2013 LEGISLATURE : SUMMARY OF LEGISLATION

The following is an outline of legislation from the 2013 Legislative Session that would have affected or will affect businesses in Montana. It is broken down by issue area including the Montana Chamber’s Roadmap to Jobs Agenda, spending, work comp, health care, tax policy, employment law, environment and natural resource development, and property rights and land use. Each bill includes the title, sponsor, final status, effective date, and summary. Bill summaries are broken down into the following categories: 1) Roadmap to Jobs Agenda; 2) spending; 3) work comp issues; 4) health care policy; 5) employment policy; 6) military issues; 7) environmental and natural resource development; 8) property rights and land use.

Contact: Glenn Oppel, Government Relations Director, [email protected], 431-3685

ROADMAP TO JOBS AGENDA :

HB 224 Revise appeal bonds in civil cases Sponsor: Rep. (Billings) Final Status: Became Law Effective Date: April 5, 2013 Summary: In order to stay the execution of a judgment pending appeal, Montana law requires the defendant to post an “appeal bond” for the full amount of the judgment, plus estimated costs for the appeal and interest. Montana is one of the few remaining jurisdictions with no limit on appeal bonds. Since 2000, at least 38 states have enacted legislation or adopted rules to limit or waive an appeal bond. Seven other states do not require an appeal bond. The bond limits in other states range from $1 million to $150 million. Initially, we were recommending a two-tiered appeal bond cap: 1) $1 million for businesses with 100 or fewer employees; and 2) $50 million for all other businesses. The initial proposal passed through the House. In Senate Judiciary, we worked with committee members and the Trial Lawyers to amend the bill to just a $50 million cap. There was general concern that companies with large gross receipts but few employees would only have to post a $1 million bond to appeal. Next session we can look at a lower cap based on gross receipts. The amended version passed nearly unanimously in the Senate and House and was signed by Governor Bullock.

HB 225 Revise interest payments in civil cases Sponsor: Rep. Cary Smith (Billings) Final Status: Died in Process (vetoed) Summary: Plaintiffs in Montana who win favorable verdicts are usually entitled to recover interest on the damages awarded. Montana last established the interest rate in 1985 at 10 percent. Unless otherwise agreed to by the parties in contract, that is the interest rate applied to awarded damages. Such a high interest rate discourages defendants from appealing a judgment and provides a windfall to plaintiffs. Similar to numerous states, HB 225 proposed to set the rate at the federal prime rate plus two percentage points in tort cases. Governor Bullock proposed amendments to the bill that increased the interest to prime plus four percent and applied it to all civil cases, not just tort cases. The House rejected the amendments while the Senate accepted them. The bill went back to Governor Bullock as initially passed in both chambers and he vetoed the bill.

HB 232 Strengthen exclusive remedy in work comp Sponsor: Rep. Austin Knudsen (Culbertson) Final Status: Became Law Effective Date: July 1, 2013 Summary: Montana’s work comp law provides that in return for the right to receive work comp, an employee relinquishes his right to sue his employer for damages in tort. This is referred to as the “exclusive remedy doctrine.” However, Montana law specifically provides for an exception to this exclusive remedy for intentional acts that cause injury (MCA 39-71-413(1)). The courts have adopted a broad application of the exception that encourages tort suits in addition to the no-fault remedy of our 1 work comp system. Strengthening exclusive remedy would go a long way toward improving Montana’s business climate while also protecting employer’s from frivolous lawsuits that often lead to large settlements or damage awards. HB 232 accomplished this goal by establishing an evidentiary standard – “clear and convincing evidence” – to determine whether an act was intentional or deliberate. Doing so should facilitate summary judgment in such cases and avoid unnecessary jury trials. Strengthening exclusive remedy would in no manner limit an injured worker’s right to work comp benefits. The amended bill passed unanimously in the House and 32-16 in the Senate. Governor Bullock signed the bill.

HB 268 Generally revise income tax laws Sponsor: Rep. (Polson) Final Status: Died in Process (tabled in committee) Summary: Under current law, the Montana Department of Revenue (DOR) can audit a corporate tax return and assess additional tax on returns that were filed within the last three years or that are being audited by the IRS. The income tax statute of limitations at the federal level is three years for all classes of taxpayers. However, for individuals and sole proprietors in Montana, the DOR can reach back five years. There is no reason for the state taxing agency to treat individuals and sole proprietors differently from corporations for auditing purposes. The federal government does not. The five-year reach back is just another disincentive for wealth and capital to come to the state. The Chamber proposed to equalize the statute of limitations to three years for all classes of taxpayers in Montana. The sponsor and stakeholders visited with DOR Director Mike Kadas and agreed to have the bill tabled to work on the idea over the interim and get it in the Governor Bullock’s next biennial budget.

