It  would  specify   that  transportation  network                                                              
company  services  are provided  from  the  moment that  a  driver                                                              
accepts  a request  for  services  for a  ride  to  the point  the                                                              
passenger  exits their  vehicle.   In  addition,  this bill  would                                                              
offers transportation  network company drivers the  same exemption                                                              
from  workers'  compensation insurance  coverage  requirements  as                                                              
enjoyed by  other people  in Alaska,  including babysitters,  real                                                              
estate professionals,  certain sports referees and  officials, and                                                              
taxicab  drivers since  these people  are not  employees, but  are                                                              
independent  contractors.    The   Chugiak-Eagle  River  area  has                                                              
expressed a strong  desire for more choice, more  competition, and                                                              
more  opportunities  for  transportation  services.   He  directed                                                              
attention  to  documents  in  members'   packets  from  the  local                                                              
chamber of commerce.   He offered his belief that  HB 120 provides                                                              
one step toward  addressing the changing market  in transportation                                                              
needs in underserved communities in Alaska.                                                                                     
3:55:00 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  asked whether there was a  way to ensure                                                              
to transportation  network companies (TNCs) could  operate, but to                                                              
also  ensure that  all participants  in the  enterprise are  fully                                                              
REPRESENTATIVE  SADDLER answered  that his  intent was to  address                                                              
some  of  the  fundamental  issues  involved  with  transportation                                                              
network company operations;  however, he also desires  to focus on                                                              
this aspect and not be "everything to all people."                                                                              
3:55:59 PM                                                                                                                    
VICE CHAIR HUGHES opened public testimony on HB 120.                                                                            
3:56:09 PM                                                                                                                    
MICHAEL MONAGLE,  Director, Central  Office, Division  of Workers'                                                              
Compensation,   Department  of   Labor  &  Workforce   Development                                                              
(DLWD),  stated  that  he  was not  an  expert  on  transportation                                                              
network services.   He said that the department is  neutral on the                                                              
bill.  He advised  members that there was a companion  bill in the                                                              
other body,  [SB 58] and he  testified in opposition to  the bill;                                                              
however, that  is incorrect.   The bills are currently  identical,                                                              
he said,  apologizing  for any confusion.   He  said the  official                                                              
position of  the Department  of Labor  & Workforce Development  is                                                              
that it is neutral on both bills.                                                                                               
MR. MONAGLE  referred to  page 2,  line 25,  noting that  the bill                                                              
would  exempt a  transportation  network company  driver from  the                                                              
moment  the  driver  picks  up a  passenger  until  the  passenger                                                              
disembarks.    He  highlighted   that  what  was  unclear  to  the                                                              
department  is how  the exemption  would apply  to someone  at the                                                              
curbside waiting for  a passenger and something happens  or if the                                                              
driver  was waiting  for  a passenger  to  contact  him/her and  a                                                              
crash happened.   He  asked for  further clarification  on whether                                                              
that  person  was   considered  an  employee  or   if  he/she  was                                                              
considered an independent contractor.                                                                                           
3:58:21 PM                                                                                                                    
MR.  MONAGLE  directed  attention  to the  current  exemption  for                                                              
taxicabs; however,  he offered  his belief  that the language  [on                                                              
page 2, lines 21-22  in HB 120 [in paragraph  (11)] seemed broader                                                              
than just taxi services.   He read, "(11) a person  who operates a                                                          
motor vehicle  that is  (A) owned, leased,  or authorized  for use                                                          
by  the  person;   ...."    Under  the  definition   of  having  a                                                          
technology platform,  a smart  phone, to connect  the driver  to a                                                              
passenger, it  would seem that  tour operators that  treated their                                                              
drivers as  independent operators with  a smart phones  could take                                                              
advantage   of  the   same  language.      While  the   department                                                              
acknowledged an  exemption exists  for taxi drivers  and limousine                                                              
services,  expanding  the  industry  further -  into  the  tourism                                                              
business - would be of concern to the department.                                                                               
3:59:33 PM                                                                                                                    
MR.  MONAGLE directed  attention  to proposed  Sections  3 and  4,                                                              
which are  retroactive to January  1, 2014.  He  expressed concern                                                              
that  an  injured  worker  or  an   ongoing  proceeding  could  be                                                              
nullified by the retroactive clause.                                                                                            
3:59:57 PM                                                                                                                    
VICE  CHAIR HUGHES,  in  reference to  the  concern about  drivers                                                              
waiting on  the curb  for passengers,  directed attention  to page                                                              
2, [line  27] which  indicates service starts  at the  point "when                                                              
the person accept  a request."  She suggested that  a person would                                                              
