Legislature(1997 - 1998)
02/23/1998 03:21 PM House L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 347 - OVERTIME WAGE EXEMPTION FOR MECHANICS Number 0104 CHAIRMAN ROKEBERG announced the committee's first order of business was HB 347, "An Act relating to an exemption from overtime wage requirements for certain motor vehicle mechanics." REPRESENTATIVE JOHN COWDERY, the bill sponsor, stated his staff would present HB 347. HB 347 read: * Section 1. AS 23.10.060(d) is amended by adding a new paragraph to read: (17) work performed by a mechanic primarily engaged in the servicing of motor vehicles if the mechanic is employed as a flat-rate mechanic by a nonmanufacturing establishment primarily engaged in the business of selling or servicing motor vehicles; in this paragraph, "motor vehicles" does not include boats or aircraft. * Sec. 2. The amendment to AS 23.10.060(d) made by sec. 1 of this Act applies to work first performed on or after the effective date of this Act. Number 0117 MARCO PIGNALBERI, Legislative Assistant to Representative John Cowdery, came forward to present some background information on HB 347. He stated, speaking from a prepared statement which was distributed to the committee members: This bill is necessary to allow flat-rate mechanics, their employers and consumers, to be certain about the price of a particular repair job, whether or not that job extends into overtime. In current practice, a flat-rate mechanic is compensated on the basis of a percentage of the hourly shop rate. The flat-rate mechanic provides the skill and maybe the specialized tools to do the job. The employer provides the garage and the overhead expenses. If the flat-rate mechanic takes 8 hours or less to complete a job there is no problem. However, if it takes more than 8 hours then the overtime law is triggered. Alaska's overtime law requires flat-rate mechanics' compensation to be based on a complex hourly rate formula that vitiates the flat-rate concept. This is the fundamental reason for HB 347. Hourly compensation and flat-rate compensation are fundamentally different animals and do not mix. Flat-rate compensation cannot and should not be converted to hourly compensation. This legislation will bring our state statute in line with the federal statute by exempting flat-rate mechanics from overtime requirements. The federal law recognizes the uniqueness of flat-rate compensation and therefore exempts flat-rate mechanics. The language in the federal law is found at Title 29 of U.S. Code Section 213, subsection (10)(A) where it says: "Any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by an nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers;". Number 0269 Now HB 347 does not apply to partsmen. It is mechanic specific to the mechanics who work in nonmanufacturing establishments that sell or service motor vehicles, but not boats or aircraft. Alaska's overtime pay requirement is stricter than the federal government's. The federal requirement is that overtime pay be paid ... after 40 hours of work per week. Alaska's requirement is that overtime pay be paid after 40 hours per week and after 8 hours per day. Flat-rate mechanics are exempt from the federal requirement. HB 347 will exempt them from both the weekly and the daily overtime requirements in Alaska law. For example, in Day 1 in the work life of Bob, the flat- rate mechanic, if he does a job for 10 billable hours and does it in 9 hours, his agreement with his shop owner is that he gets ... 40 percent of the shop rate, if we say the shop rate is $60 per hour. Current law requires that Bob's compensation be calculated as follows and you'll see on page 1 of the testimony, the table [Mr. Pignalberi referred to Table 1 in his written statement], that you have to go through all the steps in each one of these columns to determine what Bob's compensation is for that particular job. Number 0367 A problem exists in that a daily calculation is just that, it's a daily calculation that is only good for one day. It changes each day whenever there's a variance in the number of hours worked, or in the daily flat-rate total. Any variation in either the length of the work day, or the flat-rate mechanic's daily earnings, will change the effective pay rate and thus the overtime rate. On Day 2, look at what happens if another customer comes in with exactly the same 9-hour job. Say the mechanic has already worked a 3-hour job before he starts on the new 9-hour job. ... The table [Table 2] there will show that the total compensation due the mechanic was different than he got for the same job on Day 1, it's $40 more. Now current Department of Labor rules require the calculation of an effective hourly rate on a cumulative, weekly basis. The flat-rate mechanic's compensation for the very same work will differ if his pay is calculated on a two-day work week vis- -vis, say, a five-day work week. Now this calculation assumes that the flat-rate mechanic will work no more the rest of the week. If he works more, then the effective hourly rate and hence the overtime rate will change. This situation prevents the employee and employer from knowing what is each day's compensation because it depends on knowing the exact amount of work for the whole week in advance. For example, the compensation for a job completed on Wednesday will differ depending on whether the employee is paid on that Wednesday or whether he works additional days that would cause the calculation of Wednesday's compensation to change. The law forces absurdity, which is probably why the federal government provides the exemption. Number 0498 Now to progress to