HB 472 / SB 96 Reduce the business equipment tax Sponsor: Rep. Jerry Bennett (Libby) / Sen. Bruce Tutvedt (Kalispell) Final Status: SB 96 Became Law; HB 472 Died in Process Effective Date: May 3, 2013; Applies to property tax years beginning after December 31, 2013 Summary: Over the past 20 years, the Legislature has incrementally reduced the business equipment tax (BET) rate from a high of 12 percent in the 1980s. The BET discourages capital investment and, as is typical, renders Montana’s tax policy uncompetitive with other states that do not have it, including North Dakota, South Dakota, and Wyoming. The $20,000 threshold exemption currently in statute simply is not tax relief when many small businesses easily exceed the threshold and pay the tax on the entire value of their equipment. Short of outright repeal, the most effective way to reduce the BET burden on businesses is to establish a high exemption. With HB 472, the Montana Chamber initially recommended a $250,000 exemption, which would have exempted about 85 percent of Montana businesses – in particular small businesses – from the BET. After the hearing in Senate Taxation, it was apparent that the committee would table HB 472, which it eventually did. House Taxation in turn amended the $250,000 exemption into SB 96, different business equipment tax reduction that proposed raising the top threshold to $10 million and lowering the rate to 1.5 percent. The Senate rejected the House amendments and the bill went to a conference committee, which adopted a $100,000 exemption, a top threshold of $6 million, and a lower 1.5 percent rate. Equipment valued under $6 million is taxed at 1.5 percent. If that threshold is exceeded, the rate is three percent. The free conference committee report was approved 34-16 in the Senate and 84-16 in the House. Governor Bullock signed the bill.

SB 139 Require small business impact analyses prior to adoption of administrative rules Sponsor: Sen. Ed Walker (Billings) Final Status: Became Law Effective Date: July 1, 2013; sunsets July 1, 2015 Summary: SB 139 sought to protect small businesses from the costs of complying with rules and regulations. The federal government and 42 states require agencies to analyze how a proposed regulation would economically impact small businesses before it is adopted. These laws also require agencies to consider whether there are less-burdensome solutions that will still accomplish agency rulemaking goals. SB 139 creates an affirmative duty for state agencies to analyze “direct and significant adverse impacts” to small business before adopting new rules and regulations. Like the federal law and similar laws in other states, the agency has to consider less onerous rules and regulations if an adverse impact is identified by the analysis. SB 139 defines a small business as one with 50 or fewer employees. House Business and Labor amended the bill with a two-year sunset provision and with a bar on any cause of action based on the content of the small business impact analysis. The Senate concurred with the House amendments and the bill was transmitted to Governor Bullock. He proposed an amendment that would further bar any cause of action if an agency opted not to conduct a small business impact analysis on a proposed rule. The Montana Chamber and other supporters believed that adopting this amendment would neuter the bill

2 because agencies would simply ignore the requirement. The House (60-40) and Senate (31-17) rejected Governor Bullock’s amendments. After the bill was returned to him, Governor Bullock subsequently signed the bill without his amendments.

SB 148 Limit awards in Wrongful Discharge Act Sponsor: Sen. Llew Jones (Conrad) Final Status: Died in Process (vetoed) Summary: Currently, Montana’s wrongful discharge law allows a wrongfully discharged employee to be awarded lost wages and fringe benefits “for a period not to exceed 4 years from the date of discharge, together with interest on the lost wages and fringe benefits” (MCA 39-2-905(1)). How long the employee worked for the employer is immaterial in statute. The high potential for large “lost wage and benefit” awards in Montana is a significant disincentive to outside businesses that will compare our legal climate to Wyoming, the Dakotas, or Idaho. The Montana Chamber believes that awards should be tied to time on the job. The House amended SB 148 to limit lost wages and benefits awards “in an amount equal to one-half of the period of time the employee was employed” with a cap of 48 months. The Senate did not concur with the House amendments and SB 148 was sent to a conference committee which adopted a clarification by changing “equal” to “up” in order to provide courts with flexibility to consider a lower award than simply one-half of the period of time employed. The free conference committee report was adopted by the Senate 30-20 and the House 61-39. It was vetoed by Governor Bullock.

