Legislature(2005 - 2006)CAPITOL 17
03/09/2005 03:15 PM LABOR & COMMERCE
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* first hearing in first committee of referral
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HB 171-OVERTIME WAGES FOR FLIGHT CREW CHAIR ANDERSON announced that the first order of business would be HOUSE BILL NO. 171, "An Act relating to the retrospective application and applicability of the overtime compensation exemption for flight crew members; and providing for an effective date." HEATH HILYARD, Staff to Representative Mike Kelly, Alaska State Legislature, said HB 171 clarifies legislative intent by retroactively removing flight crews from the scope of statutory overtime compensation required under the Alaska Wage and Hour Act. It will apply to work performed on or after January 1, 2000, he said. 3:52:47 PM MR. HILYARD said the Department of Labor has had an uncodified policy to apply an exemption, but recent class action lawsuits created confusion. In the Twenty-Third Alaska State Legislature, Senate Bill 54 codified the informal policy. HB 171 will provide even better clarity, he said. TOM DANIEL, Partner, Perkins Coie Law Firm, Anchorage, said he is an attorney concentrating on labor and employment law, and he is in favor of HB 171. He said he represents Hageland Aviation in a class action lawsuit brought against Hageland by pilots claiming overtime. The lawsuit is occurring because the 2003 law was not retroactive, and there are claims being made for the time period before 2003, when an explicit exemption for pilots was passed, he said. Since 1949, pilots have been exempt from overtime under federal law, and under Alaska law there was no explicit exemption. In the 1980s, the Attorney General of Alaska issued an opinion that pilots are exempt from overtime. In 1986, the Alaska Department of Labor sent a letter to the Alaska Air Carriers Association stating that pilots who carried passengers or mail were exempt from overtime law. For almost 20 years, air carriers have operated on the assumption that they did not have to pay pilots overtime, he said. In the late 1990s a few attorneys started seeing a possible way to sue in court because courts don't have to follow an attorney general's opinion. 3:57:12 PM MR. DANIELS said there are three lawsuits pending against small air carriers in Alaska claiming overtime for flight crews. The 2003 law to exempt flight crews from overtime pay was not made retroactive. He said the Hageland lawsuit was initiated by a single pilot who had lost his job at Hageland and filed a complaint alleging age discrimination--not a complaint about pay. The Alaska Human Rights Commission dismissed his complaint, Mr. Daniels continued, so the pilot found a lawyer who told him he didn't have much of an age discrimination claim but he might have an overtime claim. That same pilot had already stated that he was fairly paid. His case became a class action suit on behalf of all present and former pilots of Hageland Aviation, which totals 82 people. Mr. Daniels said that 60 of those 82 pilots have affirmatively chosen not to participate in the lawsuit. MR. DANIELS said Hageland Aviation is a true success story, and he described the start-up and growth of the company. He opined that this lawsuit threatens the viability of the business, which is one of the best in the region and pays its pilots well. Hageland pays pilots on a daily rate, which means they get paid even if weather or mechanical problems keep them from flying. This system benefits the pilot and the safety of passengers. The end result of this lawsuit, he said, is bankruptcy for a business that pays its pilots well and provides an essential service to a region, all due to a technical violation of a law that was never intended to apply, he said. 4:02:27 PM REPRESENTATIVE KOTT asked why the date, January 1, 2000, was inserted. MR. DANIELS said he thinks it is because the statute of limitations is two years, but moving the date back further would be fine. REPRESENTATIVE CRAWFORD said he remembers working on this bill and there was concern that the legislation could affect court cases, and he was assured that it wouldn't. It's bad public policy to interfere with court cases, he said. MR. DANIELS said he was not involved in last year's legislation, and did not give that assurance. REPRESENTATIVE CRAWFORD put it on the record that there were many legislators that understood that it would not be retroactive and that it was not a mistake or an oversight. 