the third day in this hypothetical life of Bob the flat-rate mechanic, no flat-rate jobs were available that day, they didn't come in, and he stands by for 10 hours, and he has a standby rate of $12 per hour. Now we simply do that calculation in the table [Table 3] so that we'll be able to see how it affects his overall weekly total at the end of Day 6. Now this Day 3 table shows Bob's compensation as if it was a stand-alone day. However, if Bob got sick and didn't work Day 4 and didn't work Day 5, then his pay would have to be calculated differently [Table 3A]. It is absurd that the flat-rate mechanic's compensation for a given day's work should differ depending on what work was performed on other days of the week. But, that's the situation inflicted by the current statute. On the fourth day, the flat-rate mechanic works three identical flat-rate jobs of three hours each. The first job's flat rate is $72, as you'll see in Table 4. The second job's flat rate is also $72. The third job cannot be charged $72 because there is an ... hour of overtime included. The overtime hour triggers the Department of Labor's conversion formula from flat-rate to hourly calculation, hence the third job must be charged two hours of straight time and one hour at an overtime rate for a total job cost of $84, whereas the other jobs were $72. Under the flat-rate mechanic concept, all three consumers would have paid the identical price for the identical job. However, the statute vitiates the flat- rate concept and requires the flat-rate mechanic's compensation to be converted to hourly, overtime rates. Number 0615 Then on the fifth day in our hypothetical example, we have an 11-hour repair which is done in 8 hours but no overtime is due because ... he only worked 8 hours and did not yet trigger the 40-hour weekly overtime [Table 5]. Finally on the sixth day a job comes in that is identical the job that came in on the first day. Again, the ... overtime statute is triggered. The job that cost $253 on the first day cost $356 on the sixth day. [Mr. Pignalberi noted Table 6 had not copied on the written statement, but he referred the committee to the bottom of the next page, where it said "Day 6," noting the bottom table had the same numbers.] ... The final table is a combination of the six days of work activity that I've just described. You will note that the effective hourly rate changes each day because it is based on the cumulative hours and pay from previous days of the week. Also, the overtime rate changes because it is a function of the effective hourly rate. Consequently, it's impossible for an employer and a flat- rate mechanic to know, in advance, the exact amount of compensation due at the end of any day or week. As a result, most of the employers of flat-rate mechanics simply restrict them from working overtime to avoid confusion and the attendant liability of violating the law. Current state statute requires conversion of flat-rate agreements between the employers and their flat-rate mechanics, conversion to an hourly rate. This is akin to trying to convert a cat into a dog. You can force an operation and move around the parts but you only end up with a freak, and the current law is a freak. It scares employers. It deprives flat-rate mechanics of the opportunity to work. HB 347 corrects the situation by separating flat-rate compensation from the statute governing hourly and overtime pay. Number 0755 MR. PIGNALBERI stated he would be happy to answer any questions and noted the presence via teleconference of Ms. Monte Jordan from the Department of Labor (DOL) in Fairbanks to assist with any technical questions regarding the formula. Number 0765 REPRESENTATIVE COWDERY noted Mr. Pignalberi had worked pretty extensively with this and asked Mr. Pignalberi if he really understood what he had just said. Representative Cowdery asked if, in Mr. Pignalberi's opinion, the average person in the DOL understood it. Number 0782 MR. PIGNALBERI responded that there were only a couple of people specialized in the DOL who knew how this formula worked through its various permutations. He said, of the six tables mentioned, they had probably done 70 or so iterations and many of them differed. He said they finally had these verified by the DOL that morning. Mr. Pignalberi stated, "So it's ... more complex than even I could portray to you, because every day the situation is somewhat different. ... It's more than any employer or employee would want to deal with." Number 0815 CHAIRMAN ROKEBERG noted the attendance of Representative Sanders, Representative Brice and Representative Kubina. He commented that it would be much easier for the committee to decipher the formula if they would have had it the previous Friday. Number 0831 REPRESENTATIVE COWDERY responded that they hadn't gotten the formula down themselves until a matter of minutes ago, noting they had worked both Saturday and Sunday. Representative Cowdery displayed a copy of what he called the flat-rate parts guide (Motor parts and time guide), noting it was a 1995 version. He stated this was a standard most shops, small and large, used. Representative Cowdery stated hourly and parts rates were given for any job - brakes, motor, transmission, for example - so that estimates could given to customers when they came in. He said, from his experience in this business using this book, that any seasoned mechanic could beat this book. For a ten-hour job, he would say a seasoned mechanic could do it in less time, in the seven to eight-hour range, commenting he hoped some mechanics were present who could testify to that fact. Representative Cowdery