Legislature(2001 - 2002)
04/01/2002 03:20 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 504-WAGES FOR WORKERS IN FISHERIES Number 1497 CHAIR MURKOWSKI announced that the next order of business would be HOUSE BILL NO. 504, "An Act relating to the wages of people working in the fisheries business." [HB 504 was sponsored by the House Rules Standing Committee, chaired by Representative Kott. Adopted as a work draft on 3/25/02 was a proposed committee substitute (CS), Version L, 22-LS1595\L, Craver, 3/25/02.] Number 1532 KRIS NOROSZ, Icicle Seafoods, testified via teleconference in support of [Version L], which would allow Icicle Seafoods to recover some of the costs for providing room and board for employees in remote locations. This would also standardize the practice used currently for nonremote locations where there are other [housing options] available. MS. NOROSZ addressed the concern regarding the amount of money that might be deducted from an employee's wages. She offered an example of [Icicle Seafood's] practice in Petersburg: employees are charged $10 a day to stay in the bunkhouse, and $3.50 for a hot, unlimited meal. She argued that one would be hard-pressed to find a comparable deal anywhere for that price. The meal plan for senior citizens in Petersburg is subsidized by the federal, state, and local governments, she noted; this program provides three portioned dinners a week for $3.50 a meal. She argued that the price [Icicle Seafoods] charges employees for a meal is "very, very reasonable," and indicated Icicle Seafoods loses money each year [with the meal program]. Number 1652 MS. NOROSZ offered that [Icicle Seafoods] would follow a similar pattern for its remote locations for a number of reasons. One reason is that it is important for the employees to have a good experience and return as experienced, seasoned employees. It costs more to hire people who leave before the season is over and to have to replace them. She said it is in the best interest of both the employer and the employee to make sure that "things are fair." MS. NOROSZ disclosed that [Icicle Seafoods] is in competition with other employers to find good workers, and therefore it doesn't make sense to charge the employees too much for room and board. She urged passage of [HB 504, Version L], which will standardize the practice that [Icicle Seafoods] currently uses in nonremote locations. Number 1737 REPRESENTATIVE MEYER asked if the Department of Labor and Workforce Development (DLWD) or the Occupational Safety and Health Administration (OSHA) periodically visit any of Icicle Seafood's remote locations. MS. NOROSZ replied in the affirmative, saying she believes the DLWD is responsible for overseeing OSHA regulations in Alaska. REPRESENTATIVE MEYER asked how often this occurs. MS. NOROSZ answered that she doesn't know, but offered to find that information for the committee. REPRESENTATIVE MEYER asked if OSHA doesn't visit the remote locations because the DLWD is in charge of overseeing OSHA regulations. MS. NOROSZ said she believes that is true. Number 1787 REPRESENTATIVE ROKEBERG, referring to an e-mail received from a gentleman in Soldotna, reported that some canneries and processors will sometimes only work the workers one to four days a week. He argued that under HB 504, these workers could end up owing the canneries for room and board. He inquired about Icicle Seafood's hiring practices. MS. NOROSZ reported that the nature of the industry in fisheries is dependent on Mother Nature, and therefore it is hard for an employer to say when the fish are going to arrive, and in what quantities. She said [Icicle Seafoods] wants employees to get a lot of work; as a result, it tries to not hire more employees than needed for the season. The number of employees Icicle Seafoods predicts it will need is based on the "run size prediction" of the Alaska Department of Fish & Game (ADF&G). She offered that unfortunately Icicle Seafoods can't guarantee workers that they will work a certain number of hours per week. But when there is a smaller run, Icicle Seafoods tries to find other jobs for its employees around the plant - for example, doing maintenance. Regardless of whether someone is working, that person still is eating meals, and she said she feels this is a reasonable expense to charge employees. Number 1884 REPRESENTATIVE KOTT asked if [Icicle Seafoods] outlines in the contractual arrangement with an employee what the costs will be so that an employee will know ahead of time. MS. NOROSZ replied in the affirmative and said "everything is spelled out." In further response, she relayed that Icicle Seafoods requires that all employees speak and understand English, although not necessarily read and write English. There are also people available to ensure that employees understand what they are being told. MS. NOROSZ said it's expensive to go through a hiring process. It is also expensive to have an unhappy worker wanting to quit halfway through a season, because a replacement worker must be hired. Thus it is important to have a thorough hiring process at the beginning of the season to find the right people for the right jobs, instead of replacing workers midseason. Number 2026 CHAIR MURKOWSKI