SPENDING :

HB 5 Long-range building appropriations Sponsor: Rep. (Colstrip) Final Status: Became law with Governor Bullock’s line-item veto Effective Date: July 10, 2013 Summary: HB 5 appropriates money for capital projects and capital improvements around the state for state agencies and the university system. After the failure of HB 14 to authorize bonding for construction projects around the state, support emerged to spend cash instead. Therefore, numerous construction projects in HB 14 were amended into HB 5. HB 5 was line- item vetoed by Governor Bullock for a rider placed on the bill that affects administration of the Habitat Montana program, which uses license dollars paid by hunters to secure wildlife habitat. The effort to override Governor Bullock’s veto failed so the bill becomes law with his line-item.

HB 218 Require Board of Oil and Gas to administer grant program for oil and gas impacts Sponsor: Rep. Duane Ankney (Colstrip) Final Status: Died in Process (vetoed) Summary: As amended, HB 218 provides for a diversion of US Mineral Royalty revenues to a new state special revenue oil and gas impact fund from the general fund through December 31, 2020. The bill creates a new program to be administered by the Department of Commerce to provide grants to local governments for oil and gas impact projects as defined and prioritized by criteria set forth in the bill. After getting out of a free conference committee, the Senate adopted its report 48- 2 and the House 93-6. Governor Bullock vetoed HB 218 on the grounds that HB 218 was excessive and duplicative and that other funds provide adequate infrastructure funding. The veto override attempt was unsuccessful.

WORK COMP ISSUES :

HB 82 Revise applicability of extraterritorial work comp agreements Sponsor: Rep. Scott Reichner (Bigfork) Final Status: Became Law Effective Date: April 20, 2013 Summary: Employers in construction from another state must obtain work comp in Montana unless there is a reciprocal agreement between Montana and the employer’s state. HB 82 authorizes the Montana Department of Labor and Industry and the Governor to enter in to reciprocal agreements with other states for employers to have their employees work in Montana without obtaining work comp from both states. HB 82 outlines what reciprocal agreements from this point forward must contain and requires out of state employers to obtain certificate that verifies that the employer has agreed to be bound by Montana’s work comp act. It passed unanimously in the Senate and House and was signed by Governor Bullock.

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HJ 25 Interim study of work comp and subrogation, other issues Sponsor: Rep. Scott Reichner (Bigfork) Final Status: Assigned to Economic Affairs Interim Committee Summary: In a situation in which a worker is injured by a third party (i.e. not injured by their employer or co-worker), work comp benefits should be offset if the injured worker is made whole by damages in a tort claim. This offsetting is referred to as “subrogation.” Due to court decisions in Montana, subrogation does not apply until a claimant is given a chance to be made whole in a civil action against a third party or, as provided in Article II, section 16, of the Montana Constitution, given “full legal redress for injury incurred in employment.” Work comp insurers in other states may be able to successfully subrogate and receive offsets against their costs thus potentially lowering work comp premiums while in Montana few insurers are willing to pay the court costs necessary to pursue subrogation because of concerns that under the constitutional interpretations an injured worker first must be made whole. Montana still has the 10 th highest work comp rates in the nation. Lack of subrogation contributes to pressures that push up premiums in Montana and the issue is worthy of consideration over the 2013-2014 Interim.

SB 173 Generally revising state work comp insurance fund laws Sponsor: Sen. Jim Keane (Butte) Final Status: Died in Process Summary: Since 1991, the general fund has appropriated funds to the Montana State Fund (MSF) to cover Old Fund liabilities. Montana statute also bars the Legislature from placing the Old Fund liability on the MSF. SB 173 proposed to eliminate the general fund appropriation for the coming biennium and to move the Old Fund liability over to the MSF. It also barred the MSF from increasing rates to cover Old Fund claims while also providing for oversight of executive pay at the MSF. Various business groups opposed SB 173. Although SB 173 would have barred rate increases, it would have effectively reduced reserves in the MSF and compromised its actuarial soundness. In order for MSF to meet actuarial requirements and goals for their reserves, they would have had to freeze rates or even increase them. If SB 173 would have been enacted, the Montana State Fund Board of Directors would not have decreased rates 6 percent overall at its May 3, 2013 meeting.