open his/her  smart phone application,  "app," and click on  it to                                                              
make a payment.   She said that  the Uber car sitting  by the curb                                                              
waiting  for  someone who  has  accepted  the request  would  fall                                                              
under this language.   She asked for further  clarification on his                                                              
concern that there would be a "gap."                                                                                            
4:00:40 PM                                                                                                                    
MR. MONAGLE  referred  to page  2, line  25 which  read, "...  ; a                                                          
person  is  performing  transportation  network  company  services                                                          
under  this subparagraph  when the  person accepts  a request  for                                                          
transportation  ...."    He  suggested  that  the  department  was                                                          
concerned about  a driver who was  "in between" requests,  who had                                                              
not  yet received  a  text or  other  communication  for the  next                                                              
passenger.   He clarified  he was interested  in what  happened to                                                              
the driver in between calls.                                                                                                    
VICE CHAIR HUGHES said she had misunderstood his concern.                                                                       
4:01:24 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON   asked  whether  he   considered  these                                                              
drivers  as  employees   and  not  as  contractors;   further,  to                                                              
consider the policy decision being made by this language.                                                                       
MR. MONAGLE answered  if a dispute arose as to  whether the driver                                                              
was  an   independent  contractor   or  an   employee,  that   the                                                              
department would  use the  "relative nature of  the work  test" to                                                              
make  the  determination,   which  would  consider   a  series  of                                                              
questions.  For  example, one of the primary  considerations would                                                              
be whether this  was a separate calling or in other  words whether                                                              
the work  being done  was independent  of the  employer or  if the                                                              
employer  gained   significantly  from   the  activities   of  the                                                              
employee.   He  characterized  the "relative  nature  of the  work                                                              
test"  as  consisting  of  a series  of  questions,  such  as  who                                                              
provides  the tools  and equipment,  who sets  the hours,  whether                                                              
the employee has  the right to hire others, and  if the conditions                                                              
of employment  were set  by the independent  contractor or  by the                                                              
employer.    He   said  this  type  of  analysis   will  help  the                                                              
department  make the  determination  on whether  the person  truly                                                              
was an employee or is an independent contractor.                                                                                
4:03:00 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  asked what the ramifications  to the law                                                              
would be if the exemption was adopted.                                                                                          
MR.  MONAGLE said  that  ultimately whether  to  exempt the  party                                                              
would be  a policy decision  by the legislature.   Of  course, the                                                              
department  always  has  concerns  about  exemptions  since  there                                                              
seems  to  be  a  growing  movement   nationally  to  classify  as                                                              
employees  as  independent  contractors,  he  said.   One  of  the                                                              
common  complaints specific  to the  construction industry  occurs                                                              
when   employers   classify  their   carpenters   as   independent                                                              
contractors instead  of as employees.  The department  has a staff                                                              
of investigators  who delve  into these complaints,  he said.   He                                                              
recalled a  national delivery company  had classified  its drivers                                                              
as  independent   contractors  since  their  drivers   leased  the                                                              
vehicles; however,  the California  district court ruled  that the                                                              
drivers were employees  and not independent contractors.   He said                                                              
the  department  has  had  some concern  about  the  growing  push                                                              
toward independent  contractors, but  their concern  was primarily                                                              
to ensure  that workers  are covered in  the event that  something                                                              
happens to  them.  The department  wants to ensure  that employees                                                              
have medical  coverage and wage  replacement covered in  the event                                                              
injuries are sustained on the job.                                                                                              
4:04:56 PM                                                                                                                    
VICE  CHAIR HUGHES  asked  for  further clarification  on  whether                                                              
taxicab drivers are considered independent contractors.                                                                         
MR. MONAGLE answered yes.                                                                                                       
4:05:10 PM                                                                                                                    
SHELDON  WINTERS,  Lobbyist,  State Farm  Insurance,  stated  that                                                              
State  Farm  Insurance   was  the  largest  insurer   of  personal                                                              
automobiles  in the country  and in  Alaska.   He said  that State                                                              
Farm   Insurance   does   not   have   any   objection   to   TNCs                                                              
[transportation  network companies]  or any  position on  the gist                                                              
of  the  bill,  which  was  to   exempt  TNCs  from  the  workers'                                                              
compensation  requirements.   However,  State  Farm Insurance  has                                                              
expressed concerned  about the narrow  definition of  TNC services                                                              
in  HB  120,  which  could  have   dire  consequences  if  applied                                                              
4:06:15 PM                                                                                                                    
