House Committee on Business Affairs and Labor (03/04/2009)

Final
STAFF SUMMARY OF MEETING

HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR

Date:	03/04/2009	ATTENDANCE

Time:	09:47 AM to 04:21 PM	Balmer	X
		Bradford	X
Place:	SupCt	Gagliardi	X
		Liston	X
This Meeting was called to order by		Priola	X
	Representative Rice	Ryden	X
		Scanlan	X
This Report was prepared by		Soper	X
	Christie Lee	Stephens	*
		Casso	X
		Rice	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
HB09-1170 SB09-091		Witness Testimony and/or Committee Discussion Only Referred to the Committee of the Whole

09:47 AM -- House Bill 09-1170

Representative Casso, prime sponsor, presented House Bill 09-1170 concerning unemployment insurance benefits for locked-out employees. This bill allows an employee who is subject to an employer-initiated lock-out to receive unemployment benefits. He talked about the types of employees the bill would affect, including grocery store workers. Representative Casso talked about 1999 when the current law was enacted.

09:57 AM

Representative Balmer asked the sponsor to explain the difference between an offensive lock-out and a defensive lock-out. Representative Stephens talked about the rising unemployment rate and said she is concerned about the effect on the unemployment fund if there are additional unemployment claims. Representative Casso stated that these employees lost their job through no fault of their own and he feels they should be allowed to receive unemployment benefits. Representative Casso responded to additional questions.

10:06 AM -- James Hautzinger, an attorney representing King Soopers, testified against the bill. He talked about Senate Bill 155 that was passed in 1999 and said he spoke in support of that bill and is against House Bill 09-1170. Mr. Hautzinger said that House Bill 09-1170 returns the statute to the way it was before the 1999 changes. He explained that existing law makes a distinction between offensive and defensive lock-outs and that employees that are offensively locked-out can receive unemployment benefits. Only defensively locked-out employees are currently denied benefits which is when the union initiates the strike. Mr. Hautzinger said House Bill 09-1170 would remove the distinction.

Mr. Hautzinger listed his concerns with the bill. He stated that unemployment compensation is a benefit that is provided to employees who lose their job through no fault of their own and that the law as it is now does that. If it is the union's fault, then unemployment compensation is denied. Similarly, if it the employer's fault, unemployment compensation will be granted. Secondly, he said House Bill 09-1170 provides an incentive for unions to strike and receive unemployment compensation which he said is what happened in the 1996 grocery store strikes. Mr. Hautzinger said that House Bill 09-1170 provides unpredictable results because there is no way to know what the legal consequences are going to be. He stated that existing law has worked well over the past 10 years and there have been no multiemployer lock outs and no one has been denied unemployment compensation. Mr. Hautzinger also stated that the timing of the bill is unfortunate because grocery workers’ contracts expire in May 2009 and he said the bill could result in a heightened chance of a strike occurring like in 1996 which would be costly for both employers and employees.

10:15 AM

Mr. Hautzinger responded to questions from the committee regarding employees being able to receive unemployment benefits under current law. Mr. Hautzinger stated that employees who just show up to work and are locked-out can already receive unemployment benefits. There was a discussion about strike benefits that are provided to employees. Mr. Hautzinger stated that, under the bill, if there is a strike, the employees striking against the first employer are paid out of the strike fund, but if another employer in the multiemployer bargaining unit defensively lock-out their employees, then those employees will be paid out of the unemployment compensation fund. Representative Soper mentioned that some unions do not have a strike fund. Representative Rice asked about Albertson's and whether they are part of the multiemployer bargaining unit with King Soopers and Safeway. Mr. Hautzinger said that Albertson's makes up less than 5 percent of the retail market in Colorado whereas King Soopers and Safeway about 55 percent. He responded that over the last 10 years Albertson's has not been in the multiemployer bargaining unit with Safeway and King Soopers. Representative Rice asked whether unions are required to approve multiemployer bargaining units. Mr. Hautzinger explained that the employers commit to bargain together and all of the employers have to agree and the unions have to agree. He talked about coordinated bargaining and said that is when employers want to negotiate together, but make their own deals and the unions do not have to agree to those. Mr. Hautzinger was asked to elaborate on his earlier numbers on market share. He said the numbers he have are the retail market share by statewide sales revenue of each company which is as follows: King Soopers and City Market make up 32 percent of the market share; Walmart, which is nonunion, makes up 26 percent of the market share; Safeway makes up 21 percent of the market share; Albertson's is 4.5 percent of the market share; and the remaining is made up of stores like Super Target and Whole Foods.