HEALTH CARE POLICY :

HB 87 Provide state insurance commissioner with health insurance rate review authority Sponsor: Rep. (Dillon) Final Status: Became Law Effective Date: July 1, 2013, and applies to rate filings that affect health insurance coverage in the individual or small group market issued on or after January 1, 2014 Summary: HB 87 gives the State Auditor (Commissioner of Insurance) the authority to review health insurance rates based on specific statutory criteria. However, it does not give the Commissioner the authority to require a health insurer to alter rates. The process created by HB 87 works as follows. Within 60 days before a rate goes into effect, a health insurer must file with the Commissioner its rates, fees, dues, and other charges for each product intended for use in Montana, together with sufficient information to support the premium to be charged as described. Within 60 days, the Commissioner must provide a notice of whether and why the proposed premium rate is excessive, inadequate, unjustified, or unfairly discriminatory. Within 30 days, the insurer may amend its rate filing, request reconsideration based upon additional information, or implement the proposed rate, unless the rate is unfairly discriminatory. If the insurer implements a rate that the Commissioner has determined to be excessive, inadequate, unjustified, or unfairly discriminatory, the Commissioner shall publish the finding on the Commissioner’s website indicating the Commissioner’s determination. It passed the House and Senate and was signed by Governor Bullock.

HB 489 An act to create the Montana health care database Sponsor: Rep. Chuck Hunter (Helena) Final Status: Died in Process Summary: HB 489 sets up a database to facilitate the review and evaluation of information related to health care services and costs. The benefit of having a database is that it enables policymakers, health plans, health care providers, researchers, businesses, and consumers to analysis the information to make more informed decisions about controlling health care costs, judging the relative value of health care services, and using available health care resources. The Montana Chambers supported HB 489 because it would help businesses monitor the cost of coverage, provide a better negotiating position with insurers, and choose insurance products based on price and quality. Although the bill made it through the House, it was 4 tabled in Senate Public Health, Welfare, and Safety.

HB 544 Revising insurance provisions related to provider networks Sponsor: Rep. Scott Reichner (Bigfork) Final Status: Became Law Effective Date: October 1, 2013 Summary: HB 544 states that a health benefit plan that contains a payment difference provision and has not been determined to have an adequate provider network may not exceed a 25% payment difference in the reimbursement level for a preferred provider. Under HB 544, a provider network is adequate if: 1) the network includes at least 80% of the licensed individual physicians actively practicing in the state of Montana; 2) the network includes at least 80% of the licensed individual nonphysician health care providers actively practicing in the state of Montana; and 3) the network includes at least 90% of those facilities licensed and operating as hospitals in the state of Montana. The Montana Chamber supported the bill because it will save health insurance costs by allowing employers to cover less of the cost of services if an insured employee uses a nonparticipating provider as long as the insurer maintains an adequate preferred provider network. The Senate passed the amended version of the bill 32- 18 and the House concurred 69-28. Governor Bullock allowed the bill to become law without his signature.

HB 545 Allow employer to fund total cost of qualifying employee’s health insurance Sponsor: Rep. Scott Reichner (Bigfork) Final Status: Became Law Effective Date: January 1, 2014 Summary: HB 545 allows employers to pay all or a portion of qualified employees’ disability insurance coverage if the employer does not offer group health insurance or the cost of the employer offered health insurance exceeds 9.5 percent of the employee’s household income. The bill also excludes the employer-paid premium from adjusted gross income. The bill passed nearly unanimously in both chambers and was signed by Governor Bullock.

SB 297 Revise laws related to health care provider service payments Sponsor: Sen. Elsie Arntzen (Billings) Final Status: Became Law Effective Date: May 7, 2013 Summary: SB 297 provides certainty over which insurer pays how much to providers in automobile accidents. Confusion has led to numerous lawsuits against hospitals recently. When hospitals get sued for complying with their preferred provider agreements (PPAs), then there is no incentive for providers to enter into PPAs with insurance companies. Insurance companies rely upon PPAs to pass savings on to their insured members. Providers have saved billions of dollars because of these agreements. SB 297 preserves the integrity of PPAs to help manage health care costs and pass savings on to consumers such as small businesses providing coverage for their employees. The House amended the bill and passed it 61-39. The Senate concurred with the amendments on a 33-17 vote. The bill became law without Governor Bullock’s signature.

TAX POLICY :

HB 152 Provide deadlines for governing bodies to review tax exemption applications Sponsor: Rep. (Great Falls) Final Status: Became Law Effective Date: February 28, 2013 Summary: HB 152, as amended, establishes new processes and time lines for local government approval or denial of a property tax abatement or property tax exemption relating to: new or expanding industry; remodeling, reconstruction, or expansion of buildings or structures; remodeling, reconstruction, or expansion of certain commercial properties; historic properties; business incubators; industrial parks; and buildings and land owned by a local economic development organization. It passed in the House and Senate and was signed by Governor Bullock.