MR. WINTERS  offered to  read some snippets  from the  Division of                                                              
Insurance's  consumer warning  posted on  the division's  website.                                                              
He  read, "Alaska  Division  of  Insurance  (DOI) joins  14  other                                                              
states  in issuing  a warning  about  the risks  of rideshare  and                                                              
vehicle-sharing programs  ...."  He stated that figure  was now 22                                                              
states that have  issued similar warning.  He  read, "Ride-sharing                                                              
programs,  or   transportation  network  companies/TNCs,   use  an                                                              
online service  to connect passengers  with drivers who  use their                                                              
personal  vehicles   for  pre-arranged  taxi-like   transportation                                                              
services  for hire.   The  Division  wants Alaskans  to know  that                                                            
these  programs   may  result  in   a  denial  of   insurance  for                                                            
participating vehicle owners, drivers, and passengers."                                                                       
4:07:20 PM                                                                                                                    
MR. WINTERS  continued to  read, "Personal  auto insurance  is not                                                              
intended  to  cover   individuals  who  use  their   vehicles  for                                                              
commercial purposes.   Most personal auto policies  will not cover                                                            
an  accident  that   occurs  when  someone  uses   their  personal                                                              
vehicles for commercial purposes."                                                                                              
MR. WINTERS said  that other regulators refer to  various "gaps in                                                              
insurance" that  exist with  this new emerging  industry.   One of                                                              
the gaps is  of concern in this  bill.  He stated  that commercial                                                              
activities  of a TNC  driver do  not begin  when the passenger  is                                                              
picked  up  or  when  the  passenger  calls;  instead,  commercial                                                              
activities that  are not intended  to be covered by  personal auto                                                              
insurance  begin  the  moment  that   "app"  is  turned  on.    He                                                              
suggested that  typically the  TNC driver turns  the "app"  on and                                                              
either drives around  or sits on the side of  the street "roaming"                                                              
for  customers.   He offered  his belief  that the  aforementioned                                                              
period  of  time was  not  contained  in  the definition  [in  the                                                              
bill].   He characterized it  as being  similar to when  a taxicab                                                              
driver turns  on his light  to indicate the  cab is for hire.   At                                                              
that  point,  the  taxicab  driver   does  not  have  a  customer;                                                              
however,  he is  engaged in  a commercial  activity,  just as  any                                                              
Uber  driver or  TNC driver  who has turned  on the  "app" and  is                                                              
roaming around for passengers.                                                                                                  
4:08:58 PM                                                                                                                    
MR. WINTERS  suggested for  TNC drivers it  was arguably  the most                                                              
dangerous time  because they are  engaged in the app,  roaming for                                                              
customers  and some  tragic accidents  have  occurred during  this                                                              
time; for  example, the  death of  a six-year-old  in which  a TNC                                                              
driver did  not have a  passenger, but the  "app" was on  when the                                                              
driver ran  into a family and the  young daughter was  killed.  He                                                              
stated  that  in that  high-profile  accident,  the TNC  took  the                                                              
position that since  a passenger connection had not  yet been made                                                              
the TNC was not responsible.                                                                                                    
4:09:42 PM                                                                                                                    
MR.  WINTERS   expressed  concern  that  "transportation   network                                                              
services" are defined  too narrowly.  He referred to  page 3, line                                                              
6, to  paragraph  (5), "transportation  network company  services"                                                              
means transportation  of a passenger between points  chosen by the                                                              
passenger and prearranged  with a transportation  network company-                                                              
endorsed  driver  through  the use  of  a  transportation  network                                                              
company's  digital network  or software application."   He  stated                                                              
that it  was unclear if  TNS starts when  passenger is  picked up,                                                              
or is engaged, but it doesn't include the "roaming" period.                                                                     
MR. WINTERS  characterized  this bill as  a workers'  compensation                                                              
bill.  He expressed  concern that this narrow  definition would be                                                              
used to  preclude the  injured party.   The concern  was two-fold;                                                              
first, because that  was what TNCs have argued in  the past, which                                                              
is that  even though  the app is  on, it  is before any  passenger                                                              
was  engaged, and  thus would  not  be a  TNC activity.   If  this                                                              
legislation  passes,  it will  be  the  only  law in  Alaska  that                                                              
defines  TNCs.   From his  experience  as a  defense attorney,  he                                                              
opined that the  courts will look at this definition  to determine                                                              
whether workers' compensation  will apply or not.   He said he was                                                              
working  with  the sponsor  on  language  that would  broaden  the                                                              
definition  to include "app  on."   When the app  was on  it would                                                              
become a TNC enterprise, he said.                                                                                               
4:11:41 PM                                                                                                                    
MR. WINTERS  said that TNC's  are evolving,  which he viewed  as a                                                              
