Legislature(1997 - 1998)
04/14/1997 03:17 PM House L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 14, 1997
3:17 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative John Cowdery, Vice Chairman
Representative Bill Hudson
Representative Jerry Sanders
Representative Joe Ryan
Representative Tom Brice
MEMBERS ABSENT
Representative Gene Kubina
COMMITTEE CALENDAR
*HOUSE BILL NO. 217
"An Act relating to certified nurse aides; and providing for an
effective date."
- MOVED CSHB 217(L&C) OUT OF COMMITTEE
*HOUSE BILL NO. 237
"An Act relating to payment of minimum wages to tipped employees;
and providing for an effective date."
- MOVED HB 237 OUT OF COMMITTEE
(* First public hearing)
PREVIOUS ACTION
BILL: HB 217
SHORT TITLE: CERTIFIED NURSE AIDES
SPONSOR(S): REPRESENTATIVE(S) RYAN
JRN-DATE JRN-PG ACTION
03/27/97 872 (H) READ THE FIRST TIME - REFERRAL(S)
03/27/97 872 (H) L&C
04/14/97 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 237
SHORT TITLE: MINIMUM WAGE FOR TIPPED EMPLOYEES
SPONSOR(S): LABOR & COMMERCE BY REQUEST
JRN-DATE JRN-PG ACTION
04/07/97 1013 (H) READ THE FIRST TIME - REFERRAL(S)
04/07/97 1013 (H) LABOR & COMMERCE
04/14/97 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
REPRESENTATIVE JOE RYAN
Alaska State Legislature
State Capitol, Room 420
Juneau, Alaska 99801
Telephone: (907) 465-3875
POSITION STATEMENT: Provided information on HB 217
as Sponsor
GAIL MCGUILL, President
Alaska Nurses Association
237 East 3rd Avenue
Anchorage, Alaska 99501
Telephone: (907) 264-1710
POSITION STATEMENT: Testified on HB 217
RON COWAN
Department of Health and
Social Services
Division of Health Facilities,
Licensing and Certification
4730 Business Park, Blvd. 18
Anchorage, Alaska 99503
Telephone: (907) 561-8081
POSITION STATEMENT: Testified on HB 217
PAT DOOLEY, Board Member
Alaska State Nurses Association
9100 Centennial Drive
Anchorage, Alaska 99504
Telephone: (907) 269-3223
POSITION STATEMENT: Testified on HB 217
CAROL CLAUSSON, Private Citizen
13200 Ridgeview Drive
Anchorage, Alaska 99516
Telephone: (907) 261-3141
POSITION STATEMENT: Testified on HB 217
MARY WEISS, Registered Nurse
P.O. Box 221514
Anchorage, Alaska 99522
Telephone: (907) 786-4565
POSITION STATEMENT: Testified on HB 217
SUE NIKODYM, First Vice President
Alaska Nurses Association
P.O. Box 2154
Wrangell, Alaska 99929
Telephone: (907) 874-2081
POSITION STATEMENT: Testified on HB 217
BARBARA HUFFTUCKNESS, Director
Legislative and Governmental Affairs
for the Teamsters
4300 Boniface Parkway
Anchorage, Alaska 99804
Telephone: (907) 269-4236
POSITION STATEMENT: Testified on HB 217
CATHERINE REARDON, Director
Division of Occupational Licensing
Department of Commerce and Economic Development
P.O. Box 110806
Juneau, Alaska 99811-0806
Telephone: (907) 465-2534
POSITION STATEMENT: Testified on HB 237
LOUISE DEAN, Chair
Alaska Board of Nursing
1911 Waldron Drive
Anchorage, Alaska 99807
Telephone: (907) 563-3500
POSITION STATEMENT: Testified on HB 237
JACK AMON, Partner
Marx Bros. Cafe
627 West Third Avenue
Anchorage, Alaska 99501
Telephone: (907) 278-2133
POSITION STATEMENT: Testified on HB 237
ROBERT GILL, Secretary/Treasurer
Hotel Employees and Restaurant Employees Union
530 E 4th Avenue
Anchorage, Alaska 99501
Telephone: (907) 272-6591
POSITION STATEMENT: Testified on HB 237
FRED ROSENBERG, Owner
Red Robin Restaurant
4450 Cordova Street, Number 200
Anchorage, Alaska 99503
Telephone: (907) 563-7777
POSITION STATEMENT: Testified on HB 237
ANGELINA CHRISTIANSEN, Business Representative
Hotel Employees and Restaurant Employees
Union, Local 878
530 E 4th Avenue
Anchorage, Alaska 99501
Telephone: (907) 272-6024
POSITION STATEMENT: Testified on HB 237
WILLIAM J. CULLINANE, Owner
Inn at the Waterfront
455 S. Franklin
Juneau, Alaska 99801
Telephone: (907) 586-2050
POSITION STATEMENT: Testified on HB 237
THERESA PEREZ, Waitress
1326 W 25th, Number 5
Anchorage, Alaska 99503
Telephone: (907) 272-4215
POSITION STATEMENT: Testified on HB 237
CHRIS ANDERSON, Owner
Glacier BrewHouse
737 W 5th Avenue
Anchorage, Alaska 99501
Telephone: (907) 274-2739
POSITION STATEMENT: Testified on HB 237
DWIGHT PERKINS, Special Assistant
Commissioner of Labor
Department of Labor
P.O. Box 21149
Juneau, Alaska 99802-1149
Telephone: (907) 465-2700
POSITION STATEMENT: Testified on HB 237
KYLE PARKER, Lobbyist
P.O. Box 241043
Anchorage, Alaska 99524
Telephone: (907) 566-1220
POSITION STATEMENT: Testified on HB 237
TRINA JOHNSON, Owner
La Mex Restaurants
2550 Spenard Road
Anchorage, Alaska 99501
Telephone: (907) 274-7511
POSITION STATEMENT: Testified on HB 237
ACTION NARRATIVE
TAPE 97-40, SIDE A
Number 000
CHAIRMAN ROKEBERG called the House Labor & Commerce Committee to
order at 3:17 p.m. Members present at the call to order were
Representatives Cowdery, Ryan, Hudson, and Sanders. Representative
Brice arrived at 3:21 p.m. Representative Kubina was absent.
HB 217 - CERTIFIED NURSE AIDES
CHAIRMAN NORMAN ROKEBERG indicated that the committee would
consider HB 217, "An Act relating to certified nurse aides; and
providing for an effective date." Representative Ryan came forward
as sponsor to provide information to the committee.
Number 050
REPRESENTATIVE JOE RYAN testified on HB 217 as sponsor to this
legislation. The need for this bill was brought to his attention
and it's a means to give legislative authority to the nursing aide
certification program established by executive order. Through the
Board of Nursing this establishes minimum requirements for nurse
aide training. This legislation also calls for a registry of
certified nursing aides.
REPRESENTATIVE RYAN stated that since Certified Nurse Aides (CNA)
requirements were established by executive order, there is no
legislative authority to take disciplinary action against these
individuals. If they prove to be incompetent or injure people, the
Board of Nursing doesn't have any authority. This bill allows the
Board of Nursing to deny, suspend or revoke a nurse aide
certificate for reasons such as conviction of a crime related to a
nurse aide function, negligence that results in an injury, risk of
the health or safety of a client or an addiction to illegal drugs
or alcohol.
REPRESENTATIVE RYAN continued that this legislation will continue
to allow the Department of Health and Social Services to maintain
a list of CNAs who have worked in state licensed long term care
facilities and home health agencies who have committed abuse,
neglect or misappropriation of property. The medical profession is
moving very quickly these days and the number of people in the
country, especially those growing older, requires more and more
medical attention. There have been a lot of instances in the Lower
48 where hospitals and nursing facilities, etc. have tried to get
these CNAs to perform duties for which they really weren't trained.
REPRESENTATIVE RYAN added that this legislation allows for the
Board of Nursing to have authority over these individuals to
maintain adequate training and at the same time if they commit acts
which are not ethical and/or criminal a means to reprimand. The
Board of Nursing will have the authority to remove this license,
suspend it or to take the appropriate action. Representative Ryan
noted that his wife was a registered nurse in the state of Alaska
which might be considered a conflict of interest.
Number 399
REPRESENTATIVE RYAN introduced and moved a new committee substitute
for HB 217 labeled 0-LS0737\B, dated 4/9/97, to be adopted by the
committee. Hearing no objection it was so moved.
Number 580
GAIL MCGUILL, President Alaska Nurses Association came forward to
testify on HB 217. She's a registered nurse, a Licensed Nursing
Home Administrator, and is presently employed as the Director of
Quality Management at Columbia Alaska Regional Hospital in
Anchorage. On behalf of the Alaska Nurses Association she spoke in
support of HB 217. The protection of Alaska's senior citizens and
others in need of nursing aide services is of utmost importance to
their organization.