HB 408 Revise tax rate laws on mandated pollution control equipment Sponsor: Rep. Mike Miller (Helmville) Final Status: Died in Process (vetoed)

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Summary: HB 408 reduces the rate for Class 5 Pollution Control Equipment from 3 percent to 1 percent over 4 years. Since its inception 30 years ago, the Class 5 tax rate has remained at 3 percent while Class 8 business equipment has been reduced more than fivefold from 12 percent to 1.5 percent. There is no fiscal impact to the budget from HB 408 this biennium. The bill passed 72-38 in the House and 32-18 in the Senate. It was vetoed by Governor Bullock. A veto override was unsuccessful.

HB 578 Eliminate countries listed in water’s edge law Sponsor: Rep. Mike Miller (Helmville) Final Status: Died in Process Summary: HB 578 eliminates the requirement of corporations that make water’s-edge elections to include in their corporation license tax returns the activity from units, subsidiaries, or affiliates that are incorporated in tax havens when apportioning the Montana share of their federal taxable income. The bill further eliminates the list of tax havens, and the report by the Department of Revenue to the Revenue and Transportation Interim Committee concerning the list of tax haven countries. It would have resulted in about $20 million per biennium in tax relief once fully implemented. The bill was tabled in House Taxation.

SB 4 Generally revise property reappraisal laws Sponsor: Sen. Jim Peterson (Buffalo) Final Status: Died in Process Summary: This bill would have shortened the revaluation schedule for class three (agricultural), four (residential and commercial), and ten (forest) property from a six-year cycle to a single two-year cycle in TY 2015 and annual revaluation beginning in TY 2017. Additionally, this bill would have required the DOR to conduct individual property inspections, building permit reviews, sales data verification, and electronic data reviews, including but not limited to: aerial imagery and change detection software for approximately 16 percent of class four property, in each county, each year, so that by the end of the 6- year period, 100 percent of this property would have been “appraised.” The costs of implementing this bill would have been approximately $10 million per biennium. The bill was tabled in Senate Taxation.

SB 208 Revise tax laws related to water’s edge elections Sponsor: Sen. Dick Barrett (Missoula) Final Status: Died in Process Summary: This bill proposes to eliminate the water’s election for corporate license taxpayers. This change to corporate license taxes is estimated to increase general fund revenues by $8 million per year, phased in over several years, as current elections expire. The bill was tabled in Senate Taxation.

SB 240 Revise taxation of pollution control equipment Sponsor: Sen. Bruce Tutvedt (Kalispell) Final Status: Died in Process (vetoed) Summary: SB 240 attempted to partially match surrounding states by exempting taxes paid on all mandated air and water pollution control equipment installed in 2012 and later. Governor Bullock vetoed the bill. Even though the vote in the Senate was 40-9 (2 nd reading on April 4; 3 rd reading vote was 28-0) and 92-8 in the House, a veto override attempt was unsuccessful.

SB 280 Allow mediation for dispute of property valuation Sponsor: Sen. Fred Thomas (Hamilton) Final Status: Became Law Effective Date: May 7, 2013; Section 2 (mediation of valuation disputes) is January 1, 2015 Summary: This bill allows owners of property to enter into mediation with the DOR. The mediation is non-binding and the cost is split between the taxpayer and the DOR. The taxpayer must pay a $100 fee for a request for mediation. SB 280 is expected to raise $18,900 in fee revenue for the biennium and cost $224,017 for the biennium. The bill passed unanimously in both chambers and became law without Governor Bullock’s signature.

SB 282 Generally revise taxation of income, including the corporate license tax (Montana Chamber also supported tax simplification proposals HB 532 (Hollandsworth) and HB 581(Hansen), both of which died in process) Sponsor: Sen. Bruce Tutvedt (Kalispell) 6

Final Status: Died in Process (vetoed) Summary: SB 282 was designed to simplify Montana’s income tax code for individuals and corporations. Filing status would have been the same as federal. The Montana return would have started with federal taxable income and reduced substantially the additions to and subtractions from federal taxable income. For individuals, the tax rates would have been 4 percent on the first $15,600 of Montana taxable income and 5.9 percent on the excess over $15,600 for married individuals filing a joint return. Other rates are similarly revised for other filing statuses. The tax rates are reduced for capital gains by 2 percent for taxpayers in the 4 percent bracket and 1.75 percent for taxpayers in the 5.9 percent bracket. The corporate tax rate is reduced from 6.75 percent to 6.5 percent. In order to offset lost revenues, the bill proposed to eliminate various state tax credits. The free conference committee report was adopted in the Senate 29-21 and in the House 65-35. Governor Bullock vetoed the bill and an override attempt was unsuccessful.