good  thing.     Certainly  legislation  can  evolve   over  time;                                                              
however,  what must  be  "gotten  right" from  the  start was  the                                                              
definition of  the TNC.  He  asked members to  consider broadening                                                              
the  definition  in  this workers'  compensation  bill.    Lastly,                                                              
although  he agreed  he  is not  a workers'  compensation  expert,                                                              
when  an industry  attempts to  put  in statute  an exemption  for                                                              
workers'  compensation responsibility,  the  industry should  want                                                              
it to be as  broad as possible, therefore, he  found the liability                                                              
aspects in the bill to be very troubling.                                                                                       
4:13:43 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON said Mr.  Winter's proposal  seemed like                                                              
a "win-win"  situation.   He noted  that Uber  was very  effective                                                              
since  its service  is cheaper,  but the  externalities not  being                                                              
absorbed by  the transaction.   He related his understanding  that                                                              
the insurance industry  wants to make money, but it  is willing to                                                              
cover people for  injuries.  He suggested that  under Mr. Winter's                                                              
proposal  drivers of  Uber cars  would have  more protection  from                                                              
the courts  and their  passengers would  be better protected,  but                                                              
the whole enterprise would cost more.                                                                                           
MR.  WINTERS answered  that he  thinks  that characterization  was                                                              
accurate,  but  added that  if  personal  auto insurance  were  to                                                              
cover the commercial  policy and activities, everyone  would be in                                                              
the  "pool" and  it will  cost everyone  more  for that  coverage.                                                              
Instead,  the cost  of coverage  should rest  with the  enterprise                                                              
engaged  in  the  commercial  activity,  which  is the  TNC.    He                                                              
recalled  earlier  testimony  that  stated part  of  the  business                                                              
model  was to  leverage the  use of  the personal  auto policy  to                                                              
avoid  having  to  pay  for  insurance.     He  acknowledged  that                                                              
highlighted the  issue.  He said  a person's personal  auto policy                                                              
does  not cover  commercial activity  and  the insurance  industry                                                              
wants  to  fill  that  gap.    At the  end  of  the  day,  a  more                                                              
comprehensive  liability  bill  has  been  passed  in  four  other                                                              
states,  which states  that  from moment  the  "app" is  on it  is                                                              
clear that  the personal auto policy  does not apply.   This would                                                              
it require the  TNCs to basically obtain commercial  insurance for                                                              
their activities at that point.                                                                                                 
4:16:03 PM                                                                                                                    
REPRESENTATIVE  KITO said  Mr. Winters mentioned  ride-share.   It                                                              
made him  think about carpooling in  which people pay $5  for gas.                                                              
He said as  the vehicle owner, he  has provided rides  to work and                                                              
was  reimbursed   for  gas.    He  asked  whether   personal  auto                                                              
insurance  covers  that activity  since  it  happens five  days  a                                                              
MR.  WINTERS answered  that carpooling  does not  put the  vehicle                                                              
"out for  hire."  He  offered his belief  that the  activity would                                                              
be covered  under the personal auto  policy.  The  distinction was                                                              
that  the TNCs  are  commercial enterprises  that  make money  and                                                              
carpooling does not.                                                                                                            
4:17:45 PM                                                                                                                    
BRYCE BENNETT, Senior  Operations Manager, Uber,  stated that this                                                              
bill has a  much narrower scope, which specifically  addresses the                                                              
workers' compensation piece being evaluated.                                                                                    
MR.  BENNETT explained  that  Uber was  a  platform that  connects                                                              
drivers and  riders through a mobile  application [or "app"].   He                                                              
stated that Uber  brings an unprecedented level  of accountability                                                              
to the  transportation industry  since riders  know who  will come                                                              
to pick  them up.   The system  is a  cashless system  with riders                                                              
paying  for the  service with  their credit  cards, which  removes                                                              
danger for  drivers.  On  top of that  Uber provides  a continuous                                                              
feedback look  and a rating  system after  every single trip.   He                                                              
described  Uber   drivers  as  independent  contractors   who  may                                                              
provide  a couple of  trips a  week to  30 or  40 trips per  week.                                                              
These  drivers  must  apply  on   line,  submit  basic  documents,                                                              
including   registration,   proof   of  insurance   and   driver's                                                              
licenses.  Driver  must obtain a 19-point vehicle  inspection at a                                                              
local  certified mechanic,  such  as a  Midas shop.   The  drivers                                                              
must  submit to  a stringent  and thorough  background check  that                                                              
spans seven  years and considers  motor vehicle records,  criminal                                                              
background  check, sex offender  data base  registry check,  and a                                                              
social  security  trace that  pulls  local and  multi-state  court                                                              
records.   Only after  taking all  of these  steps can  any driver                                                              
have  access to  the platform.   One  of the  things that  drivers                                                              