asked if a prospective employee signs a written contract. MS. NOROSZ responded in the affirmative. She explained that [Icicle Seafoods] wants employees to sign a written contract so that it can count on those employees for the duration of the season. REPRESENTATIVE CRAWFORD inquired if an employee working at a remote location is entitled to return airfare if he/she has decided to quit because there is a low run of fish and that person isn't getting much work. MS. NOROSZ explained that for an employee to get transportation back, he/she must complete the contract. If [an employee] ends the contract early, It is the employee's responsibility to provide transportation back if that person decides to end the contract early, or if that person is caught with drugs or alcohol on the premises - which is strictly forbidden by the contract - and is involuntarily terminated. Ms. Norosz pointed out that not all of the processing occurs with salmon. There are other species, some of which entail cooperative fishing, so that the fish come in at a steady pace. Number 2117 REPRESENTATIVE CRAWFORD said it was the intent of [the House] to raise the minimum wage, but that [HB 504] seems "to give on the right hand and take away on the left hand." He questioned the benefit to a worker who would work for possibly three or four days a week and still be required to pay room-and-board fees in a remote area where there aren't other employment options. MS. NOROSZ responded that every season is a little different. If a run of fish is smaller than expected in a certain location, [Icicle Seafoods] will downsize the operation and move workers to another location if they want to keep working. If there isn't enough work, employees can be let out of their contracts. She offered that after a reasonable time, [if] ADF&G downsizes the forecast [of returning fish], Icicle Seafoods would then provide employees with other opportunities. Number 2246 REPRESENTATIVE HALCRO asked how many applicants are attracted to the occupation because of overtime pay. MS. NOROSZ responded that she thinks it is a "big lure." Few other industries require as much overtime. Many employees like working in remote locations because there aren't as many distractions as some towns have, she said, and therefore they won't spend as much money at stores or drinking establishments. Ms. Norosz pointed out that Icicle Seafoods actually discourages applicants from going to remote locations because if the employee doesn't like it and wants to leave, it's not a good situation for the employer or the employee. Number 2318 MS. NOROSZ, in response to Chair Murkowski, reported that employees in Petersburg are started at $7 an hour, and remote employees are paid $6 an hour. As to whether there is any difficulty in finding the number of employees needed, she said it depends on the season and the current state of the job market in Alaska and the Lower 48. She offered that three to four years ago there was some difficulty attracting enough employees, and the DLWD was "very helpful" in helping with that. The past few years, it has been much easier to find employees. TAPE 02-45, SIDE B Number 2383 REPRESENTATIVE ROKEBERG asked what the average retention rate is for returning employees. MS. NOROSZ offered to find out. She said regular wage increases, as well as benefits, are given to employees according to the number of hours they have worked. CHAIR MURKOWSKI asked Mr. Mastriano whether his office conducts visits to remote locations. Number 2325 RICHARD MASTRIANO, Director, Division of Labor Standards and Safety, Department of Labor and Workforce Development, testifying via teleconference, replied in the affirmative. He reported that OSHA, under labor standards, does do "the shore- based processing - we go out and do the shore-based processing." The U.S. Department of Labor covers the [floating processors]. In further response, he said [a processor usually gets a visit] about once a year unless a problem requires a follow-up visit. Number 2290 REPRESENTATIVE HALCRO asked if there have been complaints with regard to employment practices in remote facilities. MR. MASTRIANO answered that he receives a number of complaints, but not very many are related to housing. The complaints are with regard to return transportation, wages, and deductions from wages. He reported that last year DLWD received 71 claims statewide for various deduction problems, 20 of which were from processors. In further response, he explained that usually when there is a wage claim, an employee has signed a contract with the employer and isn't getting enough work in a remote location. An employee who quits must pay for transportation, as outlined in the contract. REPRESENTATIVE KOTT told members that a statute deals with the right to return transportation, and that it is also spelled out in the contract. He said some of the other issues, such as not being paid correctly for the amount of hours worked, aren't any different from issues for workers elsewhere. MR. MASTRIANO agreed. Number 2162 CHAIR MURKOWSKI asked if DLWD is involved with complaints from employees who don't feel they are being charged a fair price for room and board. MR. MASTRIANO responded that most processors charge