June 3, 2026 · Commerce and Labor Committee · 14,874 words · 7 speakers · 124 segments
I've got 11 a.m. and I call the Ohio House Commerce and Labor Committee to order. Would you please rise, if able, for the Pledge of Allegiance.
I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation, under God, indivisible, with liberty and justice for all.
Will the clerk please call the roll? Chair Johnson. Here. Vice Chair Lear. Here. Ranking Member McNally excused. Representatives Abrams. Here. Brent. Present. Claggett. Here. Creech. Here. Fisher. Here. Hoops. Kishman. Here. Pizzouli. Rader. Here. White. Present. Present. We have a quorum. And we will proceed as a full committee. In the absence of ranking member McNally, who's been excused, would Representative Brent please fill in for her duties? Yes. Thank you. The minutes of the previous meeting are located on your iPods. Would you please take iPads? Would you please take a moment to review the minutes? Are there any objections? Hearing no objections. The minutes are approved. Now bring House Bill 921 for its first hearing. We call on Representative Williams for sponsor testimony. Welcome to committee.
Thank you, Chair Johnson. Vice Chair Lear, and ranking member McNally. Just generally speaking, you all have the written testimony on your iPods, and you can read that. But we're already back expanding on E-Verify, in part based off of a specific situation that happened near Rep. Williams' district. But Representative Fisher and I testified in front of this committee last year on the importance of E-Verify. its benefits to our workforce, its benefits to a free and fair market, its benefits to having quality work done in the state of Ohio and working families that live here and pay our taxes and use our schools and participate in a fair and good faith way with our society. So we'd reiterate those, and I'll let Rep. Williams expand upon his story.
Chairman Johnson, Vice Chair Lear, Ranking Member McNally, and members of the House Commerce and Labor Committee, thank you for the opportunity to testify in support of House Bill 921. I also would like to thank my joint sponsor, Representative Swearingen, for his work on this bill and the previous legislation and the victories we've had on E-Verify in the state of Ohio. Codifying E-Verify and protecting Ohio's workers has long been a give and take in the legislature. Despite our hesitancy to expand E-Verify, the world keeps on turning, and more insane examples of what happens when you limit E-Verify makes national news. Not long ago, immigration officials arrested a superintendent of the Des Moines public school system in Iowa. The superintendent a man entrusted by his community to run the school of Iowa capital city was an illegal alien from Ghana with an extensive criminal history and was even caught in possession of a firearm illegally at the time of his arrest Not only are our country schools and universities going out of their way to hire and shield illegal aliens from prosecution, but Ohio's public benefit systems like publicly funded child care and Medicaid have absolutely no restrictions on who can be employed for these jobs. empowering the same cohorts of organized criminal illegal aliens to commit fraud in our state which we're seeing now in national news. While a step in the right direction, Ohio's current e-verify requirements do not cover nearly enough bases, which is why I present House Bill 921 before the committee today. House Bill 921 expands e-verify by expanding mandatory e-verify both in the aforementioned industries and by closing e-verify loopholes in the industries it is already partially mandated in. Ensuring that no American loses their job to foreign labor just because of who they labor for. Specifically, House Bill 921 expands mandatory E-Verify usage for the following workers in the following industries. Individuals seeking employment in child care centers, including type A child care centers, type B child care centers, and day cap child care centers. Individuals seeking employment in Ohio schools, colleges, and universities. Individuals seeking employment by the state or local governments. An individual seeking employment in residential contracting and construction, closing Ohio's E-Verify loopholes where only individuals who were contracted to do non-residential construction were required to verify their immigration status. All of the above industries are industries where public trust is paramount and where Americans don't deserve to be outcompeted by illegal aliens who are able to take employment for half the salary of their American counterpart, usually on the taxpayers' time and send most of their money to their families in foreign countries. When Ohioans grow to distrust our state because they think we're forking over millions to fraudulently run daycare centers and home health care companies, we should at least be able to show them that illegal aliens aren't reaping the benefits of those taxpayer-funded programs. When trust in educational institutions is at an all-time low and our constituents wonder why they pay so much property taxes to schools that once unified their communities, we should at least be able to show them that we're hiring their children, not criminal illegal aliens. When competition among Ohioans is at an all-time high for white-collar jobs in our state and local governments, we should be able to show Ohioans that they come first in their home state. And when a new home buyer is searching for their first home or their forever home, they should be able to trust that their home was constructed with care and not built by someone who was only there to undercut their neighbor's wages. Thank you again, Chair Johnson, Vice Chair Lear, and Ranking Member McNally, and the members of the House Commerce Labor Committee. I appreciate the opportunity to testify on this important legislation, and at the Chair's discretion, we are available for any and all questions.
Thank you for your testimony. Are there any questions for the witnesses or sponsors? Representative Fisher.
Thank you, Chair. Thank you both for bringing this bill. Obviously, big believer in E-Verify. Has there been any thought to even expanding the scope of this bill further? I think we see a lot of situations in workplaces where workers can be exploited, and ultimately I think it's the Ohioans who end up paying the price because the wages get repressed through maybe like delivery service drivers, trucking, long-distance trucking. Is there any thought to expanding the scope of the bill to cover those industries as well?
through the chair to the member we we have had discussions i mean in my office i have a draft of e for every employer in the state of ohio um but Ohio But we try to take incremental steps in the right direction So we have you know the Hail Mary of doing what we should be doing which is anyone employed in the state of Ohio should be able to verify their immigration status and their ability to work lawfully in the United States
I think that's reasonable policy. But even just a small step in the right direction of making sure our local governments are providing for e-verify, our local schools and universities are providing for e-verify, and our residential contractors, just like our commercial contractors are providing for E-Verify, I think it's a reasonable step in the right direction. But you know as much as I do that once a bill comes to the committee, it's the baby of the committee.
So if the committee wants to move in that direction, I have the language already drafted.
Follow-up? You know, what was it? I think Representative Swearingen, you had a bill several years ago that was pretty extensive that expanded into many industries, and we had issues with it. The federal government, to some degree, needs to address this situation,
and that hasn't quite happened yet except for federal construction work. But anyway, are there any other questions?
Vice Chair Lear.
Thank you, Chair. Thank you, gentlemen. And I'm curious especially about the e-verify for people being employed to work with children. So in Ohio, we have a requirement for background checks to try to weed out those who could harm kids and have a history of doing that. Will e-verify for people in these positions help ensure that we're not getting people who commit crimes against children in positions where they could actively do so again? Through the chair to the vice chair. So e-verify is all about immigration status at the federal level. It's just requiring that employers use the e-verify system that's been provided by the federal government to make sure that the employees are legally permitted to work in the United States. That's the goal. We can have other conversations about the safety and security of the employees, especially when we're talking about daycare centers. That has really popped up in the state of Ohio where we have videos of daycare workers that can't even speak English providing for the care and security of children at daycare centers that we're providing publicly funded child care services to. So that's definitely a concern of mine, but this was directly guided towards immigration status and piggybacking off of the work that Representative Swearingen had already done in the commercial space to make sure that there was going to be e-verify. And we've seen legislation like this across the country. We saw it in Florida, where Florida did the residential and commercial e-verify in the construction trades. I remember because I have friends that are in the construction trades, and job sites went empty for a couple weeks when all the illegal immigrants weren't allowed to work. and I had friends of mine from Ohio that were recruited to go to Florida and work in those construction trades. That's American jobs that are filled by American workers. I think that's the minimum that we should be doing here in the United States, is making sure that our citizens, our constituents that we are answering to, that are lawfully present because they have the right to vote, are able to make sure that when they do their time and build up their skills, that there's going to be employment available for them, their children, their grandchildren, their spouses. I think that's the minimum that we should be doing in the state of Ohio. So that's the goal of this bill is to make sure that we provide for that. Chair Johnson and Vice Chair Lear if I had my ideal I would apply this to everyone to all employers And the bill that Chair Johnson referenced was any employer with over 75 employees because we saw that you know in our opinion with former Representative Wiggum we thought that that was a threshold where those businesses could handle doing the ear-verified process and making sure they're in compliance. So it was kind of a fairness thing. The smaller businesses can handle it, but we didn't want to have those folks in like a gotcha moment where, you know, they're small business. They're worried about the day-to-day and they don't have the administrative setup to handle this. If I had my ideal, though, we would have a package of bills that not only had E-Verify, but we'd also have the Wired Act. We'd have things like that that says, okay, if you're here legally, great. Compete in the workforce. It's fair to the workers who are here who are doing it legally. It's fair to the small businesses who hire legally as well. So it's really a fairness issue and we really need to stop the system of cheating, whether that's hiring illegal labor, whether that's coming here illegally and getting a job and sending your money back to your family and not paying taxes for the services that you've consumed in our country. We need really a comprehensive overhaul of our system, and I think that over the next couple years we can hopefully do that, especially with the WIRED Act as well. It's a great companion bill to you verify. Any other questions?