said when  polled was that one  of the greatest things  about Uber                                                              
was  the  flexibility  that  it provided  them,  rather  than  the                                                              
money.  They can come and go as they please, he said.                                                                           
4:20:29 PM                                                                                                                    
MR.  BENNETT stated  that drivers  could sign  on once  a week  or                                                              
choose  to offer  services  on Friday  and  Saturday  nights.   He                                                              
characterized the  drivers as part-time  drivers or "stay  at home                                                              
moms,"  but  the main  theme  was  the complete  flexibility  Uber                                                              
drivers have.   He said that  Uber drivers own their  own personal                                                              
vehicles and  drive an average of  20 hours a month with  the "app                                                              
on", which  he contrasted  with taxicab  companies, whose  drivers                                                              
are dispatched,  often working on  a set shift, and  leasing their                                                              
vehicles  from permanent  owners.   In the case  of Uber,  drivers                                                              
have an  option to  receive a  request.   These drivers  receive a                                                              
request via  their smart  phones, and can  decide whether  to pick                                                              
up the passengers  or not.  It depends on the  city, but typically                                                              
drivers are  required to  obtain business  licenses.   Drivers are                                                              
not furnished  any equipment.  He  offered his belief that  one of                                                              
the conditions  for exemptions  for taxicab  companies was  due to                                                              
the rate-based fare  by mile or minute, which is  also how Uber is                                                              
calculated.   He  stated that  the  [drivers] take  80 percent  of                                                              
share and do not work any shifts or for any hourly rates.                                                                       
4:22:35 PM                                                                                                                    
MR. BENNETT  stated  that the partners  receive  an IRS 1099  form                                                              
each  year  since there  isn't  any  tax  withholding.   In  other                                                              
cities  that  have  Lyft  and  Sidecar,   Uber  doesn't  have  any                                                              
exclusivity.   The Uber  drivers can  have all three  applications                                                              
on their phone and can be affiliated with all three companies.                                                                  
MR. BENNETT  said that  this bill  looks at workers'  compensation                                                              
portion.    He  said  that no  other  state  has  classified  Uber                                                              
affiliated partners,  or drivers,  as employees.   He acknowledged                                                              
that other states,  including Arkansas and Florida  are evaluating                                                              
workers' compensation.   In terms of insurance, there  are not any                                                              
gaps.  He directed  attention to a chart in members'  packets that                                                              
describes every  level of insurance,  beginning with period  1, in                                                              
which  the application  is  on, but  there  isn't any  transaction                                                              
taking place and the rider is not connected to the driver.                                                                      
4:24:18 PM                                                                                                                    
MR.  BENNETT  referred to  the  tragic  case that  was  previously                                                              
mentioned  that occurred  in San  Francisco.   He stated that  the                                                              
accident  occurred during  period  1 and  personal auto  insurance                                                              
settled  by offering  to pay  up to  the limits  of the  insurance                                                              
policy.  He explained  that period 2 will cover  the timeframe one                                                              
the  driver receives  a beep  and taps  the screen  to accept  the                                                              
ride, which  is the point when  the driver is considered  en route                                                              
to pick up the  rider.  At that point, period  2, the Uber primary                                                              
$1 million insurance  starts and continues through  period 3, when                                                              
the rider  is in  the car.   This $1  million coverage  extends to                                                              
uninsured motorists,  underinsured motorists,  and collision.   He                                                              
said that  Uber hoped  to address  narrow scope  addressed  by the                                                              
bill.   Uber  has  been  working  with the  MOA  to reach  a  more                                                              
comprehensive  solution  that  will   allow  Uber  to  operate  in                                                              
Alaska,  he said,  noting that  Uber paused  its operations  after                                                              
providing  five  months  of  free rides  in  the  Anchorage  area,                                                              
partnering with  almost 100 small  businesses and  providing rides                                                              
to thousands of people.                                                                                                         
4:26:04 PM                                                                                                                    
VICE  CHAIR  HUGHES  asked for  further  clarification  that  Uber                                                              
drivers are logged on for an average of 20 hours per month.                                                                     
MR. BENNETT  answered yes; the  average was 5  hours a week  or 20                                                              
hours per month.                                                                                                                
4:26:24 PM                                                                                                                    
VICE CHAIR HUGHES  asked whether people were using  their vehicles                                                              
for other purposes.                                                                                                             
MR.  BENNETT answered  that typically  people  use their  personal                                                              
vehicles as they see fit.                                                                                                       
VICE CHAIR HUGHES said she was surprised the average was so low.                                                                
4:26:53 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON  asked  for further  clarification  that                                                              
the commercial  transaction starts  when the  driver picks  up the                                                              
MR. BENNETT  answered that  the commercial  insurance begins  when                                                              