MS. MCGUILL continued that the Alaska Nurses Association has worked
with the Alaska Board of Nursing for over seven years in trying to
achieve the public protection goals which this legislation
provides. In 1989, the governor signed the Administrative Order
115 calling for the Department of Commerce to take responsibility
for the training, certification and registration of nurse aides
required by the federal government. Since this time the Board of
Nursing has worked with the Division of Medical Assistance, the
Office of Certification and Licensing, and the industry's long-term
care facilities and home health agencies to maintain standards for
nurse aide training testing and competency. The Board of Nursing
has shown fairness and cooperation in working with the nurse aides,
employers of nurse aides, and home health aides.
MS. MCGUILL stated that the Alaska Nurses Association believes the
statutory and regulatory authority for nurse aides should rest with
the Board of Nursing, the state agency responsible for regulating
nursing care in Alaska. This legislation will strengthen the
board's ability to protect the public. It will grant the board the
ability to set standards for certification, for defining competency
for nurse aides, it also sets standards for the certification and
training curriculum and does allow the board the ability to
discipline nurse aides by revoking certification when appropriate
in the same way it does with Registered Nurses (RNs) and Licenses
Practical Nurses (LPNs).
MS. MCGUILL continued to state that although the board has set
standards for education and competency testing for nursing aides
since 1989, it has not been able to perform any disciplinary action
because it lacked the statutory authority to do so. The Department
of Health and Social Services has had responsibility to do
investigations only when the allegations involve client abuse,
neglect or misappropriation of funds only when the individual is
employed in a long term care facilities or a home health agency.
In fact, over the past seven years, staff from the Board of Nursing
have provided professional consultation to the department and
Senior Ombudsman in investigating complaints related to certified
nurse aides and nursing care of Alaska's senior citizens. She
pointed out that this bill provides the board the ability to
protect the public with regard to all the nurse aides who are
certified.
Number 775
REPRESENTATIVE JOHN COWDERY understood that the Board of Nursing
has the authority to oversee training of nurse aides. He wondered
what defined the word "oversee."
MS. MCGUILL responded that there were 34 programs already approved
in the state that provide basic education. The number of hours
ranges depending on which program someone is enrolled, with a
minimum of 75 hours. There is hands on training and classroom
training.
Number 841
REPRESENTATIVE COWDERY asked in relation to becoming a registered
nurse could an individual build from their training as a nurse
aide. This was how she got started.
MS. MCGUILL stated that a nurse aide is an entry into becoming a
nurse.
Number 877
REPRESENTATIVE BILL HUDSON asked if there was a compelling concern
regarding public safety and these nursing aide individuals?
MS. MCGUILL responded that the concern they have relates to the
fact that the state of Alaska is limited in preventing someone from
continuing to practice if they're working in a variety of different
settings.
Number 934
REPRESENTATIVE HUDSON asked if there was a possibility that this
legislation may serve as a bar to some folks getting into this
field? He wondered otherwise if this legislation would serve as a
registration and management scheme program and an ability to take
action in the interest of safety.
MS. MCGUILL agreed with the latter representation.
Number 962
REPRESENTATIVE COWDERY asked if this legislation would be a burden
for the Department of Health and Social Services in relation to
fielding complaints.
MS. MCGUILL responded that Catherine Reardon from the department
might speak to this question. The fiscal note does call for an
investigator in occupational licensing.
Number 986
REPRESENTATIVE RYAN alluded to the case loads of registered nurses
which are currently picking up in volume.
MS. MCGUILL responded that case load depended on settings and the
kinds of services provided. Registered nurses are responsible for
more patients.
Number 1035
REPRESENTATIVE RYAN added that nurse aides are required to help
nurses perform their duties.
MS. MCGUILL responded that this was one of the reasons why the
Alaska Nurses Association supports this bill.
Number 1072
REPRESENTATIVE HUDSON asked that when "they" establish a regimen
for control do they also have a testimonial to qualifications. If
so, do they have additional liability by asserting that someone
meets certain qualifications when it turns out they might not.
MS. MCGUILL responded that the individual who becomes certified has
additional responsibilities in order to maintain this certification
and to practice in accordance with this certification, along with
the regulations that are applied to this occupation.
Number 1138
CHAIRMAN ROKEBERG asked if the Board of Nursing has disciplinary
and enforcement power over their current membership.
MS. MCGUILL responded that they do over registered nurses.
CHAIRMAN ROKEBERG asked if they are able to met out fines,
punishments, investigation powers, revoke and suspend licenses.
MS. MCGUILL responded that, "yes" they do.
Number 1261
RON COWAN, Department of Health and Social Services, Division of
Health Facilities, Licensing and Certification testified from
Anchorage via teleconference on HB 217. This division is
responsible for the licensing of health care facilities in the
state including the certification of facilities to receive medicare
and medicaid funding. One of the responsibilities is to conduct
complaint investigations which sometimes involve certified nursing
assistants. The department supports this bill and he reiterated
everything Ms. McGuill said about the need for this legislation.
MR. COWAN stated that they've been hamstrung for years without
statutory authority for the board to take action in regards to
existing federal law and also because the number of nursing
assistants has grown to over 5,000. The clientele are often times
vulnerable and in need of some type of consumer protection. As a
result of their investigations they've found instances of abuse,
neglect and misappropriation of funds. Without this legislation,
neither they nor any other entity in the state would be allowed to
take appropriate action.
MR. COWAN mentioned that it recently came to the department's
attention that there was a possible problem in the bill,
specifically with Section 16 which is a change to existing law.
This affects the assisted living homes and the sharing of
information related to investigations.
Number 1395
REPRESENTATIVE RYAN stated that he has an amendment suggested by
the department which addresses the investigation of an individual
when it's found they are not guilty of what they were accused. In
the course of this investigation, if it's found that additional
information incriminates a different person, presently no action
can be taken because of confidentiality. This amendment would
allow this additional individual to be investigated. He moved
amendment one on page 7, line 27 the deletion of language
"certified nurse aides." He also noted the change to the bill
title as follows, "An Act relating to certified nurse aides;
disclosure of investigative information to the appropriate agencies
and providing for an effective date." Hearing no objection it was
so ordered.
Number 1521
REPRESENTATIVE HUDSON asked if there would be anyone caught in the
"middle of this thing," people who are subject to higher standards
and "shoved out of the pipeline" here, or does this legislation
take care of everyone that's already in these programs.
MR. COWAN responded that this legislation provides the board with
authority to take action and to adopt regulations for those persons
who are currently certified. This will also impact those
individuals who become certified after the passage of this
legislation. This will not retroactively affect anyone relative to
their current status as being certified. If they were to
perpetrate one of the acts for which disciplinary action is
appropriate they would be impacted by this, but it would not change
the current certification requirements for those who have already
gone through the process.
Number 1582
CHAIRMAN ROKEBERG referred to the enforcement provisions of this
legislation. It seems in these sections the department has the
duty to create new regulations for implementation of the
enforcement provision, but noted the zero fiscal note at the same
time. He asked if this meant that their existing investigative
staff and hearing officers are adequate to meet the concerns that
are specifically required for the Health and Social Services
Department, as opposed to Occupational Licensing.
MR. COWAN responded that the nursing assistants that may be subject
to this legislation, the number that would actually fall within the
department is a very small one. Also, it's important to note that
they receive reimbursement from the federal government to provide
this service. They anticipate this funding to continue. This
funding has been adequate to date to carry out their
responsibilities.
Number 1653
CHAIRMAN ROKEBERG asked if their purview was only for those areas
covered by medicaid and/or other medicare type programs under the
department's jurisdiction. He also wondered if this legislation
was in conflict with the federal Health Care Financing
Administration (HCFA) requirements.
MR. COWAN responded that Chairman Rokeberg was correct in the
relation to the first question and stated that he was involved with
the original legislation. He believed there was nothing in this
legislation which is contradictory, in fact, some of the language
is specifically written to avoid conflicts with the federal
requirements.
Number 1722
PAT DOOLEY, Board Member, Alaska State Nurses Association testified
from Anchorage via teleconference on HB 217. She added that she
was the Director of Nursing at the Mary Conrad Center in Anchorage.
She wished to respond to the nursing assistants program being an
entry level into the nursing program. She said this was true for
many of the nurse assistants, but they don't have the same level of
education that nurses do. Nurses take a lot of classes which help
them understand anatomy and physiology, including pharmacology.
