Legislature(1999 - 2000)
03/10/1999 03:20 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE March 10, 1999 3:20 p.m. MEMBERS PRESENT Representative Norman Rokeberg, Chairman Representative Andrew Halcro, Vice Chairman Representative Jerry Sanders Representative Lisa Murkowski Representative John Harris Representative Sharon Cissna MEMBERS ABSENT Representative Tom Brice COMMITTEE CALENDAR * HOUSE BILL NO. 123 "An Act exempting individuals who provide ski patrol services on a voluntary basis from the requirement for payment of minimum wage and overtime compensation; and providing for an effective date." - HEARD AND HELD (* First public hearing) PREVIOUS ACTION BILL: HB 123 SHORT TITLE: EXEMPT VOL. SKI PATROL FROM MINIMUM WAGE SPONSOR(S): LABOR & COMMERCE BY REQUEST Jrn-Date Jrn-Page Action 3/03/99 342 (H) READ THE FIRST TIME - REFERRAL(S) 3/03/99 342 (H) L&C 3/10/99 (H) L&C AT 3:15 PM CAPITOL 17 WITNESS REGISTER CHRIS ROSS, Alaska Division Director National Ski Patrol P.O. Box 92207 Anchorage, Alaska 99509 Telephone: (907) 265-1113 POSITION STATEMENT: Testified in support of HB 123 on behalf of the National Ski Patrol. GAYLE JOSEPH National Ski Patrol 2221 Tasha Drive Anchorage, Alaska 99502 Telephone: (907) 344-5298 POSITION STATEMENT: Testified in support of HB 123. SEAN EDWARDS, Southeast Region Director Alaska Division National Ski Patrol 4350 Taku Boulevard Juneau, Alaska 99801 Telephone: (907) 789-1224 POSITION STATEMENT: Testified in support of HB 123. LARRY DANIELS, Ski Area General Manager Alyeska Ski Resort P.O. Box 249 Girdwood, Alaska 99587 Telephone: (907) 754-2260 POSITION STATEMENT: Testified in support of HB 123. RANDY CARR, Chief of Labor Standards and Safety Wage and Hour/Mechanical Inspection Division of Labor Standards and Safety Department of Labor P.O. Box 107021 Anchorage, Alaska 99510-7021 Telephone: (907) 269-4914 POSITION STATEMENT: Provided department position and information on HB 123 and the proposed Version G committee substitute. DWIGHT PERKINS, Deputy Commissioner Department of Labor P.O. Box 21149 Juneau, Alaska 99802-1149 Telephone: (907) 465-2700 POSITION STATEMENT: Testified on HB 123. TERRY CRAMER, Legislative Counsel Legislative Legal and Research Services Legislative Affairs Agency 130 Seward Street, Suite 409 Juneau, Alaska 99801-2105 Telephone: (907) 465-2450 POSITION STATEMENT: Answered questions as bill drafter on the proposed Version G committee substitute for HB 123. ACTION NARRATIVE TAPE 99-22, SIDE A Number 0001 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce Standing Committee meeting to order at 3:20 p.m. Members present at the call to order were Representatives Rokeberg, Halcro, Sanders, Murkowski, Harris and Cissna. HB 123 - EXEMPT VOL. SKI PATROL FROM MINIMUM WAGE Number 0074 CHAIRMAN ROKEBERG announced the committee would hear HB 123, "An Act exempting individuals who provide ski patrol services on a voluntary basis from the requirement for payment of minimum wage and overtime compensation; and providing for an effective date." He stated the legislation was brought to the committee by the Alaska Division of the National Ski Patrol (NSP) asking for an exemption from Alaska's minimum wage law for volunteer ski patrollers. He referred to AS 23.10.055, the wage and hour exemptions, noting subsection (6) did not apply because ski patrollers work in privately-owned, commercially-operated ski resort areas. AS 23.10.055(6) reads: AS 23.10.055. Exemptions. The provisions of AS 23.10.050 - 23.10.150 do not apply to ... (6) an individual engaged in the activities of a nonprofit religious, charitable, cemetery, or educational organization where the employer-employee relationship does not, in fact, exist, and where services rendered to the organization are on a voluntary basis; CHAIRMAN ROKEBERG commented material in the bill packet mentions that there are also professional ski patrollers at these commercial ski areas employed by the ski resort, but these paid employees are augmented by the volunteer ski patrollers acting as agents of the commercial operation. The distinction here is that the volunteers are not patrolling for a nonprofit organization. Chairman Rokeberg directed the committee's attention to the proposed Version G committee substitute (CS) [1-LS0577\G, Cramer, 3/9/99] which he indicated had a somewhat broader approach. Number 0265 REPRESENTATIVE HARRIS made a motion to adopt the proposed CS for HB 123, Version G, labeled 1-LS0577\G, 3/9/99, as a work draft. There being no objection, it was so ordered. Number 0328 CHRIS ROSS, Alaska Division Director, National Ski Patrol, testified via teleconference from Anchorage in support of HB 123. He spoke from a prepared statement: "Good afternoon Mr. Chairman, distinguished committee members and guests. My name is Chris Ross. I'm employed by NANA Development Corporation as the Corporate Health, Safety and Environmental Manager. I currently serve on the Alaska Safety Advisory Council as an industry rep [representative] and chair the Governor's Annual Safety and Health Conference. But today I am here as a member of the National Ski Patrol system where I am a volunteer patroller at Mt. Alyeska. "During the past 22 years that I've been a patroller, I've served in training and testing capacities, served as a Region and Division Advisor, (indisc.) served as the volunteer Patrol Director for the past ten years, and currently serve as the Division Director for the Alaska Division. "Throughout the history of NSP, its members have devoted a significant part of their lives to providing the public with emergency care, rescue services, and education programs that promote the safety and enjoyment of mountain recreation. As a result, thousands of injured people have received prompt, skillful emergency care, and numerous lives have been saved. "The history of NSP is rich and varied, reflecting the dedication of members who are motivated by a love of outdoor recreation and a desire to help those in need. This long tradition of promoting the enjoyment and safety of skiing prompted the United States Congress to grant a federal charter to NSP under Public Rule 96-489. The NSP is registered under Section 501(c)(1) of the IRS Code [Internal Revenue Service Code] as a nonprofit association, organized and operated exclusively for educational purposes. Subordinate units are granted exempt status under Section 501(c)(3). "NSP is dedicated to providing its members with educational programs and materials that will help them fulfill their role within the outdoor recreation community, whether in the context of skiing, snowboarding or other activities. Normally, NSP members provide this service under the direction of the ski area operator, a public lands administrator, military base commander, ski club or municipality. This is the important distinction, as it forms the basis of the current issue." Number 0482 "The mission of the national organization is somewhat different than that of its subunits. The