Legislature(1993 - 1994)

03/10/1994 08:00 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             HOUSE STATE AFFAIRS STANDING COMMITTEE                            
                         March 10, 1994                                        
                            8:00 a.m.                                          
  MEMBERS PRESENT                                                              
  Representative Al Vezey, Chairman                                            
  Representative Pete Kott, Vice Chairman                                      
  Representative Bettye Davis                                                  
  Representative Gary Davis                                                    
  Representative Harley Olberg                                                 
  Representative Jerry Sanders                                                 
  MEMBERS ABSENT                                                               
  Representative Fran Ulmer                                                    
  COMMITTEE CALENDAR                                                           
  HB 407:        "An Act relating to issuance of commemorative                 
                 gold rush motor vehicle license plates."                      
                 CSHB 407 PASSED OUT OF COMMITTEE                              
  *HB 307:       "An Act relating to the Uniform Probate Code,                 
                 including nonprobate transfers,                               
                 guardianships, trusts, and multiple-party                     
                 accounts; relating to the Uniform                             
                 Simultaneous Death Act; amending Alaska Rule                  
                 of Probate Procedure 5; and providing for an                  
                 effective date."                                              
                 HELD IN COMMITTEE                                             
  *HB 489:       "An Act repealing the state requirement to                    
                 provide overtime compensation and relating to                 
                 liquidated damages for unpaid minimum wages."                 
                 PASSED OUT OF COMMITTEE                                       
  HB 459:        "An Act relating to liquidated damages and                    
                 attorney fees for minimum wage and overtime                   
                 compensation claims."                                         
                 CSHB 59 PASSED OUT OF COMMITTEE                               
  *HB 389:       "An Act relating to criminal mischief."                       
                 NOT HEARD                                                     
  HB 347:        "An Act relating to long-term plans of                        
                 certain state agencies."                                      
                 NOT HEARD                                                     
  WITNESS REGISTER                                                             
  TIM BENINTENDI, Staff                                                        
  Representative Carl Moses                                                    
  Alaska State Capitol, Room 204                                               
  Juneau, AK  99811-0460                                                       
  Phone:  465-4451                                                             
  POSITION STATEMENT:  Gave the sponsor statement for SSHB 307                 
  ART PETERSON, Attorney                                                       
  Dillon & Findley                                                             
  Alaska Uniform Law Commissioner                                              
  350 N. Franklin                                                              
  Juneau, AK  99801                                                            
  Phone:  586-4000                                                             
  POSITION STATEMENT:  Supported SSHB 307                                      
  JOHN GEORGE                                                                  
  American Council of Life Insurance                                           
  9515 Moraine Way                                                             
  Juneau, AK  99801                                                            
  Phone:  789-0172                                                             
  POSITION STATEMENT:  Stated concerns on SSHB 307                             
  J.R. `RANDY' CARR, Chief                                                     
  Wage & Hour Division                                                         
  Department of Labor                                                          
  P.O. Box 107021                                                              
  Anchorage, AK  99510-7021                                                    
  Phone:  269-4913                                                             
  POSITION STATEMENT:  Answered questions on HB 489 and HB 459                 
  KEN LEGACKI                                                                  
  425 G Street, Ste. 760                                                       
  Anchorage, AK  99501                                                         
  Phone:  258-2422                                                             
  POSITION STATEMENT:  Commented on HB 459 and HB 489                          
  REPRESENTATIVE ELDON MULDER                                                  
  Alaska State Legislature                                                     
  Alaska State Capitol, Room 116                                               
  Juneau, AK  99811-0460                                                       
  Phone:  465-2647                                                             