the driver accepts the connection.                                                                                              
4:27:41 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON asked how  many instances  of litigation                                                              
have  occurred when  something happens  during period  1 prior  to                                                              
the "app" connection.                                                                                                           
MR.  BENNETT answered  that  there  have not  been  any issues  in                                                              
period 1 in Alaska.                                                                                                             
4:28:06 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON  offered  his  belief  that  each  state                                                              
would  essentially  have a  case  if  their statutes  didn't  make                                                              
period 1  clear or else the  court will need decide  when coverage                                                              
actually began.   He asked whether there was not  any dispute that                                                              
the  insurance  coverage  begins   from  the  time  the  Uber  app                                                              
[application] was  activated, which  was basically the  receipt of                                                              
the trip request until the end of the trip.                                                                                     
MR. BENNETT  answered  that the  period 1 timeframe  was when  the                                                              
Uber driver  has the Uber app on,  but prior to the  request being                                                              
received  by the  potential  passenger.   He  clarified that  this                                                              
timeframe  is the period  for the  contingent liability  coverage.                                                              
He said  the issue is  who provides the  primary coverage,  and in                                                              
this  instance   the  personal  insurance  provides   the  primary                                                              
coverage.      He   reported   that   Illinois   actually   passed                                                              
comprehensive legislation  that aligned with that,  but he offered                                                              
his belief  that most other states  are working on that  aspect as                                                              
well.   Again,  during the  time period  when the  Uber driver  is                                                              
logged  on  and available,  if  there  were  any issues  with  the                                                              
driver's personal  auto insurance,  the Uber contingent  liability                                                              
coverage would  then "kick in."   He added that Uber  has provided                                                              
these  insurance policies  to multiple  cities  and states  around                                                              
the country, including the Municipality of Anchorage.                                                                           
4:29:34 PM                                                                                                                    
REPRESENTATIVE  KITO related  a  scenario in  which  a driver  has                                                              
multiple  apps on,  including  the Uber  app.   He  asked how  the                                                              
insurance gets  determined if an  incident occurred  during period                                                              
1, prior  to the driver accepting  a trip if three  different apps                                                              
were activated.                                                                                                                 
MR. BENNETT  replied that  there have not  been any  issues during                                                              
period  1.  He  offered to  follow up  with the  legal team  since                                                              
Uber has  been operating  in California  for  a longer period  and                                                              
more competition exists so that specific issue may have arisen.                                                                 
4:30:14 PM                                                                                                                    
VICE  CHAIR  HUGHES  asked  for   further  clarification  that  in                                                              
Illinois  the   commercial  coverage   begins  at  the   point  of                                                              
MR.  BENNETT  agreed that  was  correct.    He said  the  Illinois                                                              
legislature  passed  legislation  that identified  the  contingent                                                              
coverage  as  well identifying  the  primary  commercial  coverage                                                              
begins  when a  ride  is requested,  which  also  aligns with  the                                                              
language in this bill.                                                                                                          
VICE CHAIR  HUGHES asked whether  any states have passed  that the                                                              
defining moment  was the point at  which the app was  activated or                                                              
"app on."                                                                                                                       
MR. BENNETT answered  that California transitioned to  an "app on"                                                              
and Colorado  also considers  [primary coverage]  when the  app is                                                              
turned on [or "app on."                                                                                                         
VICE  CHAIR HUGHES  recapped  her  understanding  that two  states                                                              
[California  and  Colorado]  consider  "app on"  as  the  defining                                                              
moment  for commercial  coverage and  one considers  it to  be the                                                              
point  of purchase  [Illinois], when  the passenger  pays for  the                                                              
ride via  a credit card.   She asked  whether this issue  was also                                                              
currently being considered in other states.                                                                                     
MR.  BENNETT  answered  that  a  wide  range  of  legislation  was                                                              
currently being considered in multiple states.                                                                                  
4:31:23 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON  said there  was  nothing magical  about                                                              
when  the  clock  begins,  but  states  were  making  pure  policy                                                              
decisions.   Prior to the  existence of Uber, insurance  companies                                                              
such as State  Farm Insurance and Farmers Insurance  did not cover                                                              
this sort  of activity.   He asked  why the  burden be  shifted to                                                              
them during  the period  when the  driver might  be distracted  by                                                              
trying  to identify  whether  a potential  rider  has requested  a                                                              
ride.   He offered that  these drivers  were on the  streets since                                                              
they  were offering  rides.   He asked  for further  clarification                                                              