mission of the NSP national organization is to provide its members with educational resources to help them fulfill their duties required of them by area management. The association's goal is to provide high-quality training programs in multiple disciplines and deliver these programs to the members in a cost-effective manner. "Nearly 30 percent of the patrollers registered in Alaska are instructors. I think that's an amazing percentage. We offer Emergency Care, Avalanche Training, Mountaineering, Toboggan Handling, and all the skills required. The Alaska Division of the NSP currently has nearly 400 patrollers registered in eighteen patrols across the state. Each of these patrols serves a different ski area or geographical area in the case of the Anchorage Nordic Patrol and Pioneer Peak Ski Patrol. "Ski areas in Alaska are a bit unique in that we have quite a mixture of ownership. We have publicly-owned areas such as Hilltop and Juneau which are operated by the municipality; privately-owned areas such as Moose Mountain, Mount Alyeska and Aurora SkiLand; military areas such as Hillberg, Arctic Valley Military, Birch Hill, Ravenwood and Black Rapids; and privately-owned nonprofit areas such as Alpenglow and Mount Eyak. We also have the Nordic Patrol that services most all of ... Southcentral Alaska on lands that are public, private, municipal, state [and] federal." Number 0588 "It's important to note, however, that a patrol, once established at a given ski area, is under the supervision and direction of the ski area's manager or local public lands administrator, and must abide by the policies and procedures established by management. The ski area manager or public lands administrator ultimately supervises and controls the patrolling activities of the individual NSP members and patrols at each area. While an area's paid patrollers are employees of the area, the area's volunteer patrollers are agents of the area. "By virtue of an oversight, however, the current wage and hour statutes appear to make the use of volunteer patrols impossible at many of our local ski areas. Because the current wording in Alaska Statutes 23.10.055 do not expressly allow volunteer ski patrollers, a valid interpretation of the law is that volunteer ski patrollers are not legally allowed to patrol at any entity not specifically excluded by exemption; although there is not consensus on the status of these patrollers in those areas either, and I'm referring to the municipal and nonprofit patrols. We do not believe the legislature intended these results. The exemption already lists wage and hour exemptions for groups such as volunteer ambulance attendants, volunteer firemen, volunteers for nonprofit associations and other groups." Number 0681 "Because there are only two ski resorts in Alaska that are nonprofit organizations - the other[s] being military, municipal or for profit - these current exemptions don't apply. We're asking for legislation to include the term 'volunteer ski patroller' in AS 23.10.055 to allow the NSP to continue in the state of Alaska. This is accomplished by the wording proposed in CS House Bill 123. The legislation will have zero fiscal impact. The legislation is fully supported by all of our division ski patrol members, ski area operators and public lands administrators. "So why do we want volunteer patrollers to continue in existence in Alaska? Probably the single biggest reason is that without the support of the volunteer patrollers in Alaska, ski patrols would cease to exist as we know them today. As previously mentioned, nearly 30 percent of the patrollers in Alaska are instructors. Take away the instructor cadre and there will be no outdoor emergency care, avalanche or mountaineering training, or any other NSP educational programs. If you take away the volunteer leadership and administration, there will be no direction, patrol registration, newsletters, instructor support group or funding to accomplish our program. "The second reason is that the organization and the individuals have a long tradition of service and support to the outdoor community. The NSP has been volunteering at ski areas for the past 60 years - nationally and in Alaska. NSP started in Alaska in 1939 at the ... 'third hut' in Juneau, (indisc.) hut. ... During that time, no volunteer ever anticipated that they would be covered as of the provisions of minimum wage or overtime laws. This legislation will have no impact on the status of paid patrollers; this is only to rectify the status of volunteer patrollers." Number 0794 "Finally, the members of NSP are some of Alaska's most generous volunteers. In addition to volunteering their time to serve the outdoor public, almost every patroller is involved in additional civic, community or cultural volunteer activity. Volunteerism must be allowed to flourish and grow, especially as budgets get tightened and we have fewer resources available. Alaska Division NSP members ... offer the community a tremendous wealth of talent, leadership, technical expertise and time. You'll find our members working with mountain rescue teams, Search and Rescue Dogs, American Red Cross, American Heart Association, volunteer ambulance crews, volunteer fire departments, local sporting events, and many more activities. "But until a new law is enacted we may not be able to volunteer our time as ski patrollers at many of Alaska's resorts. "NSP volunteers want to continue to ski at the mountains where we have been patrolling for the past sixty years. We want the opportunity to continue to offer our talents to recruit and train patrollers. And we want the legislature to correct this oversight in wage and hour [law] by passing House Bill 123. "Thank you for your attention Mr. Chairman and distinguished committee members, and I would be happy to answer any questions you may have." Number 0869 CHAIRMAN ROKEBERG questioned whether the lack of exemption from minimum wage and other wage and hour Acts is a national or local issue, wondering why this issue is being brought before the legislature now. MR. ROSS responded it was primarily a local issue because an attorney's letter had said they would probably not be able to patrol in Alaska anymore. In response to the chairman, Mr. Ross said this attorney is affiliated with the Alyeska patrol. CHAIRMAN ROKEBERG noted, then, it was a concern of Alyeska Ski Resort that this might come into play. Number 0959 GAYLE JOSEPH, National Ski Patrol, testified next via teleconference from Anchorage in support of HB 123. She noted Mr. Ross has stated the issues; she would like to speak from more of personal level. Ms. Joseph stated she has been patrolling since 1991. Recently she became the patrol representative, indicating she was responsible for meeting the volunteer force at Alyeska Ski Resort and ensuring that the volunteer force meets the needs of area management. She voiced support for HB 123 on behalf of the their 60-plus active members. Being on the