Fifty-fifth Legislature                                                  Commerce

Second Regular Session                                                  S.B. 1278




(Reference to Senate engrossed bill)




Strike everything after the enacting clause and insert:

"Section 1. Repeal

Section 23-1421, Arizona Revised Statutes, is repealed.

Sec. 2. Title 23, chapter 8, article 7, Arizona Revised Statutes, is amended by adding a new section 23-1421, to read:

START_STATUTE23-1421. Labor benefits organizations; damages; presumptions; applicability; definitions

A. An employee may recover three times the CALCULATED damages from a labor benefits organization for benefits paid by the employee.  An employer may recover three times the calculated damages from a labor benefits ORGANIZATION for the cost of benefits incurred by the employer.  The calculated damages are as follows:

1. for Health, pension or vacation or sick leave benefits, any monies paid for the category of the employee during a TWELVE-MONTH period that is more than one hundred twenty percent of the cost of an equivalent plan or insurance policy.  To show EQUIVALENCY, the plaintiff may submit a MATHEMATICAL or an actuarial data analysis that demonstrates that the employee would have received at least ninety-five percent of the same value from a product available through the employer or on the general market.

2. For training benefits, any monies paid in excess of one hundred twenty percent of any reasonable training costs incurred during a twelve-month period for the specific benefit of the employee's job skill. 

3. For any other benefit, any monies paid in excess of $1,000 during a TWELVE-MONTH period where no direct benefit can be attributed to the employee.

4. For all other benefits that are not included in paragraph 1, 2 or 3 of this subsection, any monies PAID by the employee during a TWELVE-MONTH period for hours worked in excess of the lesser amount of any of the following:

(a) If the employee was not eligible for a benefit during the twelve-month period, the amount is zero.

(b) If the benefit contains an ELIGIBILITY provision, the hours required to remain eligible.

(c) If the benefit does not require an ELIGIBILITY period, the hours CONSIDERED to be a full-time employee.

(d) One thousand eight hundred hours.

B. A labor benefits organization is not liable pursuant to this section if the labor benefits organization satisfies all of the following:

1. Provides a reconciliation to its member employees through United States mail or email that would reasonably allow an employee to determine the costs and expenses of the benefits.  The reconciliation must be listed by benefit for a TWELVE-MONTH period and provide the following:

(a) The specific rates charged to the employee and employer.

(b) The direct expense rates charged to the plan by THIRD-party insurers and plan providers.

(c) The total number of employees, including hours and revenue collected in this state and nationally.

(d) The total direct claims expenses or payments to beneficiaries, if any, in this state and nationally.

(e) A list of total payments made to any THIRD-PARTY insurers or plan providers in this state and nationally.

(f) A list of all administrative expenses incurred in this state and nationally.

(g) A list that summarizes the difference between the REVENUES and expenses in subdivisions (a) through (f) of this paragraph in this state and nationally listed in total dollars and as a percentage of revenue.

2. Allows an employee to opt out of any health, pension or vacation or sick leave benefits and to choose either:

(a) Benefits from the employee's employer if the employer agrees and The employer withholds payment to the labor benefits organization for that particular benefit category.

(b) Benefits outside the employment RELATIONSHIP if the employer withholds payment from the labor BENEFITS organization for that particular benefit category and forwards the monies to the employee. 

3. Eliminates any PENALTY for an employer to use employees that are not AFFILIATED with the labor benefits organization.

4. Eliminates any PENALTY for an employee or employer to terminate the relationship with the labor benefits organization, including liability for any benefits that are actuarily underfunded.

C. For the purposes of this section:

1. Any benefit that is established with an hourly or daily rate where the underlying expense is not directly tied to the individual contribution for that employee is presumed to be DISPROPORTIONATE and excessive.  If an employee works additional hours and the charges to the employee do not result in a direct additional benefit to the employee, the benefits are discriminatory.

2. A labor benefits organization has a duty to act in the best interests of its member employees, including not charging excess rates.

3. If a labor benefits organization used a STANDARDIZED labor union agreement and the employer had limited negotiating power, the employer is presumed to be in a disadvantageous position to the labor benefits organization.

D. This section applies to any labor benefits organization that establishes or negotiates the rates or collects monies for employee benefits on behalf of a resident of this state or an employer that is located in this state.

E. This section does not apply to either:

1. An employer of an employee, insurer, insurance agent, investment management firm or THIRD-party administrator PERFORMING a purely administrative role.

2. An employee who is employed by the federal government or a political subdivision of this state.

F. For the purposes of this section:

1. "Benefits":

(a) Means monies paid by an employee or employer to a labor benefits organization for the benefit of the employee and includes health, pension, vacation or sick leave or other benefits. 

(b) Does not include labor ORGANIZATION membership dues.

2. "Labor benefits organization" includes any labor organization as defined in sections 23-1301 and 23-1321 and any Taft Hartley Trust, other fund or entity used to administer any benefit required by a labor agreement adopted by a labor benefits organization." END_STATUTE

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