March 14, 2014
KS-1
2014 KANSAS SESSION PASSES HALFWAY POINT
Deadlines are important in the legislative process and the February 28 “turnaround” deadline in Kansas has now passed. Bills that have not been “blessed” by being introduced by or referred to one of the relative few “deadline exempt” committees in each house and were not passed in their “house of origin” prior to the turnaround deadline are now considered dead. It is possible, however, that language from “dead” bills can be amended into other germane legislation still going through the legislative process. Finally, the deadline for consideration of bills in the opposite house is March 26. Following are brief summaries of several bills of interest to the construction industry in Kansas.
70% KANSAS WORKFORCE PREFERENCE FAILS TO MEET DEADLINE
The Builders’ Association and Kansas City Chapter, AGC provided testimony to the House Commerce Committee in opposition to House Bill 2273 on February 11. This “carryover” bill from last session would have required all contractors entering into a state contract of $100,000 or more, or performing work on a STAR bond project, to have their workforces, and their subcontractors’ workforces, made up of at least 70% Kansans. Committee members were advised that adoption of such a preference would restrict competition for such work and even bar Kansas contractors located near state lines who may not have at least a 70% Kansas workforce from competing for such work in their own state. In addition, it would not only bar most qualified out-of-state contractors from competing for such work in Kansas, it would also hurt Kansas contractors and subcontractors who would like to compete for similar work in neighboring states. That is because preference laws in one state are generally countered by other states’ “reciprocal” preference laws which impose the same or similar restrictions in favor of their residents. HB 2273 failed to get out of committee prior to deadline and an effort to amend the bill into Substitute for House Bill 2430 (summarized below) on the House floor failed on February 27. We have a long history of opposing preference laws wherever they are proposed because open competition across state lines and across the boundary lines of political subdivisions within a state is essential to the building construction industry and other industries, as well.
BAR AGAINST EXPANDED LIABILITY FOR LAND OCCUPANTS
The Builders’ Association and KC/AGC provided testimony in support of House Bill 2447 to the House Judiciary Committee on January 30 and to the Senate Judiciary Committee on March 12. The bill was passed as amended by the full House, 119-2, on February 21. This bill provides that a possessor of any fee, reversionary or easement interest in real property, including an owner, lessee or other lawful occupant (including contractors), owes no duty of care to a trespasser except in those circumstances where a common law or statutory right of action existed on or before July 1, 2014. As in most other states, land possessors in Kansas generally owe no duty of care to trespassers and are not liable for their injuries, with certain limited exceptions. The American Law Institute’s (ALI’s) latest Restatement Third of Torts seeks to upend the traditional approach, however, by recommending that courts impose a broad new duty on land possessors to exercise reasonable care for all entrants on their land, including unwanted trespassers. The ALI is highly influential with courts and the new duty rule for land possessors has been described as one of the “top 10” provisions in the new Restatement that will benefit trial lawyers. HB 2447 would, in effect, freeze current trespasser law in the state and preempt courts from adopting the radical Restatement duty rule which would subject land possessors in Kansas to broad new liability.
STATE OSHA PROPOSAL
House Bill 2616 is currently on a fairly fast track having been passed out of the House Commerce Committee on February 25, approved (93-30) by the House on February 27 and heard by the Senate Commerce Committee on March 13. This measure would require the Secretary of the Department of Labor to propose a plan for the state to provide for safe and healthful employment that is at least as effective as the standards set by the federal Occupational Safety and Health Administration (OSHA). The Secretary would submit a report to the President of the Senate and the Speaker of the House by January 12, 2015 that would include an outline of the plan, a list of necessary changes in statute and rules and regulations required by the federal government, a list of additional staff required to implement the plan, and a projected date by which a cooperative agreement with the federal government and other states could be executed. Further legislation would then be required in order to implement a state OSHA plan in Kansas.
PEAK LEGISLATION
The Substitute for House Bill 2430 would modify the Promoting Employment Across Kansas (PEAK) Act in several ways. PEAK allows qualified for-profit companies that are creating net, new jobs in Kansas to retain or receive quarterly refunds for 95 percent of the payroll withholding tax for up to a period of 10 years for the new “PEAK-eligible jobs” that are paying at or above the county median wage. As currently written, the substitute bill provides that companies could qualify for PEAK by agreeing to pay “average” wages equal to or in excess of the county median wage (thus allowing more new employees’ withholding taxes to be eligible for the benefits). Qualified companies that had entered into the program prior to January 1, 2013 could request extension of the program for an additional two years. The statutory cap on the amount of employee income taxes that may be diverted from the State General Fund (SGF) directly to employers would be expanded so that any unused or ungranted amounts would be carried forward and increase the limitation. Beginning July 1, 2020, the total amount of benefits authorized or granted could not exceed the total authorized for fiscal year 2019. In addition, the December 31, 2014 sunset date for the retention portion of the PEAK program would be removed. Sub HB 2430 passed the House (110-13) on February 27 and has been referred to the Senate Commerce Committee.