volunteer force and having the opportunity to give back to the community provides a lot of personal satisfaction. Ms. Joseph stated ski patrolling had enhanced her life through numerous experiences "on the hill," and she would be greatly saddened if this opportunity was removed because of the wage and hour issue. Number 1049 SEAN EDWARDS, Southeast Region Director, Alaska Division, National Ski Patrol, came forward in Juneau to testify in support of HB 123. He said he has been patrolling in Juneau for approximately 15 years. He is speaking as a general ski patroller and also to assist Mr. Ross in the efforts to pass HB 123. Mr. Edwards spoke from a prepared statement: "Good afternoon Mr. Chairman, distinguished committee members and guests. My name is Sean Edwards, I'm a volunteer ski patroller here in Juneau. I've been involved in the ski patrol for most of the last 15 years. I've served as a patrol director, an outdoor emergency care and avalanche instructor, and I'm currently the Southeast Region Director for the Alaska Division. "Today I'd like to talk a little bit about the roles we play as members of the National Ski Patrol and at the local patrol level. As members of the National Ski Patrol, we're involved in providing our membership with exceptional training programs such the outdoor emergency care, avalanche, toboggan training, et cetera. As members of the local patrol, we provide the emergency rescue service and emergency care to the skiing public. "As the skiing industry's evolved it became necessary to define the roles of the National Ski Patrol, its members and ski area management. Out of that, the Joint Statement of Understanding was issued between the National Ski Patrol and the National Ski Areas Association [NSAA]. ... I've got a copy of that and I'll give that to the committee. ... That really defines our working relationship and what type of activities we conduct ... under the national umbrella and what activities we conduct under the auspices of the local patrol." Number 1166 CHAIRMAN ROKEBERG apologized for interrupting, obtaining a copy of the joint statement of understanding from Mr. Edwards for legislative counsel's [Terry Cramer] immediate review. Number 1176 MR. EDWARDS continued his testimony: "In a nutshell, when we're providing our members with the National Ski Patrol training programs we're involved in a nonprofit educational organization which, at least according to my interpretation, exempts us from the current minimum wage and hour laws. But when we're providing our local patrol services we're acting as agents of ski area management or the public lands administrator, and this is where the situation becomes less clear because of the variety of entities responsible for ski area operations, such as private companies, [public] lands administrators, military commanders' ski clubs and municipalities." "Most of the ski areas in the state are not run by nonprofit organizations and this is where the potential conflict lies. Without a specific exemption, many volunteer patrollers may be subject to the wage and hour laws, which would end volunteer ski patrolling in Alaska. "And as volunteer patroller, I would ask that you pass House Bill 123 which will allow myself and other 400 or so members of the National Ski Patrol in Alaska to continue volunteering and spending our time. And I thank you for your attention." Number 1237 CHAIRMAN ROKEBERG asked if the committee had any questions of Mr. Edwards. REPRESENTATIVE MURKOWSKI sought clarification as to the problem, and why amendments to current statute were being brought forward in two different areas. She commented on operating under the umbrella of the National Ski Patrol's 501(3)(c) protection and the resulting exemption from wage and hour issues, and then operating under a different umbrella on the local level which somehow gave exposure. Representative Murkowski asked Mr. Edwards what he is doing differently when he is acting at the local level as opposed to when he is volunteering for the National Ski Patrol. Number 1294 MR. EDWARDS replied when the volunteers actually perform the patrol and rescue services they are acting under the sole guidance and direction of that particular ski area's management. REPRESENTATIVE MURKOWSKI confirmed they were being directed in Juneau, then, by the manager of Eaglecrest Ski Area (Eaglecrest). MR. EDWARDS agreed, adding that the management determines all the policies and procedures used at the local level. There is a definite distinction between the nationally-organized training programs and the actual provision of rescue services and emergency care to the skiing public. To Mr. Edwards' understanding, this has developed out of managing liability and risk for the ski areas. In response to Representative Murkowski's additional question regarding whether volunteer ski patrollers had any kind of insurance through the National Ski Patrol, Mr. Edwards stated it depends on the patrollers' activities. National Ski Patrol has an umbrella liability policy covering training under the nationally-approved and supervised programs. All other insurance provided is provided through the area and ski area management. When they are performing patrol duties on the ski slopes, they are entirely covered under ski area management. Number 1389 CHAIRMAN ROKEBERG clarified that Eaglecrest is a publicly-owned facility, not a for-profit, which is one of the dilemmas here. MR. EDWARDS agreed one of the problems is that there are multiple entities running ski areas: military bases, the City and Borough of Juneau, the Municipality of Anchorage, and a couple of nonprofit groups. CHAIRMAN ROKEBERG indicated the for-profit entities are the problem, noting a witness from Alyeska Ski Resort (Alyeska) would be testifying. Number 1467 REPRESENTATIVE HALCRO asked the chairman what the difference is between volunteering to pick up trash in a park for the Municipality of Anchorage and volunteering to patrol a ski area. CHAIRMAN ROKEBERG responded that is a defect of the current statute. Referring again to AS 23.10.055(6), he noted there are 16 exemptions [AS 23.10.055(1) through (16)]. None of these exemptions allow volunteering for a commercial or profit-making organization. He indicated subsection (6) allows volunteering for nonprofits. REPRESENTATIVE HALCRO commented, then, he guesses he is not understanding the bigger picture: if he is a volunteer, he is a volunteer no matter who it is for. There is no contract, no wage set. CHAIRMAN ROKEBERG responded there is no exception or exemption in the statute for a volunteer operating under the supervision of a profit-making organization. The chairman indicated the "litany of organizations" under the existing statute's subsection (6) allowed to have volunteers is not clear. He noted the similarity between subsection (6) and subsection (15) [AS 23.10.055(15)]. Subsection (15) is basically the same except it is under "ATPA" [ATAP, Alaska Temporary Assistance Program] type