Representative White?
Thank you, and thank you for you both coming in and presenting the bill. My question has to do with database errors, which is also a concern of understanding, also coming from the trades and understanding how this happens to workers. Just my question is, how long then would a worker be delayed when they are actually saying, this is incorrect, I'm trying to make sure this gets corrected, how long are we looking that someone can be delayed being employed who actually there's just a database error that's stopping them from moving forward? Through the chair to the member, I can't give you an exact time if there was someone that there was an error. When it comes to, like, our data centers, which is the construction, our E-Verify legislation already applies to them because they're commercial. That's a commercial construction project that already is subject to E-Verify. That was supported by all of our labor unions in Ohio. They were supportive of E-Verify. This takes it a step further. We can talk about daycares and universities and local government, which I think all have the ability to be able to take on the burden of E-Verifying, and it should already be confirmed in a person's immigration status. But we're also talking about the residential side of it, the new home construction side of it. Now, there are some concerns, and this is through the committee process. You know, the home builders are going to come in and say, we already have a housing shortage. We're not going to be able to build homes. Well, the simple answer is how about we get back to the workforce development training that we had before the 1970s at our inner city schools and produce the carpenters and electricians and the plumbers that are necessary to build our houses? How about we deal with American labor? Why are we using illegal immigrants? But we're open to conversations, just like he was willing to compromise on the number of employees. We're willing to go through the committee process and negotiate. and I've already have proposals to be able to alleviate some of those concerns on small construction, like repairs to people's houses. You know, if there's a hole in your wall and you want to cause someone to come and do drywall, I don't want you to have to try to verify that the person coming to patch a small hole in your wall, you know, their immigration status. I don't want your neighbor going, checking your lawn care company to be like, hey, did you check that guy with the blower? So there's exceptions that we're willing to make. But we're talking about if you are building the condos that are being built down from my house and there's 30 of them going up and you're a construction company, there's no reason you should be using illegal labor. And you should be using our building trades. You should be using our skilled labor. And you should be using the people that work hard in our community that need to make a living, that are paying the taxes, that are doing everything right. They need to have employment. And these are some of the barriers that we're seeing. So I can't give you an exact answer of the turnaround of when someone has an error. But when it comes to data centers, they're already subject to the E-Verify legislation that this great representative passed last time. Follow-up. Thank you. I want to get a little more specific to the type A daycares and type B daycares. knowing that they're different and also having a mother who ran type A daycare and knowing that the background, even for me, to step into her daycare and just sub for her. I had to have a background test. I had to pass background. I also had to pass CPR. I had to have first aid. I could not even come in and be help in that daycare at all without passing a background investigation. So I'm just wondering how this then, if you've already passed all that, and it's something that gets hung up in that data, because that construction is very different from a daycare center, how are there going to be things in there that also say, hey, we know this person already passed their background. They are, you know, actually a legal citizen, that we want to make sure there may be a database error that stops them from being employed at that daycare was more specifically my question. Through the chair to the member, we can have a conversation about it. When we talk background checks, the traditional background check is a criminal background check to make sure an individual doesn't have criminal offenses like endangering or abusing children, sexual offenses towards minors or women before they're eligible to work in those industries. But that background check doesn't show immigration status. And especially what we're starting to see with the explosion of fraud in the daycare space where many individuals have very similar names. And since they are here previously on protected status or on refugee status, those individuals will not have current birth dates. Some individuals would just be marked as January 1st of a particular year. You estimate their age. We want to make sure that a person is legally present here to work in the daycare center. And what we want to say is that it's not just the employee that gets in trouble, right? If we go and do one of our safety and security inspections or even if we do a public integrity inspection of a daycare center, We want the employer to be held accountable if during that inspection we determine that you have somebody off of the books that are providing the supervision for the minor children that are illegally present here in the United States. There should be some consequences for you. It shouldn't be a small slap on the wrist. If you look at some of the inspections that we had at daycare centers, daycare centers in the state of Ohio got caught supervising children by camera, where children were in a room without supervision and a person was in another building on a camera watching the kids. I don't put it past any of those providers to not try to skirt it by paying someone that's not lawfully present here less than minimum wage in order to provide those services to be able to get a boost in the market share and be able to provide the services at a cheaper rate than what our normal YMCA's and other daycare centers do. So all we're saying is, look, if we're going to be the theory behind it for us is if we're providing a public benefit, we want to make sure the people that are providing the services under that public benefit are here lawfully. So that means our home health care, our medical transportation, our daycare centers. If they're publicly funded, we should be at least able to tell the taxpayers that I can guarantee you the employee providing those services is a lawful resident legally present here in the United States and has permission to work in the state of Ohio. I think that's a bare minimum. I should be able to look at my constituents and say, hey, I'm taxing you to provide free child care. I at least can promise you that the person providing the child care services is lawfully present and legal to work here in the United States One more follow So can this be expanded then Because I know that they have the ratios which you have to have So you have to have those. You're not supposed to have someone watching kids by camera. You're supposed to have one person per six kids, depending if they're adults or mixed age, all of that. So when we're talking about this, with this being even with public, why or can we expand this then to all daycare centers? Because if you stop type A or type B, I'm not certain that I feel secure that this may not happen other places. If it's an issue and we're talking about our kids and we're having to pay for daycare, wherever it is, it's something that me, if it's that serious, which it is, that it should be expanded to all daycares, no matter, not just type A or type B. Through the chair, remember, I don't mind if we say all daycare providers. Type A and type B are the type of daycare providers. They're just the differences. Type A is your traditional daycare center. Type B is the in-home daycare center where a person actually is opening their home for daycare. We want to make sure that person that's going to be there actually that's providing the services is lawfully present because sometimes it will be your home, but you have an employee that actually is providing for the services for the minor children. So I can just say all daycare centers. That's not a problem. I tried to use the categories as they're defined under the current administrative code to make sure it's the same language that's used in House Bill 649, our daycare fraud prevention bill. So we just tried to mirror that language. But I'm more than willing to use any term the committee decides to make sure it's as broad as possible to encompass the safety and security of our kids. That's not a problem. Thank you for the question. Any other questions?
Representative Brent.