said the book was available for the committee's perusal, noting he had some pages marked. He commented that this was also the "bible" the automobile factories used for jobs done under factory warranty. Number 0936 REPRESENTATIVE TOM BRICE asked if a consumer was charged for ten hours if a job estimated at ten hours by this took only nine hours. Number 0945 REPRESENTATIVE COWDERY answered in the affirmative. Number 0955 MR. PIGNALBERI stated this bill was not about what the consumer is charged, it's only about the way to determine compensation for the flat-rate mechanic. Number 0967 REPRESENTATIVE JOE RYAN noted, for the edification of committee, he knew from a friend who was an orthopedic surgeon that orthopedic surgeons use a similar book to determine charges for operations. Number 0990 REPRESENTATIVE BILL HUDSON asked Representative Cowdery who published the book Representative Cowdery was referring to, and if it was for Alaska. Number 0995 REPRESENTATIVE COWDERY responded that there were several, indicating it was a national publication. He said he had some dating back to the 1940s, noting they were published and sold more or less like the statutes. Representative Cowdery commented that it is very complex, referring to a passage on an engine for a Camaro or Firebird. He said it has the parts, the retail prices, and a list of times for the different functions, whether it be a brake job, steering wheel, engine, transmission, starter; it has all of these broken out in the number of hours each job would require. He said, "And it has nothing to do with the hours that the shop time - you know, the shop charges or the hours that they pay the mechanic, it's just a kind of a bible." Number 1075 CHAIRMAN ROKEBERG noted there were approximately nine people waiting to testify. Chairman Rokeberg asked Ms. Shirley Armstrong, committee aide to the House Labor and Commerce Standing Committee, for a copy of the federal statute, stating it was Title 29 of the United States Code, the Fair Labor Standards Act (FLSA). He referred to "section" (10)(A) of 29 U.S.C. 213. To Mr. Pignalberi, Chairman Rokeberg said he was concerned that if they went forward with this, HB 347 would exempt the automobile dealers, but not the corner auto mechanics' shop, the few gas stations left in the state with service bays, things of that nature. Number 1136 MR. PIGNALBERI responded he thought the problem Chairman Rokeberg was alluding to was the difference between the federal exemption and state law. Mr. Pignalberi said HB 347, as written, would apply to the corner garage repair place but not the gas station, because they had to be primarily engaged in the business of servicing auto vehicles. Number 1157 CHAIRMAN ROKEBERG pointed out that the federal code said "selling," not "servicing." MR. PIGNALBERI replied that was the difference between the federal statute and the way they have crafted HB 347, stating HB 347 would apply to the small independent repair facility. Number 1173 CHAIRMAN ROKEBERG asked how it could apply if it was against the federal code. Number 1179 MR. PIGNALBERI stated, "In speaking with legal services on this subject earlier today, they say if the federal inspector was to do an investigation, it would be up them as to whether or not they would try to make an employer pay [an] amount that might be due under the federal statute vis- -vis the state statute." However, Mr. Pignalberi said the big difference is that HB 347 applies to the eight hour per day situation which does not exist in federal statute. He thinks Alaska is unique among the 50 states in that it requires employers to pay overtime after an 8-hour day. Mr. Pignalberi stated the federal law and the rest of the states require overtime pay after the 40-hour week, noting, "So, we don't have a rub with the federal statute until after we've passed the 40-hour per week situation, and then it's ... somewhat hazy to me what happens after that." Number 1235 REPRESENTATIVE RYAN asked, "If I were the owner of N C Machinery [N C Machinery Company], could I qualify my people under this bill?" indicating he was referring to the Caterpillar, Incorporated, franchise. Number 1246 MR. PIGNALBERI noted he did not have a copy of the bill in front of him, but stated, " If N C -- the Caterpillar dealer qualifies with that language in that one sentence of the bill, then you - you certainly want this bill. I believe it would, yes." REPRESENTATIVE RYAN added, "It says selling or servicing motor vehicles. It's rather broad -- 'motor vehicles' is rather broad." Number 1268 MR. PIGNALBERI asked if a "caterpillar" qualified as a motor vehicle. REPRESENTATIVE RYAN replied, "Propelled by internal combustion engine ...." Number 1278 REPRESENTATIVE COWDERY stated he had phoned several small shops in Anchorage that morning, "In fact the ones that do my business, it's a two-man shop and owner with one mechanic. I asked 'em about this and he said, he told me the way he does business, he pays his - his guy an hourly rate, plus a percentage of the flat-rate book because everything that comes in ... might or might not be covered, so that's how he does it. I asked if he was aware that probably what he's doing is probably not in tune with the state statutes and he didn't know that, but he said half the shops that are his size that he knew did a similar -- things that he did or similar." Number 1320 CHAIRMAN ROKEBERG noted he wished the committee to take all the testimony at that meeting. Number 1325 REPRESENTATIVE HUDSON pointed out what he thought was a technical flaw in the bill; on line 5 of the bill, it designates this as (17), but he believed