activities, referring to welfare recipients. The hope is that, with the participation of the bill drafter [Terry Cramer], Mr. Carr from the department [Department of Labor (DOL)], et cetera, this situation can be resolved with minimal impact. AS 23.10.055(15) reads: (15) an individual engaged in activities for a nonprofit religious, charitable, civic, cemetery, recreational, or educational organization where the employer-employee relationship does not, in fact, exist, and where services are rendered to the organization under a work activity requirement of AS 47.27 (Alaska temporary assistance program); or Number 1550 REPRESENTATIVE HARRIS confirmed that AS 23.10.055(5) allows volunteering for a political subdivision of the state. REPRESENTATIVE HALCRO reiterated his belief that if someone is volunteering they are naturally exempt because they are not getting paid. CHAIRMAN ROKEBERG indicated the law requires minimum wage pay for work unless one of the exemptions is met. He noted it hasn't been enforced before because it is an unclear area; the committee wants to make it clear, and that is what the ski patrollers are requesting. Chairman Rokeberg confirmed Mr. Edwards thought this is probably a fair assessment. Number 1630 LARRY DANIELS, Ski Area General Manager, Alyeska Ski Resort, testified next via teleconference from Anchorage in support of HB 123. He asked that the committee recognize the statute and the National Ski Patrol's 60 years of service [in Alaska]. This legislation does not change the operational status quo in Alaska or at hundreds of ski areas nationwide where voluntary ski patrollers have been serving for many years. Alyeska currently has nearly 60 voluntary patrollers and approximately 20 professional patrollers. A fairly recent review of Alaska Statutes brought forward this question of whether volunteers could provide this service at for-profit organizations like Alyeska and other ski areas not specifically exempted. House Bill 123 allows the 39-year-old relationship at Alyeska to continue. Mr. Daniels said they hoped the committee would view the legislation favorably and pass it on to the full body. CHAIRMAN ROKEBERG confirmed that Alyeska's legal advisor had brought this question to Alyeska's attention. He asked if Alyeska is concerned, both as an employer and a major ski resort operator, that its operations may be detrimentally impacted if its attorney's interpretation of the existing wage and hour laws is enforced. Number 1737 MR. DANIELS agreed losing the majority of those 60 volunteers would be a concern, but he indicated it is also a concern that those individuals would be losing an avenue of voluntary and community service they want. CHAIRMAN ROKEBERG asked if Alyeska could, even under ideal conditions, open all its trails without those 60 patrollers. MR. DANIELS clarified the volunteers worked on a rotational basis; all 60 are not there at one time. CHAIRMAN ROKEBERG questioned if having to replace those volunteers with employees being paid at least minimum wage wouldn't impact Alyeska's ability to maintain all its areas and affect its financial bottom line. MR. DANIELS confirmed it would affect the bottom line, but noted what would be lost is the training and years of service the volunteers bring to the organization. If it came down to it, ten professional patrollers could be hired; that would displace those 60 people and eliminate their avenue for providing services to the skiing public. CHAIRMAN ROKEBERG confirmed Mr. Daniels is familiar with the Joint Statement of Understanding Between the National Ski Patrol and the National Ski Areas Association, revised July 1993, provided to the committee by Mr. Edwards, and that it is in effect at Alyeska under Mr. Daniel's operations. Number 1849 REPRESENTATIVE HARRIS asked for clarification on why the legislation is being brought forward. He wondered if there is a serious problem, if it is just for protection, or if it is for some other reason. MR. DANIELS replied one approach is to wait for a problem to arise. He noted one hasn't in the last 39 years and there is some fair likelihood it might never, since most of this statute has probably been in effect for a long time. On other hand, if a problem did arise, they might be dealing with all of the patrollers as a group, whether the patrollers want that or not. This could potentially be a very large problem. Mr. Daniels indicated he is unsure how the Department of Labor would approach the situation. Number 1920 MR. ROSS asked to share some possibly explanatory history with the committee. He thinks they all understand the history of the National Ski Patrol and can envision people skiing around in the mountains for the past 60 years. Mr. Ross noted that about 20 years ago, no ski patroller anywhere would have imagined another volunteer ski patroller filing a worker's compensation claim. About 15 years ago, that happened for the first time. About 10 years ago, no one would have ever thought a ski patroller would have sued a ski resort or the National Ski Patrol system; it would have been unthinkable. However, 3 years ago that happened and there was a $1.6 million judgement against the NSP. This judgement has caused even more delineation between the actions of the NSP as a national organization and the actions of the patrollers on the local level. Mr. Ross indicated he and Mr. Daniels first thought, when faced with the attorney opinion, that no patroller would ever act on this, but they reconsidered and decided that might not be the right approach. He confirmed for the chairman that this is preventive legislation, and, for Representative Harris, that all the situations he (Mr. Ross) had just described involved volunteers. CHAIRMAN ROKEBERG stated the committee would next hear from Randy Carr with the Department of Labor, indicating he thought Mr. Carr would help them "straighten this mess out." Number 2000 RANDY CARR, Chief of Labor Standards and Safety, Wage and Hour/Mechanical Inspection, Division of Labor Standards and Safety, Department of Labor, testified next via teleconference from Anchorage. He stated to the chairman that he would certainly try but he doesn't know if this mess has an easy solution. Mr. Carr said he would like to break the proposed CS into its two elements, hopefully clarifying the history, application, and why it presents a problem. Referring to Section 1 of Version G, Mr. Carr noted he thinks the statute being amended [AS 23.10.055(6)] has been in existence since the 1949 territorial legislature. This language carved out a group of nonprofit organizations that could accept volunteer service without being subject to Alaska's minimum wage and overtime laws. This was modeled after a standard set in the federal Fair Labor Standards Act (FLSA) which allowed any nonprofit group to accept volunteer services. There is no history regarding why the 1949 legislature limited Alaska's law to four types of nonprofit groups: religious, charitable, cemetery, educational. This means that unless a nonprofit is organized for one of those four purposes, and the group's bylaws and original paperwork filed with the IRS indicate that is the group's purpose, that nonprofit group cannot legally avail itself of the services of volunteers. Number 2077 MR. CARR commented everyone present knows that every nonprofit group in the state functions out of the good services of volunteer labor. The Department of Labor does not make an issue of actively enforcing this by investigating nonprofit groups for illegal volunteers, nor is the department interested in doing so. However, these statutory rights exist. Mr. Carr noted in the last few years the department has seen individuals coming forward asserting claims for minimum wage or overtime under this statute because of services the individuals were providing to a nonprofit group that did not fit the exemption. Mr. Carr indicated there are numerous non-exempt nonprofit organizations in Alaska. In response to comments from the chairman, Mr. Carr confirmed that the Iditarod dog sled race is not exempt and he indicated there is a large problem with Alaska's future hosting of the 2001 Special Olympics World Winter Games. He said he has been told about 3,000 people will be involved in the Special Olympics group; that group is not exempt under statute. Mr. Carr explained that the Department of Labor saw the NSP bill as an opportunity to address an urgent problem, and wanted to bring forward the language in the proposed CS to expand the existing language in exemption (6) to incorporate any type of nonprofit organization functioning in the context of that organization's nonprofit activities. The DOL's intent with the language of the proposed CS's Section 1 is to allow any nonprofit organization to legitimately accept the services of volunteer labor in its nonprofit activity. If an organization has a for-profit arm, that for-profit arm should still be subject to the Alaska Wage and Hour Act; an unfair competitive advantage should not be allowed. Number 2168 MR. CARR indicated the DOL believes the language in Section 1 of Version G would address the current disparity between the state's nonprofit groups. Mr. Carr indicated federal law already recognizes these other nonprofit organizations. The change in Section 1 would essentially allow the state to take the same posture towards nonprofits as the Fair Labor Standards Act does. Section 1 of Version G reads: * Section 1. AS 23.10.055(6) is amended to read: (6) an individual engaged in the nonprofit activities of a nonprofit religious, charitable, cemetery, or educational organization or other nonprofit organization where the employer-employee relationship does not, in fact, exist, and where services rendered to the organization are on a voluntary basis and are related only to the organization's nonprofit activities; MR. CARR referred to the main language of the original HB 123, now found in Section 2 of Version G. Section 2 of Version G reads: * Sec. 2. AS 23.10.055 is amended by adding a new paragraph to read: (17) an individual who provides ski patrol services on a voluntary basis. MR. CARR noted the previous testimony has shown that many different kinds of organizations benefit from the services of volunteer ski patrollers. He expressed the desire to examine how these different organizations are currently addressed in state and federal law and how they would be addressed if this legislation passes. The federal organizations like the National Park Service and the military are exempt from FLSA and, by the state's exemptions [AS 23.10.055(5)], are exempt from the Alaska Wage and Hour Act. Overtime is not a problem for these groups and they can accept volunteers. Municipalities and other public entities/political subdivisions are exempt from the Alaska Wage and Hour Act, but not from FLSA. These groups must pay minimum wage and overtime to their employees but FLSA allows political subdivisions to accept volunteer services. Nonprofit groups are completely exempt under FLSA and would be completely exempt if the state law is amended. Regarding private for-profit businesses, the suggested language would exempt private for-profit businesses from the obligation under state law to pay minimum wage and overtime for any ski patroller volunteering his or her services. However, those private for-profit businesses would still be subject to FLSA. The current proposed CS for HB 123 cannot address that; it will not give any relief from FLSA liability. Number 2289 CHAIRMAN ROKEBERG confirmed Mr. Carr's point is that they can exempt it from state law, but not from federal. MR. CARR agreed. The federal exposure will still be out there for private for-profit businesses and, potentially, municipalities. The current form of HB 123 would only take the state out of the concern and make a federal case out of any case that might come forward. CHAIRMAN ROKEBERG commented that Mr. Carr's comments were germane and appreciated, noting all the committee can do is what can be done in the state of Alaska. The chairman indicated he feels it is still a valuable exercise in going forward with what can be done in this state. Number 2319 MR. CARR agreed, but noted the point is that it would be important for any entity operating under the exemption as proposed to understand it still has the same obligation at the federal level. These entities will still have the same exposure regarding volunteer labor if this legislation passes. CHAIRMAN ROKEBERG asked if the state DOL had any jurisdiction in enforcing the federal wage and hour [Act]. MR. CARR said absolutely not; a matter not within the state's jurisdiction is referred to the United States Department of Labor (USDOL). CHAIRMAN ROKEBERG confirmed with Mr. Carr that it is the duties of the state Department of Labor to follow the public policies of the state of Alaska as articulated by the legislature. Number 2356 MR. CARR said the department has an additional concern with regards to the legislation. This bill takes a very small group of people who are employees under the law, volunteer ski patrollers working for a private sector employer, and makes this group exempt. Once these people are exempted, they don't have to be paid, they don't have to be treated as employees. The department feels that sets a very dangerous precedent. Mr. Carr indicated HB 123 sets a precedent that some employees could be considered volunteers, noting the possibility future legislation might be brought forward requesting additional exemptions for other groups willing to volunteers in exchange for tips, like counter help or bellhops. He indicated that concluded his testimony and he was willing to answer any questions with regards to the juxtaposition of the state and federal laws, or the state's position regarding volunteers as a whole. CHAIRMAN ROKEBERG said he understood the department's feeling that, as a departmental policy, it is a dangerous precedent