Although nursing assistants conduct a lot of hands on care they do
lack the ability to access a patient's condition. She said this
would be like asking a cashier at a gas station to open the hood of
someone's car to make an assessment.
MS. DOOLEY continued that the other concept she'd like to address
relates to delegation. When a situation has been delegated nurses
have a specific scope of practice. When they delegate, they still
retain responsibility for the outcome. They determine what the
task might be with specific guidelines to follow. A big concern to
nurses is that it's great to have nursing assistance to do the more
repetitive tasks which don't require the years of training and
knowledge. It's a concern to nurses that when they still retain
responsibilities for things, that they don't have the ability to
follow up if individuals aren't doing things correctly or if
there's a need for a disciplinary process. This situation is a
catch 22 because usually people are doing more with less and these
people are asked to supervise when they don't have any control over
the quality of the staff that they supervise.
Number 1879
CAROL CLAUSSON, private citizen, testified via teleconference from
Kenai. She is also a registered nurse. She testified in favor of
this legislation. She felt that anyone who worked with the
patients, the vulnerable public, needs to have a minimum of
training while being held accountable for their actions. There
needs to be a mechanism in place to assure this. Since nurse aides
work under licensed nurses the regulation of these aides is best
done by the Board of Nursing. She hoped that in the future nurse
aides working in the hospital setting will be required to be
certified.
Number 1937
MARY WEISS, Registered Nurse, testified via teleconference from
Anchorage. She read a letter which she received from a nursing
assistant. "My name is Judy Lowberg. I've been working as a
certified nursing assistant in an Anchorage home care facility for
over four years. I urge you to require mandatory certification for
all nursing assistants as a condition of work. First of all,
certification provides a way for CNAs to be current on changes by
requiring continuing education for recertification. Secondly,
certification provides a way to track information about past work
experiences, training and even any criminal history about people
who are giving direct care to patients of nursing assistants."
MS. WEISS stated that as a registered nurse who has worked in rural
areas she found out how very difficult it was to get certified
nursing assistants.
Number 2048
SUE NIKODYM, a Registered Nurse; First Vice President, Alaska
Nurses Association; and Long Term Care Coordinator at the Wrangell
General Hospital came forward to testify on HB 217. She said that
she works with CNAs every day. She plans, implements and
coordinates their education. Their facility is one of 34 which is
certified with the state to teach courses.
MS. NIKODYM spoke in support of HB 217 which would bring the
regulatory authority of CNAs under the Board of Nursing. As a
nurse, she is responsible for all aspects of care to their elderly
population which also encompasses the actions of CNAs. This
legislation will give the Board of Nursing the authority to
regulate education, incompetency of CNAs, as well as act in a
disciplinary capacity if necessary.
MS. NIKODYM stated that the Alaska Nurses Association is taking
positive approaches toward the regulation of all nurse aides in the
state. Through these regulations this ensures quality and safe
patient resident care. She also was a member of the American
Nurses Association Task Force that looked at federal regulation of
all nursing assistants and through this task force they came up
with guidelines for the state nurses association. This association
advocates competency based education for all nursing assistants
despite the area of health care that they work within.
MS. NIKODYM continued that the state Board of Nursing would be able
to maintain competency based education, as well as maintaining a
national registry database that pertains to health care. With
downsizing and deregulation they must help to protect this group of
health care providers by helping them maintain their competency
levels and by giving the RNs and the Board of Nursing to go to for
advice and counsel.
Number 2163
BARBARA HUFFTUCKNESS, Director, Legislative and Governmental
Affairs for the Teamsters, came forward to testify on HB 217.
The Teamsters represent CNAs, as well as RNs and several of the
hospitals around the state. The Teamsters support this
legislation. They do have a certified program in place with
respect to at least one of the hospitals in Alaska. This bill will
bring a more focused umbrella by having all these programs under
the Board of Nursing. They also believe it will reinforce some
valuable perspectives with requirements being set forth in the law.
Number 2255
CATHERINE REARDON, Director, Division of Occupational Licensing,
Department of Commerce and Economic Development came forward to
testify on HB 217. The department supports this legislation and
the Board of Nursing is on record in support as well. First, the
Division of Occupational Licensing already certifies CNAs. There
are approximately 2,000 of them in Alaska and the department
certifies them under a federal law, a federal requirement. This
does not take a group of people who have not had any interaction
with government already. This legislation gives the department and
board the tools they need to make the system work better and to
protect the public.
MS. REARDON believed that public protection was the real benefit of
this legislation. The federal government has required they certify
nurse aides only in relation to their activities in a small sub-set
of facilities. There are approximately 2,000 individuals out there
who have state certification, but they could commit any type of
heinous act and as long they didn't do it in one of these licensed
facilities she would have no way of taking away their
certification. This legislation would allow the division under the
Board of Nursing to investigate, suspend or revoke CNA
certification for offenses that take place in other locations.
MS. REARDON added that it's difficult to administer a program under
federal law without any state law accommodations. They can't write
regulations since they have no statutory authority to do so. This
legislation would rectify this situation. In conclusion, this is
not an attempt to block entry of a new group and it's not a
mandatory licensure law. Anyone who has not been required to have
CNA certification before will be required to have it now. Anyone
can be hired to take care of an elderly adult in a home, for
example, but if someone chooses a CNA or are part of a staff that
is licensed by the federal government, the public can be more
assured that these individuals have the qualifications and are
under the disciplinary regulations that make them safe
practitioners.
Number 2434
REPRESENTATIVE RYAN stated for the record that he appreciated the
fiscal note and noted that it seemed to be a wash, even though
there is an expense the division anticipates program receipts for
the licenses to cover these expenses.
MS. REARDON responded that with all the occupational licensing
programs the fees will cover the cost. There will not be any new
general funds used. The fiscal note primarily allows for an
investigator because the division is taking on the responsibility
for disciplining a new set of licenses, it's important to follow up
on complaints.
Number 2470
CHAIRMAN ROKEBERG asked about subsection (e) and how the board can
establish procedures regarding abuse, neglect, misappropriation of
property, etc. and that they would write regulations. His concern
is that there is nothing in the statute that provides for a hearing
to take place where the offending CNA can bring exculpatory
information.
TAPE 97-40, SIDE B
Number 000
CHAIRMAN ROKEBERG asked about the division's fiscal note. He took
legislative notice that this was not a general fund, but will
become part of the general fund budget number. "I am concerned
though that it may cause a burden on the certified nurse aides in
the state because if you use even the larger figure of 2500 CNA, a
potential CNA in the state by your $86,000 fiscal note that's
approximately rounded up to $35.00 per year or how we do it by
annually normally a $70.00 bi-annual cost. Is that about how you
reckon it?"
MS. REARDON stated that she believed the bi-annual fee will
probably be around $100.00. She noted that nurses pay $135.00
every two years presently. This fiscal note reflects the
additional expenditures the state will make and the revenues which
balance out as a result. The nurse aide share of the Board of
Nursing per capita cost is not reflected. That's why the math does
not work. With enforcement and investigative activity they match
this to the complaints that come in. If they find they're not
getting quite that many complaints concerning CNAs and they have
some investigator time to spend on nursing RNs they will do this
and the CNAs won't be billed for it.
Number 146
LOUISE DEAN, Chair, Alaska Board of Nursing, testified via
teleconference from Anchorage on HB 217. She is a public member on
the board and could not stress enough the importance of this
legislation. She's been on the board since 1990 and this has been
a project they've tried to pass through since that time. Each week
the number of nurse aides grows larger and larger. She also wanted
to stress that the right to practice, whether someone is licensed
or certified, is a privilege that someone works for and it needs to
be held by certain standards.
CHAIRMAN ROKEBERG noted that the committee had not taken any
testimony from any actual nurse aides. He asked if she was aware
of anyone in this category who might be against this bill or
negatively impacted by it?
Number 211
MS. DEAN responded that she had not heard anything and mentioned a
letter they would be faxing in support of it, a letter from a CNA.
Any nurse aides she has spoken to support this bill. She knows
several CNAs who have gone through nurse aide training as part of
the jobs program and they were in support of this effort. They
feel they are a group of professionals and want to be held to
certain standards.
CHAIRMAN ROKEBERG noted that this legislation in certain instances
exempts the division from the provisions of the Administrative
Procedures Act and then implements others..."requires that you
write regulations as the board under Title 8 and then brings in the
department." It appears to him that there are two different
enforcement agencies under this bill. He was concerned with this.