Thank you, Chairman. I'm going to start off with a statement, a question, and then a follow-up, if it's okay with the Chairman. Thank you. So I'd just like to start off with a statement. This is an unfunded mandate, and we are not providing broadband across our state like we should. That's just one. Two, we also have a daycare shortage that the Chamber of Commerce, NFIB, and other business organizations have said because they want to get more people working, just making some statements. statement number three and then I'm gonna get to my question I'm just reminding you I am the daughter of an immigrant my dad didn't get his citizenship until a couple years ago so even him bringing him to the state house and people hearing his very thick accent you know folks in our chamber our general assembly asked some of the craziest things to people when they hear somebody with an accent not realizing that was my father too so my question is what safeguards are put in place to stop predatory employers from using databases delays as an excuse to discriminate against minority applicants? All right. Chair Johnson, Rep. Rent, that's a great question. My understanding of E-Verify, you know, we apply it to everyone under these circumstances. So it has to be applied to everybody. And you can't consider any protected class when you apply it. It's just applied to any employee that is subject to the E-Verify requirements. So that's how we avoid any type of discrimination, which we don't want. We want fairness, and we want it to be applied broadly and not just to a select group of people. I agree with that, Chairman. Follow-up? Yes. This is a Part 1, Part 2A of the follow-up. I have a 2A and a 2B. So the 2A of the follow-up is that discrimination is just real. sometimes we have to put things in place to make sure people aren't using E-Verify as a reason to discriminate against people because your name is Alu Kime like my name is Juanita O Brent but my name is Alu Kime so when people see my name they don assume that off a first glance that I even American So I looking for some type of guardrails to make sure that people are not being discriminated against when they're seeing me compared to a Johnson when people are going through this process of going through e-verify. Also, too, I notice there's only 10 states that are actually using e-verify. I will go through the states for the grandmothers at home. Alabama, Arizona, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, and Utah. The only states that actually go through the whole process of doing E-Verify for all their people. My second question, Chairman, Ohio is an agricultural state. Anybody who knows me know I sat as the ranking member on agriculture for six years. I go to our county fairs. I go meet our meat processors. our state is built off of people from outside of our state, outside of our country, who come to Ohio to help us in the agriculture space. So since this is a bill about immigration and employment, why are we doing Congress's job? Why are we wasting Ohio's taxpayer dollars to do Congress's job to worry about immigration and employment? Shouldn't this be something that the people in Washington should be doing? Chair Johnson and Rep. Brent, great questions. I'll try to address them in turn. So the states that you mentioned, I think they're like full E-Verify states. I want to say there's 23 or 24 states that have some variation of E-Verify and Ohio's in that. So there's more there. I understand your concern with individuals who come to our country looking for work. what we're saying to those individuals is come here through the right channels. And I do wish Congress would do their job in making sure that that happens as well. I feel like some of our efforts at this level, whether it's through fraud, Medicaid, the Wired Act, E-Verify, is making up for a lack of at the congressional level, whether that's through the border being insecure or any number of other issues. So here we sit with our bills to protect fairness in Ohio, and that's what I think this does. And to your point about discrimination, that's very, very critically important that that not happen. And I know in our bill with Representative Fisher, I think we had language in there that E-Verified was applied regardless of any type of protected class. It's just applied to the employee that comes on to the employer who's subject to the E-Verify requirement. Thank you, Chair. Thank you. You know, today in the residential field of construction, we've got a lot of brokers. We don't have employers. A lot of cash economy. And no employees. And, you know, federal tax law requires a 1099 to be sent. But sometimes that may be a gray area also. And who's an employee and who isn't? But I believe if this bill was to pass that our workforce participation rate might increase. And we've got a lot of people that's out here working in the cash economy that's using Medicaid for their health care and sometimes subsidized housing and other benefits. And it's engineered that way. and all at the same time, they're raking in boatloads of cash at the time. The whole industry is based on piecework and framing per foot and there is a lot of issues out there So I assume that you already spoken to the home builders and we will get into that at a later date But anyway, are there any other questions?
Seeing none, that will complete the first hearing on House Bill 921. Now I'll bring forward House Bill 605 for its second hearing. I'd like to call up Griffin Wessel on behalf of the ABC of Ohio to offer proponent testimony, and welcome to committee.
Good morning, Chair Johnson, Vice Chair Lair, Ranking Member McNally, and members of the House Commerce and Labor Committee. Thank you for the opportunity to provide proponent testimony on House Bill 605. As the chairman said, my name is Griffin Weasel, and I serve as the vice president of government affairs and communications for the Associated Builders and Contractors of Ohio, or ABC of Ohio. ABC of Ohio strongly supports House Bill 605 because contractors should never be punished for faithfully following the plans and specifications provided by a public owner. We thank Representative Heidi Workman for championing this critical issue during this General Assembly. The bill legislates fundamental fairness to Ohio's public construction process by codifying the long-established Spearing Doctrine. Contractors must currently build significant risk premiums into their projects against design errors and incomplete specifications they did not create and cannot correct, which is a commonly found issue for our members throughout the state of Ohio. Smaller contractors in particular are often discouraged from bidding on public work because a major design defect can threaten the survival of their small business. Like many other industries throughout the state, they operate on thin margins and cannot merely take the risk associated with such a defect. Defective or incomplete plans account for an estimated 25 to 40 percent of change orders in disputes on public projects throughout the state of Ohio. With Ohio spending roughly $13 billion on public construction, these inefficiencies cost taxpayers hundreds of millions of dollars each year through higher bids, project delays, and litigation. House Bill 605 is a targeted, common-sense solution. It creates a statutory implied warranty that plans and specifications furnished by public owners are complete, accurate, and sufficient. It protects contractors who reasonably rely on and build according to those documents. It avoids conflicting exculpatory clauses in public projects. And it maintains important limitations by not applying to private projects, design-build delivery methods, or contractors' own workmanship errors. By restoring balance, more contractors, especially responsible and emerging firms, will be able to bid on public projects with greater confidence. Increased competition leads to better pricing, faster product delivery, and lower costs for Ohio taxpayers. ABC of Ohio urges the House Commerce and Labor Committee to move House Bill 605 forward. this legislation promotes fairness, reduces unnecessary costs, increases bidding competition, and delivers better value for Ohio taxpayers. It reflects a proven legal principle that has successfully guided public construction across the country for generations. Thank you to Representative Heidi Workman for sponsoring this bill. Thank you to the committee for your time and consideration and I'd be happy to answer any questions that members of the committee may have.
Questions for the witness? Representative Rader.
Thank you, Chairman Johnson, and thank you for being here and testifying to this bill. Previous testimony, I had asked about why this bill is going to be a bill. wouldn't be applied to other institutions. But I do see that the Spirin Doctrine is pretty much in practice the law of the land. So what are we actually doing by codifying it? Why take an extra step to do what we're doing here today?
Yeah, so we're taking the extra step with here because to your question, so yeah, approximately 49 of 50 states, like you said, recognize and apply the Spirin Doctrine through either like the longstanding case law or in growing number of cases through statutes. So like Texas, for example, is the most recent state to codify it. In 2021, their Senate Bill 219. But only a handful of the states like fully embrace the doctorate from like vertical to horizontal construction. And no state – so that's kind of where the market gaps, I guess, kind of risk in terms of liability. So it's really just the liability shifting from the contractors who follow the specified plans to the public owner that provides those default plans. And so that said, that kind of presents itself in innate ways in the construction sector, but in different ways. But I'll say, though, I'll be happy to follow back with the committee on some specific data to address elements of your question.
Representative White.
Thank you, Chair. Thank you for your testimony today. What is a default plan? I'm trying to understand this because we're thinking that we're paying for someone to provide plans, and then they're not able to follow up if something were to go awry, and there is a defect, and we've put in a lot of money from the state or a county or somewhere in the state of Ohio to build a public building, and there's no recourse. I just want to better understand what is this plan you're talking about that can be, that's provided that you all with this bill that can then say that that goes back on the person that provided that plan.
Yeah, for the chair, to the representative, I think to understanding your question, this would just say that any plans that are default and if this is provided to the public contractor and they follow specifically to that plan, if there's unbeknownst errors that weren't incorporated into that plan and the contractors was the one that just came to know that and there were damages that incurred, that is what that is seeking to address. I think I'm understanding the crux of your question. Sorry.
I think there's a, you're both using the word and you're talking about different things. The plans you refer into, the plans to build the building. So the drawings and specifications. So the actual architect or engineer. It's not a plan as in we're going to do something in theory here. It's the actual spec. It's blueprints. That's the old term structure. Sure. So what I was asking, so from those plans that are put forward, is there a way for a contractor to even know before if it came from then the person who's asking you to do the work, to say we already recognize this is an error and that we can't move forward, that's still going to happen even under this bill, correct?