about $10 a day for room and board, which the department feels is reasonable. If a complaint is received, the employer must furnish a complete budget to show the department the costs to operate and maintain that facility. A program in the C.F.R. [Code of Federal Regulations] tells what expenses are allowable without profit, which is what [DLWD] will look at. He hasn't had that happen since becoming director, he said, and therefore hasn't had to perform this procedure. Number 2073 REPRESENTATIVE ROKEBERG referred to AS 23.10.380(a)(1), which read in part, "(1) on or after the termination of employment for a cause considered good and sufficient by the department, beyond the control of the person, or on or after the termination of the contract of employment or a renewal of the contract". He asked whether, when an employee is fired, the employer must still provide return transportation. MR. MASTRIANO replied that there is a companion regulation that goes along with that; he indicated that if an employee is terminated for an unexcused absence, drinking on the job, or fighting, the employer doesn't have to pay for return transportation. However, if an employee is fired for anything else, [the employer] must pay the return transportation. Number 2010 DON ETHERIDGE, Lobbyist for Alaska State AFL-CIO, testified before the committee in opposition to HB 504. He said [AFL-CIO] sees HB 504 as the "tip of this iceberg," and although the fisheries industry is in a slump, it shouldn't be exempted from minimum wage. REPRESENTATIVE ROKEBERG asked if "organized labor" is aware of the economic situation surrounding the seafood processing industry, particularly with the regard to the importation of foreign fish. MR. ETHERIDGE replied in the affirmative. He said the [AFL-CIO] is concerned for the [fishing] industry and the workers. He offered that he knows a person who is a recruiter for a "fishing group" that is about to go broke, and yet this person owns a new house on Bainbridge Island in Washington and a brand-new house in San Francisco. He stated, "He's a recruiter for them, so they can't be all that broke." Number 1879 REPRESENTATIVE ROKEBERG offered that the "integrated [fishing] business" in Alaska encompasses the small gillnetter through to the large processor. He speculated that the individual that Mr. Etheridge had referred to is on the executive end of the industry, and will be out of a job quickly if the industry fails entirely. He said he can foresee the industry failing in the next couple of years, particularly "after the ALF-CIO ... was able to pass a petition to raise the minimum wage by 26 percent." He asked if some of the businesses that are struggling financially deserve a break. MR. ETHERIDGE responded that "every business in the world" could use a break for one reason or another. He said he has worked extensively in the commercial fisheries industry, from commercial fishing to working in the canneries, and these workers deserve the same wages as those in other industries. Number 1829 CHAIR MURKOWSKI closed public testimony. She spoke to Representative Kott regarding the language in Section 1 that provides that there is a written agreement with an employee in order to take the deduction. She referred to page 1, line 7, which allows for a deduction "based on a negotiated union agreement or a written agreement with the employee". She suggested that "at the time of hire" might need to be added as a clarification. This would require the employer to disclose the room-and-board deductions with the prospective employee before work begins so that the employee knows what to expect. REPRESENTATIVE KOTT agreed that should be added. Number 1744 CHAIR MURKOWSKI referred to 8 AAC 15.160, subsection (e), and said this states that the employer and employee have executed the written agreement at the time of hire. Number 1712 CHAIR MURKOWSKI moved to adopt Amendment 1, on page 1, line 7, to read, "based on a negotiated union agreement or a written agreement entered at the time of hire with the employee". There being no objection, Amendment 1 was adopted. REPRESENTATIVE ROKEBERG stated a concern regarding any subsequent amendments or changes "to that document." He offered that the "courts would look at it only in the subject matter that we're stressing here." CHAIR MURKOWSKI agreed with Representative Rokeberg's concern, mentioning an employee who is hired to work in one location and then moved to another location because of a lack of fish. REPRESENTATIVE ROKEBERG offered that this employee could enter into a new written contract. Number 1660 CHAIR MURKOWSKI pointed out there has been discussion that [allowing the fishing industry] to deduct from wages will prompt other industries to [request the same provision]. She said to Representative Kott, "As I understand, what you are doing with [HB 504] is codifying the language from regulations." REPRESENTATIVE KOTT said that is "pretty much true," and offered that there is potentially an opportunity for another occupation to perhaps tweak [the regulations]. He said, however, that the statutes clearly indicate the commissioner can pass regulations that will allow for the reduction from the minimum wage for specific occupations. He said, "In