10:34 AM -- Patrick Scully, an attorney from Sherman and Howard, testified against the bill on behalf of the Colorado Retail Council and the Rocky Mountain Food Association. Mr. Scully talked about federal law and said that the current state law harmonizes well with the federal law regarding strikes and lock-outs which is designed to govern the process as opposed to the results in collective bargaining. It sets the rules and allows the parties to exercise whatever leverage they may have in bargaining. Mr. Scully added that federal law has been very clear on two things for the last 70 years: it does not compel results in collective bargaining and it does not intervene when each side wants to use its respective economic weapons in collective bargaining. He said the law in Colorado adopts the federal law's approach. Mr. Scully said he feels the purpose of House Bill 09-1107 is to reverse the current system and subvert the balance of power that exists in the federal labor law system. He said the bill allows employees to receive unemployment benefits if they are subject of a defensive lock-out which invites the state to sit in judgement of the quality of each side's collective bargaining proposals. Mr. Scully said House Bill 09-1170 would create a politicized process where the decision of whether something proposed is either favorable or unfavorable to employees is made by an individual and may depend on that individual's point of view. He said this would increase costs and cause uncertainty on how people are going to be regulated.

Mr. Scully talked about other western states that have laws that are more conservative and do not allow anyone involved in a strike to receive unemployment benefits and distributed a handout of those laws (Attachment A). Representative Gagliardi asked if Mr. Scully if he had been involved in negotiating collective bargaining. He said he has, but not in Colorado. Representative Gagliardi asked some questions about the process. Mr. Scully stated that he feels the bill is directed at the upcoming negotiations of the grocery chains in May. Representative Liston asked Mr. Scully to explain a whip saw strike. Mr. Scully said it is when employers are engaged in a multiemployer bargaining agreement and the employees strike one of the partners rather than striking all of the employers in the agreement.

10:50 AM -- Dennis Jakubowski, Director of Government Affairs for the Associated General Contractors of Colorado, testified against the bill and said the current law should not be changed. He responded to some questions from the committee.

10:55 AM -- Tony Gagliardi, the Colorado State Director of the National Federation of Independent Business, testified against the bill. He said Colorado's unemployment fund was never meant to pay benefits to workers who were locked-out due to a breakdown in collective bargaining attempts. Mr. Gagliardi explained that under Colorado unemployment law, when workers are out of the workplace due to a lock-out the employee still holds the position and are therefore not unemployed. He talked about the costs that will be associated with the bill if it passes. He talked about the impact on small and independent businesses and said there are also small businesses involved in multiemployer bargaining agreements. Mr. Gagliardi said his members have said the current law has been working well. He said this bill would drive a wedge between employers and employees.

11:02 AM -- Sybil Kisken, representing the Colorado Association of Commerce and Industry (CACI), the statewide chamber of commerce, testified against the bill. She said CACI is strongly opposed to the bill and said there is no live issue or problem that needs to be addressed by House Bill 09-1170. Ms. Kisken said there is no evidence that employers are improperly using defensive lock-outs. If an employee is locked-out by an employer that is using an offensive lock-out, they can already receive unemployment benefits under current law. However, she said, if the employer uses a defensive lock-out, one that is prompted by employee action, then employees are not eligible for unemployment benefits. Ms. Kisken said if the bill is directed at the upcoming negotiations of the grocery chains in May, that it is not good policy making. Ms. Kisken talked about the economic impact of the bill and how the bill is inconsistent with the purpose of unemployment compensation insurance. She talked about other states that do not provide any unemployment if there is a strike at all. Ms. Kisken said if this bill passes, it could result in drawn out strikes. Ms. Kisken explained that unemployment benefits are paid from a state trust fund funded by employers and that there will be an impact on the trust fund if the bill passes.