there was already a (17), community health aides. REPRESENTATIVE GENE KUBINA commented that he thought one of them had been dropped. CHAIRMAN ROKEBERG noted it was a drafting issue. Number 1358 REPRESENTATIVE KUBINA stated he thought Representative Cowdery was wrong, that a business had to have over four employees for any of that section to count for overtime. Number 1370 REPRESENTATIVE COWDERY stated that was the shop owner's comment to him. Number 1376 CHAIRMAN ROKEBERG went to Ms. Jordan in Fairbanks. He asked her to clarify two of the technical issues raised: Representative Kubina's comment about the four-employee standard and the Chairman's question about the potential conflict between state and federal law. Number 1394 MONTE JORDAN, Supervising Investigator, Wage and Hour Section, Division of Labor Standards and Safety, Department of Labor, testified via teleconference from Fairbanks. She said there is an exemption from all of the overtime statutes for an employer with less than four employees. She stated, "A small business that has less than four employees does not have to pay overtime under state law, you still have to look at federal law." Number 1412 CHAIRMAN ROKEBERG noted the federal code spoke to automobile dealers. He gave the situation of a larger mechanics center - for example, 20 employees working at an auto maintenance shop - saying that would not be covered because of the federal statute speaking only to auto dealers and he asked Ms. Jordan if that was correct or incorrect. Number 1437 MS. JORDAN noted she was not an expert on FLSA, but it was her understanding that FLSA does exempt auto dealerships, but not gas stations and small garages. She stated, "So what if someone called our office, or the employee came in and wanted to file against that auto dealership if - if they would be exempt under the feds if we had a law that exempted them and they were a small garage employee, then we would refer them to the feds because there is no such exemption." Number 1473 CHAIRMAN ROKEBERG asked if the federal law applied to small shops with less than four employees. Number 1480 MS. JORDAN replied that the federal government does not have an exemption based on number of employees, it has an exemption based on gross received income of the employer. She said, "Again, federal law occasionally does cover an area that we don't, because ours is both over 8 and over 40." Number 1497 CHAIRMAN ROKEBERG asked if there were further questions of Ms. Jordan. There being none, he requested she stand by. Number 1524 STEVE ALLWINE, Vice President, Alaska Auto Dealers Association (AADA), came forward in Juneau to testify. He commented, as the committee had heard from Mr. Pignalberi, it was a pretty confusing issue. Mr. Allwine said he would try not "beat the same things," and try not to make it quite as complex as it unfortunately seems to become. He commented that, in a nut-shell, current statutes in the state of Alaska do not provide an exemption from overtime restrictions for flat-rate mechanics and that, unfortunately, requires the DOL to attempt to regulate what has historically been an unregulated area in most other states. He said the fundamental difficulty with this issue is that flat-rate mechanics are not paid by the hour. Mechanics are paid either a flat amount, $10, $20, $30 per billable hour, or a percentage of the billable hour, explaining that "billable hour" refers to the charge on a per hour basis the merchant bills to the consumer. Mr. Allwine noted the example of 40 percent was given earlier. He said it came out of the parts and times guide previously referred to, and he would provide more history shortly. He stated that, as the committee could see, the DOL had been relegated to what was really an impossible task of trying to convert flat-rate pay to an hourly calculation. He stated customers affected by the current regulation included, but were not limited to, automobile dealers, retail consumers, wholesale accounts (repairs completed for another garage), and automotive manufacturers. Number 1614 MR. ALLWINE explained, regarding the way flat-rate mechanics are paid, that the times for specific repairs are calculated in a way to accurately predict how long the work will take to perform and the resulting time is then divided into tenths of an hour. He said examples of these calculations range from .2 hours to replace the windshield wipers on a Lincoln Continental to 8.3 hours for the complete removal and replacement of an engine in a Saturn 4-door sedan. The times used are obtained from several published sources: Motor's, Chilton's, Mitchell's (ph), and each manufacturers' own time guides provided to automobile dealers. Mr. Allwine said that it is that data in those books which allows an accurate estimation of the cost of a particular repair to the consumer. He noted it also worked, and was especially true, in automobile body shops. He stated that a flat-rate mechanic is structured into an eight-hour day under the current system. If the mechanic exceeded the eight hours, his compensation was subject to the extremely complex overtime formula as interpreted by the DOL. Mr. Allwine commented that the DOL has no choice, it has to do this through "regulation." He referred to the Mr. Pignalberi's explanation, stating the committee could see the calculation was extremely difficult to administer in the areas of calculation, accrual for accountants, and payment - "You never know exactly whether you're doing it right." He said, for these reasons, most Alaskan employers restrict their flat-rate mechanics to an eight-hour workday. Mr. Allwine explained