to have an exemption for a small group of people, but asked where the exemption for volunteers under a commercial activity is in the proposed CS. MR. CARR said they are not suggesting in the proposed CS that volunteers working under commercial activity be exempt. The last portion of Version G's Section 1 would exclude anyone who is working in a commercial activity for a nonprofit organization from the modified exemption, with minimum wage and overtime still required under the [state's] wage and hour Act. CHAIRMAN ROKEBERG pointed out, then, that ski patrollers working at Alyeska would not be exempt. The chairman indicated this is the reason why both Mr. Carr and the bill drafter, Ms. Cramer, have been asked to participate, and that the chairman also shares a concern about adding another exempt group to the statute. He posed the question to Mr. Carr and Ms. Cramer, "Is there a way we can delete number 17 [subsection (17) of Version G] and put into the subsection (6) in Section 1 of the CS, provisions for exemption for volunteers ... under a commercial operation, ... without doing to much damage to this thing. And then also using..." [TESTIMONY INTERRUPTED BY TAPE CHANGE] [From tape log notes: "Also using 'term of art' ... so we can stipulate ski patrollers ..."] TAPE 99-22, SIDE B Number 0001 CHAIRMAN ROKEBERG continued, "... we can delete 17 as another exemption and overcome your fears, but you seemed to have expressed some concern about having a - any kind of volunteerism under the guise of commercial operation. So, there we have what I'd like -- that is the proposition before the committee." Number 0020 MR. CARR indicated agreement, adding, "And that is the crux of the dilemma. When we first saw HB 123, I had not yet talked with Chris [Mr. Ross] and I was not as educated on the background of National Ski Patrol in Alaska, and how many different organizations it serviced, as I am now. But we saw this as an opportunity to perhaps take a (indisc.) which we thought addressed at the time only ski patrol services to nonprofits, and expand that so that we could address the other nonprofit problems that existed out there." Mr. Carr noted since that time it has become evident that the nonprofit side of the ski patrol in Alaska is a very, very small aspect of the ski patrol's problem. The federal agencies don't have a problem; the state/municipal agencies probably don't have a problem because they can accept volunteers. The problem is with the for-profit businesses. Mr. Carr noted he doesn't know how many people or ski operations this involves. The existing law with the suggested minor modifications in Section 1 of the proposed CS pretty well address everyone else, but the CS's Section 1 does not, and was not intended to, address a for-profit operation. CHAIRMAN ROKEBERG indicated his understanding. He recognized that Dwight Perkins, Deputy Commissioner, Department of Labor, wished to comment. Number 0083 DWIGHT PERKINS, Deputy Commissioner, Department of Labor, came forward. He stated for the committee, for example, that Alyeska has paid ski patrol staff and also the National Ski Patrol. The National Ski Patrol is a national umbrella, as Representative Murkowski touched on, using its [IRS] 501(c)(1) status as a nonprofit. The National Ski Patrol is keeping that nonprofit distinction, but because it is taking direction from Alyeska, an employee-employer relationship exists. Mr. Perkins questioned Mr. Carr, "And if not, shouldn't we be okay with the language that we suggested as the change in the CS?" MR. CARR replied the likelihood is that the relationship would be one of a joint employer. Using the example of Alyeska: Alyeska is going to manage and control the duties and pursuits of the ski patrol on its grounds. The case law indicates that there is most likely going to be a joint employer relationship, with Alyeska being the employer on the private side and the nonprofit group being the employer accepting volunteer services on the other side. Mr. Carr stated, "So I think that's where the exposure arises - is the control asserted by the ski operation puts them into a position ... in the eyes of the state and federal laws, and the courts' interpretation of them, of a joint employer. Thus they suffer the exposure." Number 0193 REPRESENTATIVE MURKOWSKI noted she has reviewed the Joint Statement of Understanding between the National Ski Patrol and the National Ski Areas Association. In her reading, the individual ski areas have the right to approve selection of volunteer patrols, the right to dismiss, et cetera. However, Representative Murkowski said the joint statement goes on to say that, notwithstanding, "'There is nothing that shall vary the very clear non-employee status of individual volunteer patrollers. Volunteer patrollers are not, and have not, been employees, but agents ... when acting within the scope of their assigned duties in view of the voluntary nature of their patrolling services.'" She noted it seems clear that the volunteer patrollers are not treated as employees, there isn't a joint employer type of relationship or an employee-employer relationship; it is a clear separation based their volunteer responsibilities. The paraphrased section of the joint statement of understanding reads: "7. It is specifically understood between the parties to this Agreement that nothing herein, and nothing contained in any individual agreement between the NSP and individual ski areas based on the Joint Statement of Understanding, shall in any way vary the clear, non-employee status of individual volunteer patrollers. In fact, it is expressly understood between the NSP and the NSAA, as well as the membership of both organizations, that the volunteer patrollers are not and have not been employees, but agents when acting within the scope of their assigned duties, in view of the voluntary nature of their patrolling services." MR. PERKINS noted that was kind of what he had been driving at. He stated, "I didn't see the tie there, and because they are truly a nonprofit and they do have the ... 