SB 394 Generally revise income tax laws and decrease taxes Sponsor: Sen. Art Wittich (Bozeman) Final Status: Died in Process (vetoed) Summary: SB 394 would have reduced a taxpayer’s individual income tax liability by 5 percent by providing an income tax relief discount factor of 0.95 for tax year 2014 only. It would have been $47 million in one-time tax relief for individual income taxpayers. It passed in the House 57-42 and in the Senate 26-24 (2 nd reading vote on April 4; 3 rd reading vote was 23- 6). Governor Bullock vetoed the bill.

SJ 23 Study the tax appeal process Sponsor: Sen. Bruce Tutvedt (Kalispell) Final Status: Assigned to the Revenue and Transportation Interim Committee (RATIC) Summary: Tax laws in Montana include numerous complicated tax types, tax rates, and tax applications all of which are subject to an appeals process. SJ 23 directs the RATIC to review the current local government tax appeal process and state tax appeal process; analyze whether the current local government tax appeal process and state tax appeal process should be maintained; analyze whether there should be changes generally to the current local government tax appeal process and state tax appeal process to improve access and efficiency for taxpayer appeals; analyze the appropriateness and timeliness of formal mandatory or voluntary mediation processes as part of the taxpayer appeal process; analyze whether changes to the appeal process are necessary for appeal of centrally assessed properties and large industrial facility properties to ensure an efficient process that attempts to avoid costly and time-consuming appeals; determine whether to recommend an alternate process other than the current local government tax appeal process and state tax appeal process. It passed 43-7 in the Senate and 69-31 in the House.

EMPLOYMENT POLICY :

HB 226 Exempt computer professionals from overtime pay Sponsor: Rep. Don Jones (Billings) Final Status: Became Law Effective Date: October 1, 2013 Summary: HB 226 exempts certain higher paid computer professionals from overtime passed the Legislature and became law without the signature of Governor Bullock. The Bill will end confusion and uncertainty whether overtime for higher paid computer professionals is exempt in Montana. Computer professionals are exempt from overtime under the Federal Fair Labor Standards Act, but Montana law was silent on the subject. The ONLY purpose of the Bill is to make Montana law consistent with Federal Law. Of course, under HB 226 the employer has the ability to pay it or not for those professional IT employees making more than $27 per hour (about $57,000 on an annual basis). (Those computer professionals making less than $27 per hour are required to receive overtime.) In the Legislature the Bill was supported by the NFIB, Montana Chamber of Commerce and Billings Area Chamber of Commerce. It was opposed by the MEA and AFL/CIO. It passed 30-18 in the Senate and 58-40 in the House. Governor Bullock allowed the bill to become law without his signature.

HB 297 Provide that employment of an unauthorized alien is unlawful Sponsor: Rep. David Howard (Park City) Final Status: Died in Process (vetoed) Summary: HB 297 creates a process through which the State of Montana Department of Justice must investigate complaints that a Montana business has hired an alien unauthorized to work in the United States, conduct hearings, and in some 7 instances appear in state district court. The bill also establishes penalties for businesses that hire unauthorized aliens, up to and including suspension of their business license for 10 days. The Montana Chamber and other business groups have held the position that the hiring of illegal aliens is not a widespread problem in our state. We also feel that the federal government, not the business community, is best suited to deal with protecting our borders and keeping undocumented workers out of the country. Furthermore, the e-Verify and I-9 programs are an effective method of determining if someone is an illegal alien. The Montana Chamber and other business groups have been concerned about proposals like HB 297 because in general they propose regulations, requirements, and penalties that can be costly and overly punitive. Nonetheless, the Montana Chamber and other business groups supported the final amended version of HB 297 because it indemnified employers that utilize the e-Verify or I-9 programs while establishing fairly reasonable penalties. The bill passed 29-21 in the Senate and 63-37 in the House. Governor Bullock vetoed the bill.

HB 400 / HB 572 Revise laws related to personal information privacy Sponsors: HB 400 – Rep. Daniel Zolnikov (Billings); HB 572 – Rep. (Missoula) Final Status: Died in Process Summary: These bills would have required that companies notify customers when they want to collect their information and give consumers an opportunity to opt out. Both bills were tabled in House Business and Labor.