the regulatory scheme of things, what has happened is we've added a little provision there that basically now separates occupation from remote to nonremote." Currently, deductions can be made in nonremote sites - for example, in Petersburg - but not in remote areas. REPRESENTATIVE KOTT suggested the occupation, not the location, is the important factor. He remarked, "Our statute allows for it, the feds allow for it, and the regulations allow for it in part; they didn't quite go all the way. So they've carved out this niche between nonremote and remote, and we're trying to fill the void." In response to Representative Rokeberg, said he would guess that because there is alternative public housing available, Unalaska is a nonremote site. Number 1500 ED FLANAGAN, Commissioner, Department of Labor and Workforce Development, (DLWD) responded in the affirmative to a question from Representative Meyer regarding whether the department will need to hire another person if the bill passes. REPRESENTATIVE MEYER questioned that, suggesting [the department] is already going out to job sites to oversee OSHA regulations. COMMISSIONER FLANAGAN explained that [the department] tries to do as much "cross-training" as possible, but there are distinctions between programs, especially in the case of OSHA, since it's 50 percent federally funded. He said a lot of this would be kind of an audit function, and it wasn't the department's intention to introduce a prohibitive fiscal note. He said if there was a provision [in state statute] whereby if [an employer] just charges $10 [for room and board], there wouldn't be an audit. He explained that the reason for the additional position on the fiscal note is because there are a lot of remote facilities in Alaska, and an audit [in a remote area] could be fairly labor-intensive. REPRESENTATIVE MEYER asked if the [$70,600] indicated on the fiscal note represents the position and travel costs. COMMISSIONER FLANAGAN reported that it is the "full position cost." He deferred to Mr. Mastriano. Number 1401 MR. MASTRIANO said, "Yes, it does." With regard to the [$9,300] contractual cost on the fiscal note, he said that figure would cover a desk, computer, and other office equipment. COMMISSIONER FLANAGAN added that the figure should be listed under equipment on the fiscal note. Number 1375 REPRESENTATIVE MEYER restated his concern over hiring an additional person if there already are people going to the remote sites. COMMISSIONER FLANAGAN responded, "Wage & Hour doesn't get in nearly as often." He said OSHA does have scheduled inspections and tries to get into the processing facilities at least once a year, because it is a high-hazard industry. He explained that the return-transportation issue does generate a lot of complaints, even if employers are complying with the law. He stated, "It's one of our last fully general-funded sections, so there's no ... ability to pick up any additional tasks without reflecting it in a fiscal note." Number 1298 REPRESENTATIVE MEYER asked whether one visit a year to the remote sites is anticipated. MR. MASTRIANO explained that since it would be a new situation, [the department] would probably go out and visit the sites - particularly the outlying areas - because there is no history of what to charge out there and what the operating costs are. In each of those areas, unless the employer chose to charge $10 for room and board a day, [the department] would have to go out and get into [a business's] records or have them forwarded [to the department], which businesses generally don't like to do. He explained that [the department] would have to develop a spreadsheet for calculating all the operating costs and making sure [the cost for room and board] was reasonable. He said, "More than likely, it would end up being more than $10, but we would still have to go through the exercise." REPRESENTATIVE MEYER asked if the investigation would only have to be done once. MR. MASTRIANO replied that the investigation would be done once only if the cost didn't change. He offered that many factors could lead to an increased cost, such as a rise in the price of electricity or natural gas. Number 1189 CHAIR MURKOWSKI asked if [the department] would have to do an analysis of each [fishing business] to determine the fair value of room and board before the employee and employer entered into a written contract. MR. MASTRIANO responded, "Yes, but we're complaint-driven". Therefore, an audit would have to be done on each new complaint. CHAIR MURKOWSKI surmised that until a complaint was received, there would be no audits. MR. MASTRIANO replied, "Not unless the statute were passed, and then we would probably have to do that on some of them, but ... not until we got everybody in line with the new statute." He offered that [an initial audit] would most likely be done in the most remote areas to make sure those costs are reasonable, and "then wait for the complaints to come in." REPRESENTATIVE ROKEBERG asked if the OSHA inspectors can do other jobs because they are federally funded. MR. MASTRIANO replied in the negative and said, "We have a strict guideline from Occupational Safety and Health [Administration] as to what our folks can do." He explained