501(c) exemption, I thought we could draw that distinction between the lodge, if you will, the employee, as the employer and the employee relationship, which would ... -- and then we could use the language that we suggested as a blanket for all the nonprofits, because they're still acting in the nonprofit capacity as ski patrollers, ... honestly I'm confused too. ... I want to think there's a way that we can craft this to where, without putting in an exemption just specifically for ski patrollers, but what the language that Mr. Carr had suggested to me for this amendment ..." CHAIRMAN ROKEBERG noted Mr. Ross in Anchorage had wished to make a comment. Number 0285 MR. ROSS clarified that all patrollers at Alyeska, both paid and volunteer, are members of the National Ski Patrol; all patrollers in the state of Alaska, both paid and volunteer, are NSP members. The National Ski Patrol is an educational organization, not a mountain operations organization. Mr. Ross commented this is confusing even within their own ranks because of the changes that have taken place. The National Ski Patrol is not an employer and has no employer liability "for any number of different reasons." He indicated the NSP/NSAA joint statement of understanding was crafted to guide that relationship when patrollers are on the mountain but state law seems to supersede this. For example, Alyeska volunteer patrollers are clearly covered under worker's compensation even though they are agents, not employees. Under current state law, a volunteer patroller could file a valid wage and hour claim with the state. Mr. Ross pointed out the language in the proposed CS that exempts commercial operations would take patrollers away from Alyeska, "Moose Mountain," "SkiLand," and some of the other smaller areas. This is about three-quarters of the patrollers in the [NSP's] Alaska Division. This would additionally remove the division director, trainers, and volunteer support. Alyeska would have paid patrollers but no one to train them. Eaglecrest would have patrollers but without all the division and national support. Mr. Ross indicated the issue goes beyond simply requiring commercial operations to replace volunteers with paid staff. Number 0400 REPRESENTATIVE HALCRO asked Mr. Ross if the NSP is doing anything on the federal level to get this addressed in the Fair Labor Standards Act. MR. ROSS noted Mr. Carr had suggested it that day. REPRESENTATIVE HALCRO indicated he thinks an additional exemption for an individual providing the valuable service of volunteer ski patrolling is not too much to ask for, and he is opposed to the deletion of subsection (17), the proposed ski patroller exemption. Representative Halcro compared this to some of the other exemptions in existing statute, specifically naming the exemption for an individual employed in the handpicking of shrimp [AS 23.10.055(3)]. Representative Halcro said it begs a question about the larger picture, asking if volunteer course marshals at golf courses are exposed. Number 0478 REPRESENTATIVE SANDERS asked for clarification, questioning whether there are paid volunteers and nonpaid volunteers. MR. ROSS replied the specific distinction would be paid ski patrollers and volunteer ski patrollers. REPRESENTATIVE SANDERS asked for clarification on the problem before the committee. Number 0513 MR. CARR replied the difficulty is that it is illegal for a for-profit business to have volunteers; it's considered an unfair competitive advantage. In the ski patrol issue context, Alyeska has a certain number of paid ski patrollers augmented by volunteers providing the services necessary to cover the entire mountain. The Department of Labor has not gone out and told Alyeska that it cannot have volunteers. The problem is that there is legal exposure. These volunteers have an entitlement to minimum wage and overtime. If any of these volunteers, either in the ski patrol or in any of the nonprofits not covered by the exemption [in AS 23.10.055(6)], decide they wish to be paid, they have a valid claim and would be able to collect. Mr. Carr indicated there is no doubt or defense regarding the ability to collect. He commented he thinks that is the problem presenting itself here: Alyeska is concerned that it has exposure, as it should be. If someone decided they wanted to be paid for all his or her previous volunteer services and has time records, this person could get an attorney, file a minimum wage and/or overtime complaint, and would be paid. REPRESENTATIVE SANDERS said that seemed to him, then, to be the problem. He asked if they couldn't write something disallowing payment to those people for past services. He questioned if that covered the problem, noting then there is no problem if the people wanted to be paid for future services. Number 0600 MR. CARR replied he didn't know if that could be written and would have to think about it, commenting, "Because ... you would be essentially sacrificing their rights retroactively." REPRESENTATIVE SANDERS commented the people in question did that when they volunteered, adding, "Now ... they don't want to volunteer so they don't have any more rights now." MR. CARR indicated the state has a lot of volunteers who don't understand they even have these rights. He commented this might be part of the reason the issue is coming forward. More and more people are becoming aware that they may have a legal entitlement to something and when things get tough, they decide they want those wages. REPRESENTATIVE SANDERS indicated his concern is that if this enacted this year to protect volunteer ski patrollers, Alyeska might decide it needs volunteer kitchen help next year. CHAIRMAN ROKEBERG indicated volunteer ski patrollers have been serving for 30 years. Number 0660 REPRESENTATIVE HALCRO questioned whether Mr. Carr's testimony regarding the existing exposure hadn't made the case for exempting these people. MR. CARR replied that could be argued both ways. The patrollers have noted they haven't had a problem in 39 years and the law has been in existence that entire time. REPRESENTATIVE HALCRO said he could understand "the fear that the camel's getting his nose under the tent here," but indicated he doesn't think a large shift to volunteerism for commercial entities is likely. MR. CARR was not in agreement, stating, "Every (indisc.) getting tighter, suppose this bill is passed and two years from now a ... new manager at Alyeska says, '... I've got three paid ski patrol people and I got a budget cut - I don't need them, I can replace them with volunteers. So they're out the door and I'm gonna use all volunteers.' And this would allow that." Number 0709 REPRESENTATIVE MURKOWSKI asked Mr. Ross if voluntary ski patrollers receive any form of compensation, such as free lift tickets. MR. ROSS responded they receive a ticket for a day of skiing. CHAIRMAN ROKEBERG asked Mr. Perkins if a ski lift ticket would be considered taxable compensation under Alaska law. Mr. Perkins referred that issue to the Department of Revenue and the IRS. Number 0769 REPRESENTATIVE CISSNA asked if the concern was that they would wind up with slave labor - people willing to work for food and shelter if times became very tough. MR. CARR answered in the negative, although he supposed that was an ultimate potential. The reason why commercial businesses cannot have volunteer labor is because some commercial businesses are well-equipped to accept volunteer labor but their competitor(s) may not be able to get or keep volunteers. An unfair competitive advantage is created in this situation. Mr. Carr indicated this has been a constant enforcement problem at the federal level although there haven't been a lot of problems at the state level. At the federal level there have been numerous situations where a business, for religious purposes, sets up a religious nonprofit organization with volunteers, and