and emphasized this means that if a repair is close to completion and the work day is at an end, as an employer he is requiring the mechanic to stop work even it would only take an additional half hour to complete the repair. Mr. Allwine noted this was especially annoying for a customer in Southeast Alaska trying to catch a ferry who had to wait several more days for the next ferry because the repair couldn't be complete in time. He said this situation results in frustrated consumers not just frustrated workers. Number 1742 MR. ALLWINE stressed that HB 347 differed significantly from the federal wage and hour exemptions, and that the AADA applauded Representative Cowdery's foresight in this area. He said HB 347 is broad inasmuch as it includes independent repair facilities indicating these facilities are prevalent in Alaska, as well as automobile retailers. Mr. Allwine said HB 347 identifies and separates mechanics employed as hourly mechanics from those paid under the flat-rate mechanism. He stated HB 347 narrowed federal law because it states, "Primarily engaged in selling or servicing motor vehicles." He indicated the AADA believes this would eliminate a possible problem in situations where mechanics are working in gas stations and required to perform other duties, because selling and servicing are not the primary functions in those cases. He said federal wage and hour laws provide numerous exemptions, and when Alaska took control of its labor laws, restricting the federal statutes in a blanket manner was the prudent thing to do. Mr. Allwine stated this was done by simply not allowing any exemptions at the outset and, as time has progressed, specific exemptions have been authorized. He noted he mentioned this for a couple of reasons: 1) to demonstrate that flat-rate mechanics were not singled out, nor was any class of employee in the initial legislation; and 2) because HB 347 is specific and appropriate, as are other exemptions that have been authorized over time. Number 1815 MR. ALLWINE said beneficiaries of HB 347 include flat-rate mechanics, body and paint personnel, employers, consumers, and the DOL, because the department would no longer have to administer such a cumbersome "regulation." The revised statute would allow flat- rate mechanics flexibility in the workplace, increased productivity and higher income. Mr. Allwine stated it would eliminate a cumbersome overtime calculation for employers and place Alaska on a par with other states. He said this would serve to attract and retain flat-rate mechanics and new personnel to a vocation which is suffering major shortages nationwide. Number 1848 REPRESENTATIVE HUDSON noted Mr. Allwine indicated in his testimony that the DOL was unable to deal with this because of regulations. Representative Hudson asked if Mr. Allwine thought this was the department's interpretation of regulations or if could he point specifically to the statutes which precluded the DOL from trying to find a regulatory solution. Number 1865 MR. ALLWINE said he believed this is complicated because an exemption is required to eliminate something from "wage and hour." He said he believes if there was another way to do it, if they could do this through regulation, the AADA would be happy consider all ideas and work toward that. Mr. Allwine stated he also wanted to briefly address Representative Ryan's question about whether N C Machinery Company would fall under HB 347. Mr. Allwine said the answer was technically no, because to be a motor vehicle, he believed, the vehicle had to be licensed to be operated on state and federal highways indicating he thought that would effectively eliminate the equipment N C Machinery Company dealt with. Number 1908 CHAIRMAN ROKEBERG asked Mr. Allwine if he had any comments regarding the Chairman's previous question about the federal law and its impact in the differential between auto dealers and corner mechanics. Number 1915 MR. ALLWINE asked the Chairman to restate the question. Number 1949 CHAIRMAN ROKEBERG clarified he was talking about the differential between the federal statute of the United States Code [29 U.S.C. 213, subsection (10)(A)] which specifically cited auto dealers, not corner mechanics. Number 1961 MR. ALLWINE stated he thinks HB 347 was a somewhat more favorable take on that because smaller independent shops, including paint and body shops, are prevalent in Alaska. He noted there aren't just franchise automobile dealers throughout the state. Mr. Allwine said he thinks that if it is proper, it certainly is appropriate from AADA's perspective that the language of HB 347 include those independent shops. He indicated he thinks it's appropriate, in other words, to include a shop that primarily services, as well as a shop that primarily sells and services automobiles. Number 1988 CHAIRMAN ROKEBERG stated he would like to move on to other testimony, commenting that the committee would not be moving HB 347 at this meeting. Number 1994 REPRESENTATIVE COWDERY stated Mr. Allwine had previously said he would "get into this book a little bit more," and asked him to expand his comments. Number 1999 MR. ALLWINE replied that he had covered it about halfway through. He said, "If you go to another state, you will find a book like that. If you were to take your car in and ask for a repair, it will be based on these books, it is very consistent throughout the United States." Mr. Allwine confirmed that the book (the Motors parts and times guide) was a national publication. Number 2016 CHAIRMAN ROKEBERG said he wouldn't ask some of the other dealers on-line but could ask Mr. Allwine, as an AADA