  POSITION STATEMENT:  Addressed HB 459                                        
  PREVIOUS ACTION                                                              
  BILL:  HB 407                                                                
  SPONSOR(S): REPRESENTATIVE(S) FOSTER,Toohey                                  
  JRN-DATE     JRN-PG               ACTION                                     
  01/27/94      2166    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/27/94      2166    (H)   STATE AFFAIRS, FINANCE                           
  01/31/94      2207    (H)   COSPONSOR(S):  TOOHEY                            
  03/01/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  03/01/94              (H)   MINUTE(STA)                                      
  03/05/94              (H)   MINUTE(STA)                                      
  03/08/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  BILL:  HB 307                                                                
  SHORT TITLE: UNIFORM PROBATE CODE                                            
  SPONSOR(S): REPRESENTATIVE(S) MOSES,Ulmer                                    
  JRN-DATE     JRN-PG               ACTION                                     
  01/03/94      2007    (H)   PREFILE RELEASED                                 
  01/10/94      2007    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/10/94      2007    (H)   STATE AFFAIRS,JUDICIARY,FINANCE                  
  01/31/94      2204    (H)   SPONSOR SUBSTITUTE                               
  01/31/94      2204    (H)   STATE AFFAIRS,JUDICIARY,FINANCE                  
  03/10/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  BILL:  HB 489                                                                
  SHORT TITLE: OVERTIME COMPENSATION                                           
  SPONSOR(S): REPRESENTATIVE(S) VEZEY                                          
  JRN-DATE     JRN-PG               ACTION                                     
  02/14/94      2379    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/14/94      2379    (H)   STATE AFFAIRS                                    
  02/18/94      2461    (H)   L&C REFERRAL ADDED                               
  03/10/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  BILL:  HB 459                                                                
  SHORT TITLE: DAMAGES & ATTY FEES FOR UNPAID WAGES                            
  SPONSOR(S): LABOR & COMMERCE                                                 
  JRN-DATE     JRN-PG               ACTION                                     
  02/09/94      2321    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/09/94      2321    (H)   L&C,STATE AFFAIRS,JUDICIARY                      
  02/22/94              (H)   L&C AT 03:00 PM CAPITOL 17                       
  02/22/94              (H)   MINUTE(L&C)                                      
  02/23/94      2495    (H)   L&C RPT  2DP 4NR                                 
  02/23/94      2495    (H)   DP:  PORTER, MULDER                              
  02/23/94      2496    (H)   NR:  SITTON, WILLIAMS, GREEN,                    
  02/23/94      2496    (H)   -ZERO FISCAL NOTE (LABOR)                        
  03/10/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  BILL:  HB 389                                                                
  SPONSOR(S): REPRESENTATIVE(S) NORDLUND,Finkelstein                           
  JRN-DATE     JRN-PG               ACTION                                     
  01/21/94      2124    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/21/94      2124    (H)   STATE AFFAIRS,JUDICIARY,FINANCE                  
  03/10/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  BILL:  HB 347                                                                
  SHORT TITLE: STATE LONG-TERM PLANNING                                        
  SPONSOR(S): REPRESENTATIVE(S)PARNELL,Hanley,Therriault,                      
  JRN-DATE     JRN-PG               ACTION                                     
  01/07/94      2018    (H)   PREFILE RELEASED                                 
  01/10/94      2018    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/10/94      2019    (H)   STATE AFFAIRS, FINANCE                           
  01/12/94      2043    (H)   COSPONSOR(S): THERRIAULT                         
  01/13/94      2056    (H)   COSPONSOR(S):  B. DAVIS                          
  01/14/94      2084    (H)   COSPONSOR(S):  JAMES                             
  03/08/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  03/08/94              (H)   MINUTE(STA)                                      
  03/10/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  ACTION NARRATIVE                                                             
  TAPE 94-26, SIDE A                                                           
  Number 000                                                                   
  CHAIRMAN AL VEZEY called the meeting to order at 8:00 a.m.                   
  Members present were REPRESENTATIVES SANDERS, OLBERG, G.                     
  DAVIS, and B. DAVIS.                                                         
  HB 407 - COMMEMORATIVE GOLD RUSH LICENSE PLATES                              
  CHAIRMAN VEZEY opened CSHB 407, Version J, for discussion                    
  under bills previously heard.  He stated a fiscal note had                   
  been received from the Department of Public Safety which                     
  stated CSHB 407 would average a positive revenue of $22,500                  
  a year.                                                                      
  CSHB 407:      "An Act relating to issuance of commemorative                 
                 gold rush motor vehicle license plates; and                   
                 providing for an effective date."                             
  (REPRESENTATIVE KOTT joined the meeting at 8:01 a.m.)                        