since  the courts  will ultimately  determine  whether that  would                                                              
constitutes an economic activity absent a statute.                                                                              
MR. BENNETT  answered that  he was not  familiar with  a situation                                                              
in which the  courts made such determinations.   He suggested that                                                              
most states have addressed this in one form or another.                                                                         
4:33:14 PM                                                                                                                    
ARMAND  FELICIANO,  Vice-President,   Property  Casualty  Insurers                                                              
Association   of   America   (PCI),  offered   that   State   Farm                                                              
Insurance's  testimony  was "spot  on."   He  said  that the  real                                                              
issue  was  that  the  transportation   network  companies  (TNCs)                                                              
definition of  service is so narrowly  defined [in the  bill].  He                                                              
related a  scenario in  which an Uber  driver was "roaming"  ["app                                                              
on"] without  a passenger  and was  involved in  an accident.   He                                                              
offered his  belief that the  courts, using the  narrow definition                                                              
of  TNCs,  would  determine  that the  driver  was  not  providing                                                              
transportation  network services  and therefore  Uber is  "off the                                                              
hook."   He asked to next respond to Uber's testimony.                                                                          
4:34:11 PM                                                                                                                    
MR. FELICIANO  directed  attention to  the "gap"  issue.   He said                                                              
that 22  state regulators have  already deemed that  personal auto                                                              
insurance does  not cover the period  described as period  1.  The                                                              
main debate  surrounds  turning the  Uber "app  on," the point  at                                                              
which the  driver is engaging in  commercial activity.   He agreed                                                              
this  was a  matter of  opinion,  but PCI's  opinion is  different                                                              
than  Uber's opinion.    He related  his  understanding that  Uber                                                              
believes period  1 is  considered personal  use, but PCI  believes                                                              
it  falls under  commercial use.    He characterized  this as  the                                                              
"heart  of the  issue."   The  Uber  insurance  was contingent  on                                                              
personal  auto insurance,  but  PCI  disagrees and  believes  that                                                              
personal auto insurance  simply does not cover that  activity.  In                                                              
fact, that  is exactly  what a gap  is, he said.   If  an accident                                                              
happens and  the driver indicates the  Uber app was on  during the                                                              
investigation,  personal   auto  insurance  will   not  cover  it;                                                              
however,  Uber disagrees  with this determination.   He  suggested                                                              
that drivers really  shouldn't want auto insurance  coverage based                                                              
on the  court stepping  in and determining  the coverage.   Having                                                              
Uber services as  an option for transportation  is great; however,                                                              
he  disagreed  that  insurance  law  should  be  so  gray.    Uber                                                              
testified  that incidents  have not  yet happened  in Alaska,  but                                                              
why wait until they do.                                                                                                         
4:35:46 PM                                                                                                                    
MR. FELICIANO  suggested that in  Uber's home state  of California                                                              
an  Uber  driver  did  have  an accident  during  period  1.    He                                                              
reported  that  36 states  are  currently  debating this  type  of                                                              
insurance coverage  today.  He stated  that PCI has  been involved                                                              
in  this nationally,  and California,  Colorado,  the District  of                                                              
Columbia,  and  West  Virginia  have  agreed  that  transportation                                                              
network company  services (TNC) services  begin when the  Uber app                                                              
is turned on [app  on].  He suggested that if  Uber was willing to                                                              
consider that  the service occurs  during "app on"  in California,                                                              
why  not extend  that  same level  of protection  in  Alaska.   He                                                              
offered to work  with Uber on this issue, just as  his company has                                                              
done in California.   He suggested that the California  model will                                                              
work  in  Alaska.    He  remarked  that  Illinois  represents  the                                                              
minority  since it  considers  TNC happens  when  the Uber  driver                                                              
accepts the  rider.  He  said this captures  what is  happening at                                                              
the national level.                                                                                                             
MR.  FELICIANO recalled  questions raised  earlier, including  one                                                              
asking what will  happen to insurance rates.   In California, Uber                                                              
agreed  to a hybrid  insurance policy  to make  it affordable,  he                                                              
said,  noting the  hybrid policy  was not  personal or  commercial                                                              
insurance,  but  was  insurance  based  on  metro  mile  provided.                                                              
Another  question   was  raised  about  someone   providing  rides                                                              
[carpooling].    He  said  the distinction  was  that  the  person                                                              
providing  rides and  collecting  money for  gas does  not make  a                                                              
living out  of his/her  car.   The driver  sharing rides  does not                                                              
log  on for  five hours  a day  to make  money.   He concluded  by                                                              
stating that  PCI is  opposed to  HB 120, but  is willing  to work                                                              
with  Uber  on the  insurance  issues,  similar issues  have  been                                                              
settled in  other states  and those  solutions should  be extended                                                              