member, "If they calculated that a job will take 8 hours based on the book, and it only takes the mechanic 6 hours and he gets paid his 40 percent of the six hours or however the formula works, what happens to the ..." Number 2028 MR. ALLWINE stated the mechanic gets paid for his 8 hours, noting that was the incentive; if the mechanic produces the job and does it properly in 6 hours, he is paid the 40 percent of the 8 hours. Number 2036 CHAIRMAN ROKEBERG asked who gets the 60 percent and the savings per hour between the customer and the dealer. Chairman Rokeberg asked if the dealer made the profit. Number 2043 MR. ALLWINE responded he was in it for the money. CHAIRMAN ROKEBERG replied that was okay, he believed in profits. Chairman Rokeberg noted he had just wanted to go on record without putting any of Mr. Allwine's associates on the spot when they were testifying. Number 2054 REPRESENTATIVE RYAN asked if this was predicated upon a journeyman mechanic. MR. ALLWINE answered in the affirmative. REPRESENTATIVE RYAN asked if a customer still received the originally quoted price if there were a lot of complications and a job ran over. MR. ALLWINE responded in the affirmative, adding that the book took additional options on the vehicle and complications like rusted bolts into consideration. He noted there were adjustments for those types of things. Number 2078 REPRESENTATIVE BRICE asked who audited the book to ensure reasonable accuracy. MR. ALLWINE indicated he was not sure, probably the Society of Automotive Engineers (SAE). Number 2118 JAMES D. HINES, auto technician, Mendenhall Auto Center, came forward to testify in support of HB 347. He stated he has been working for approximately 36 years as a flat-rate mechanic. Mr. Hines said he feels that if they don't get this bill and it goes the other way with the overtime, he would lose time if he had to stop after the eight hours and start again the next day. He said it would cost him more time on the job and make his job a lot harder to do. He added, "And I don't know, as far the overtime, I don't know how you'd ever figure what your pay would be on that." Mr. Hines said he's asked people in other states and he said they don't have this overtime problem. Number 2161 REPRESENTATIVE KUBINA confirmed that Mr. Hines worked for the dealership but was paid on a per-job basis, receiving health insurance and a retirement plan, and was almost like an independent contractor. Number 2187 CHAIRMAN ROKEBERG asked Mr. Hines if his employer in Juneau allowed him a little flexibility, or if he was asked to quit working after eight hours. MR. HINES replied that he was currently allowed the flexibility to work over the eight hours. CHAIRMAN ROKEBERG asked if they had to pay him the overtime. MR. HINES responded, "Well, that's in the makings -- I don't know how they figure it out." CHAIRMAN ROKEBERG continued, "Why, 'cause it's so complex you're not sure what you're getting paid every week? In other words, you actually have to rely on your boss's accountant to figure out what you're gonna get paid every week, and you can't really figure out if you're getting the right amount of money." MR. HINES agreed. Number 2214 REPRESENTATIVE KUBINA asked what happened if Mr. Hines came in one day and there was no work. Did he just not get paid, or did they tell him to go home? Number 2219 MR. HINES replied that he could go home or he could wait and hope something came through the door. REPRESENTATIVE KUBINA asked if Mr. Hines received a standby wage while he was waiting. MR. HINES answered in the negative. He said he guessed that was part of the job. Number 2232 REPRESENTATIVE KUBINA asked if that had been the case for pretty much of Mr. Hines' whole 36 years as a flat-rate mechanic. MR. HINES indicated that had been the case for most of his 36 years, that his pay has been based on commission. Number 2241 CHAIRMAN ROKEBERG asked if Mr. Hines thought that he made a pretty good living for a hardworking man. MR. HINES replied he made a good living. Number 2243 REPRESENTATIVE COWDERY confirmed Mr. Hines was familiar with the parts and times book. MR. HINES stated he had been working out of it for many years. REPRESENTATIVE COWDERY asked Mr. Hines if he felt comfortable saying he could beat the time in the book. MR. HINES indicated he could match the time, if not beat it. REPRESENTATIVE COWDERY asked Mr. Hines if he generally beat the time. MR. HINES answered in the affirmative. Number 2259 REPRESENTATIVE RYAN commented that Mr. Hines testified he received retirement and health benefits, saying that somewhat explained the 60 percent to the dealer. Number 2265 CHAIRMAN ROKEBERG stated the committee would go to teleconference testimony from Anchorage, asking witnesses to limit their testimony to two or three minutes. Number 2283 SCOTT HANCOCK, auto technician, Saturn of Anchorage, testified via teleconference from Anchorage in support of HB 347. He stated he has worked as a technician with Saturn of Anchorage for 14 years. Mr. Hancock said the law, as it currently stands, limits their shop hours, and changing the law would be a win-win situation for both the consumer and the technician. It would allow them to expand their shop hours and would allow him to earn more money. Number 2335 JIM SLOAN, auto technician, Eero Volkswagen of Anchorage, Incorporated, testified next via teleconference from Anchorage in support of HB 347. He stated he has been a flat-rate automotive technician for 25-plus years. He currently works for Eero Volkswagen of Anchorage, Incorporated, and has been there almost 21 years. Mr. Sloan stated that the flat rate is a good