that the enforcement and consultation employees [with the department] are separated and are not allowed to discuss where they are supposed to go [to investigate]. REPRESENTATIVE ROKEBERG, referring to 8 AAC 15.160(d), asked if [the department] already has the ability in nonremote sites to deduct [room and board]. MR. MASTRIANO answered that if alternative public housing is available and the employee agrees to stay at the employer's place of business, then the deductions can be made. Number 1038 REPRESENTATIVE ROKEBERG suggested it would likely include most of the larger communities. MR. MASTRIANO replied that it would include communities such as Kenai, Soldotna, Homer, or Ninilchik. He said the wage-and-hour investigators try to make a visit in late May or early June, and then again at the end of the season in September if there have been a lot of complaints. REPRESENTATIVE ROKEBERG asked Mr. Mastriano where the 71 complaints he'd mentioned had come from. MR. MASTRIANO explained that the figure was the total of statewide complaints [the department] had received for deductions. He said that is what the wage and hour administration calls "150, ... wrongful deductions, and those require investigations." These "wrongful deductions" require an investigation and can vary; examples are a deduction for a bad check, or after someone walked out on a meal. Number 0933 REPRESENTATIVE CRAWFORD began discussion of conceptual Amendment 2. He said he is opposed to "the spirit of [HB 504]" but understands that the fish processors have a problem. He noted his concern over the wording on line 8, "a reasonable cost", because this cost can vary throughout the state. He said this wording might leave employers open to charge up to $25 [for room and board], giving too much leeway to charge whatever they deem is reasonable. Number 0779 REPRESENTATIVE CRAWFORD moved to adopt conceptual Amendment 2, to clarify "reasonable cost" on page 1, line 8, to specify that amount to begin at $8 [per day] and to be adjusted [annually] based on the consumer price index (CPI}. This amendment would also state that employees would not have to pay [room and board] for days they don't work. CHAIR MURKOWSKI offered her understanding that [employers] generally charge $10 a day for board, but that meals are extra. REPRESENTATIVE CRAWFORD said some charge [extra for meals], but Mr. Mastriano had indicated some employers charge $10 a day for room and board. Number 0723 REPRESENTATIVE HALCRO offered his understanding from the testimony that the "accepted level is $10 a day." He stated a concern with a worker's accepting a remote job with the notion of working "significant hours," and then if the fish don't show or there is a poor return, the worker will sit and wait until the fish come in. Meanwhile, the person is only working two or three hours a day and is being charged $10 a day for room and board, and could possibly, at the end of the two- or three-week slow period, end up owing money [to the employer]. He said he would like to see some kind of protection for employees in a situation in which they would owe money after they left because of a lack of work. Number 0617 REPRESENTATIVE CRAWFORD remarked that Representative Halcro's point is part of his concern also, and said he doesn't want to see [employees leave] with a very small paycheck. He said there are people who wait in an unemployment office and wait for employers to call. If there is more than one employer looking for workers, the prospective employee must decide where to work, based on the pay and whether room and board is included. Once the employee accepts a job, that person is "at the mercy of Mother Nature." He said he knows people who haven't made much money because they made the wrong decision but couldn't leave because they couldn't afford return transportation. Number 0516 REPRESENTATIVE ROKEBERG referred to 8 AAC 15.160[(e)], which read: Unless the employer and the employee have executed a written agreement as described in (d) of this section, at the time of hire, the employer is prohibited from seeking to retroactively deduct the cost of board and lodging as an offset against wages due upon termination or wage deficiencies subject to collection by the department. REPRESENTATIVE ROKEBERG interpreted this to mean that the department won't collect money from "this person, nor should the employer." He said, "You can't charge him for more than he's made." He asked Representative Crawford if this is the point of [his amendment]. Number 0450 REPRESENTATIVE CRAWFORD reiterated that he doesn't want an employee charged for more than was earned, and wants the person to have at least something to show for his/her time out there. REPRESENTATIVE ROKEBERG offered that this issue is partially resolved in the regulations. REPRESENTATIVE CRAWFORD added that if there is no work on a particular day, an employee shouldn't be charged for room and board. REPRESENTATIVE ROKEBERG said he understands the concern, but suggested it could be an accounting nightmare deciding who worked on what day, and what kind of work a particular employee did. He offered, "We could put a prohibition [whereby] there's no way they can offset or deduct more than the wages earned by