Number 286
MS. REARDON responded that this was a bit complex. Mostly the
reason for this was because of the federal law which overlays the
entire system and the division's inability to get around it. As
Mr. Cowan noted earlier there is a federal requirement that only
his agency can make a finding of abuse concerning CNAs in certain
licensed facilities. His department, HESS, will continue to
conduct this function under due process and make the finding of
abuse for those CNAs in those limited number of facilities. The
Board of Nursing with Commerce's assistance regulates all of the
other Nurse Aides who might commit offenses or become incompetent.
If HESS makes a finding of abuse concerning a CNA in one of their
facilities they will conduct due process hearings, finish findings
and report them to the Board of Nursing. The Board of Nursing will
immediately, without conducting a second hearing, revoke the
license. Their main goal was to avoid two due process hearings for
the same event, since this would slow the process down. HESS and
Commerce would still discipline nurse aides, HESS the smaller group
and Board of Nursing/Commerce conducting the remainder.
MS. REARDON stated that the APA question might be addressed to Mr.
Cowan. HESS would like the ability to have flexibility in what due
process system they establish when they discipline a nurse aide
while meeting constitutional due process rules, but not necessarily
under the due process system required by the APA. The Department
of Commerce and Board of Nursing have been operating under the APA.
She wanted to make sure that on page 3, line 30, regarding notice,
the board shall immediately revoke certification without a hearing.
She wanted to retain this because a second hearing would be avoided
for the exact same offense.
MS. REARDON stated that she was not certain they would need an
exemption from the APA to do this. They may need the exemption,
but this is the only reason they would be interested in being
exempted from the APA. HESS has other reasons to be exempted from
the APA.
Number 474
CHAIRMAN ROKEBERG called for a public hearing recess on this
legislation and delayed it to the latter part of the committee
meeting.
Number 487
HB 237 - MINIMUM WAGE FOR TIPPED EMPLOYEES
CHAIRMAN ROKEBERG indicated that the committee would consider HB
237, "An Act relating to payment of minimum wages to tipped
employees; and providing for an effective date." He noted that
this was a committee bill by request and he referred the committee
to the Marx Bros. Cafe letter dated April 10, in the committee
packet.
Number 521
JACK AMON, Partner, Marx Bros. Cafe, Anchorage, came forward to
testify on HB 237. He spoke in support of this legislation on
behalf of the Alaska Cabaret Hotels Restaurants and Retailers
(CHARR). This legislation allows employers of tipped employees to
use a portion of their tipped income to satisfy hourly requirements
under the Federal Minimum Wage Guidelines. He gave a brief history
regarding these efforts.
MR. AMON continued that minimum wage was established in 1938 by the
Roosevelt Administration under the Fair Labor Standards Act. Its
intent was to establish a liveable wage for workers in the
manufacturing industry. It was not extended to tipped employees
until 1967, at this same time the federal government included
tipped employees under the minimum wage requirements. They also
enacted a tipped credit which is still on the federal government
books along with 43 other states.
MR. AMON submitted a chart to the committee which shows how a
tipped credit works and how this situation is handled in 43 other
states. He referred to this chart entitled, "State Wage Laws."
This chart reflects how tipped credits work on the federal level
and each of the states. On the first line, federal numbers are
outlined for minimum wage, which is $4.75 per hour. The tipped
credit is the amount of tipped income that an employer, following
the federal guidelines, can use to satisfy the minimum wage. The
cash wage is the minimum wage that employer must pay. If someone
is in a state that follows federal law, for example, Alabama which
doesn't have an applicable law, they would follow federal
legislation. An employer in this situation is required to pay an
hourly wage of $2.13 an hour and would be allowed a tipped credit
of up to $2.62 an hour.
MR. AMON added that many states provide anywhere from 50 percent of
the cash wages of tipped income to 23 percent. Some put a cap
figure on this. He stated that an important feature of this
legislation is that it in no way exempts the employers from the
minimum wage and in no way does it cap the state's minimum wage.
Any employer cannot take a credit for tips that were not earned and
reported by that employee. If any employee does not make enough in
tipped income to satisfy the state's minimum wage requirement then
the employer is responsible for the difference. In no way, under
enactment of this statute, would an employee ever earn less than
the state's prevailing minimum wage, whatever that may be. Nor
does it change the state's differential which is 50 cents higher
per hour than the federal minimum wage.
MR. AMON noted that what CHARR is seeking to do with this
legislation is to cap the cash portion of the wage that an employer
would pay at $5.25 an hour. This is 240 percent above the federal
requirement presently. When the minimum wage goes up again in
September, Alaska would have a tipped credit of 40 cents an hour.
Number 707
CHAIRMAN ROKEBERG noted the two handouts in the committee packet
published by the IRS called "Tips on Tips." He asked Mr. Amon
to explain briefly the procedures under the IRS rules, whether
there is a daily requirement for recording. This provision
provides that an individual will never receive less than the
minimum wage and is easily accountable because of the requirements
of the IRS.
MR. AMON stated that the IRS requires all employees to report 100
percent of all tips earned in a restaurant. The tips are usually
accounted for on a time card that the employee submits. By
correlating the amount of hours worked and the amount of tipped
income reported it would be very easy to discern how much per hour
an employee made. The reason they seek this relief, is that the
IRS has precipitated this formula because not only do they treat
tips as wages for withholding purposes, but tips are also treated
as wages for matching FICA and FUDA amounts. "We feel if we are
being, making a payroll matching amount, we have a payroll burden
on tipped income then we feel that they are wages and we should be
able to count them in our compensation packages." He pointed out
that tipped employees generally are well above minimum wage and
from additional testimony it will be shown that these hourly wages
range from $8.00 to $20.00.
Number 806
CHAIRMAN ROKEBERG reiterated that "Nobody's going to get 'rooked or
gypped' out of their wage on a daily basis because they had a bad
day, it snowed bad, they didn't have enough customers, their going
to be fully compensated the Alaska statutory minimum wage if they
had no tips that day."
MR. AMON stated, "absolutely." An employer would be required to
make up the difference on a daily basis. He assumed that this
would be addressed in regulation.
Number 857
REPRESENTATIVE RYAN asked what this would do to Worker's
Compensation Insurance costs if an employer is required to
contribute to an employee who nets $20.00 per hour.
MR. AMON responded that when an employer conducts their Worker
Compensation audit, gratuities are excluded from a Worker's
Compensation audit. This would help keep Worker's Compensation
amounts from going up.
Number 890
REPRESENTATIVE RYAN asked if there was a general average among
restaurants regardless of their characteristics, such as a fast-
food business and a more formal establishment, as to a gross or a
net, a margin in order to determine what the restaurant's expenses
are, etc.
MR. AMON responded that on a statistical analysis provided by the
National Restaurant Industry Operations Report, profitable
restaurants run anywhere from the lower quartile of net operating
profit of 5 percent to a high of an upper quartile of 7.9 to 8.0
percent. These restaurants operate on slim margins that are quite
labor intensive. It takes a lot of people to run a restaurant.
"You have to really generate a 10 to 1 sales to bottom line
relationship." If a restaurant has a $4,000 increase in costs they
would have to generate $40,000 to put themselves back in the same
spot.
Number 949
REPRESENTATIVE HUDSON stated that he was contemplating this issue
on Workers Compensation. He could certainly see where the added
cost for Workers Compensation Insurance would benefit "a place."
He wondered what affect this would have on the workers who would
have to collect for some reason. He affirmed that this
compensation would be figured on the basis of the Alaska minimum
wage.
MR. AMON stated that when an insurance premium is considered the
payroll is figured by allowed subtracted gratuities and overtime
compensation. This is in accordance with current law.
Number 1000
REPRESENTATIVE COWDERY asked what the hours worked were for a
normal shift in a restaurant.
MR. AMON responded that this shift is anywhere between 6 and 8
hours. On average a waiter or waitress work 35 hours a week.
Number 1014
REPRESENTATIVE COWDERY asked about full service restaurants and
assumed there were more tips to be made in these establishments.
MR. AMON noted that the upcoming testimony would shed light on this
issue. A representative from the Red Robin Restaurant in Anchorage
would address this common misperception. While each table might
generate more tips they do considerably less volume. Say for
example, the restaurant Gwennie's, their tipped employees are doing
better in this establishment than someone in the Marks Bros. Cafe.
because of the volume they generate.
Number 1049
REPRESENTATIVE COWDERY asked how many persons would a waiter or
waitress serve during a normal shift in Mr. Amon's establishment?
MR. AMON responded that their restaurant was unique since they have
a team operation. They probably average about 20 individuals an
evening.
Number 1075
REPRESENTATIVE COWDERY asked what the average tip was in his
restaurant in regards to the average meal served.
MR. AMON responded 15 to 20 percent.
Number 1112
CHAIRMAN ROKEBERG asked if any employee in the Marx Bros. Cafe made
minimum wage.