11:16 AM

Representative Priola asked some questions about the unemployment insurance fund. Ms. Kisken said both union and nonunion employers pay into the fund. There was a discussion about union workers who do not want to strike when their union goes on strike.

11:27 AM -- Joe Blake, representing the Denver Metro Chamber of Commerce, testified against the bill. He said the unemployment insurance fund is paid into by all employers and the bill would impact all businesses. Mr. Blake said 47,000 Coloradoans have become unemployed in the last 12 months and that the state's unemployment rate is 6.1 percent and it is expected to go up to 6.8 by the end of the year. He said state funds were not intended to support workers who join a union that results in a strike and a lock-out; the unemployment insurance fund is for people who lost their jobs. Mr. Blake said the state should not be involved in employee and employer disputes unless there are illegal actions.

11:35 AM -- Gus Achey, representing the Mountain States Employers Council, testified against the bill. He talked about the differences between offensive and defensive lockouts.

11:43 AM -- Grace Lopez Ramirez, the Colorado State Director of Mi Familia Vota, testified in support of the bill. She said fair and equal access to unemployment benefits will prevent foreclosures, evictions, and other disastrous economic impacts.

11:46 AM -- Linda Meric, Director of 9 to 5 National Association of Working Women, testified in support of the bill. She said lockouts are solely an employer decision and should not disqualify workers from receiving unemployment benefits. Ms. Meric said unemployment benefits should be viewed as a foreclosure and bankruptcy avoidance strategy, a strategy to avoid pushing more Coloradoans on to the welfare rolls, and as an economic stimulus strategy. Ms. Meric responded to questions from the committee.

11:55 AM -- Reverend Patrick Demmer, a Pastor of the Graham Memorial Community Church of God and Christ in Denver, Vice President of Political Affairs for the Greater Metropolitan Denver Ministerial Alliance, testified in support of the bill.

talked about the 1999 bill and the problems he sees with it. Rev said that employees in this situation must receive welfare??

12:01 PM -- Chuck Carillo, representing his son who is employed with Safeway, testified in support of the bill and talked about being locked out in 1996. He said he was the sole income for his family at the time and said he applied for, and received, unemployment benefits. Representative Balmer asked Mr. Carillo to comment on the fact that there have not been similar disputes since the passage of the current law in 1999.

12:04 PM -- Recess

12:38 PM

The committee was called back to order.

12:38 PM -- Phil Hayes, representing the Colorado ALF-CIO, testified in support of the bill. He said the bill would restore fairness and balance to the Colorado statutes. The bill would address very specific and narrow situations where workers negotiating for a new contract find themselves locked-out of their jobs by their employers through no fault of their own. Mr. Hayes said the bill does not expand workers' rights, it just restores them to where they were prior to 1999. Mr. Hayes addressed some of the points the opposition made earlier. He said the current law is not balanced or fair because it allows employers to use a defensive lock-out in order to protect their property or operations and said that is too broad. Mr. Hayes said the other reason an employer can use a defensive lock-out is when there is a multiemployer bargaining unit and one of the union partners decide to strike. Mr. Hayes responded to questions.

01:01 PM -- Reverend Daniel Klawitter, representing FRESC, formerly the Front Range Economic Strategy Center, testified in support of the bill.

01:05 PM -- Vincent Shaw, representing Teamsters Local 455, testified in support of the bill. He talked about the change to the law in 1999. Mr. Shaw said just because the law has been around for 10 years does not mean it is working.

01:12 PM -- Tom Russel, Vice President of Healthcare for All Colorado, testified in support of the bill. He talked about the concerns about healthcare.