that religious organization sets up a for-profit business enterprise. This situation occurred in Alaska regarding a gas station; all the church volunteers operated the gas station and no one was paid. The other three gas stations in that town complained to their legislators because they were being put out of business. Mr. Carr stated this is trying to keep the playing field level so there is no opportunity for abuse. He noted that is not the problem with the ski resorts, but said that is the overall reasoning behind the law. Mr. Carr commented he realizes how they balance that with the problem before them today is a very difficult question. Number 0905 CHAIRMAN ROKEBERG noted the presence of Terry Cramer, Legislative Counsel, at the meeting by the chairman's request. He asked Ms. Cramer if it is possible, from a drafting standpoint, to include the volunteers under a commercial entity by redrafting subsection (6) [Section 1, Version G]. He expressed some concern about the gas station analogy. Number 0954 TERRY CRAMER, Legislative Counsel, Legislative Legal and Research Services, came forward. She stated she has come up with some language but is not sure it would preclude the gas station example. It would include the National Ski Patrol. Ms. Cramer indicated the proposed CS contains the tightest language, where both the National Ski Patrol issue and the broadening of the nonprofit organization are specifically addressed without attempts to blend the two together. Ms. Cramer provided her possible language to the committee, adding to the end of the proposed CS's Section 1 after "and are related only to the organization's nonprofit activities", the wording, "whether or not the activities of the individual are performed under the direction of another for-profit organization". Ms. Cramer commented it might be possible to omit the word "another"; she additionally said it could be a for-profit or nonprofit organization. CHAIRMAN ROKEBERG stated, "under the direction of a for-profit organization". MR. PERKINS asked if just using "organization" would be inclusive of for-profit. Number 1045 MS. CRAMER indicated her concern about using only the word "organization" in her suggested language is because the previous use of "organization" in subsection (6) refers to nonprofit organizations. She mentioned the language, "another for-profit or nonprofit organization". CHAIRMAN ROKEBERG asked if they could refer to business, as under the business code. He noted the legislature had redefined "business" last year to include nonprofits, indicating it is applicable. MS. CRAMER said she would have examine that definition. CHAIRMAN ROKEBERG indicated the legislature had revised the definition of business under the business license. Chairman Rokeberg commented he guesses this goes back to the point: the department opposes the addition of further exemptions. Noting Mr. Carr's testimony and the gas station scenario, the chairman questioned Mr. Perkins whether it wasn't better to have the tighter language. He indicated he meant the current language in Version G. Number 1126 MR. PERKINS asked if Mr. Carr had understood Ms. Cramer's comments regarding the possible amendment. MR. CARR answered in the affirmative. He indicated he agreed that probably the best way to do it would be to leave the proposed CS in its current form; that would be the "tightest language" discussed so far. CHAIRMAN ROKEBERG noted this would require the department to accept subsection (17). The chairman indicated he thinks the proposed CS corrects a serious, long-overdue problem in the existing statute's subsection (6), and a that very unique set of circumstances exist with the National Ski Patrol. The volunteer patrollers try to posit themselves as agents on a volunteer basis of a for-profit investor-owned corporation. The chairman commented on the hybrid nature of the relationship. However, he noted, as Ms. Cramer indicated, attempting to "open up" the statute on a more generic basis allows possible abuse such as the previously-mentioned gas station situation. The committee is trying to accommodate the Department of Labor and organized labor's antipathy toward additional exemptions, but the chairman said he doesn't think it works. He asked if Mr. Perkins had an opinion. Number 1221 MR. PERKINS said he certainly understood the chairman's comments, noting it appears both he (Mr. Perkins) and Representative Murkowski agreed regarding the "arm's length, if you will," and it not being arm's length far enough according to Mr. Carr. Mr. Perkins indicated he would defer to Mr. Carr's knowledge regarding what other groups might request exemptions if subsection (17) is added to current statute. CHAIRMAN ROKEBERG said he isn't concerned about that if the groups can make their case and the process is followed. The chairman noted they had exposed a major defect in subsection (6) [in current statute], with a lot of benefit to that. Nevertheless, the volunteer ski patrollers have a legitimate request. The chairman commented his position is that the policy of the department and of organized labor in Alaska needs to bend a bit when it is doing the right thing. He said he was willing to allow the department more time if it thought it could come up with a "wordsmithing fix," expressing his own scepticism and deferring to Mr. Carr. MR. PERKINS said he would like to review this with the commissioner. He indicated the department would be present if the chairman would hold the bill until the next committee meeting. Number 1337 REPRESENTATIVE MURKOWSKI inferred that by amending subsection (6) they would solve a lot of potential problems, and therefore perhaps would not see requests in the immediate future for the possible additional exemptions Mr. Perkins is concerned about. REPRESENTATIVE HALCRO stated there are exemptions because there need to be, indicating he agreed with the chairman's previous comment. Laws are obvious designed to protect some, and in this case he feels the ski patrol needs to be protected against unfair claims. Representative Halcro said he sees no problem adding subsection (17) for ski patrol services on a voluntary basis, indicating some of the current exemptions, like the handpicking of shrimp [AS 23.10.055(3)], are for commercial operations. He doesn't see the argument and thinks the committee should add the exemption. Number 1448 CHAIRMAN ROKEBERG strongly agreed. Without the National Ski Patrol, there would be no avalanche or mountain rescue teams in Alaska, or in the nation. He asked if there were further comments or discussion, announcing that HB 123 would be held till the next meeting at the request of Mr. Perkins, Deputy Commissioner of the Department of Labor. However, the chairman's intention is to move the legislation out of committee at that time unless the department or another party can provide a solution. ADJOURNMENT Number 1500 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing Committee meeting at 4:40 p.m.