Yes, that would happen, as to my understanding. I think there are other witnesses that can speak to that, but that would be a pause work order in that instance.
Okay, thank you.
Any other questions for the witness?
Representative Brent. Thank you so much. From the chairman to the witness, thank you for coming before our committee. I know this Sparrow doctrine comes from like 1918, the U.S. Supreme Court versus Sparrow. that is older than anybody here in this building That a long time to say that whoever is the designer which could be like the architect or the engineer or the owner the build owner, will be the ones responsible for it. Why do we need to bring that to Ohio? Especially with something that's been so old, like what other states are actually doing this type of doctrine?
From the chair to the representative. To answer your question, we're bringing this to Ohio because this is something that addresses the long-standing liability aspects of what Sparron establishes. You mentioned from 1918. 1918. To jog the members of the committee, the Sparron Doctrine was when Sparron was a contractor that was building a dry dock in the New York City area, and unbeknownst to Sparron's knowledge, the plans that he included had, as I recall in the case, there was a sewage line that was damaged, and therefore the city held that Sparron was liable for the damage that incurred. So the litigation went forward, and so it was established and went all the way to the Supreme Court where it was found that Sparron, the contractor himself, shall not be found liable for following through the specs and plans for the required build on the contract.
Chairman, I have another question. I'll be quick with it. So I'm thinking about getting a deck put on my house this summer. We've got a little time off. We're not coming back until November. Anybody else wants to know what I'm doing? Putting a deck on my house. So in the process of doing this, I had to, you know, we're getting a permit. We're going through all of the stages of getting a deck. So my question, if this gets put into law, Chairman, I'm just trying to just get for clarification. and I get an architecture to do all the different things, got to take down a wall, it's a lot, it's a lot. Pray for me. It's a lot. For clarification, who's going to be held responsible if this deck is not working? I got to take down my porch. If this is put into place and something happens and I fall and I can't get up, somebody fall through the floor, I'm coming back in a scooter like I did a couple years ago with a broke leg, Who can I sue? Who's going to be held responsible? Is it the guy that I hired to put it together? Is it the architect? Because I'm going to feel like my first inclination is just the contractor who put it together, and how do we make sure that bad apples of people who just did a bad job at doing it don't get off the hook?
From the chair to the representative, you identify a pretty good point, But under the current language of the Sparrow Induction that we have, this doesn't apply to private contracts. This is only for public works contracts. So that would therefore be – there's a conversation I think maybe to be had for this broader committee about applying Sparrow Induction across all industries, which ABC, we would be welcome to partner with you on that. But that's kind of a can of worms that we're really proud of. It could also go into the quality of work, too, and was it built to specs and so forth. But in public works, our architects and mechanical engineers and structural engineers are paid pretty well. And for them to pass the buck to the contractor, this is what we're talking about here.
Correct?
Yes.
I digress. You got another question? That's okay.
I want to keep the committee moving.
Thank you, Chairman.
Okay.
Thank you for coming.
Thank you, Chairman.
Appreciate your testimony.
Now I call up Dan Edwards with the Associated General Contractors Welcome to committee Thank you so much Chair Johnson Vice Chair of the Year Ranking Member Brent and members of the House Commerce and Labor Committee
thank you for the opportunity to testify today in support of House Bill 605. My name is Dan Edwards. I'm the CEO of the Associated General Contractors of Ohio. AGC of Ohio is a statewide trade association representing large and small, open shop and union contractors in commercial buildings and industrial construction in Ohio. Our members build schools, hospitals, wastewater treatment plants, government buildings, and other public facilities that Ohioans rely on every day. I also come to this issue from the perspective of someone who practiced law for more than 30 years, most of it in the construction industry. During my career, I represented general contractors, subcontractors, owners, design professionals, insurities. I also represented public owners, including the United States Air Force, where I served as a JAG together with Mike Copley. I've seen this issue from multiple perspectives. AGC of Ohio supports House Bill 605, and we thank Representative Workman and Representative Claggett for sponsoring the legislation. At its core, the Spear and Doctrine is a simple principle. When an owner provides the plans and specifications for a project and requires a contractor to build according to those plans, the owner should stand behind the accuracy and sufficiency. Contractors should be responsible for their own work, their workmanship for safety, for means and methods, and the work they perform. To Representative Brent's point about the deck, in a case where if the deck plans are bad and the contractor follows them, you should go after the architect. If the plans are adequate and the contractor failed to follow them, then you go after that contractor. The problems... This matters because contractors bid projects based on the information that's provided to them. When plans contain errors, omissions, conflicts, or inaccurate information, The consequences are real. Those problems often result in RFIs, change orders, resequencing, delay, rework. It goes on and on. Ultimately, those impacts affect not only contractors, but also owners and the taxpayers. Importantly, Ohio law already reflects this expectation. Ohio Revised Code 15301 and 15331 require the public authorities to obtain full and accurate plans and complete specifications prepared by qualified design professionals. What House Bill 605 does, it doesn't create a new obligation for accurate plans and specifications. It gives practical effect to the obligation that already exists. The legislation is also good for public owners and taxpayers because fair risk allocation leads to more competitive bidding, more predictable project delivery, and fewer disputes. When contractors are required to absorb risks, they cannot control. Those risks are reflected in higher bid prices. AGC believes House Bill 605 would benefit from a few clarifying amendments as it moves through the legislative process. In particular, we believe the bill should make clear that contractors are entitled to proper time and compensation when defective plans and specifications cause delays in additional work. We also believe the statute should avoid language that could be interpreted as requiring contractors to perform a professional design review engineering analysis or subsurface exploration in order to preserve the protections that are intended by the bill To Representative Raider's earlier question about why bring this to Ohio now, the Spear and Doctrine has been around, and it's been around in Ohio for a long time, but it has also been diminished. It was diminished by the Dugan and Myers case where I was the trial attorney back in 2003 and it's been diminished by the Enri Miami Conservancy District case as well. So what has happened in some of the public contract language is there's exculpatory language, there's a shifting of risk and so what this does is it restores what has been the traditional construction risk allocation that the owners providing the plans are guaranteeing to the contractor that they'll be adequate for building. So I'd be happy to answer any questions. I appreciate your time and the opportunity to testify.
Wouldn't you say it's a fair statement that this would save the state of Ohio on come bid day that we're not having to build in extra money constituent for unknowns, especially when you deal with a certain architect or engineer?
I think that good plans always produce better bids, and then having some fundamental guarantee that the plans are going to be adequate will help in that respect. There's a lot of things, obviously, that go into it. I'll digress. In public contracts right now, there are a lot of onerous provisions. This just happens to be one, and we appreciate Representative Claggett and Representative Workman for bringing it forward.
Questions for the witness? Seeing none, thank you for coming to committee.
Thank you.
Are there any other witnesses to come testify on behalf of 605? Seeing none, members of the committee, please note that there is written testimony from the Ohio Contractors Association here and its proponent testimony also. This concludes the second hearing on House Bill 605. Now bring forward House Bill 717 for its second hearing. I'd like to call up Gosh Gerke to offer proponent testimony.
Welcome to committee, sir. Thank you very much, and great pronunciation of my last name. You got it dead on. And thank you for the members of the committee for hearing this. We're very grateful for you taking the time for this. I'd also like to thank Representative Dean for sponsoring the bill. It was phenomenal that he could get this started. House Bill 717 is going to fix something that has been outdated since 1957 for the best that I could find. We had put in a regulation to limit individual vehicle sales to five. So for almost 70 years, we have followed this regulation on the individual. Increasing this to 15 does not harm our dealership friends as they have unlimited amounts of vehicles they could sell per year. We also have of the ability to stop curb stoning, which is a very big problem in our state as well as many others. This encourages people to put titles in their names, put more plates on their vehicles, ensure them properly. It also allows the state to collect more revenue from these activities. This has been done in Indiana since 2013. They have a higher limit than we do. It has allowed their dealerships to work just fine. They have a network out there that's working for them. that has not been affected by individuals with an increased limit. Theirs is at 11, but they do not have an age restriction on the vehicle. Putting the age restriction on ours allows dealers to also maintain their ease of finance for vehicles that are younger. It brings buyers into them. This does not affect anything to do with their ability to go to auctions, their ability to have in-house financing and networks working, of that matter. It's just a bill to help the individual, say a car enthusiast as myself, to expand a little bit. And I'm happy to answer any questions that you may have for me.
