Legislature(1995 - 1996)
03/20/1996 01:15 PM House TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 518 - OVERTIME COMP FOR VEHICLE SALES PEOPLE Number 0286 CHAIRMAN GARY DAVIS announced that the next item on the agenda was HB 518, an act exempting certain persons engaged in selling or servicing certain vehicles from overtime wage requirements. GEORGE DOZIER, Junior, Legislative Aide for Representative Kott, said that HB 518 modifies the Alaska Wage and Hour Act, specifically those provisions which mandate the payment of overtime. He said the overtime requirement has a number of exemptions already in place and HB 518 adds another one. He said this exemption would apply to employers that operate non- manufacturing establishments which are primarily engaged in the business of selling vehicles to purchasers. He said the affected employees would be salesmen, partsmen or mechanics who primarily engage in selling or servicing automobiles, trucks or farm implements. Number 0384 STEVE ALLWINE, Representing, Alaska Auto Dealers, said HB 518 will bring the state of Alaska in line with the federal overtime exemption for the automotive industry, this makes HB 518 a narrow piece of legislation which his organization feels is appropriate. He said his organization's interest in HB 518 is in the area of technicians and whether they should be paid as hourly employees or as flat rate personnel. He said the industry standard for technicians, whether body or mechanical, is dependent on the flat rate. He said this means that a specific repair is based on a published time, determined by the time it would take to complete the repair under normal circumstances. The technician performs the specific repair and is either faster or slower than the published time. In either situation the employee is compensated at the published time. MR. ALLWINE said as the employee's skills increase his or her efficiency also increases and the result is a significant increase in income. Efficiency is also increased because technicians know that by improving their education and skills they become more effective and are rewarded for those efforts. In Alaska, technicians are rewarded for improving their skills but never reach the income potential of their counterparts, in other states, because the hours are limited to an eight hour day. He said the employees do not have the opportunity to pick up more time because of the overtime situation. He said, in other states, employees have the opportunity to dictate and work additional hours if they choose. MR. ALLWINE said at the national and state level there is a shortage of qualified technicians. He said the shortage offers an excellent opportunity for local employment. He said opportunities for training are limited and his organization is forced to "home grow" most of the personnel. He said current employees express opposition to the current overtime laws because they restrict that additional earning opportunity. He said, in other areas of the country, technicians have the opportunity to earn as much income as they desire by flexibility in hours. He said, in the state, the current circumstances hinder the ability to attract and retain qualified technicians. He said, due to the significant training and investment, it is in everyone's best interest to retain personnel. Number 0661 MR. ALLWINE said HB 518 will help reduce the loss of quality employees to employers outside of Alaska. He said, to the customers, the benefits of using publishing times and paying for repairs based on flat rate, a more accurate estimation can be made of the repair. He said HB 518 will allow the technicians to complete a job that otherwise would be carried over into the next days business. He said HB 518 also provides continuity. If there is a dealer or a service facility that works two shifts of technicians, a technician might start the job with the second technician completing the job. MR. ALLWINE said HB 518 takes the pressure off the work for the quick completion of jobs within the eight hour work period. The bill allows flexibility in scheduling work loads, eliminates peaks and valleys and increases employee moral by giving the employees an opportunity to enjoy a higher earning capacity. He said his organization would appreciate positive legislative support for HB 518. Number 0693 CHAIRMAN GARY DAVIS said HB 518 brings the state in line with other federal law and asked how many other sections of regulated employment are still out of line with federal law in the Alaska statutes. Number 0716 MR. ALLWINE said he did not know. Number 0750 DEAN BAKER, Alaska Auto Dealers, said he is in an apprenticeship with a local car dealer. He said he would be able to make more money by putting more effort into it. He said being limited to 40 hours per week would not give him the incentive to learn additional skills. He said he currently works on an hourly rate, but when he goes flat rate, he wants the opportunity to make more money. Number 0800 CHAIRMAN GARY DAVIS clarified that Mr. Baker currently works an eight hour shift and then asked how often Mr. Baker had to leave work uncompleted. Number 0819 MR. BAKER said he frequently has to leave work unfinished. He said that if he had the opportunity to make more money he would stay longer and complete the job. Number 0844 JAMES D HINES, Technician, Alaska Auto Dealer Association, was next to testify. He said he supported HB 518 because if it does not pass his overtime will be cut, his wages will decrease and he prefers earning more money. Number 0881 REPRESENTATIVE BEVERLY MASEK asked what the situation has been in the past and what the present situation is. Number 0893 MR. HINES said his work place does not force him to work overtime, he has chosen to work extra hours on his own. He said, he is afraid that if HB 518 passes, his overtime will be cut when they hire more help in order to get jobs done in the eight hour time frame. Number 0930 REPRESENTATIVE MASEK asked if needing to get the job done in eight hours affected his quality of work. MR. HINES said it did not affect his quality of work because if a job is done in an unsatisfactory manner he needs to redo it. He said he would not get paid for that work. He said he must do the job correctly the first time or