system and that they don't need overtime. He said it would be nice for him to be able to finish a job without burdening his employer with overtime; he would be able to get his cars finished at the end of the day whether it took him (indisc.) hours or ten hours. Number 2364 CHAIRMAN ROKEBERG asked if that concluded Mr. Sloan's testimony, and if anyone had asked him to testify that day. Number 2370 MR. SLOAN replied that his employer did invite him to come down on his own volition. CHAIRMAN ROKEBERG asked Mr. Sloan if he worked beyond eight hours a day. Number 2378 MR. SLOAN replied generally he did not. CHAIRMAN ROKEBERG asked if his employer had to pay him overtime if he worked beyond eight hours a day. MR. SLOAN answered in the affirmative. Number 2392 STAN PETITO, Service Manager, Cal Worthington Ford of Alaska, Incorporated, testified next via teleconference from Anchorage. He stated he has been a service manager for 20 years. Mr. Petito said it is important to point out that all the technicians he has ever talked to are against any (indisc.) of this sort. He said the technicians feel like they are independent employees because they are allowed freedom during the day from constant supervision. He said if they need to make a run or have a cup of coffee, they're allowed to because they work by piecework. Mr. Petito mentioned the discussion of what he referred to as the labor time guide. He said the more productive a technician is, the better trained he is, the more money he invests in tools, the more efficient he is going to be. He indicated they have some technicians who might take 9 hours for an 8-hour pay job; they have others who might take 6 hours for an 8-hour job. He said the labor time guide they keep referring to is there for the protection of the consumer and the technician because it gives a fair, established time for a well- trained, well-equipped technician. Mr. Petito said he thinks the accounting nightmare that would be involved in calculating overtime pay was pointed out very well in the beginning. He said (indisc.) technicians do not have to work over 8 hours a day, about 80 percent of the time there isn't a need for it, but there are those times 15 minutes or an hour away from completion of a job when the technicians would like to be able to have the freedom to make that choice and finish the customer's vehicle. Number 2459 RICK MORRISON, Alaska Auto Dealers Association; Eero Volkswagen of Anchorage, Incorporated; Saturn of Anchorage, testified next via teleconference from Anchorage. Mr. Morrison stated, "In listening to the testimony today I ..." [TESTIMONY INTERRUPTED BY TAPE CHANGE] TAPE 98-16, SIDE B Number 0001 MR. MORRISON continued, "... but because of this law, we cannot sit and calculate what our expenses are gonna be (indisc.) try to create the bill to come in under that estimate. Most of our technicians today are a much smarter group, very highly educated. We don't refer to them as mechanics anymore, and even though the print-out in here says 'mechanic,' these guys are truly and highly motivated technicians." He said many technicians have their own tool boxes, which may contain as much as $30,000 to $35,000 worth of their own tools. He stated they send the technicians out for continuing education; he personally sends 10 to 15 people out a year. Mr. Morrison stated he is trying to emphasize that these are very, very sophisticated technicians compared to the situation in the industry 25 to 30 years ago when this law was enacted. Mr. Morrison said he would say the technicians in his stores made, on average, about 120 to 140 percent every hour they worked because of their ability to do the job faster than the times the books called for, noting it was a great incentive. He indicated it was also an incentive to do the job right the first time because if it wasn't done right the technicians would have to do the job again on their own time, and he indicated this made it a self-governing or self- policing system. Mr. Morrison indicated he thought any journeyman- level technician in the industry, if asked, would say he or she would much rather work under flat rate system than an hourly and overtime system because he or she had the ability to do the job as fast as he or she wanted. Number 0068 MR. MORRISON stated one of the disadvantages of the current law was that it limited flexibility. He related: A couple of gentlemen in their Saturn store came to him with the idea of opening up on Saturdays to provide better customer service. They would see if everybody would be willing to work one extra hour a day and "every other week we'd take one day off." Mr. Morrison said it sounded like a great idea but he couldn't do it under the current law, he said, "Because the customers are not willing to pay the extra amount of money that it costs them their flat-rate hour, which, again, they're making 120 to 140 percent more, and pay overtime on top of that, so I have to look at 'em (indisc.) so I can't allow you to do that. So there isn't flexibility to do it." Mr. Morrison said he started in the automotive business 25 years ago as a technician. He noted he had been an ambitious young man, and commented that he and his family had benefited because he was given the privilege of being able to put in as much time as he wanted working off of a flat-rate system. He stated, "Under current Alaska law, you can't do that because it's too restrictive. ... In conclusion, I'd tell you that it's a very minor exception. It provides a lot of additional incentive for the workforce. If they don't want to work more than that, I don't believe that they would be forced