SB 127 Revise unemployment law, revise def. of misconduct Sponsor: Sen. Ed Buttrey (Great Falls) Final Status: Became Law Effective Date: October 1, 2013 Summary: SB 127 revises the definition of misconduct in MCA 39-51-201 that disqualifies an employee from receiving unemployment insurance benefits. It literally codifies the list of what constitutes misconduct currently in the Administrative Rules of Montana 24.11.461. This includes: 1) insubordination showing a deliberate, willful, or purposeful refusal to follow the reasonable directions, processes, or instructions of the employer; 2) repeated inexcusable tardiness following warnings by the employer; 3) dishonesty related to employment, including but not limited to deliberate falsification of company records, theft, deliberate deception, or lying; 4) false statements made as part of a job application process, including but not limited to deliberate falsification of the individual’s criminal history, work record, or educational or licensure achievements; 5) repeated and inexcusable absences, including absences for which the employee was able to give advance notice and failed to do so; 6) deliberate acts that are illegal, provoke violence or violation of the law, or violate a collective bargaining agreement by which the employee is covered. However, an employee who engages in lawful union activity may not be disqualified because of misconduct under this subsection (19)(a)(i)(F); 7) violations of a company rule if the rule is reasonable and if the claimant knew or should have known of the existence of the rule; or 8) actions by the claimant who, while acting within the scope of employment, commits violations of law that significantly affect the claimant’s job performance or that significantly harm the employer’s ability to do business. The bill passed nearly unanimously in both chambers and was signed by Governor Bullock.

SB 128 Revise when unemployment insurance rates not affected by benefits paid Sponsor: Sen. Ed Buttrey (Great Falls) Final Status: Became Law Effective Date: July 1, 2013 Summary: SB 128 simply provides that an account of an experience-rated employer may not be charged with respect to unemployment benefits when an employee leaves for good cause. It passed in the House and Senate and was signed by Governor Bullock.

SB 195 Revise laws protecting job applicant/employee privacy related to social media Sponsor: Sen. Anders Blewett (Great Falls) Status: Died in Process Summary: The stated impetus of SB 195 was to protect job applicants from having to disclose social media usernames or passwords, provide access to social media sites, or divulge personal information on social media sites. While the business groups thought that this was a laudable goal, SB 195 greatly exceeded that general purpose and would have had significant unintended consequences. Exemptions in SB 195 did not include exemptions for business investigations. Therefore, an employer is prohibited from investigating a sexual harassment situation, hostile work environment, or other workplace problems emanating from an employee’s social media site. There was no exemption for state law requirements. Therefore, employers could face liability for not investigating or solving issues arising under state law because SB 195 bars them from 8 doing so. Furthermore, there was no exemption for necessary business purposes. The bill would have created strict liability if an employee happens to use the same username or password for work accounts as they do for social media sites. If an employer requires the work account username and password, they would have violated the bill. Oftentimes, employees use social media for business purposes and employers should have access to such usage. SB 195 would have prevented a business from investigating an employee that commits, for example, fraud while using personal social media to conduct business functions. The bill would have prevented an employer from ensuring confidential business-related information is not disclosed on social media. The bill would have chilled the development of cyber-security measures and “data loss prevention” tools to prevent security breaches on a company’s network, as these programs may inadvertently collect username and password information when employees log in to personal accounts from work. Supervising employers have an obligation under federal and state law to monitor personal social media accounts utilized for business purposes, and must have in place mechanisms to capture and store relevant communications. The bill did not fully address these concerns. Any legislation that is designed to limit an employer’s access to social media accounts must provide exemptions that permit access to such accounts to meet legal and regulatory requirements and contain exemptions when the accounts and devices are used for business purposes. These exceptions would also serve to promote and enhance consumer and investor protection. SB 195 did not contain these exceptions. Although it passed in the Senate 48-2, it was tabled in House Business and Labor. A blast motion in the House was unsuccessful on a 48-52 vote.

MILITARY ISSUES :

HB 259 Revising professional, occupational licensing terms regarding military training (Montana Chamber also supported similar proposal SB 183 (Arntzen) which also became law) Sponsor: Rep. Chuck Hunter (Helena) Final Status: Became Law Effective Date: April 26, 2013 Summary: HB 259 directs each licensing board to adopt rules by July 1, 2014, that provide that certification or licensure requirements established by that board or program may be met by relevant military training, service, or education completed by an individual as a member of the armed forces or reserves of the United States, the national guard of any state, or the military reserves. It passed nearly unanimously in both chambers and was signed by Governor Bullock.

HB 579 Establish task force on military missions and strategic/economic impacts in MT Sponsor: Rep. Roger Hagan (Great Falls) Final Status: Died in Process Summary: HB 579 sought to create a statewide Military Task Force to advocate for retention and development of military missions, installations, and force structures that provide economic development opportunities in Montana and serve a role in the defense strategy of the nation. It also would have been tasked with educating the public, legislature, and congressional delegation about the economic and strategic impact of current and future military development in Montana. HB 579 would have directed the task force to examine potential base realignment and closure actions; study the economic impact that the active and reserve component military missions and force structures in Montana have on Montana’s economy and the strategic impact for the nation of those programs and assets; develop a strategic plan for how to position Montana with respect to potential base realignment and closure actions so that Montana has the best possible opportunity to retain and develop future military economic development opportunities; provide regular updates on task force activities to the governor, the president of the senate, and the speaker of the house; prepare reports and presentations consistent with its purpose and duties; lobby members of congress and act as a liaison with civilian and military personnel engaged in making decisions concerning current and potential military missions and active and reserve component force structures in Montana; and work and coordinate with other local and state military advocacy organizations as necessary. The bill made it through the House, was blasted to the Senate, and died on a 19-31 vote.