4:05:07 PM MR. DANIELS said the law should be retroactive because air carriers have operated on a 20-year policy of the Department of Labor. It is unfair to them to be told they don't have to pay overtime to pilots, and all of a sudden they are being sued, he said. REPRESENTATIVE CRAWFORD said this was a difficult vote for him and he understands that the Department of Labor and the courts came up with different interpretations. He said he doesn't think it is a good idea for the legislature to go back and change what the courts have done. He added that he generally has faith in the courts in rendering a good decision. MIKE HAGELAND, Owner, Hageland Aviation, said the lawsuit is not for pilots, because only one pilot sued. The lawyer sued on behalf of other pilots, most of who opted out of the lawsuit within 60 days. Only one pilot has come forward to state that he wants to be part of this lawsuit. It's about the lawyers, he said, they are the ones who stand to gain. CHAIR ANDERSON said it is also about consistency in public policy. MR. HAGELAND said the pilots are still being paid the same way, and they are happy. MIKE BERGT, General Manager, Alaska Central Express, said his company is a cargo carrier based in Anchorage, and the company supports HB 171. He said the company has been sued by a former pilot in July 2004 based on a loophole. The pilot is trying to seek a windfall, he added. Mr. Bergt said he didn't think the legislature intended to open a two-year window for pilots and attorneys to seek a windfall. REPRESENTATIVE GUTTENBERG asked Mr. Bergt if he had assumed the overtime policy was in place, would he have been able to schedule pilots workably. MR. BERGT said the company would have altered the pay scale so that overtime would have been taken into consideration, and pay would have been similar. In the end pilots would have been paid the same. BRUCE MCGLASSON, President and Owner, Grant Aviation, said he employs about 120 people, and 44 are pilots. Grant Aviation pays its pilots the same kind of daily rate that Hageland Aviation does. It does it for safety reasons because it gives no incentive for pilots to fly in unsafe conditions. Mr. Hageland is a direct competitor, and Grant Aviation stands to gain a lot if Hageland went out of business, but he doesn't think the lawsuit is fair. He said that his company has not been sued, but because of the law, it is vulnerable to such lawsuits. 4:14:10 PM RICHARD CLARK, Pilot, Hageland Aviation, said the company is fair, honest, and generous. He said he opted out of the lawsuit because it was unfair. CHAIR ANDERSON asked if Mr. Clark was content with his salary. MR. CLARK said he always has been, and the company has always been fair. IGNATIUS BEANS, Safety Check Pilot, Hageland Aviation, said he was born and raised in Mountain Village, where Mike Hageland started his business. He said he has flown commercially in western Alaska for ten years. He has known Mr. Hageland for more than 20 years, and he is fair and honest. "When I heard about a lawsuit, I was really discouraged." He encouraged the committee to pass HB 171. KAREN CASANOVAS, Executive Director, Alaska Air Carriers Association, said the association represents over 67 carriers in Alaska. The failure of this legislation would have a direct and profound impact on small carriers, which are critical to Alaskans around the state. The companies are abiding by the Department of Labor policy. 4:19:39 PM MS. CASANOVAS said the lawsuits are not typically covered by insurance in Alaska. Small carriers provide transportation for Alaskans, and a class action lawsuits will put many of them out of business, she added. The Alaska Air Carriers Association overwhelmingly supports HB 171. 4:21:14 PM MARK JOHNSON, Pilot, Hageland Aviation, said his job is the best he has ever had, and the pay is more than fair. He said in the early eighties pilots were paid by the flight hour, and it is a very dangerous way to pay pilots. The fairest and safest way to pay pilots is the way Mike Hageland pays, he said. CHAIR ANDERSON asked if there are any witnesses that are opposed to HB 171. [None came forward.] MICHAEL CHARLIE, Pilot, Hageland Aviation, said if the lawsuit is successful it will hurt staff and the whole economy of the region. 4:26:44 PM REPRESENTATIVE KOTT said it is unfortunate that the bill is before the legislature, which should have addressed the problem a few years ago. Everyone would have been much happier. He added that the bill does have judicial impact, and it should be looked at in the House Judiciary Standing Committee. CHAIR ANDERSON said, "So your motion is to move the bill out of committee. I'll object to note that I will, as chairman of labor and commerce, recommend that it be referred to judiciary and stricken from being referred to the finance committee." He withdrew his objection and hearing no further objection, HB 171 was passed out of the House Labor and Commerce Standing Committee.