MR. AMON responded, "no, sir."
Number 1124
CHAIRMAN ROKEBERG also confirmed that Mr. Amon was a national board
member of the National Restaurant Association. He also asked if
Mr. Amon had any idea how many tipped employees there are in the
state of Alaska.
MR. AMON stated he had no idea how to answer this question.
Number 1154
REPRESENTATIVE COWDERY asked what the Marx Bros. Cafe employee
turnover was.
MR. AMON said they have not had much turnover. Their wait staff
goes through a major turnover every two to three years. Currently
their newest waitress has been with them for a year and some of
them have been there from four to five years.
Number 1213
ROBERT GILL, Secretary/Treasurer, Hotel Employees and Restaurant
Employees Union (HERE), testified via teleconference from Anchorage
on HB 217. This union represents approximately 2,000 employees
throughout the state of Alaska and they are vigorously opposed to
this bill for numerous reasons. Although there are many servers
who do make an excellent income the vast majority of servers in the
state make $20,000 to $30,000 a year. According to the Alaska
Department of Labor statistics, a family income of $25,000 is
considered extremely low. The same could be said of $30,000. This
tipped credit bill will serve to increase the welfare rolls and not
serve to take people off of welfare. With the new five year
welfare rolls they need incentives to get people off of welfare and
back to work. He thought it was a great thing that Alaska had a 50
cent tie in with the federal minimum because of the higher cost of
living in Alaska.
MR. GILL continued that 40 cents cash reduction in wages a year
constitutes $800 a year which constitutes food, clothing and
housing for Alaska citizens. This bill would freeze the tipped
credit at $5.25. There are so many unemployed single mothers who
are trying to get off welfare and work. Many work at places such
as Denny's, Village Inn, etc., which are not represented by the
Hotel Employees and Restaurant Employees Union. Very few have
health and welfare benefit packages, as do the union hotels and
union restaurants. They feel that this tipped credit law will not
serve the people of the state of Alaska well. If everyone in these
situations were making $50,000 a year, he would probably not be
opposed to this legislation, but the fact is most people make
between $20,000 and $30,000 a year which is considered very low to
low income. He noted that there was no reference in this
legislation to collective bargaining agreements. "I presume it's
the intent of the bill not to prohibit minimums much higher than
that." He suggested that collective bargaining be referred to in
the statute.
Number 1435
REPRESENTATIVE HUDSON asked if Mr. Gill represented the lion's
share of the employees within these restaurants that are in the
non-tipped category, that is the employees who are cooks, etc., who
work strictly for salary.
MR. GILL responded that yes he did. At the union hotels the
disparity in wages between the front of the restaurants and the
back is not as great. Many of their cooks and dishwashers make
$10.00 to $13.00 an hour. The disparity is not as great as it is
in the non-union hotels. In his negotiations he always addresses
this disparity.
Number 1522
REPRESENTATIVE HUDSON stated that he was trying to understand what,
with the passage of the minimum wage as adjusted for Alaska, was
some of the information he has received is that all of the
restaurants and food service folks within the industry are
confronted with $70,000 a year of added costs. This has to come
out of the bottom line, if it does this could have a negative
impact on those non-tipped employees and it was for this reason
that he was attracted to this legislation. He felt it would
provide some opportunity for the owners of these establishments to
upgrade the salary of the non-tipped employees. He thought that
since Mr. Gill represents them, Representative Hudson thought he
would have some sympathy on their behalf.
MR. GILL responded that he does have some sympathy for them. So
many of the servers in the state work at moderate priced
restaurants. He could say unequivocally that if every server in
the state made the type of income at Mr. Amon's restaurant which is
a higher cover cost, "but there are so many people who work in the
state that work at places that are like Denny's, Village Inn or
Elmers that really do not make the type of income, and they need
that protection of that extra 40 cents an hour." Without a union
contract there is no guarantee that this 40 cents would go either
to the "back of the house" or would go to a benefit package as has
been suggested.
Number 1736
CHAIRMAN ROKEBERG asked if any of the people that he represents are
presently in a tipped employee category?
MR. GILL responded about 25 percent of their 2,000 members are in
the tipped category.
Number 1760
CHAIRMAN ROKEBERG asked if any of these individuals have a wage
schedule that is at or below the minimum wage?
MR. GILL noted that in some of the houses the employees are at the
minimum wage, but not below. He gave some examples of these. He
said that many of the union houses are a significant degree higher
than the non-union sector and it was his responsibility to make
sure that the wage scale of union employees is not undercut. He
made the argument that they shouldn't lower the wages in "the front
of the house" in order to bring the "back of the house" up.
Number 1942
FRED ROSENBERG, Owner, Red Robin Restaurant, Anchorage, testified
from Anchorage via teleconference on HB 237. Previously he
submitted to Representative Rokeberg an excerpt from payroll
records to take an extract of numbers. What they found, based on
reported tips (all employees are required federally to report 100
percent of their tips) is that their servers are making from $3.75
per hour to $8.09 cents per hour, just tips. When added to the
present minimum wage they make between $9.13 and $13.34 per hour
based on the reported tip records.
MR. ROSENBERG continued that by comparing his establishment to the
more fine dining restaurants with larger customer meal checks,
their average check at lunch is under $10.00 and at dinner, it's
right around $10.00. The Red Robin also has a larger turnover of
customers. He referred to the bottom line information Mr. Amon
spoke about in relation to the national standards for profitability
in a restaurant. He then quoted the numbers of profitability as
previously noted. The Red Robin falls into this range on the low
side and part of this is that they try to be a very value oriented
restaurant while keeping their prices down. The 50 cent increase
in the minimum wage in 1996 reflects $125,000 to his bottom line.
His business is making $125,000 less than it was before accounting
for 25 to 30 percent of his profit. These are real numbers and he
would have to generate over an additional $1 million in sales,
which is impossible, just to break even on.
MR. ROSENBERG noted that freight expenses are up, food and beverage
costs are up and menu prices in no way can keep pace with this.
There is no way to operate a small business and still provide a
benefit. In order to make a profit they are required to monitor
expenses. He conceded that tipped employees do make different
wages depending on who they work for, but they do well. It's not
possible for them to make up these differences. He also noted that
the cost of living in Anchorage was equal with Seattle, even though
they have a 50 cent differential in the minimum wage.
Number 2265
CHAIRMAN ROKEBERG asked Mr. Rosenberg if he had done anything in
his business practices that have negatively impacted his employees
because of the last increase forced on them by the federal
government.
MR. ROSENBERG responded that they are not going ahead with any new
benefits. New team members working for them are not in a position
to get any of the benefits. They were contributing to medical
packages. Outside of Red Robin they started two new restaurants
and they haven't been able to afford providing any contribution
towards medical or any other benefits.
MR. ROSENBERG stated that in their restaurant they do not have
anyone who gets paid minimum wage, they pay in excess of minimum
wage except for the tipped employees. Their hosts and hostess,
dishwashers and cooks are above minimum wage depending on their
experience. He said they needed to keep the lid on these types of
pay. In their two Red Robin Restaurants they employee 225 people.
Number 2477
REPRESENTATIVE RYAN asked Mr. Rosenberg if he would be able to
cover future increases in the minimum wage law with any type of
cover charge or admittance charge into his establishment.
MR. ROSENBERG responded, "not at all." He didn't think any
restaurant could and the Red Robin is a very value oriented
restaurant. They appeal to people of more modest incomes. There
is no way they can afford to try and pass this on through a cover
charge to the consumers, especially in light of additional
competition.
TAPE 97-41, SIDE A
Number 001
REPRESENTATIVE HUDSON asked what the average income was of their
tipped employees and the range for the non-tipped employees.
MR. ROSENBERG gave the numbers again for the tipped employees and
the non-tipped employees who make anywhere from $5.50 to $12.00.
Number 130
ANGELINA CHRISTIANSEN, Business Representative, Hotel Employees and
Restaurant Employees Union, Local 878, testified from Anchorage via
teleconference on HB 237. She strongly opposed this bill. There
is a reason why the federal minimum wage is higher in Alaska
because of the higher standard of living. She noted the figures of
$13.00 per hour as the high end for a 40 hour work week, this
factors out to $27,000 a year. This is not high income. The
exception to the rule are those individuals who make $50,000 a year
and she guessed that not even five percent of Alaska servers make
this much money.
MS. CHRISTIANSEN continued that she has two children and is a
single mother. She said that she's been on welfare before. Her
day care bill alone for two children is $1194.00 a month. In
reference to the comments made by the two previous restaurant
owners who claim they pay their tipped employees above minimum
wage, she wondered why they didn't pay them the minimum wage rate
now if their costs are so high, especially since these employees
are making the wages they claim. She also noted that most of the
servers work more than one job and live paycheck to paycheck. Ms.