UC BREAK FOR NEW EMPLOYERS
House Bill 2576 was approved by the House (123-0) on February 27 and was heard by the Senate Commerce Committee on March 11. This Unemployment Insurance (UI) bill provides that, starting in rate year 2015, all new employers – both construction and nonconstruction employers - who start doing business in Kansas as of July 1, 2014, would be eligible for a UI contribution rate equal to either 2.7 percent of wages paid or, in the alternative, the UI rate paid by the employer in another state prior to moving to Kansas. To be eligible for the alternative rate, a new employer would file a request with the Department of Labor within 30 days of receiving notice of contributions owed and provide information showing that: (1) the new employer has been in operation in another state for a minimum of three years; (2) there is an authenticated account history from the employer’s operations; and (3) the business operations established in Kansas are of the same nature, as defined by the North American Industrial System, as the operations in another state. In no event would the alternative contribution rate be less than 1.0 percent. Under current law, new non-construction employers who have less than 24 months of payroll history pay a contribution rate equal to 2.7 percent of wages paid, and new construction employers pay a rate equal to 6.0 percent. A new classification of employers, called “Entering and Expanding Employer” would be eligible to receive a new employer rate of 2.7 percent for four years. To be classified as such, an employer would be required to meet the following criteria: (1) there has been a 100 percent increase in the taxable payroll over the previous year; (2) the employer has a positive account balance; and (3) the employer maintains a positive account balance throughout a four year period. Finally, the bill would remove the cap placed on voluntary contributions made to the UI System that annually limits employers from reducing their rates by no more than five rate groups.
OTHER BILLS OF INTEREST
DISCRIMINATION AGAINST HIRING THE UNEMPLOYED - House Bill 2559 which would have established prohibitions against discriminating against hiring the unemployed and set out penalties for violating those provisions of up to $5,000 for the first offense and up to $10,000 for each subsequent offense died in the House Commerce Committee.
STORM SHELTERS FOR SCHOOLS – Senate Bill 264 would require that storm shelters be constructed as part of the construction of a new school district building or any remodeling or modifying project costing 50.0 percent or more of the insured value of an existing building. The definition would exclude those school district buildings not being used as student attendance centers. This bill was heard and amended by the Senate Federal and State Affairs Committee (a deadline exempt committee) on February 23 and recommended “do pass” on February 26. A similar bill, House Bill 2623, died in the House Education Budget Committee for failure to meet the turnaround deadline.
RISING CAPS ON NONECONOMIC DAMAGES – Senate Bill 311 was approved by the Senate on February 27 and referred to the House Commerce Committee on March 6. Among other things, this bill would amend the Code of Civil Procedure with regard to caps on non-economic damages, witness and expert witness testimony, and evidence of collateral source benefits. The bill would amend the limits to be applied for noneconomic damages in personal injury actions as follows: $250,000 for causes of action accruing from July 1, 1988, to July 1, 2014; $300,000 for causes of action accruing from July 1, 2014, to July 1, 2018; $325,000 for causes of action accruing on or after July 1, 2018, to July 1, 2022; and $350,000 for causes of action accruing on or after July 1, 2022.
LIMITING LIABILITY UNDER ONE CALL - Senate Bill 327 would have provided that excavators shall not be responsible for any damage to underground facilities of a municipality which has elected to exempt itself from the Kansas underground utility damage prevention act, unless such excavator is guilty of gross and wanton negligence proximately causing such damage. This bill has died in the House Utilities Committee.
ASHGROVE CEMENT BILL - House Bill 2456 would define all commercial and industrial machinery used directly in the manufacture of cement, lime, or similar products as commercial and industrial machinery and equipment for property tax purposes. The bill would allow the specific equipment detailed in the bill to qualify for the commercial and industrial machinery and equipment property tax exemption and would be retroactive to tax year 2013. This measure was passed by the House (100-23) on February 26 and has been referred to the Senate Assessment and Taxation Committee.
RURAL OPPORTUNITY ZONES - House Bill 2417 as amended, would add four additional counties (Cherokee, Labette, Montgomery, and Sumner) to the definition of “rural opportunity zone” and bring the total number of designated counties to 77. The Rural Opportunity Zones Program is an economic development program designed to attract financial investment, business development, and job growth in rural areas of the state. This bill was approved by the House (104-19) on February 27 and has been referred to the Senate Assessment and Taxation Committee.
OVERSIZED LOADS - Senate Bill 344 was approved by the Senate (39-0) on February 26 and referred to the House Transportation Committee where it was heard on March 11. This bill provides for the size and type of signage that would be displayed on an oversized vehicle and provides exemptions from such signage requirements. It would also restrict the hours of operation and the operation of certain vehicles under specific weather conditions.