else he is in trouble. Number 0962 REPRESENTATIVE WILLIAMS clarified that if HB 518 goes through it would hurt Mr. Hines. MR. HINES said if HB 518 cuts the overtime by making an eight hour day, it would hurt him. REPRESENTATIVE WILLIAMS said, it was his understanding, that HB 518 cut overtime compensation. MR. HINES said he wants HB 518 to pass so that he can get his overtime. REPRESENTATIVE WILLIAMS clarified that Mr. Hines supported HB 518. Number 1006 REPRESENTATIVE DON LONG referred to Alaska Statute 23.10.060 regarding the payment of overtime. He said HB 518 will no longer allow certain employees the right to receive overtime. MR. HINES said he would support straight time with no overtime. Number 1043 REPRESENTATIVE LONG said HB 518 does not address flat rate, it just exempts overtime for automotive partsmen and mechanics, et cetera, by putting them in a supervisory category which exempts them from overtime. Number 1090 ED FLANAGAN, Deputy Commissioner, Office of the Commissioner, Department of Labor (DOL), was next to testify. He said the DOL is opposed to HB 518, as they are opposed to most exemptions which take away the very basic protection of overtime after 40 hours. He said the long-standing, pre-statehood policy, the state Wage and Hour Act, which protects these basic rights. He said the state act is not congruent with federal Fair Labor Standards Act, but added that the federal government is not necessarily the repository of all wisdom on what is a proper law. MR. FLANAGAN said it is true as Mr. Allwine said, that a similar or verbatim exemption is in the federal law. He said this exemption is not consistent throughout the nation and added that only four states have specific exemptions for the class of worker who are service advisors. He said 16 states, "Washington D.C., the Virgin Islands, and Puerto Rico don't." He clarified that HB 518 applies to partsmen as well as service advisors. He said there is a current lawsuit where several of "those workers" have come forward to receive their overtime pay and added that DOL has ruled that it is their right under the law. He said the suit probably has something to do with support for HB 518. Number 1179 MR. FLANAGAN clarified that HB 518 only grants this exemption to auto dealers, to sellers and non-manufacturing industries, giving them a competitive advantage over the service stations who are not affiliated with an auto sales arrangement. Number 1205 MR. FLANAGAN said there are current flat rate situations despite the legal issue of flat rates. He said employers require mechanics to be available, without pay, at the work site for hours in excess of the hours they are compensated, if there is no work to be done. He said this is not always the case, but it is not uncommon. He said diagnostic and warranty work may require mechanics to work without pay and said auto dealers promote "freebies" that are not covered under the book rate. He said a difficult repair, not as a result of the mechanic, might require excess hours of work without compensation and in a case where something comes back and needs to be redone, the mechanic works for free. He said a flat rate could be structured which would have the basic guarantees of minimum wage and overtime. He said this illegal flat rate used by service stations includes other work, such as pumping gas and cleaning vehicles, which is not compensated under the flat rate. Number 1270 MR. FLANAGAN said the basic public policy in the state of Alaska is that time worked is time paid. He said individual workers should not be able to abrogate the state's Wage and Hour Act. Number 1288 CHAIRMAN GARY DAVIS asked if HB 518 specifically brings the state law in line with federal law. Number 1297 MR. FLANAGAN said there is a provision in the federal Fair Labor Standards Act, the federal counterpart to the Alaska Wage and Hour Act which has, virtually verbatim, the same exception. Number 1311 REPRESENTATIVE LONG asked for more information regarding the illegal use of the flat rate. MR. FLANAGAN said the flat rate can occur within the law if employees are properly compensated for eight hours. He said, in the service advisor's lawsuit under the Wage and Hour Act, the employees worked 50 hour per week for a flat salary. He said these service advisors are not properly salaried employees. The three provisions for salaried employees include executive, administrative and supervisory. Number 1356 REPRESENTATIVE LONG asked if HB 518 would put the flat rate into place. Number 1380 MR. FLANAGAN said the flat rate would no longer violate the law if HB 518 went into affect. He said the employees, classified under HB 518, could work as much as they wanted to, paid or unpaid, if the employer charged by the book rate. He said the employees would be removed from the overtime protection. He said, he believed, that there were more employers favoring HB 518, than employees. Number 1391 CHAIRMAN GARY DAVIS asked if those, working on a book rate, were salaried employees. He also asked, if it was the employer or the employee who sets the book rate and if it takes longer than the listed hours to do a job, would the employee be compensated for this time. Number 1422 MR. FLANAGAN said the book rate lists the amount of hours the repair will take and then the shop rate is totalled into that many hours were the mechanics portion of the shop rate calculated by shop policy. Number 1445 REPRESENTATIVE WILLIAMS referred to the testimony and the letters in support of HB 518. He expressed confusion over this support when people would lose their ability to receive overtime. CHAIRMAN GARY DAVIS asked Mr. Allwine to explain the situation where employees would be putting in extra time. Number 1514 MR. ALLWINE said the employees would put in extra time by personal choice. He said if you bring your car in for a specific repair, in most cases the shop will go to a published manual such as Milton or Chilton which will list a time for the repair for example, two hours for the job. If the certified or journeyman technician can do the job in less than two hours he is still paid for two hours according to this flat rate. He said someone who doesn't have a lot of experience might take two and half hours, but he is only paid for two hours. He said there