to Alaska.                                                                                                                      
4:38:06 PM                                                                                                                    
VICE  CHAIR  HUGHES   related  a  scenario  in   which  commercial                                                              
insurance  started at  "app on,"  but it  was a slow  day and  the                                                              
Uber  driver decided  to pick  up  his/her dry  cleaning and  then                                                              
pick  up  his/her  child  from school.    She  asked  whether  the                                                              
commercial  coverage  would cover  any  accident  since it  seemed                                                              
like it  would fall under  personal use  even though the  Uber app                                                              
was turned on.                                                                                                                  
MR. FELICIANO  answered  that was  the reason  a hybrid policy  is                                                              
needed.  He  said that from the  moment of "app on"  that a hybrid                                                              
policy should be  in place to protect the driver.   One suggestion                                                              
was  that it  shouldn't be  difficult  to develop  a kill  switch;                                                              
however, if the  app has been on  for an hour and there  isn't any                                                              
movement, the  Uber driver  is not working,  just hanging  out, he                                                              
said.  He identified  the multiple app issue as one  that needs to                                                              
be  considered, especially  if this  type  of ridesharing  becomes                                                              
popular in  Anchorage, since some  drivers will have  three phones                                                              
on.     This  issue   has  not   yet  been   addressed  in   other                                                              
jurisdictions  and he  characterized  it as  being  a real  "legal                                                              
mess."   He  predicted it  would be  a "legal  mess" if  something                                                              
happened when all three apps were turned on.                                                                                    
4:39:53 PM                                                                                                                    
SUSAN GORSKI, Executive  Director, Chugiak-Eagle River  Chamber of                                                              
Commerce,  said  that  it  has   been  interesting  to  listen  to                                                              
discussion  on the  transportation  network  companies (TNCs)  and                                                              
how they  might safely  operate  in Alaska.   She recognized  that                                                              
these represent  new challenges for everyone since  the technology                                                              
was rapidly changing.   She supported the sponsor's  comments that                                                              
the  community  needs  to  increase  its  transportation  options,                                                              
noting the  Chugiak-Eagle River  community has been  working since                                                              
the 1990s  on various  scenarios.   However, the taxicab  industry                                                              
as it  is regulated  in the  MOA, cannot  serve the  Chugiak-Eagle                                                              
River area  nor it  does it make  any financial  sense.   Thus the                                                              
Chugiak-  Eagle River  area  has been  totally  lacking in  intra-                                                              
community   transportation    and   transportation    within   the                                                              
community.   Transportation network  companies, such as  Uber, are                                                              
innovative  private  sector concepts.    She hoped  the  insurance                                                              
issues  would  be  resolved since  the  Chugiak-Eagle  River  area                                                              
consists  of  35,000 people  without  transportation  networks  in                                                              
place.    She  said  that the  TNCs  are  a  multi-billion  dollar                                                              
industry  that provide  services  in  over 200  cities  and in  47                                                              
countries.   She offered her belief  that Alaska also  needs TNCs,                                                              
which will  bring efficiencies  to the  market.  Some  communities                                                              
have implemented  safety measures  for drivers and  passengers and                                                              
have also  instituted rigorous  background  checks, which  are the                                                              
issues the public  is concerned about.  She encouraged  members to                                                              
work  on this  issue for  a positive  resolution, which  can be  a                                                              
"win-win" situation for all of us.                                                                                              
4:42:20 PM                                                                                                                    
VICE CHAIR HUGHES  said it was clear  that Ms. Gorski is  a fan of                                                              
transportation  network  companies  (TNC).   She  asked  to  leave                                                              
public testimony open on HB 120.                                                                                                
[HB 120 was held over)                                                                                                          

Document Name Date/Time Subjects
HB123 Draft Proposed Blank CS ver W .pdf HL&C 3/20/2015 3:15:00 PM
HB 123
HB123 Draft Proposed Amendment ver W.1.pdf HL&C 3/20/2015 3:15:00 PM
HB 123
HB123 Draft Proposed Amendment ver W.2.pdf HL&C 3/20/2015 3:15:00 PM
HB 123
HB123 Draft Proposed Amendment-Josephson.PDF HL&C 3/20/2015 3:15:00 PM
HB 123
HB123 Follow-up from DCCED-Marijuana Agencies Other States.pdf HL&C 3/20/2015 3:15:00 PM
HB 123
HB123 Supporting Documents-ABC Board Recommendations for Implementation of AS 17.38.pdf HL&C 3/20/2015 3:15:00 PM
HB 123
HB120 ver A.pdf HL&C 3/20/2015 3:15:00 PM
HB 120
HB120 Sponsor Statement.pdf HL&C 3/20/2015 3:15:00 PM
HB 120
HB120 Fiscal Note-DOLWD-WC-02-27-15.pdf HL&C 3/20/2015 3:15:00 PM
HB 120
HB120 Supporting Document - Chugiak-Eagle River Chamber of Commerce.pdf HL&C 3/20/2015 3:15:00 PM
HB 120
HB120 Supporting Documents-UBER Driver Screening.PDF HL&C 3/20/2015 3:15:00 PM
HB 120
HB120 Opposing Documents-Letter NAMIC 2-26-2015.pdf HL&C 3/20/2015 3:15:00 PM
HB 120
HB58 ver S.pdf HL&C 3/20/2015 3:15:00 PM
HB 58
HB58 Sponsor Statement.pdf HL&C 3/20/2015 3:15:00 PM
HB 58
HB58 Sectional Analysis.pdf HL&C 3/20/2015 3:15:00 PM
HB 58
HB58 Fiscal Note-DOR-AHFC-02-10-15.pdf HL&C 3/20/2015 3:15:00 PM
HB 58
HB58 Summary of Changes ver W to ver S.pdf HL&C 3/20/2015 3:15:00 PM
HB 58
HB58 Supporting Documents-Letter Joel Neimeyer 2-9-2015.pdf HL&C 3/20/2015 3:15:00 PM
HB 58
HB58 Supporting Documents-Letter Tanana Chiefs Conference.PDF HL&C 3/20/2015 3:15:00 PM
HB 58
HB58 Supporting Documents-Report Energy Efficiency of Public Buildings-Rural Retrofits 11-21-14.pdf HL&C 3/20/2015 3:15:00 PM
HB 58
HB58 Supporting Documents-Whitepaper Public Facilities 11-7-2012.pdf HL&C 3/20/2015 3:15:00 PM
HB 58
HB58 Supporting Documents-Guide AEERLFP Oct 2014.pdf HL&C 3/20/2015 3:15:00 PM
HB 58
HB58 Supporting Documents-Letter CCS, Catholic Diocese of Juneau 2-9-2015.pdf HL&C 3/20/2015 3:15:00 PM
HB 58
HB58 Supporting Documents-Letter Gavin Dixon 2-9-2015.pdf HL&C 3/20/2015 3:15:00 PM
HB 58
HB58 Draft Proposed Blank CS ver F.pdf HL&C 3/20/2015 3:15:00 PM
HB 58