SJ 24 Requesting an interim study of military training applicability to civilian jobs Sponsor: Sen. Ed Buttrey (Great Falls) Final Status: Assigned to the Economic Affairs Interim Committee (EAIC) Summary: SJ 24 directs the EAIC to monitor work done by professional and occupational licensing boards regarding recognition of military training as equivalent to licensing requirements; identify and examine other certifications or licensing for civilian or state or local government jobs for which military training and skills may be acceptable equivalents; and identify

9 statutes, if any, that may need to be amended to allow reciprocity for military training for licensure or certification. It passed unanimously in the Senate and 71-29 in the House.

ENVIRONMENT AND NATURAL RESOURCE DEVELOPMENT :

HB 513 Exempt oversize load permits from the Montana Environmental Policy Act Sponsor: Rep. Bill McChesney (Miles City) Final Status: Became Law Effective Date: October 1, 2013 Summary: The process of obtaining permits to transport oversized loads through the state is uncertain and costly. Manufacturers need a predictable and expedited permitting process to ensure that oversized products can make it to development locations. HB 513 facilitates the process of obtaining permits by exempting oversized loads from environmental impact statements required by the Montana Environmental Policy Act “when existing roads through existing rights-of-way are used.” The Senate amended the rights-of-way language into the bill and passed it 37-12. The House concurred on an 87- 14 vote. Governor Bullock signed the bill.

SJ 26 Provide for study of commerce corridors along Montana highways Sponsor: Sen. Elsie Arntzen (Billings) Final Status: Assigned to the Revenue and Transportation Interim Committee (RATIC) Summary: SJ 26 is a study resolution that directs the RATIC to analyze the issue of the transport of oversize loads in Montana. RATIC is tasked to look at any impediments in Montana law that preclude or discourage transporting oversize loads through the state; and options to remove or mitigate the impediments to efficiently and in a cost-effective manner transport oversize and other loads through Montana. RATIC must look at other states or Canadian provinces for legislative methods or means enacted to foster the transport of oversize loads through various public jurisdictions, including by establishing or authorizing the establishment of commerce corridors. The bill passed 35-15 in the Senate and 82-17 in the House.

PROPERTY RIGHTS AND LAND USE :

HB 571 Establish the employee safe travel to work act Sponsor: Rep. Kirk Wagoner (Montana City) Final Status: Died in Process Summary: Also known as “guns to work,” HB 571 was proposed as a legislative referendum and would have barred employers from preventing an employee from keeping a firearm locked in the trunk of their private vehicle in the parking lot of the employer or keeping a firearm in their private vehicle while conducting the business of the employer. It would have indemnified an employer for any incident, injury, or damages resulting from a firearm being taken from an employee’s motor vehicle parked at the employee’s workplace. Finally, it would have provided a cause of action for an employee whose employer would have violated this law. The Montana Chamber and other business groups were able to convince the sponsor to have the bill tabled in committee.

SB 324 Generally revise the subdivision laws related to lease or rent requirements Sponsor: Sen. Matt Rosendale (Glendive) Final Status: Became Law Effective Date: September 1, 2013 Summary: Imagine you’re a business within city limits and you want to lease a couple vacant buildings on your lot. The city’s zoning code allows this sort of use, but the city tells you that a couple court cases and a Montana Attorney General opinion say the Subdivision and Platting Act only allows you to lease one extra building on your lot. In order to lease any additional buildings you have to go through a full-fledged subdivision review. Subdivision review is expensive compared to any potential profit from leasing additional buildings. SB 324 solved this disconnect between local zoning regulations and subdivision review requirements. SB 324 exempts the leasing of 3 or fewer buildings on a single lot from local subdivision review. The bill grandfathers existing buildings for lease or rent from further subdivision review under the new statute. Moreover, the bill clarifies that if zoning allows for adding buildings for lease or rent to a single lot, such use would be exempt from subdivision review as long as the zoning regulations have prescribed regulations in place. An amended version of the bill passed in the House and Senate and was signed by the Governor Bullock.

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