Legislature(2005 - 2006)CAPITOL 17

03/09/2005 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved Out of Committee
Heard & Held
Bills Previously Heard/Scheduled
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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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                                                               

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