the person. That way, he's protected." He asked if this is what Representative Crawford is referring to. Number 0355 REPRESENTATIVE CRAWFORD said, "No. If I don't get to work on Tuesday, then I shouldn't have to pay for room and board on that Tuesday." REPRESENTATIVE ROKEBERG stated, "But you ate." REPRESENTATIVE CRAWFORD explained that it is part of the risk an employer takes in sending employees out to a remote location. REPRESENTATIVE ROKEBERG reiterated that the accounting could be a real problem. Number 0323 REPRESENTATIVE CRAWFORD noted that this works in his line of work, and said it should work for the fisheries industry also. REPRESENTATIVE ROKEBERG said the fishing industry is in financial trouble and that he doesn't want to add any accounting costs. He offered that an employee who sat for two weeks, and didn't work, shouldn't be charged. REPRESENTATIVE CRAWFORD responded, "No, no. If I work four days and get paid for four days, I shouldn't have to pay for seven days' worth of room and board." Number 0234 REPRESENTATIVE KOTT objected to conceptual Amendment 2. He said there are risks employees must take when accepting employment in a remote site. He noted from previous testimony that employers don't want to let the employees sit idle, and that if there is a poor fish return, then the employer may relocate the employee to a nonremote area. He suggested the discussion was getting too complex with regard to determining wages and the value [of room and board]. He emphasized that there isn't a place in the state where someone can eat as much as desired for $10 a day. He said, "I'd be more than willing to compromise and go $15 a day and no audits." Number 0090 REPRESENTATIVE ROKEBERG objected as well. CHAIR MURKOWSKI offered that Representative Crawford had started out with two issues. The first was the "reasonable cost" concern. She said she didn't share Representative Crawford's discomfort with that issue, and noted that Mr. Mastriano's testimony indicated that [the wage and hour administration] spends a fair amount of time determining the fair value and reasonable cost. However, she concurred with Representative Crawford's concern about the worker who is stuck in a remote location. TAPE 02-46, SIDE A Number 0009 CHAIR MURKOWSKI offered that if one location doesn't have a large return of fish, it is beneficial to both the employer and the employee to relocate to where there is more work. Noting the concern about what can happen with employees who possibly owe more money at the end of the day due to a lack of work, she said she wasn't "so unopposed" to conceptual Amendment 2, and suggested it is an area that needs to be worked out. Number 0162 REPRESENTATIVE CRAWFORD explained the changes he would be willing to accept to conceptual Amendment 2: replace the word "reasonable" with "$10 a day", and add "not have to pay for room and board for days not worked". He clarified that he'd originally indicated $8 to replace "reasonable", but would consider changing that to $10. Number 0234 CHAIR MURKOWSKI suggested having two separate amendments. Conceptual Amendment 2 would provide language to the effect that an employee wouldn't be required to pay for room and board for days when wages were not earned. REPRESENTATIVE KOTT objected to conceptual Amendment 2. He offered his belief that there had been no anecdotal evidence or factual support in the testimony for the idea based on the nonremote sites. He said this is the existing situation, and employees aren't charged extra for days when they work 16 hours and might eat four meals. Number 0322 CHAIR MURKOWSKI explained that the way the regulations are now, deductions from the wages can be made in a nonremote setting; there is no allowance that depends on whether the employee is working. REPRESENTATIVE KOTT offered that he hasn't heard any complaints about the current regulation. REPRESENTATIVE CRAWFORD responded that he has heard plenty of complaints from his relatives and friends who have worked in nonremote sites. He emphasized that part of the attraction of working in a remote site is that an employee doesn't have to pay room and board if the fish don't return and there isn't work. Number 0401 REPRESENTATIVE ROKEBERG suggested that the contract signed prior to employment could stipulate whether [room and board would be covered by the employer when there isn't work]. He argued that [the legislature] shouldn't be writing contracts by statute. He agreed with Representative Kott that there haven't been any problems brought up in testimony about the current practice. Number 0473 REPRESENTATIVE CRAWFORD responded, "Under the present regulations, they don't have the ability to write a contract to take room and board out of remote sites; that's not there. This bill is trying to give that right to the employer." He said he is trying to "keep that from happening, or at least mitigating the damage that it might do." CHAIR MURKOWSKI pointed out that if there isn't enough work, employees can choose to find other employment in larger, nonremote sites, whereas employees in remote sites are stuck. CHAIR MURKOWSKI requested a roll call vote on conceptual Amendment 2, which she said would insert language such that if the employee