01:15 PM -- Jesse Ulibarri, representing the Colorado Progressive Coalition, testified in support of the bill.

01:25 PM -- Robert Lopez, a grocery store worker, testified in support of the bill. He talked about his career with the grocery stores since he was 16 minus his military service. He said he retired at King Soopers after going through three lock-outs without receiving unemployment benefits.

01:30 PM -- Mike Cullen, Director of the Unemployment Insurance Program, said the department is neutral on the bill, but wanted to clarify some questions that came up in testimony. Mr. Cullen said in 1996, King Soopers had gone on strike and Safeway was locked-out, but they had not been acting as a multiemployer bargaining unit so the department offered unemployment benefits to the workers. In the hearing that followed, the hearing officer disagreed and said they were acting as a multiemployer bargaining unit and he weighed the last best and final offer to see if the offer was to enhance the employees' benefits or disadvantaged the employees. He ended up affirming the payment of unemployment benefits to those employees that were locked-out because he found that the agreement was disadvantaging the employees. Mr. Cullen said the 1999 law added definitions for coordinated bargaining and offensive and defensive lock-outs. He said the ability of the department to determine if the employees are being advantaged or disadvantaged was taken away and all that is left are the offensive and defensive lock-outs.

Mr. Cullen said that it has been said that under House Bill 09-1170, workers who are subject of a defensive lock-out would receive unemployment benefits, and he said that if you return to pre-1999 law, that is not true. He explained that under the pre-1999 law, a hearing officer is going to have to decide if you have a strike by one party and a lock-out by the other the hearing officer will have to decide if the locked-out employees were advantaged or disadvantaged by the last, best, and final offer. If the last, best, and final offer advantages the employees, they will not receive unemployment benefits. If the last, best, and final offer disadvantages the employees, they will receive unemployment benefits. Does the bill only apply to multiemployer bargaining units? No, the bill applies to otherwise to apply to a single union bargaining unit. Lastly, Mr. Cullen said the bill does not return to the pre-1999 law and listed the following differences:

the bill retains some of the definitions included in the 1999 law, including lockout, multiemployer bargaining unit, strike, and labor dispute;
the pre-1999 law retained a sentence (page 3, line 9 of the bill at the end of that section) that said "participating in a strike shall include refusal to cross the picket line." which is not in House Bill 09-1170; and
the bill also eliminates the last section of the pre-1999 legislation that talked about how to deal with separate branches of work which are commonly conducted as separate businesses on separate premises if those are done as separate departments in a single premise.

01:36 PM

Mr. Cullen responded to questions from the committee. Representative Balmer asked about sympathy strikers. Representative Liston asked about the recession and its impact on the unemployment insurance fund.

01:50 PM -- Chrisantha Duran, representing the United Food and Commercial Workers (UFCW), testified in support of the bill and listed the types of industries and workers the union represents. Ms. Duran talked about the 1996 strike and said Safeway employees were locked-out just because King Soopers employees went on strike which she feels is unfair. Ms. Duran said the pre-1999 law specifically states the circumstances in which a worker can receive unemployment benefits and explained that employees would not receive benefits just because there is a lock-out, it is only when the company does so to receive concessions. Ms. Duran stated that the current definition of a defensive lock-out is so broad and said it is unclear when employees can ever receive unemployment benefits under the current law. She discussed the differences between a multiemployer bargaining unit and a coordinated bargaining unit.

Ms. Duran said House Bill 09-1170 would change the law back to what it was in order to ensure workers who are locked-out through no fault of their own are able to receive unemployment benefits when the company does so to receive concessions. She stated that 28 other states offer these benefits to locked-out workers with no effect on the economic development of those states. Ms. Duran says the current law makes it too easy for employers to lock-out employees in an effort to receive concessions and said she would like to see more discussion instead. She talked about the differences between strikes and lockouts. During a strike, employees can choose to work, but when they are under a lock-out they cannot. Ms. Duran addressed the earlier discussion about strike funds.