Christiansen stated that they're trying to help people get off
welfare. She noted that an individual should be able to depend on
their paycheck. No one can depend on regular tips. She added that
it's 40 cents this year, but what will it be next?
Number 335
REPRESENTATIVE RYAN wondered if he had missed something in Mr.
Amon's testimony regarding the fact that nobody could make below
the minimum wage. Chairman Rokeberg said that this was correct and
that's what the bill says.
MS. CHRISTIANSEN also agreed, but she figured if an employee is
making less than the minimum wage, including their tips, the
employer is required to make up the difference. She offered, who
could live off of minimum wage much less a single mother?
Number 419
WILLIAM J. CULLINANE, Owner, Inn at the Waterfront, Juneau, came
forward to testify on HB 237. He noted that Juneau has two
seasons, the legislative season and the tourist season. He
supports this legislation. He thought it made good economic and
social sense. It simply recognizes the fact of what 43 other state
legislatures have figured out. He asked how many politicians could
be wrong. This legislation will help strengthen the restaurant
industry. It will help with planning what labor costs will be for
a particular time period and he thought it would generate more jobs
in the industry. The restaurant industry is very competitive and
it's marginal. The only way to improve a restaurant is through
service and good tips are a reflection of this. Tips are income
and it should be counted as such.
MR. CULLINANE continued that their restaurant is a fine dining
establishment. One of his employees makes 22 percent of the
overall sales they singularly generate yearly. He also has some
employees at 15 percent. Generally, this translates into $15.00 to
$20.00 per hour. Usually in the summertime an employee will make
between $120 to $125 per night and federal employment taxes must be
paid on these amounts. He felt this legislation was long overdue.
Number 691
THERESA PEREZ, Waitress, testified from Anchorage via
teleconference on HB 237. She felt ambivalent about this
legislation since she's not getting the answers that she'd like to
hear. She inquired about the $5.25 figure as allotted for in the
legislation and wondered if this would stay at this amount forever.
If the minimum wage goes up, will this amount go up too? In the
Lower 48 she was making $2.01 an hour and she was afraid that this
figure of $5.25 would stay in effect for future generations. She
said she'd be more than happy to give the 40 cents an hour to her
boss as long as this amount is returned in the form of benefits or
to the staff in the "back of the house." She didn't understand why
tipped employees should be punished for making tips.
CHAIRMAN ROKEBERG asked if she tipped some of the staff she worked
with such as bus people, etc.
Number 820
MS. PEREZ said that she did. She noted that without these
individuals working for her she wouldn't make her tips. She urged
the committee to be fair to the tipped employees and noted that she
really depends on what she makes in tips.
REPRESENTATIVE HUDSON stated that he believed by law that there is
no way that the wages of these employees would go below minimum
wage. This has been testified to. The only reason this
legislation is before them is because of an increase in the minimum
wage which adds pressure to the employer. This bill guarantees
minimum wage and provides an offset to keep restaurants in
business. As a result this provides job opportunities.
Number 904
CHAIRMAN ROKEBERG asked Ms. Perez what she averaged in wages an
hours.
MS. PEREZ said she would not tell the committee this, but she
wished to note that when the minimum wage goes to $5.65 then will
"it" go up also?
REPRESENTATIVE HUDSON stated yes.
MS. PEREZ asked if there was any way for the employer to prove that
they have done something constructive with the 40 cents an hour
taken from each tipped employee to benefit the entire restaurant
staff. She wanted to make sure that somehow the employees in the
"back of the house" would benefit from this legislation.
Number 957
CHAIRMAN ROKEBERG responded that there was nothing in the
legislation to mandate an employer to prove what the money is used
for.
Number 1018
CHRIS ANDERSON, Owner, Glacier Brew House in Anchorage came forward
to testify on HB 237. He stated that he has installed an insurance
program at his restaurant and it's probably one of the finest in
Anchorage. He supports this legislation. Within the last year
the two increases in wages have cost him an additional $60,000.
He's been in operation for nine months and he hasn't made it to a
quadrant yet to realize a profit. This is not about making profits
for himself, he doesn't look at this as something to take away from
staff. He wants to be able to maintain his benefit program and to
ensure that employees on the lower end are getting compensated.
Every year he runs 70,000 man hours of tipped employees. He needs
to put the relief on his non-tipped crew members, his line cooks,
dishwashers, etc. He's very pleased with his sales and the fact
that his employees are doing well. His dinner servers average
$18.00 an hour, lunch $12.00 an hour.
MR. ANDERSON continued that the way these employees make more money
is by getting more guests in the restaurant, to provide more sales
and to keep them busy. This happens by keeping prices low and
being competitive. In order to do this he needs a staff to cook
this food that are competent and capable. He pays his cook staff
well and he'd like to keep doing so, but he weighs this against the
bank's demands. He added that when he takes a $60,000 hit in wages
within his first year of operation followed by approximately
$50,000 in benefits for insurance alone, he stated that a quadrant
for profit seems hard to find. He realizes that it's a challenge
to raise well over $1 million in increased sales in his first year
of business.
Number 1182
REPRESENTATIVE HUDSON asked how many people did Mr. Anderson employ
in his restaurant.
MR. ANDERSON responded about 80 full time and seasonally, 110.
Number 1193
REPRESENTATIVE RYAN asked how much an increase would it take to
price himself out of the market and no longer be able to compete.
MR. ANDERSON responded that this was a tough question. He felt
that if the wages go up along with everyone else, they're in the
same boat. For his business, a small increase could become a
problem. He targeted a certain guest check average when he opened
the restaurant in order to position himself in a segment of the
market. By raising the guest check to cover costs this puts him in
a segment where his guest counts decline. He works on volume. If
he doesn't do a lot of volume, he doesn't make money.
Number 1249
CHAIRMAN ROKEBERG asked what the average number of hours his staff
works.
MR. ANDERSON responded that in the summer time a server could work
40 hours and more, an average of 35 to 40. In the wintertime
between 30 and 35 hours for dinner and roughly about the same at
lunch time, maybe a little less. He outlined again the cost to
payroll with the increases in minimum wage for Chairman Rokeberg.
He noted that he would have to increase his gross sales by 25
percent to make up for this 40 cents an hour increase. He added
that he will be very profitable in about five years from now.
MR. ANDERSON continued that he had budgeted for this initial 50
cent increase in his annual plan. He did nothing different because
he's looking at top line sales right now. He's in a brand new
business and he has no plans to reduce benefits and costs. He's
been open a year now, has a track record and will look to see where
he can make this up. He'll have to take some preemptive action on
this next increase of $30,000. In the future, when he looks at
wages on an annual basis for his cooks, he might not be able to
apply the same type of raise he'd like to apply without this
$30,000 going to the "front of the house."
MR. ANDERSON added that a lunch server at the BrewHouse makes
approximately $12.50 an hour. A dinner server may make up to
$18.00 an hour on an average. It is their policy that a tipped
employee reports 100 percent of their tips.
Number 1488
REPRESENTATIVE COWDERY wondered what made the difference between
how one restaurant made more money than the other.
MR. ANDERSON responded that they needed to address minimum wage.
A minimum wage earner makes $10,900 per year. They're talking
about individuals who make in-between low-end $15,000 and top-end
$30,000 or $40,000. He said that he intends to compensate his high
end employees with 5 percent increases every year, although he was
more concerned about his dishwasher and his entry-level line cook
at $8.00 an hour. He wanted to make sure they continued to receive
insurance, crew meals, etc. He wanted to be able to give the
higher end employees more money, but felt he could do so by putting
more customers in the restaurant and attractive pricing to keep his
business alive.
Number 1580
REPRESENTATIVE COWDERY assumed he attributed some of this success
to the good service his staff provides.
MR. ANDERSON said he has a wonderful staff that opened a restaurant
under very difficult situations. He wouldn't trade one of them for
anything. He noted his turnover was very low.
Number 1613
DWIGHT PERKINS, Special Assistant to the Commissioner, Department
of Labor came forward to testify on HB 237. He cited some
statistics from the department and mentioned that the Commissioner
has some concerns with this legislation. They found that in 1995,
5,900 persons earned the majority of their wages including reported
tips for that year as waiters or waitresses. These workers earned
an average from all reported sources, including other occupations,
of $6,667.00. This figure includes anyone who worked even a day as
a waiter or waitress. They don't mean to represent this as an
average wage for year round food service.