Questions for the witness. Representative Raider.
Thank you for coming in. I appreciate your testimony, and I'm just trying to wrap my head around this. So can you maybe give me an example of like, it doesn't have to be yourself, but any car enthusiast, sort of what barriers you're running into with this five limit and moving it to 15? Just trying to get a sense for the real world application.
Absolutely. So, for example, let's say you're just as an enthusiast. Let's say you're a gentleman that for one month has a Corvette and your neighbor says, I'd love to have that car. I'll give you 10 grand more than you paid for it. Most likely you're going to sell it. and I've come across that in my own world. I've had people, you go to a gas station, somebody stops you, would you sell it, you know, whatever. Well, if you've had those five, then you're out. You can't sell it anymore. Let's say you're a widow who's liquidating her husband's collection. I've seen this over and over and over. A guy has 10, 15 cars and a barn. She sells more than five, she gets a fine. Why should she have to be subject to that? and doing so, raising this limit as I had stated, it's minimal for a yearly range and it keeps the dealers very happy so they don't have to worry about the little guy coming up and knocking away business essentially. Thank you so much.
Thank you. Good follow-up. Any other questions? Representative Brent.
Thank you, Chairman. from the chairman to the witness, thank you so much for coming before our committee and updating us about this. I was really, honestly, really intrigued as a person who just bought a car, just bought a new car.
Congratulations. Thank you. I hope. I hope. What you see is what you get.
I know. And I definitely understand about the importance of a man making his money because if a man don't work, Don't nobody want a broke man. So I totally understand that. But my question with this bill is that once we go from 5 to 20, for one, you're going to have all these cars.
Why wouldn't a person just want to be considered a used car salesman? Well, that's a great question, and it's actually to 15. Trust me, I tried to negotiate for 30, but we settled on 15. But anyways to get into and I have had a dealership license before to get into that point of entry takes a lot more capital than you would think There a lot of evaluation of your assets You have to get the building You have to pass the inspections. Just to do our building, it was, of course, we had to have updates just for the building code. It cost me $8,000 just to do that. I mean, it can be done, but if you're a guy just selling five that's looking towards that, you've got to find some seriously good deals where you're going to make $10,000 to $15,000 per car in hopes that you're going to be able to cover all your dealership, say your surety bond, your insurance, things of that matter. So there's a very wide gap between the enthusiast and the car dealer. And honestly, raising this could put somebody more towards a car dealership, which would then put more revenue back into the state.
I do. Thank you. So the Federal Trade Commission considers any seller who has sold or offered for sale five or more used vehicles in the past 12 months to be a car dealer. So why should Ohio muddy the water and really kind of just go against our federal brothers and sisters and have something different than the state and federal standards?
Well, it's not necessarily that they consider them a car dealer. They consider them on the path towards needing that license. But any vehicle after five vehicles is required to display basically your as-is, no-warranty paperwork. Now, our friends in Indiana have figured this out because they go for 11 per year. and they also, as I mentioned, don't have any age restrictions on the vehicle. So at some point, they've had to deal with this as well. And I apologize. I unfortunately don't know their exact process of how they went about it, but if they can do it, I know Ohio can.
Thank you, Chair.
Representative Brent is correct. The five number came from federal. You are correct on that.
Say that again, Chairman.
Representative Brent is correct about the Federal Trade Commission. The number five came from the federal government years ago. You know, there's two issues that could possibly solve the problem is Ohio to reform its dealer licensing portion of it. And so – and that's another issue outside this bill that, you know, to some degree, federal law, Trump, state law too. And we have to question how Indiana did it. But anyway, are there any other questions for the witness? Sure. Representative Rader.
Thank you. And thank you again. Yeah, just is there any way that you could see this potential law sort of being exploited? Certainly you and hobbyist enthusiasts aren't the problem, but are there ways that maybe somebody who doesn't want to go through the proper channels to do some type of buy here, pay here scheme for cars could use this to skirt rules, skirt laws in order to sell as a private individual rather than what they should be doing and selling cars as a dealership?
Just trying to kick the tires here. No, you're good. you already have people doing that. That's called curb stoning. So you have individuals that are going past that five car limit and already doing this. This is actually trying to discourage them from doing that. So we can hopefully have more people doing this legally. And yes on the other hand you would have to look at the fact that people can abuse anything I dealt with dealerships I owned a shop where I actually had to throw a dealership out because they were absolutely unethically trying to ship out cars with horrible repairs basically It's just the best way to put it. And it comes down to the ethics of the individual, not necessarily the law that they're confined to. If people can get around stuff, they will. They're going to do it.
Any other questions? Thank you for coming in to committee.
Thank you.
I'll now call up Tina Olinger. Welcome to committee.
Thank you for having me, and you did an awesome job at pronouncing my name, by the way. Okay, so good afternoon, everyone. Well, almost afternoon. Of course, you know I am Tina Olinger. I have been a notary public in the state of Ohio for over 23 years, and I'm here today to speak with you from the independent notary standpoint on this. The benefit of passing House Bill 717, which will, of course, you know, increase the number of vehicle sales that a private individual can sell per year without having to obtain a dealership license. so on April 6th of 2023 the law changed and it required anybody with a dealer's license that they did not have to have a notary public and it's affecting the notary industry as well because of that so and that passed with sorry, the title requirement was passed with the revised section 4505.063 chapter 4517 of House Bill 567. The issue that that's created for notaries is that when an individual or a business transitions from just flipping cars to having to get a dealer's license, it directly shifts the transition of traffic away from notary publics because now they can just do all of it without us. Independent notaries like myself who rely on the public automobile sales for walk-in business, we will continue to experience this decline in volume as more flippers are forced to get their dealer's license or stop selling automobiles for the remainder of the 12 months. As a notary, I've seen this decline. I've seen it firsthand when licensed dealers who were coming to me to get things notarized now have completely fallen off because they no longer need notary services. With that, I'll also say that around the time this shift happened, the regulations made it harder for us to continue to be notaries and put more money into our renewals every five years. So now we're spending more money to continue to be notaries, but we're getting less business because once somebody hits that threshold, they either have to stop or they have to get that dealer's license, which completely puts us out. So, you know, by increasing the number of vehicle sales that a individual can sell per year without having to obtain that dealer's license, of course, more individuals will sell vehicles. notaries like myself will still be able to grow their business and continue to stay in business and the economy will benefit from that because there will be more flow of money and more flow of money of course equals more buying power So with that I encourage you to pass Bill 717 and I thank you for your consideration in listening to me today
Thank you for your testimony. As a notary, wouldn't you firmly advise anybody selling their car to an individual to make sure that your title gets notarized at the time of sale?
Absolutely. Absolutely. So, you know, doing this thing, you're like, okay, we're, you know, yes, I would absolutely. And there's a lot of people out here in the car business that actually discourage that. So I can curb stone. Yes.
So would it be wise for us to try to require sellers to have that notarization at the time of sale? So you have a time and date of the sale and who you're selling it to.
that would probably eliminate some curb stoning. It would still go on, but I think that would be a good remedy to the problem of curb stoning.
It probably would be to the curb stoning. And the state puts limits on what you can charge as a notary.
Yes.
And do you feel that that is enough?