  Number 045                                                                   
  REPRESENTATIVE GARY DAVIS moved to pass CSHB 407 from                        
  committee with attached fiscal notes and individual                          
  Number 048                                                                   
  CHAIRMAN VEZEY asked the committee secretary to call roll on                 
  the motion.  The House State Affairs Committee passed CSHB
  IN FAVOR:      VEZEY, KOTT, SANDERS, G. DAVIS, OLBERG, B.                    
  OPPOSED:       NONE                                                          
  ABSENT:        ULMER                                                         
  HB 307 - UNIFORM PROBATE CODE                                                
  CHAIRMAN VEZEY opened discussion on SSHB 307.                                
  Number 067                                                                   
  sponsor statement for SSHB 307.  The sponsor summary reads                   
  as follows:                                                                  
  "SSHB 307 would provide a comprehensive upgrade of Alaska's                  
  probate code by adopting revisions to AS 13.11 and AS 13.31,                 
  as recommended by the National Conference of Commissioners                   
  on Uniform State Law (NCCUSL).  Revisions to AS 13.11                        
  involve Intestacy, Wills, and Donative Transfers.  There                     
  would also be changes to AS 13.06, General Provisions, and                   
  to AS 13.16, Probate of Wills and Administration.                            
  "Changes to AS 13.11 are primarily aimed at enhanced spousal                 
  and family protection, reduced risk of technical                             
  invalidation of wills, and greater harmony of the rules of                   
  presumed intention for property transfers at death.                          
  "Changes to AS 13.31 center on the clarification of the law                  
  of joint tenancy and tenancy in common for deposit accounts                  
  held by multiple parties.  It also includes Transfer-On-                     
  Death provisions for investment security accounts.                           
  "The Sponsor Substitute added the changes to AS 13.31, the                   
  Nonprobate Transfers.  It also deletes some definitions as                   
  found in the NCCUSL language, which are duplicative or                       
  unnecessary.  Other modifications convert NCCUSL language                    
  into Alaska's drafting style.  This version also places the                  
  registry for international wills in the Department of                        
  Commerce and Economic Development..."                                        
  MR. BENINTENDI stated the registry for international wills                   
  may eventually be placed in the court system, but without                    
  the court system completing its review of SSHB 307, they                     
  were not prepared to recommend this change.                                  
  The sponsor summary continued:                                               
  "HB 307 is supported by the Attorney General, the Alaska                     
  Uniform Law Commission, and the American Association of                      
  Retired Persons.  The Alaska Court System is currently                       
  reviewing its provisions.  It carries zero fiscal notes from                 
  DCED, LAW, and the Court System."                                            
  Number 126                                                                   
  CHAIRMAN VEZEY commented SSHB 307 dealt with a very                          
  complicated subject.  ART PETERSON was asked to be the next                  
  individual to testify.  CHAIRMAN VEZEY stated he had                         
  received a letter from MR. PETERSON earlier in the week.                     
  Number 166                                                                   
  COMMISSIONER, testified in favor of SSHB 307.  He stated                     
  SSHB 307 is an attempt by the NCCUSL, in conjunction with                    
  the Joint Editorial Board for the Uniform Probate Code, to                   
  update discrepancies they have found in Uniform Law.  He                     
  noted families are not the same as they were when the                        
  original version of Uniform Law was being drafted. Families                  
  now have multiple parents due to divorces and remarriages,                   
  and mixed children within them.  He stated questions arise                   
  when a decedent, in his will says, "I give to my children                    
  all of my property," because it is hard to define which                      
  children, out of which marriage, are to be included in the                   
  MR. PETERSON stated if a person dies without a will,                         
  currently the Intestacy provisions divide the assets of the                  
  deceased.  SSHB 307 will rearrange some of the traditional                   
  provisions on Intestacy.  The surviving spouse will get a                    
  larger share under the amendments in SSHB 307.  In second                    
  marriage situations, the second marriage may occur much                      
  later in life; therefore, SSHB 307 recognizes the number of                  
  years of marriage will go to the percentage that the                         
  survivor will receive.  Descendants and parents of the                       
  decedent will have distribution changes.                                     
  MR. PETERSON mentioned the Alaska delegation to the National                 
  Conference supports SSHB 307.  He commented SSHB 307 really                  
  only has one provision which has a state impact which is the                 
  registry for international wills.  This would be a state                     
  repository for performing international wills registration.                  