MR. PERKINS continued that to obtain a better number they ran a
check on all workers employed as waiters and waitresses in all four
quarters of 1995 and came up with 1500 individuals who earned an
average for the year of $12,213.00. Of this, 75 percent of the
1500 earned less than $16,139.00. This is also an imperfect
measure and it does not mean that individuals were employed for
full time, year round, only that they were employed as servers at
some point in each of the four quarters of the year.
MR. PERKINS stated that the department's mission was to foster and
promote the welfare of the wage earners of the state, improve their
working conditions and advance their opportunity for profitable
employment. The Commissioner has a hard time understanding how
this will help the wage earners of the state and didn't think it
benefited them. He conceded that there were 43 other states that
do allow less than minimum wage or minimum wage to reflect against
tips, but this was not a national agenda to have tipped credits
toward the employee wages considered. It used to be that Alaskans
were proud to say that they didn't give a damn how "they" do it
outside. The department felt that this was ill-advised
legislation.
MR. PERKINS summed up with a last statistic. In 1995, adjusted
after inflation, the Alaska average monthly wage has fallen from
1985, at approximately $3100, to $2700 in 1995. The Alaskan worker
has been taking hits for the last ten years and still continues to
be hit. He stated that the department could not support this
legislation.
Number 1839
REPRESENTATIVE HUDSON asked if there was any benefit in this or any
other leveling measure inherent in this legislation to create jobs
which in his way of thinking is one of the justifiable reasons for
trying to do something like this. He used examples of restaurants
that have gone out of business and the fact that it's hard to make
money in this business. If there's any merit to this legislation
it's because it provides an opportunity for some private investor
to put their money into an eating establishment and with a slight
bit of assistance through this type of legislation to not have to
absorb these high nationally imposed costs, they may keep these
establishments open which creates jobs. This could conceivably
maintain thousands of jobs for the state of Alaska which otherwise
might not make it. If there are no jobs these individuals won't
even make the minimum wage because they'll all be on assistance
somewhere.
Number 1922
REPRESENTATIVE RYAN stated that he was not trying to be cynical
about this situation, but a person averaging $13.20 an hour with
wages and tips figures to about $27,500. Legislators are paid
approximately $11.54 per hour and for practical purposes they hold
the fate of the state in their hands. He is not unsympathetic to
labor or the people who are making a living. He didn't want to see
anyone do any worse than they are now, but it's been demonstrated
with the margins and increased costs to take in additional gross
revenues to break even. If incremental costs keep rising there
will be a lot of establishments going out of business because they
can't afford to pay their overhead.
MR. PERKINS stated that this was a difficult issue. One of the
analogies he has heard is "we're all in this thing together." This
goes to the analogy that the private sector employers should be
supporting the public sector raises because if they don't get a
raise they won't have that much expendable income and those "drinks
on the bar will be sitting there for a while too." In the
restaurant industry there won't be as much disposable income in
order to go out for dinner. One hand feeds the other. A federally
mandated minimum wage increase has been instituted and the
restaurant industry wants to take care of this issue on a state
level in order to avoid paying the increase by crediting towards
tips instead. The department feels that this is a bad piece of
legislation.
Number 2070
CHAIRMAN ROKEBERG noted that this legislation speaks to a federally
mandated and associated raise by his calculation as of October 1,
1996, this affords a 10.5 percent increase to minimum wage earners
in the state of Alaska, reflected in the 50 cent increase.
September 1 of this calendar year the federal law and concurrent
state law would mandate an additional 40 cent increase or 7.6
percent accounting for almost an 18 percent increase in a period
less than 11 months. This seemed like a pretty substantial
increase for a non-bargained for wage increase particularly to the
people they're talking about. He asked what the federal intent is
for having a minimum wage.
MR. PERKINS responded so that a threshold could be set in order for
people to make a living.
Number 2128
CHAIRMAN ROKEBERG stated that nobody in this industry who might be
affected by this legislation makes a minimum wage, but they make
more than a minimum wage.
MR. PERKINS responded that the tipped credit would be made to the
employer. The employee ends up having to pay for this.
Number 2165
REPRESENTATIVE SANDERS said he understood that the way this
legislation was drafted would pre-empt any negotiations under
collective bargaining.
MR. PERKINS responded that the way he read the bill was that there
was no provision for collective bargaining.
Number 2205
MR. ROSENBERG noted that the most restrictive regulation
requirement someone is under is the law that prevails, much like
the minimum wage law is more restrictive or higher than the
federal. They are obligated to maintain this.
CHAIRMAN ROKEBERG added that his reading of the statute and the
supremacy clause is that there is nothing in this particular bill
which would have any impact on the right of a collective bargaining
unit to bargain for whatever wage level they would like.
Therefore, there is no need to speak to this by exempting
collective bargaining here. This is not the committee's intent to
restrict a collective bargaining unit and anyone related to labor
relations from instituting their own wage scale.
Number 2251
MR. PERKINS stated that this would be the base line figure. The
alternative is if the collective bargaining agreements don't
reflect this increase the employer certainly can decide to opt out
and become a non-union employer at the end of the contract.
CHAIRMAN ROKEBERG responded that this didn't restrict them from
offering a higher wage scale, "as we heard from the testimony there
are higher wage scales except that they do agree with that."
Number 2274
REPRESENTATIVE RYAN made an analogy between common law and the
Napoleonic Code. "We follow the basic standard of the English
Common Law versus the Napoleonic Code. Under the Napoleonic Code,
unless something is expressly permitted, it's forbidden. Under
English Common Law, everything is permitted unless it's expressly
forbidden. So, where in this legislation does it say anything
about somebody couldn't collectively bargain? I don't see the
argument there."
CHAIRMAN ROKEBERG stated that this was his opinion as well.
Number 2299
REPRESENTATIVE BRICE noted their discussions about the 40 cent
increase and he asked where in the statute would it prohibit an
employer from providing a cash wage of zero with a tipped credit of
$5.25.
MR. PERKINS responded that on page two, line two, subsection (d)
this language could be found.
Number 2335
REPRESENTATIVE BRICE realized this, but made himself more clear.
"Say you're a tipped employee and you're bringing in ten dollars
tips an hour as averaged out. What's to say that, what's to keep
the employer from basically as they do in New Jersey, having a zero
cash wage and then using the tipped credit for the entire wage."
REPRESENTATIVE HUDSON responded that on the first page of the bill
it clearly states that the employer shall pay each employee wages
at a rate of not less than 50 cents an hour, greater than the
prevailing minimum wage law which is established by federal law.
Number 2371
REPRESENTATIVE BRICE noted that this was true, but with the
exception of (b) and (d) prior to this clause.
CHAIRMAN ROKEBERG clarified that on page two that the employer must
pay a tip (indisc.) to the employee of at least 25 cents an hour.
Number 2387
REPRESENTATIVE BRICE agreed and that's what he's trying to point
out is that the tipped credit can be the $5.25.
CHAIRMAN ROKEBERG said that this sets up a "floor."
Number 2396
REPRESENTATIVE SANDERS asked if this amount of $5.25 an hour was
the federal minimum wage.
CHAIRMAN ROKEBERG responded that this was the current amount until
September 1, when it will be raised again. This legislation would
exclude this provisional raise from the Alaska statute. The
federal minimum wage is $4.75 an hour and will go up to $5.15 in
September. Alaska is above this amount.
Number 2422
REPRESENTATIVE SANDERS asked that when this federal amount is
raised to $7.50 would the Alaska amount stay at $5.25.
MR. PERKINS responded, "yes."
Number 2433
KYLE PARKER, Lobbyist, came forward to testify on HB 237. He noted
that the way this legislation will work is that when in the future
the minimum wage goes up to $7.00, the cash portion of the wage
paid to a tipped employee by his employer will be $5.25, however,
this does not relieve the tipped employee's employer from the
obligation of making up whatever difference there might be between
$5.25 and $7.00. If the employee is not earning enough in tips to
make up this differential the employer will make up this
differential on a daily basis.
REPRESENTATIVE SANDERS added that an employee will never get a
raise. If the employee is making $5.25 now and $2.00 in tips this
employee is making $7.25. If the minimum wage goes to $7.50 then
they're....
Number 2472
MR. PARKER added that Representative Sanders was absolutely
correct. As the minimum wage goes up 40 cents an employee will not
receive this from their employer, but as stated previously, the
employer is not relieved from his obligation to ensure that the
employee is earning at least $5.65 an hour when their state wage
goes to $5.65 in September.
TAPE 97-41, SIDE B
Number 000
REPRESENTATIVE SANDERS stated for the record, that this legislation
in the long run will "turn around and bite ya." Once an employer
pays $7.00 an hour and the minimum wage is $7.50 or $9.00, when the
employee is not making an amount above minimum wage as they are
presently, they will not want to work in Alaska anymore.