I feel that the limits have gotten better over the years, you know, because I remember when it used to be only $1. Right. You know, and now with, you know, mobile notaries, I'm pretty lenient on mine. You know, I only do still the $5 per title. But if I'm coming to you, then, you know, it's just whatever you feel is fair for me to travel. I try to make sure that I'm available, you know, to those who need me in order to do that. I know that a lot of people do take advantage of that mobile notary thing.
As far as your question on, you know, just making sure that the notaries are notarizing all of this stuff, which, you know, I totally wholeheartedly agree with,
I know that other than the ones that got the dealership licenses, some of them stop at four when they could potentially be selling more. Simply signing your name on the back of a title doesn't relieve you of the liability. that could come your way should somebody go out in this car, the next owner that's not taking possession of it goes out and hits somebody and kills somebody or does property damage, you could still be liable as the owner, correct? That is correct, yes, to a point, and that's why I make sure that when I notarize a title over to somebody that I inform them that they need to make sure that they're doing one of two things or both, and one of those things would be to make sure that they have a clear picture or copy of the title front and back, and the other thing being to contact the Bureau of Motor Vehicles and let them know that they have actually transferred ownership of that vehicle over to somebody else so that they can stop the registration on the tags on that vehicle and, of course, take their tags in the state of Ohio.
Should there be a 30-day limit after you notarize the title of a seller for the next owner to take possession and register at the clerk of courts of whatever county they're in? Yeah, I believe there should be.
I believe right now if you don't go and transfer the title all the way over into your name within, I believe it's 45 days now, then you get a fine. but yes I believe that there should be a cap on how long you're allowed to hold that title open thank you
Absolutely. Any other questions for the witness?
Representative Brent. Thank you so much from the chairman to the witness. Thanks for coming before us. One of the questions I have, because I just know, and I think you had mentioned this before, about how it's only $5 per every time you go someplace. And it's not based off how many signatures you have to get, but just if you go to one visit, it's $5.
That wasn't my question.
Okay. I'm just making sure I'm just giving off basic information correctly before I start off with my question. Okay. So I'm all about a lady making her money. All about that. I want to keep all Ohioans employed. But where is this with the dollars and cents? You're saying this is affecting other notary people. I know a lot of notary people who do a lot of things, no matter if it's legal documents or going to people when they're buying and selling a house. How is this affecting your bottom line dollar? Tell the grandmas at home how is this affecting you.
Now, I don't have the numbers with me or anything, and that $5 I want to clarify is per stamp, and that is for the actual notary portion. I do allow people to come to me, and then it's just the $5. So anything over the $5 would be if they just wanted to do that or if I've traveled to them. I have had dealerships that have come to me with, you know, 20 to 30 titles a month. You know, of course, that equates to a few hundred dollars. I'm just, you know, doing some quick math in my head. So that's a few hundred dollars. Now, me, I'm a notary signing agent as well, so I redo my endorsement every year. And I do do the, you know, the loan closings and all of that stuff. So, you know, and I did name my business and get all that legit with Notarial Signing Solutions when I took on that extra role. So me, myself, I'm actually doing pretty well. If I was just counting on the regular, like, title notarizing stuff, then I would say, you know, that I've literally had a decrease of $200 to $300 a month when it comes to dealerships that are no longer needing me or people who have had to get that dealer's license that no longer come back to me. So, you know, I'm looking at a few hundred dollars a month.
I have a follow-up.
Sure.
Okay. This is, and I don't know. So I'm asking a question. It's not from a place of bias. Where are people physically selling these five cars? I live in Cleveland. If I even have more than like two cars in my driveway, I'm getting a ticket. No shade to my mayor or my council. So I'm wondering, like, where are people selling these types of places? Like, where are you going where there's people with five cars just lined up? obviously they're not keeping them at their homes, but where are you typically going to find these locations? Because you would be making a state law, not just something that's right size for a particular community. So I want to hear for the grandmas.
Gotcha. So most of the private individuals that I was speaking of earlier, they come to me, but they will typically get a vehicle and they will do the work that needs to be done on it and then turn it around and sell it and take part of that money and buy a new vehicle. So most of these people only have one to two vehicles at a time.
Thank you, Chairman. And then they put them on things like the marketplace you know and sell them that way You got some people that works in the back alley in the backyard Exactly yes You got your backyard mechanics You correct Wow. Yeah, that's a lot.
Thank you for coming, and thank you for the good witness.
Absolutely.
Are there anybody here to testify for House Bill 717? Seeing none, that concludes the second hearing of House Bill 717. I now bring forward House Bill 769 for its second hearing. I'll call up George Christie on behalf of the Ohio Insurance Agents to offer proponent testimony. Welcome to committee.
Thank you, Chairman. Chairman and esteemed members of the House Commerce and Labor Committee, Thank you for the opportunity to provide proponent testimony on House Bill 769. My name is George Christie, and I'm the Government Affairs Manager for the Ohio Insurance Agents Association, or OIA. OIA is the collective voice of over 1,000 independent agencies in our state. I appreciate the opportunity to testify as a proponent of House Bill 769, which would establish important consumer protections to help shield Ohio homeowners from deceptive and abusive roofing practices. The FBI estimates that fraudulent roofing claims cost at least $1 billion each year, and honest homeowners pay the price through higher premiums, higher deductibles, and less protective coverage. Ohio consumers are already seeing these effects. in the response to fraudulent and inflated claims insurers have restricted roof coverage raised deductibles and shifted many older roofs from replacement cost coverage to actual cash value in short fraudulent roofing practices make coverage more restrictive and more expensive for honest ohio homeowners independent agents help homeowners navigate the claims and repair process after severe storms, often when they are overwhelmed and vulnerable to bad actors. Too often, fly-by-night storm-chasing contractors exploit that vulnerability by promising full roof replacements, offering to cover deductibles, demanding large upfront payments, and then providing poor workmanship or little meaningful work at all. House Bill 769 would curb this behavior by creating clear consumer protections and reasonable guardrails for the roofing industry. This legislation requires written contracts for roofing services more than $750, and it requires that these contracts have the following. A description of the contractor's insurance and workers' compensation, the contractor's full legal name and business information, and an itemized description of the work to be done. And it requires signatures from all parties. This bill establishes a three-day contract rescission period, and it requires that within 15 business days after a contract is canceled that the contractor must tender payments or deposits to that consumer. It is important to note that if a contractor has performed services or provided materials that have been acknowledged by that consumer, the contractor is entitled to reasonable value of those services. Lastly, this bill prohibits deceptive advertising, including offers to absorb a homeowner's deductible. Unfortunately, after the Indian Lake devastation in 2024, my predecessor and our executive director went out to Indian Lake to see that devastation and they saw signs popping up that we insure your roof for free free roof and our insurance will pay for your roof These practices are misleading it unethical and it harmful to the insurance system By setting clear standards for contractors and reinforcing protections for policyholders, House Bill 769 will help prevent deceptive practices. Ohio should join the 27 states who have enacted similar laws. Indiana, Kentucky, and Illinois recognized this concern and addressed it over a decade ago. For these reasons, I urge the committee to support House Bill 769. Thank you for the opportunity to testify in support of this legislation, and I'd be happy to answer any questions.
Thank you, Mr. Christie. Are there any questions? Seeing none, thank you. Thank you very much. I'd now like to call up Steve Brown to offer proponent testimony. Welcome to committee, Mr. Brown.