02:01 PM

Ms. Duran responded to questions from the committee. Representative Rice asked whether Safeway, who was locked-out in 1996 because King Soopers striked, and King Soopers were in a multiemployer bargaining unit. Ms. Duran said yes they were. Representative Rice suggested possibly tightening up the definition of defensive lock-out and put in there some language about there would have to be consent or using House Bill 09-1170. He talked about an amendment he drafted that states if the unemployment is due to a lockout involving a multiemployer bargaining unit, the individual shall not be eligible for unemployment benefits if the individual's bargaining unit is voluntarily bound to a multiemployer bargaining unit and the lockout is a result of another bargaining unit in the multiemployer bargaining unit going on strike. He explained that if one group of employees and their employer and another group of employees and their employer choose to bind themselves together then both sides should live with the consequences. However, if the two groups did not consent to bind themselves together, then the employees that were locked-out as a result of the other group going on strike should receive unemployment benefits.

02:18 PM -- Kristen Forrestal, the drafter of the bill from the Office of Legislative Legal Services, and Mike Cullen, Director of the Unemployment Insurance Program, returned to the table to discuss the amendment.

02:27 PM -- Recess

The committee took a recess to discuss the amendment.

02:34 PM

Representative Rice laid bill over to March 10 upon adjournment to allow for the committee to discuss possible amendments. A note was given to the committee to be placed in the record and is attached as Attachment B.

02:37 PM -- Senate Bill 09-091

Representative Rice, prime sponsor, presented Senate Bill 09-091 concerning motor vehicle dealer franchise agreements. This bill makes several changes to the relationship between motor vehicle manufacturers, distributors, or manufacturer representatives and motor vehicle dealers. Manufacturers, distributors, or manufacturer representatives are required to provide the dealer with the following:

compensation for facility use upon franchise contract termination;
compensation for the fair market value of the dealer's goodwill;
compensation for dealer costs incurred in trying to sell a franchise if the manufacturer, distributor, or manufacturer representative disapproved of the sale; and
30 days notice for the denial of either the location selected for relocation, the sale of the dealership, or a change in management.

The bill outlines the abilities of either party to audit the other regarding warrantee, sales, or incentive claims. Finally, the bill prohibits certain actions by manufacturers, distributors, or manufacturer representatives that would place dealers in a situation where:

unreasonable sales and service standards must be met in order to sell all models within a line of vehicles;
the dealer must devote facilities, personnel, or space exclusively to one brand;
the dealer is not offered the same incentives as other dealers; and
a franchise agreement is contingent on facilities improvements.

Violation of the bill is a class 1 misdemeanor.

02:45 PM -- Gordy Nevers, representing Chrysler Motors and the Alliance of Automobile Manufacturers, testified against the bill. He said Chrysler and the Alliance is against the bill because the timing and the economy. Mr. Nevers explained that the bill imperils manufacturers to survive in this economy. He said they oppose the for the following reasons:

the bill departs from the consumer protection purposes of the Colorado Franchise Act by allowing a dealer to place competing brands in his or her showroom without input from the manufacturer;
the limits the ability of sophisticated business partners to contract with one another and allows the state to dictate the terms of what can and cannot be negotiated in a contract; and
the bill disregards basic business fairness by removing all negotiating power from the manufacturers.

Representative Soper asked why it matters whether competing brands are in a show room together. Representative Gagliardi asked why he felt this bill disregards business fairness. Representative Ryden asked about a dealer selling competing brands.

02:57 PM -- Travis Golding, representing the Motorcycle Industry Council, testified on the bill and said the bill will raise costs for everyone.

03:07 PM -- Tim Jackson, representing the Colorado Automobile Dealers Association (CADA) and the Colorado Auto Retailers, testified in support of the bill and distributed a handout (Attachment C). He described the importance of the car dealer industry to Colorado and discussed the issue of dueling, or allowing dealers to sell competing lines of vehicles. Mr. Jackson responded to questions from the committee.