Number 035
MR. PARKER submitted that if in the future the minimum wage in
Alaska does ever get to $7.00 an hour he imagined they would
revisit this concept of a tipped credit. The other states which
have enacted this legislation, as minimum wage increases, they've
increased this amount. These states have looked at their tipped
credits to determine whether they are still appropriate.
MR. PERKINS offered that tips were never considered part of wages,
this amount used to be over and above what the servers have earned.
This is money they deserve to keep and the department feels this
legislation is a departure from this concept. He thought it was
offensive.
Number 079
CHAIRMAN ROKEBERG asked Mr. Perkins about employers that have
tipped employees and whether they are required to pay FICA on this
wage and if so, what was he saying?
MR. PERKINS responded that he was a former owner of a restaurant
and he stated that it's very difficult to tell someone that their
tips will be counted towards their wages, that basically they will
be paying for this 40 cent increase.
Number 110
TRINA JOHNSON, Owner, La Mex Restaurants, came forward to testify
on HB 237. She stated that if this tipped credit did not pass she
will seriously be forced to think about cancelling health benefits
for her employees. Over the years they've had benefits for paid
breaks, paid vacations, paid holidays, full health benefits, and
meals provided at no charge. In the last six or seven years health
benefits is the only thing that's left. She can't afford to take
any more cuts.
REPRESENTATIVE RYAN stated that he operates on the notion that the
word tip is an acronym, "insure prompt service." He said that if
he does not receive good service at a restaurant he didn't feel he
was there to support the restaurant owners employees, he goes to
restaurants to eat a good meal and to be served. If he's not
served well, he doesn't feel obligated to leave a gratuity. He
noted that if Alaska ever gets a minimum wage of $7.00 to $9.00 an
hour, having been a student of history, he could say that they
would be heading towards hyper-inflation and an economic collapse.
He saw both sides to this issue, but felt if they didn't pass this
bill it would mean that restaurant owners who are not making a lot
of money will be that much poorer, because they'll be driven out of
business. To raise $500,000 to $1 million in newly generated
income is impossible in face of the federal government raising the
minimum wage.
Number 194
CHAIRMAN ROKEBERG noted that Ms. Johnson had provided the committee
with a chart reflecting that her "back of the house" employees
would have a flat level of compensation as the minimum goes up.
This minimum wage increase has had a demonstrative, statistical
impact on these employees.
MS. JOHNSON offered that no employee in their restaurants are paid
minimum wage, except tipped employees. Their dishwashers make in
excess of $6.00 to $7.00 an hour. The cooks and line servers make
up to $10.00 to $12.00 an hour. The only employees affected wage
wise are the tipped employees. Inevitably, what will happen is, if
they don't get a tipped credit the first phase of the minimum wage
increase, her costs related to the minimum wage will increase
costing last year in excess of $20,000. The next increase will
cost her $25,000 to $30,000. In a two year period this is $55,000.
There is too much competition out there and she noted that she
could not sustain this increase.
Number 259
CHAIRMAN ROKEBERG asked if she was able to increase profitability
whether Ms. Johnson would allocate some of this money to the
employees.
MS. JOHNSON noted that they've been trying year after year. She
suggested that a year from now they see where the benefits lie.
She said she would love to reinstitute some of these benefits. The
quality of the employee has to be high and keeping someone at $5.25
an hour is impossible.
Number 302
REPRESENTATIVE COWDERY asked how many restaurants were in
Anchorage.
CHAIRMAN ROKEBERG ventured to say that there were over 300.
REPRESENTATIVE COWDERY recollected that this number may be over
500.
Number 338
REPRESENTATIVE RYAN referred to previous testimony by Mr. Gill
regarding his union and how they cover most of the hotel employees.
He wondered if these businesses were not as captive of audiences
versus people who come into her establishment off the street. He
asked how this worked.
MS. JOHNSON stated that she wasn't sure, but said that if they
looked at the difference between Mr. Anderson's place and the
Westmark, the latter has been in business for a long time. Their
start-up costs have been paid for. Presently, there are a lot of
start up businesses, new businesses that are trying to open while
the older businesses are trying to survive. She noted these
variables were proof of a difference.
Number 377
CHAIRMAN ROKEBERG ventured to say that the differentials are caused
by the fact that the food amenity services in some hotels are there
as an amenity to the guests. They try to be profit centers, but
aren't necessarily because they have a lower volume of traffic and
they have to pay a higher base wage because the employees don't
receive the amount of tips from a classic restaurant situation.
Number 414
REPRESENTATIVE HUDSON moved and asked unanimous consent to move HB
237 out of committee with individual recommendations and
accompanying zero fiscal note.
REPRESENTATIVE BRICE objected. He noted that he saw this
legislation as a kick-back payment to the employers by the
employees. He saw tips specifically as something that he gives as
a customer to servers as versus the employer. He pays his bill to
the owners. This legislation is inappropriate and it does not
address the needs stated by the restaurant owners, given that they
don't have minimum wage employees. What this does do, is hits down
on the lower end folks rather than those in the higher, more classy
establishments.
Number 483
CHAIRMAN ROKEBERG requested a roll call vote. Representatives
Cowdery, Sanders, Ryan, Hudson and Rokeberg voted yes.
Representative Brice voted no. House Bill 237 passed from the
House Labor and Commerce Committee.
Number 523
HB 217 - CERTIFIED NURSE AIDES
CHAIRMAN ROKEBERG asked Ms. Reardon if there was sufficient due
process in place on the part of an accused nurse aide to allow for
a hearing or would the division need to draft regulations to
provide these hearings under the statute. He was referring to
Section 08.68.333 on page four of the original version, subsection
(e). There is no provision in this subsection for a hearing by the
nurse aide before the Administrative Procedures Act. Further,
would this be covered by the APA?
MS. REARDON responded that subsection (f) on line 16, does exempt
the board from the requirement that the APA be followed for
procedures under this whole section. She clarified for the
chairman that his reference to AS 44.62.330 through .630 was
related to the APA. This section says that the APA does not apply
to hearings held or procedures established under this section. She
reiterated that the Board of Nursing and the division feel very
comfortable following the APA. Subsection (e) was put into their
original draft of this legislation by the Department of Law. She
thought it strange that this section was necessary at all. She
didn't think it was, but the Department of Law came up with the
idea in case of a mistaken identity. She noted they'd never had
this problem before.
Number 710
CHAIRMAN ROKEBERG referred to subsection .331, on page 2, line 30,
as giving them powers under administrative procedures and what they
are required to do when faced with a hearing regarding CNA
infractions.
MS. REARDON responded that Title 08.01 is their centralized
licensing statutes where it doesn't necessarily give them
directives, but outlines the punishments they may instruct. By all
means, before anyone in the division disciplines a licensee, this
licensee will have a hearing under APA strictures.
Number 794
CHAIRMAN ROKEBERG noted that, "right where they can have their
administrative hearing under the department's procedures, but they
can also request a revocation through Ms. Reardon's department, so
I understand that, but here we're talking about the revocation in
other future, further suspension and the hearing process in case
this happens."
Number 825
MS. REARDON stated that she does not wish for the division or the
Board of Nursing to be exempted from the APA. The HESS has a
desire to be exempted from the APA. In trying to accommodate their
desire to out from under the APA this type of language was added.
CHAIRMAN ROKEBERG again pointed out that there was no provision in
the legislation that provides for due process of somebody being
disciplined.
Number 860
MS. REARDON stated that it says they're exempt from the APA, but it
doesn't say they're exempt from the constitutional obligation to
give due process. If the APA process wasn't followed, a whole new
procedure would have to be established to ensure due process. HESS
seems to desire another alternative.
CHAIRMAN ROKEBERG referred to page 2, line 31, the word "may." He
wanted to know why "may" was used and not "shall."
Number 941
MS. REARDON stated that this was discretionary.
CHAIRMAN ROKEBERG referred to page 4, regarding the definition of
"notice," and asked if this was an APA definition.
Number 973
MS. REARDON responded she wasn't sure if it was the APA
requirement, but stated they would like to follow this procedure.
She said this could be done rather by certified mail.
CHAIRMAN ROKEBERG said he would feel more comfortable with that.
He moved a conceptual amendment to allow for this change on page 4,
line 2, the addition of "certified mail." Hearing no objections,
it was so moved.
Number 1102
REPRESENTATIVE RYAN moved and asked unanimous consent to move 217
as amended out of committee with individual recommendations and
accompanying fiscal note. Hearing no objection, HB 217 was moved
out of the House Labor and Commerce Committee.
ADJOURNMENT
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Committee
at 6:06 p.m.
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