hadn't earned a wage on a given day, that employee wouldn't be charged for room and board. Number 0570 REPRESENTATIVE KOTT asked how the situation would be handled if an employee had requested a day off and hadn't earned a wage, and whether an employee would be paid who requested a day off for illness. REPRESENTATIVE HAYES asked for clarification, conveying his understanding that most employees don't get a [scheduled] day off in this industry. Number 0708 MS. NOROSZ explained that people sign on to work for a period of time when work is available; contracts vary with each company, and she didn't know whether there was a uniform standard throughout the industry. As to whether employees have scheduled days off, she responded in the negative and offered an example of an opening during the salmon season: the fishermen will fish for two days and then bring the fish to the processing plant. It could take three to four days to process the fish once they are received, and maybe no fish will be delivered for another day; so employees may have the day off or may end up doing nonprocessing work like maintenance. During the day off, she pointed out, employees are still being fed and housed. Number 0803 MS. NOROSZ, in response to Representative Rokeberg, said [Icicle Seafoods] tries to give everybody some work, rather than giving one crew a ten-hour day and another two hours. At the end of the season when the fish run is dwindling, she noted, the company will try to reduce the workforce. She elaborated: People could either go home or, if they wanted to find other work with the company, we would try to move them somewhere else where it has a longer season. ... The State of Alaska has been very helpful in trying to direct seafood workers when their season's ended into another fishery, and even for another processor who might be doing a species ... that's going into the fall and winter. Number 0900 REPRESENTATIVE CRAWFORD offered an amendment to conceptual Amendment 2, to have there be no charge for involuntary days off. For a voluntary day off, the employee would still have to pay for room and board. CHAIR MURKOWSKI clarified that conceptual Amendment 2, then, would be that an employee would not be charged room and board for the days when he or she didn't earn a wage for an involuntary day off. Number 0966 REPRESENTATIVE KOTT referred to testimony and indicated he objected because [the legislature] would be asserting itself into managing a work schedule. He explained: All we have to do is put ... one person on the line for two hours ... [and] pay them $5.30 an hour, so that'll give them $10.80. ... We subtract $10 from his wages for room and board, [and] he's making 80 cents. That just satisfied your amendment and doesn't do anything but clog up the whole cog ... with more paperwork. REPRESENTATIVE CRAWFORD countered, "It doesn't clog anything because under [HB 504] they're going to charge them for the day anyhow, whether he works or not. So if they get two hours' worth of work, then that much the better." Number 1022 A roll call vote was taken. Representatives Crawford, Hayes, and Murkowski voted for conceptual Amendment 2 [as amended]. Representatives Halcro, Meyer, Kott, and Rokeberg voted against it. Therefore, conceptual Amendment 2 failed by a vote of 3-4. REPRESENTATIVE KOTT offered that the question brought up by Representative Crawford about how much a processor should charge an employee is a fair one. He said he would entertain an amendment that says the processors cannot charge any more than the daily average of what's being charged in nonremote sites. REPRESENTATIVE ROKEBERG indicated the amount an employee will be charged for room and board [should be in] the written agreement before the employment begins, so that the prospective employee knows the score going in. REPRESENTATIVE KOTT related his belief, after talking with members of the fishing industry on several occasions, that the amount to be charged for room and board is included in the contract. He again suggested creating [an average] that doesn't exceed what is being charged in nonremote sites. He asked Ms. Norosz whether that concept is reasonable. Number 1200 MS. NOROSZ replied that she doesn't know what other companies are doing, but said what [Icicle Seafoods] is doing is very reasonable, considering it loses money every year on meals. She noted that food in remote areas is more expensive. CHAIR MURKOWSKI said she appreciated Representative Kott's concern, but surmised that [the Wage & Hour section of the Division of Labor Standards & Safety, DLWD] makes certain that businesses aren't way out of line with what they're charging employees for room and board. She stated support for Representative Rokeberg's suggestion to make certain that the written agreement clearly sets forth what those charges will be for room and board before the employee begins working. This would let prospective employees know exactly what they will be charged prior to employment. Number 1337 REPRESENTATIVE KOTT concurred, but said there may be some potential for abuse "the other way." He stated a concern with some migrant workers or immigrants who can't read or write English. He noted that employers will need to keep their prices