Thank you, Chair Johnson and members of the House, Commerce, and Labor Committee. Thank you for the opportunity to testify in support of House Bill 769. This legislation takes meaningful steps in protecting homeowners from fraudulent roofing practices. As you said, my name is Steve Brown. I'm an insurance agent and agency owner serving Ohio families and businesses for 38 years. In my role, I work directly with homeowners to help them protect what is often their most valuable asset, their house. Unfortunately, I have witnessed firsthand the growing problem of unethical roofing practices that take advantage of Ohio consumers, particularly in the aftermath of severe weather events. Currently, homeowners across Ohio are highly susceptible to predatory contractors who descend on neighborhoods following storms. These individuals or companies often go door-to-door offering free roof inspections or suggesting that a homeowner qualifies for a free roof through their insurance policy. While this may sound appealing, it is frequently misleading and, in many cases, outright deceptive. I personally handled numerous situations where policyholders were pressured into signing contracts under false or exaggerated claims of damage. So, in the essence of time, I'm not going to share all of my 38 years of stories, but I'm going to share one with you that recently happened. One of our clients had a knock on his door from a contractor that just recently replaced a roof down the street. The roofer said that he had damage to his roof. However, he had not stepped a foot on his roof. So our client allowed him to go up on top of the roof. An hour later, came down, showed pictures of damage that was on his roof. The client called us and said, hey, I have some storm damage. A contractor told me I have wind and hail damage. I need to turn in a claim. We turned a claim into the company. The company assigns an adjuster. the adjuster actually hired an engineer to go out and look at the roof. The engineer came back with a report that shows that there was damage on the roof three feet off of the gutter on the first level only. After we told our customer that the contractor damaged his roof and vandalized his roof, he said, there's no way that this could happen. I didn't hear anything. I didn see anything Now our customer is 70 plus years old So he didn hear anything or see anything but we have an engineer report showing that the damage that was done to the roof was self by the roofing contractor He called the roofing contractor, showed him the report, and the roofing contractor realized he was caught red-handed. At that time, he said, well, I'll tell you what, I'll be happy to do your roof for just the materials only. I'll waive my labor cost. So at this time, he knew he was in trouble. Again, just one story. I'm not going to share the rest of them, but there's many more that fall in line with that, as you can imagine. In my experience, once a homeowner signs a contract with one of these companies, they often feel trapped. Contracts may be confusing, aggressive sales tactics are common, and consumers are not always aware of their rights. By the time they realize what has happened, it can be difficult, if not impossible, to unwind the agreement. That is why House Bill 769 is so important. House Bill 769 directly addresses deceptive and malicious practices in the marketplace. It prohibits contractors from advertising or implying that they will cover or rebate a homeowner's insurance deductible. One thing we see frequently and hear from our customers is that a roofing contractor wants to know, what is your deductible? I will raise my estimate, the cost of your deductible, and then when I get the job, I'll just charge you minus your deductible, which is less on his estimate. By clearly outlawing this behavior, the bill helps the playing field for honest, reputable contractors who operate with integrity. As someone who regularly helps clients navigate the aftermath of property damage, I strongly believe that House Bill 769 will provide much-needed clarity and protection. It will reduce fraud, promote ethical business practices, and give homeowners the confidence that they are being treated fairly. Thank you for your time and consideration. I respectfully urge the committee to support House Bill 769.
Thank you, Mr. Brown. I'm sure that you could tell us a whole litany of stories about roofing contractors and your business. And, you know, they prey on a lot of senior citizens. Some will want cash money. I'll give you a better deal if we work in cash and help. We've got a material deposit. And is there, you know, give me $1,500 to cover the cost of the materials, and then the materials never arrive. and boom, there it disappears. So with those kind of scenarios, is there enough teeth in this bill for enforcement where this is just a first step that we may not ever be able to fix in that scenario?
I think this is a step in the right direction. I personally think that it should go a little further. Like George had said, this is a billion-dollar fraudulent situation. Last year, our office had $4 million in claims. $2 million of the $4 million were for wind and hail. Half of my claims, you know how many autos we have insured, we have buildings insured, there's lots of claims. But half of them are wind and hail. And out of those wind and hail, I would venture to say 90% of it were roofs. so yeah somebody gave a statistic that they think that 38% of the roofs are you know in bad shape I said how can that be I feel like I've replaced every roof in central Ohio so yeah I think this is just the first step thank you
Representative Brent.
Thank you, Chair, from the Chairman to the Witness.
Thank you.
And you've actually been here to our committee before, haven't you?
I'm sorry, I have not.
You have a very friendly face.
I do.
That's a compliment.
Well, thank you.
That's a compliment.
But that's not my question.
Oh, okay. I'm not trying to flirt with him. Be focused, okay. I thought he had been here before. But my question is we're dealing with a time where the economy is on everybody's tongue. Everybody's talking about increasing the amount of gas, groceries. So this is not from a place of bias. This is a place of numbers. What is going to be the bottom line difference once this is implemented? And us as consumers are having to get a new roof. Most of us in here are homeowners. What is that going to look like on the bottom line when people have to enforce this policy?
Well, that's a really good question. I'm not sure exactly what that would be. What I can tell you is that currently homeowner premiums are going up. Insurance companies want to raise people's deductibles, so that means more out of your pocket if you do have a claim. And, oh, by the way, they're also reducing the amount of coverage that you get. Homeowner's policies used to have replacement costs, all of them, and now we're at the point where if your roof is some companies is 10 years, some companies is 12 years, but if your roof is 12 years old or older, you're now at actual cash value. So, you know, one of our customers said, well, let me get this straight. You're charging me more and you're giving me less. How is this a great deal? You know, so I have to take those phone calls and we have to try to explain it to them. So I wish I could give you an answer. I'm not really sure, but I think, you know, to me, like I just explained, half of my claims I felt like in 2025 were roofing claims from wind and hail. Now, I know we had wind and hail because I live in Columbus, Ohio, right? So I felt it. I see it. But I don't know what percentage of my claims were fraudulent and which one of them are actually real claims. If someone has damage, we want to replace their roof. We want to put them back in the same position they were in before the claim happened. But if you don't have damage to your roof, I don't want to fill up the dump down on Frank Road. I'm sorry. I don't want to do that.
Follow-up to you, Chairman. In a perfect world, I would love for us to get rid of those little signs. We have a lot of them where I live where it says get a free roof. You can just tell they're like these little mini signs. I'm not sure if this is everywhere in Ohio, but at least I can say where I live in House District 18, we see a lot of these free roofs, and they're really just scams trying to get people to call, and this is not as helpful as we would like for them to be. So if this bill can help eliminate companies that are out here offering a free roof and it's not really a free roof, then I'll be fall for it. Thank you.
Any other questions for Mr. Brown? Seeing none. Thank you for testifying.
Thank you.
I'd now like to call up Michael Farley on behalf of the Ohio Insurance Institute to offer proponent testimony. Michael, welcome to committee.