to work more than that. In our particular ... stores, we really let the technicians govern that. These guys are a smart, intelligent group and they'll work with you, and their goal is to make the consumer happy because that just brings in more business for them. And I haven't found anybody within our organization that would oppose (indisc.) if they had the flexibility on the other side." Number 0161 DON ETHERIDGE, Alaska State Chapter, AFL-CIO; District Council of Laborers, testified next in Juneau. He stated he worked for the District Council of Laborers and was speaking on behalf of the AFL- CIO. He said normally they oppose any overtime exemption bill and HB 347 is no exception, but Mr. Etheridge said they are working with the dealers and the DOL to find a solution agreeable to all parties without "messing up" state statute. He said they hope they can get that done shortly. He mentioned one of his bosses, Mano Frey, had discussed this with an AADA representative that morning, and he said Mr. Frey is also waiting to get in touch with Mr. Flanangan (Deputy Commissioner) from the DOL tomorrow to see if there is a solution which does not involve changing the statute. Mr. Etheridge stated, "We get concerned every time we change or add an exemption to overtime laws, or to the wage and hour of any type, 'cause it's just another chink in the armor the way we look at it, and we're getting so many chinks that pretty soon the armor's gonna fall off." Number 0210 CHAIRMAN ROKEBERG commented he didn't think they had lost any chinks in the past three years while he's been here. Number 0216 MR. ETHERIDGE replied that was because they have been fighting hard. Number 0225 DWIGHT PERKINS, Special Assistant, Office of the Commissioner, Department of Labor, came forward to testify. Mr. Perkins stated there had been a lot of discussion about the flat-rate mechanic, noting he thinks there are many of misconceptions about the law and about what is currently being done in the industry. He said the DOL is philosophically opposed to this type of legislation, noting the concerns Mr. Etheridge addressed. He stated the DOL's concern is that it would be a weakening of Alaska's wage and hour laws. Mr. Perkins said he agreed with Chairman Rokeberg's comments about few "chinks in the armor" in the last three years. However, Mr. Perkins stated, the DOL is "on watch" to make sure the working men and women of Alaska receive their fair pay for their fair days' work. He referred to Mr. Pignalberi's example and said he was glad there wasn't a real Bob out there because Bob would probably be filing a workers' compensation claim for all the stress he experienced figuring out his pay. Mr. Perkins said he appreciated Mr. Pignalberi's and Representative Cowdery's efforts, noting they have had an open dialogue. He said it is the DOL's understanding that the AFL-CIO and the AADA are working together, and, if it was the wish of the committee, he stated, "The Department of Labor would help facilitate to come back to the committee with some language that would be livable to all parties." Number 0311 REPRESENTATIVE HUDSON asked Mr. Perkins if he was optimistic the DOL could find something within the regulatory scheme to resolve this issue. Number 0317 MR. PERKINS said he was optimistic the department might be able to. He noted some ideas have been expressed, and stated the department would look into all avenues, hopefully coming to a resolution. Number 0332 REPRESENTATIVE RYAN thanked Mr. Perkins for being open enough to try to solve this problem, noting it makes a big problem go away. Number 0341 REPRESENTATIVE COWDERY also thanked Mr. Perkins. Representative Cowdery mentioned that they had discussed this for a long time, and he was certain they could come up with a solution he thinks would be acceptable to everyone. Representative Cowdery asked Mr. Perkins, "Do you know how many other states that have something like this that we're trying to get going here ... the eight-hour ..." Number 0359 MR. PERKINS replied he didn't know offhand. He said, "As been stated, there is the Federal Labor Standards Act, FLSA, that has been referred to that does mention it." Mr. Perkins cautioned, "There is the potential overtime liability for the shops out there that are not the automobile, and it - it does specifically state that in FLSA." He noted the department would look at this, mentioning that Mr. Pignalberi had touched on it and Monte Jordan ["Monte Brice" misstated on tape] with DOL in Fairbanks had discussed it. Mr. Perkins stated it was something the department needed to look into, but said they would be happy to report their findings, and any accomplishments or resolutions they might come to, if it was the wish of the committee. Number 0395 CHAIRMAN ROKEBERG stated Representative Cowdery's office has requested legislative research which indicates at least seven states have this type of legislation, noting the Chairman thinks the number is greater. He said it was his wish that they come back to this committee with a solution. He would commend all parties to this, including the automobile dealers and organized labor, making sure DOL fully cooperates with those groups to find a resolution to this issue in regulation to avoid amendment of the statute. He stated, "Because if we can't, then we will amend the statute. Number 0425 MR. PERKINS stated that Commissioner Cashen would be happy to try to make the wishes of the committee come true. Number 0430 CHAIRMAN ROKEBERG closed the public hearing for that meeting on HB 347, indicating HB 347 would be held over.
| Document Name | Date/Time | Subjects |
|---|