reasonable to stay competitive in the industry. Number 1407 REPRESENTATIVE HAYES offered to add a conceptual amendment that would require the House Labor and Commerce Standing Committee to review the status of this legislation and the fishing industry every two years. He suggested that in years when the fishing industry is flourishing, the exemption might not be warranted. In response to Chair Murkowski, he explained that he wasn't proposing a sunset review, but a report to the committee every two years. Number 1482 REPRESENTATIVE HALCRO referred to prior legislation that granted an exception to wages for airline employees and volunteer ski patrollers, and explained that there were warnings about the exemptions' being "a slippery slope" because other industries would ask for exemptions also. He said he doesn't think [HB 504] is a slippery slope because exceptions will come up and need to be debated on their merits every year, whether for the fishing industry or the airline industry. He said he wasn't supportive of Representative Hayes's suggested conceptual amendment. REPRESENTATIVE KOTT agreed and noted that nothing prevents the next legislature from reviewing [the new law, if enacted] next year instead of waiting for two years. He said requiring the legislature to revisit it based on a report will be throwing more paperwork on the shoulders of the [DLWD]. He suggested that a sunset provision wouldn't be prudent at this point. REPRESENTATIVE ROKEBERG also stated opposition to the conceptual amendment proposed by Representative Hayes. CHAIR MURKOWSKI offered that the House Labor and Commerce Standing Committee might want to submit a letter of intent that says the committee wants to revisit the issue in a couple of years to see how the seafood industry is doing in general. Number 1646 REPRESENTATIVE HAYES thanked Representative Murkowski for her suggestion and announced that a letter of intent would satisfy his concern instead of an amendment. REPRESENTATIVE KOTT said the regulations apply to half of the processors, but not the others. He argued that [HB 504] is "a fairness bill." Number 1712 CHAIR MURKOWSKI moved to adopt conceptual Amendment 3, to clarify the language with regard to the written agreement between the employer and the employee, to provide that it "should clearly state the terms and conditions of employment including the cost for board or lodging, which may be deducted from the applicable minimum wage." There being no objection, conceptual Amendment 3 was adopted. Number 1745 REPRESENTATIVE ROKEBERG moved to adopt conceptual Amendment 4, to add a new Section 2 to provide an immediate effective date. CHAIR MURKOWSKI objected. REPRESENTATIVE ROKEBERG explained that by the time [HB 504] is passed into law, the fishing season will have already started. CHAIR MURKOWSKI referred to a previous comment by Representative Kott indicating this bill isn't tied to the minimum-wage legislation [HB 56], which has an effective date of January 1, 2003. She said the current minimum wage of $5.65 would still be in effect if [HB 504] had an immediate effective date, and wouldn't change until January 1, 2003. REPRESENTATIVE KOTT restated that [HB 504] is an "equity issue" [between remote and nonremote employees in the fishing industry]. Number 1827 REPRESENTATIVE HAYES referred to prior testimony which indicated that remote employees are paid $6 an hour and nonremote employees are paid $7 an hour. He asked how conceptual Amendment 4 affects these employees. CHAIR MURKOWSKI clarified that the employee and employer would be able to enter into the contractual agreement that allows for the deduction of room and board this summer from whatever the minimum wage was at the time the contract was signed. Number 1897 A roll call vote was taken. Representatives Halcro, Meyer, Kott, and Rokeberg voted for conceptual Amendment 4. Representatives Hayes, Crawford, and Murkowski voted against it. Therefore, conceptual Amendment 4 was adopted by a vote of 4-3. REPRESENTATIVE MEYER suggested the fiscal note could be reduced from [$70,600]. He said there shouldn't be a need for a new full-time employee because the department is already doing at least half of this work currently. REPRESENTATIVE KOTT agreed, saying he sees no justification for the fiscal note in the "out" years. Number 2009 CHAIR MURKOWSKI concurred and suggested that the House Finance Committee "pick it apart." REPRESENTATIVE ROKEBERG commented that he suspects Congress is going to pass a minimum wage bill "sooner rather than later." He said this is one reason he'd offered conceptual Amendment 4, which creates an immediate effective date. He asked if the minimum-wage increase would be immediate in Alaska if Congress passed the minimum-wage bill. COMMISSIONER FLANAGAN replied, "It would, but you're basically negating the minimum wage for these people, so it doesn't matter." Number 2070 REPRESENTATIVE ROKEBERG moved to report CSHB 504 [version 22- LS1595\L, Craver, 3/25/02, as amended] out of committee with individual recommendations and the accompanying fiscal note. There being no objection, CSHB 504(L&C) was moved out of the House Labor and Commerce Standing Committee.
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