Thank you, Mr. Chairman. Chair Johnson and Vice Chair Lear and Ranking Member at Interim Rep. Brent and members of the House Commerce and Labor Committee, thank you for the opportunity to testify in support of House Bill 769. As a baseline member, this bill is about insurance fraud and insurance theft. I am Michael Farley of the Distinct Honor I serve as VP of Government Affairs and General Counsel for the Ohio Insurance Institute I represent the property casualty insurance companies here in Ohio Our members represent about 90% of auto insurance, 81% of homeowners insurance, and about three-quarters of the commercial market. Recent storms across the state, particularly in central Ohio, have provided numerous examples in the roofing arena of fraud and theft from Ohio consumers and attempted in real occurrences of fraud and theft against insurers. I have been made aware of numerous stories of someone knocking on the neighbor's door, promising a new roof, and only launching forth agony and aggravation for that homeowner. Ironically, I had several door-to-door roofers come to my house in Worthington offering a free inspection if I would let them on the roof. Like, you know, poor guy's got unlucky. You've got the general counsel for the Insurance Trade Association. You're knocking on his door. but, you know, it could be worse. The joke was on them. Actually, this is about six weeks ago. We had a pretty substantial, I mean, it was like, when I pulled into my driveway, it was like it snowed from the hail. So I figured I might want to, my roof's over 20 years old, so I figured I want to have somebody hop up there and take a look. We'll likely have a good friend who's an engineer. He hopped up there fairly. I don't know how he'd do it. Your roof's in great shape. That was about three days before. He says, I can tell from down here, and you can't tell from my roof down there that you have issues. But my roof's in great shape. I'm a nerd. I take care of those things. House Bill 769 provides a minimal floor protection for Ohio homeowners. Some of these protections seem like common sense. However, we have found that when you have a tarp on your roof, or a leak gushing water into your house, or someone claiming to be an expert insisting on getting your roof done, or, as the chairman points out, a senior citizen, the stress makes even the smartest homeowners forget those common sense principles. So I want to go through some of the provisions of the bill to give you a better concept of where it is. And I think Representative Brent asked about, you know, those silly signs. My least favorite sign are the ones that say, insurance approved. We don't approve rovers. This bill does take away those false and deceptive advertising. And I would say a sign is a deceptive advertising. All contracts for more than $750 have to be in writing. When you have that contract in writing, that's the first step of protection. I'm going to try to be brief because I know I'm the last thing between most of you and lunch. and a consumer may cancel the contract within three days of entering the contract. That's actually current law. Under the Ohio Home Sales Solicitation Practice Act, you have three days to cancel those. We've restated it here for clarity. We've also put in one that says, we'll talk about it in a second. Well, actually, I'll talk about it now. Where if you've been notified that all or part of your claim has been rejected for whatever reason, you have three days to cancel your policy. That protects the homeowner because that could be a $20,000 oops, but also protects the contractor. And I should disclose, my father was a roofing contractor, so I love roofing contractors. The reason he got into the business was because he got all these calls from the fraudulent roofer, and he would take care of little old ladies and stuff and decide, well, I'm going to go and buy one of these anyway. So he would rather know that I'm going to cancel this and not be down the road and say, oh, you owe me $15,000 for this roof. There's no insurance here. And then we have litigation and threats and not good things happening. It's axiomatic, but this bill does require a separate statutory regulatory requirement that they have workers' comp and other required contractors' liability insurance. We're going to codify it because we codify it, puts it in the Consumer Sales Practice Act nomenclature. One of the things people forget about is one of the reasons you don want somebody to hop up on your roof and my friend Steve the insurance agent he going to say don let people on your roof because you have a provision in your policy that gets triggered when you let people work on your property and they fall off and get hurt Because the first thing they're going to do is sue you. They're going to find one of those billboard lawyers that says, you know, I don't get paid unless you get paid. So roofers are prohibited from advertising, promise to pay, or rebating any portion of an insurance deductible or other discount as an inducement to enter into the roofing contract. If there's a deal reached by the consumer and a roofer about a discount, upgraded work, material, or other allowance, it must be included in that contract. The chairman alluded to it. Hey, you sign me up and I'll throw in some special shingles. I've never found those special shingles. If you find them, let me know. I guess you're shinier. But you put it in writing, they know that they can be sued on that. If you can track them down. Sometimes it's hard to track them down after the fact. That's why we don't give them cash. We didn't really want to codify that. You have to give them a check or a credit card because some people still use cash, i.e. before my dad had his stroke, he used cash for everything. Dad, stop doing that. Roofers are prohibited under current law from being public insurance adjusters. So House Bill 69 brings forth the prohibition under the administrative code to promote this transparency. It is important that the insured be involved with or insured directly on adjusting a claim. Having a roofer in the middle of the transaction gives too much incentive for insurance fraud and theft by roofers and the consumer not being informed of the details of the transaction. House Bill 769 does not prohibit a consumer from hiring a public insurance adjuster. You can do that. And there's also provisions in your policy that allow you to challenge the evaluation, things of that nature. Or if you have a really good agent, your agent will go to war for you. I always tell everybody the best thing you can do is hire a good insurance agent. House Bill 769 does permit the roofer to provide information of a professional opinion about a claim directly to the consumer. It can also provide information in writing to the insurance company. As you can imagine, a lot of arguments take place about these opinions. They have a vested interest in driving that cost up. We have a vested interest in paying what's appropriate. This version of the storm scam, we call it storm scam or roofing fraud bill, is the result of numerous conversations with roofers, insurers, consumers, agents, everybody. This bill's been around for about a whole long time, over 10 years. So this bill strikes, this is nothing like the original version 10, over 20 years ago, or the one 10 years ago. This has gotten much more focused, as interested party dialogue often promotes, Mr. Chairman. This bill strikes the correct balance of allowing consumers to manage their relationships with the roofer while protecting consumers from nefarious actors. And it should be clear that there are many competent and reputable roofers all over the state. The bill's aimed at the unscrupulous ones. The roofers that hear that there's a hailstorm in Worthington, Ohio, and they drive in from Texas. You can make a lot of money in roofing. I don't think you make enough to come in from Texas. Mr. Chairman, I want to thank you for the opportunity to testify. And I know there's a lot of discussion about Medicaid fraud. You guys may have heard some of that going on around the legislature the next couple of weeks. But insurance fraud is insurance theft. And this is not a victimless crime. We all pay the price. Every time one of these insurance frauds, I think Representative Brent asked you, is this going to drive? I will never tell you, and I think you and I have worked together in other days, I will never tell you that things go down in cost. Because I'm almost 50 years old and nothing has ever gone down in cost. But I will say it does prevent the increased growth. Because what we seeing is every year that insurance fraud continually insurance theft continually drives the increase in the insurance and your insurance policies across the board. So Mr. Chairman with that I'll try to attempt to answer any
questions that you or the committee may have. Thank you for your testimony and thank you for the many scenarios that come up in especially residential roofing and I could see something that may need to be clarified is the workers' comp issue. You know, there's a lot of brokers out here in the roofing business, especially in residential, that will never set foot on a roof, and everybody that works for them could be a 1099 employee. So I think we really need to require all subcontractors Contractors or anybody on your roof carries a workers' comp certificate.
So, Mr. Chairman, I think you'll be happy to know the way the language is currently written. It is broad. It is broad to include that. And it also requires the – you have a requirement to do this today. As a general, you have to maintain all your subs and affiliates. We have a three-year requirement. The federal government has a seven. That was a negotiation. I'll admit that. But you have a three-year window by which to – generally, most insurance – most statutory limitations run between two and five years. So that three was kind of the sweet spot. But to your point on the workers' comp, you have that requirement, you mask your 1099, that happens all the time, and we hate that because we want to make sure people are properly covered, both the employee but also the homeowner. Because what's the first thing that happens? They fall off that roof. There's no workers' comp, and they sue you, the homeowner. Luckily, you have a duty. We'll provide a lawyer for you, but there may not be coverage depending on what you did, depending on the policy language. So this is why we put it in there very broadly. We didn't want to start carving people out because you have that legal obligation. If you don't, we're going to allow this to bring action in the Consumer Sales Practice Act. But as you know, there's a lot of scenarios where that broker is going to pay cash money for labor.
Yeah. And that's where the problems come in there.
It sure is.
Then we've got an enforcement problem, and then homeowner beware. where to some degree the homeowner needs to hold these people responsible because of the liabilities upon themselves, where you're not going to cover that person if they fall and kill themselves off the roof. So I will tell you, as you can imagine, I have a pretty good insurance agent, and I think he still takes my calls even though I ask a lot of crazy questions, but he sends a letter out reminding folks at this time of year, don't let people on your roof because they can sue you. It's about two paragraphs long, and he gets the message. Other agents do those type of communications. But on the workers' comp piece, you're exactly right. I don't know if we would get fine enough. I'd love to see if you have any solutions, but I think this is another outlet by which homeowners could go after those folks who are not having the workers' comp. And, you know, it would allow the courts to get involved and work with BWC and the other enforcements. So you're exactly right. These brokers are all over the place, and they're causing havoc. Back to the 1099 issue that we had in a previous bill. So that concludes in-person testimony on House Bill 769. And we do have on your iPads written testimony from Patrick Bacon of Forest City Insurance, Andrew Thomason of Thomason Insurance, Joe Roth of the American Property Casualty Insurance Association, Matt Overturf, and Howard Handler of the National Insurance Crime Bureau. This concludes the second hearing of House Bill 769. And seeing no further business for committee, we are adjourned. Thank you.