are ways around that circumstance, such as paying apprentices on a flat, hourly wage. If those apprentices work extended hours they are paid overtime for that time. Number 1710 MR. ALLWINE referred to the lawsuit regarding service advisors, and he said that his organization has no interest in the service advisor's interest in HB 518. He said the personnel and the dealers were concerned because the federal exemption also includes parts people and they don't feel that exemption is appropriate. He said their only interest in HB 518 is the technician issue and flat rate versus an hourly rate with the overtime provision. MR. ALLWINE said if a journeyman technician makes his living as a journeyman technician he works through the day, putting in his eight hours. He said the objective, during those eight hours, is to bill out as many hours as is humanly possible. If the journeyman technician can bill out 16 hours, he makes 16 hours. He said, the problem is, if the journeyman technician wants to come in early and pick up a couple of extra hours, he cannot do that without the employer approving this extra time and paying him the overtime. MR. ALLWINE said if HB 518 is enacted or modified so that it specifically deals with the technicians, you are giving them the ability to work according to the schedule that they want. He said, if there is no work, people will not stay at the shop. He said journeyman technicians do not sweep floors, and added that they have thousands of dollars in tools. He said HB 518 does not address service stations and other places. He said his association is not trying to do something which creates a problem for their employees. Number 1710 MR. ALLWINE referred to his experience and said that if he worked hard and did the job right, he could make more money. He said this incentive is good and an incentive that you don't get on time and a half. He said the income flat rate technicians are able to get cannot be matched. Number 1732 REPRESENTATIVE JERRY SANDERS asked how many people work 8 hours and get 16 hours of book rate done. Number 1746 MR. ALLWINE said journeyman technicians will be able to receive over eight hours of pay 90 percent of the time for eight hours of work. REPRESENTATIVE SANDERS asked if it was for 16 hours of pay. MR. ALLWINE said it was true some of the time. REPRESENTATIVE SANDERS said, in an overtime situation, an employee is going to get $120 worth of work done and asked what the problem was with paying that employee time and a half. He said it appeared that the journeyman technician would be earning beyond that amount. Number 1782 MR. ALLWINE said the interpretation by the DOL is not consistent and has created a guessing game by what that overtime calculation would be. He heard that a technician is paid $25 an hour if he works his eight hours. He said that if he produces ten hours worth of work within that eight hours then that lump sum, divided by eight hours becomes the figure used for overtime calculation. He said, as an employer, this overtime figure becomes significant when the customer is not being charged extra to compensate for the associated overtime costs. Number 1851 CHAIRMAN GARY DAVIS asked if the employer was restricted from charging more than the book rate. Number 1858 MR. ALLWINE said automotive repair shops are ethically required to charge the book rate. He said that there might be people who charge more, but most don't. He said you are at the mercy of the customer who might not return if you overcharge. Number 1878 MR. FLANAGAN said the book rate just lists the numbers of hours, he said the shop rate will vary from dealer to dealer. He said the shop rate throughout the community will probably be consistent. He said, it has been his experience, that the employee receives a third of the shop rate. He said it seems like there would be room for an overtime multiplier if they did get overtime. Number 1920 REPRESENTATIVE WILLIAMS asked for details about the book rate and how it is set up. Number 1923 MR. ALLWINE said all the manufacturer's have published specific repair book times, in addition there are other book rates which include Motor's and Chilton's. He said these book rates are pretty consistent. He said there was a comment about doing work and not being compensated for it and said this is not an accurate statement. He said, if the technician is working on electrical or diagnostic time, the industry standard cost is time and materials. He said there are specific rules which compensate the employees for that time which is compensated even if the technician says there is no problem. Number 1981 REPRESENTATIVE SANDERS repeated his question as to the work technicians perform in an eight hour day. Number 1996 MR. ALLWINE said he could not give concrete numbers, but did say that a significant majority of the journeymen technicians bill out more than eight hours in a given eight hour day. REPRESENTATIVE SANDERS asked him to guess an average as 50 percent, 100 percent more. Number 2019 MR. ALLWINE said he did not know how to respond to the question and be accurate. Number 2028 MR. FLANAGAN referred to Mr. Allwine's comment that the manufacturers allow some payment for diagnostic time on warrantee work. He said there is a lot of non-warrantee work that is done in the shops. He said the possession of thousands of dollars of tools does not put them on an independent contractor status. He said the technician might get a tool allowance, but they provide their own tools. He said these technicians are entitled to the very basic protection of overtime pay over 40 hours of work. Number 2051 CHAIRMAN GARY DAVIS said HB 518 was a House Labor and Commerce bill and asked Mr. Allwine if his organization requested this bill. MR. ALLWINE said his organization did not. MR. DOZIER said that he didn't know who had made the request for HB 518. Number 2069 CHAIRMAN GARY DAVIS referred to the many letters of support for HB 518 and said it might be possible to narrow the scope and the way in which the employee is paid, whether by a book rate or hourly. He said HB 518 will be held over until the sponsor, the Labor and Commerce Committee, could address some of the House Transportation Committee questions.
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