03:15 PM -- John Medved, representing Medved Autoplex and CADA, testified in support of the bill. Mr. Medved discussed the current relationship between dealers and manufacturers and described the effect of the economy on his business. He talked about his experience with being required to provide special facilities for Hummer and said he spent $7 million to build a special facility only to find out that Hummer canceled the contract. Mr. Medved explained that he did not need to build those facilities in the first place and now he has no remedy against the manufacturer. He talked about the service facilities which have become half full because they are not being used as much. He talked about other requests he has had from manufacturers.

03:24 PM

Representative Ryden asked about other states. Mr. Jackson said there are several states that allow dueling.

03:30 PM -- Don Hicks, representing Shortline Auto, testified in support of the bill. He talked about a dealer who was supposed to testify but was afraid of the consequences from the manufacturers. He talked about another dealer who is not allowed to transfer stock to his family because the manufacturer is not pleased with his facility.

03:35 PM

Lisa Schomp, representing Ralph Schomp Automotive and Fay Myers Motorcycle World, spoke in support of the bill. She stated that she thinks motorcycle dealers should be included in the bill. Ms. Schomp concurred with Mr. Medved's testimony. Ms. Schomp detailed her experience of opening a new BMW dealership in November of 2007. She stated that she is highly concerned about the demands that manufactures place on her. Ms. Schomp stated she is a good business person and would like the option to bring in other types of cars into her BMW lots and said she feels that it should be her choice. She also stated that she does not believe the bill will put out any manufacturing company.

03:46 PM -- Lee Payne, a Honda dealer in the Golden area, spoke in support of the bill. He stated that the bill is about re-establishing a balance of power between the dealers and the manufacturers.

03:49 PM -- Jerry Abboud, representing Powersport Dealers, spoke in support of the bill and talked about dueling.

03:52 PM -- Steve Larson, representing Wild West Motorsports, testified in support of the bill. He talked about Harley Davidson who asks dealers to make a destination dealerships. Mr. Larson said they are a small business with only 30 employees in Greely and talked about his business where he sells more than one brand. Mr. Larson responded to Mr. Nevers' testimony. He stated that they only have about six months to make all of their money for the year and talked about the impact allowing manufacturers to make them build new buildings would have on his business.

03:57 PM -- Bill Vickery, representing the Colorado Powersports Dealers Association, testified in support of the bill. He explained dueling and said he feels it is better when there is more than one brand available to the consumer. He discussed the balance of power between manufacturers and dealers.

03:59 PM -- Donavon Facey, representing the Colorado Powersports Dealers Association, testified in support of the bill. He spoke about his business and past legislation. He discussed the balance of power between manufacturers and dealers.

04:03 PM -- Randy Pennington, representing Transwest Trucks, testified in support of the bill. He said he had a similar situation as Mr. Medved with having to build a facility to accommodate a manufacturer that later went away. Mr. Pennington said he does not agree with the grandfathering in of used trucks.

04:08 PM -- Carl Larson, testified in support except for the one piece as Mr. Pennington discussed concerning used trucks and distributed a handout (Attachment D).

04:10 PM -- Micki Hackenberger and Art Hinkel, representing Navistar and International Truck and Engine Corporation, testified in support of the bill. Ms. Hackenberger addressed the concern over grandfathering clause.

04:16 PM

Representative Rice said the bill allows dealers in Colorado to conduct their business and repeated Mr. Jackson's prior statement that the bill is a shield for the dealer not a sword against the manufacturer.


BILL:	SB09-091
TIME:	04:19:14 PM
MOVED:	Rice
MOTION:	Moved to refer Senate Bill 09-091 to the Committee of the Whole. The motion passed 11-0.
SECONDED:	Balmer
		VOTE
	Balmer	Yes
	Bradford	Yes
	Gagliardi	Yes
	Liston	Yes
	Priola	Yes
	Ryden	Yes
	Scanlan	Yes
	Soper	Yes
	Stephens	Yes
	Casso	Yes
	Rice	Yes

Final YES: 11 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS

04:20 PM

The committee adjourned.