  He stated SSHB 307 regulates the distribution of property                    
  among private individuals.                                                   
  MR. PETERSON said the letter the committee received from the                 
  Association of Retired Persons to REPRESENTATIVE MOSES,                      
  December 1, 1993, highlights SSHB 307 well.                                  
  MR. PETERSON explained there were two basic parts to SSHB
  307, Article II, Intestacy and Wills, and Article IV,                        
  Nonprobate Transfers.  Alaska already has some provisions                    
  which regard the concept of "pay on death," whereby a                        
  decedent's bank account can automatically be transferred                     
  into a survivor's name.  Current law, however, relates to                    
  multiple party accounts, and the amendment in SSHB 307 would                 
  allow the law to address single party accounts.  The                         
  transfer provisions for securities will be expanded to cover                 
  an individual's certain range of assets, whereby upon death,                 
  a person's stocks would avoid probate and be transferred                     
  directly to the property of a designated person.                             
  (REPRESENTATIVE SANDERS left the meeting at 8:15 a.m.)                       
  Number 353                                                                   
  CHAIRMAN VEZEY noticed the section of SSHB 307 regarding                     
  Alaska Native Corporation stock and pointed out it did not                   
  sound like a national issue.                                                 
  Number 360                                                                   
  MR. PETERSON responded the Alaska Native Corporation stock                   
  section was an "Alaska wrinkle."  When he worked with House                  
  Judiciary in the early 1970s, they amended the probate code                  
  to include that provision because the Alaska Native Claims                   
  Settlement Act (ANCSA) had just passed in 1971.  He noted                    
  certain provisions of state law had to be enacted to                         
  implement the federal law.  Therefore, the special situation                 
  of ANCSA stock had to be recognized in SSHB 307.                             
  MR. PETERSON pointed out the provision was on page 9, lines                  
  18-20, which states, "The intested share of the surviving                    
  spouse in settlement common stock, or other inalienable                      
  stock, in a corporation organized under ANCSA..."  He noted                  
  there have been attempts to tailor SSHB 307 to fit both the                  
  Alaska format in drafting style, as well as a "wrinkle" such                 
  as the ANCSA provision.                                                      
  Number 380                                                                   
  CHAIRMAN VEZEY asked MR. PETERSON to explain what SSHB 307                   
  would do with Native corporation stock.                                      
  (REPRESENTATIVE OLBERG left the meeting at 8:20 a.m.)                        
  Number 385                                                                   
  MR. PETERSON replied when there is no will, the surviving                    
  spouse will get all of the decedents assets if there are no                  
  children.  If there are children, the surviving spouse would                 
  get half of the assets.                                                      
  Number 390                                                                   
  CHAIRMAN VEZEY questioned the phrase "surviving issue."                      
  Number 392                                                                   
  MR. PETERSON responded SSHB 307 helps clarify and improve                    
  terminology such as "child, children, issue, descendants,                    
  etc..."  "Surviving issue" would normally be the descendant                  
  Number 401                                                                   
  CHAIRMAN VEZEY commented the revision of Uniform Probate                     
  Code has been worked on for 20 or more years and he observed                 
  society has not necessarily changed.  He noted the divorce                   
  rate in Alaska today is less than that of 25 years ago.  He                  
  asked if MR. PETERSON had been referring to societal changes                 
  which had been occurring from the mid-1970s to the current                   
  Number 416                                                                   
  MR. PETERSON answered he was referring to the complete                       
  continuum.  He said he based his testimony on the comments                   
  produced by the drafters when SSHB 307 came out.  The                        
  drafters were addressing the changes which occurred during                   
  the 20 year original promulgation and enactment of the                       
  original version of the Uniform Probate Code.  The drafters                  
  pointed out along with the substantial divorce rate, there                   
  is a substantial remarriage rate.  Remarriages produce                       
  children with multiple sets of parents and SSHB 307 deals                    
  with the questions that arise because of these changes in                    
  the family.                                                                  
  (REPRESENTATIVE OLBERG returned to the meeting at 8:24 a.m.)                 
  Number 442                                                                   
  CHAIRMAN VEZEY stated the biggest change he was aware of in                  
  the last 30 years was the number of illegitimate births.                     
  MR. PETERSON agreed, assuming CHAIRMAN VEZEY meant the                       
  parties are out of wedlock and may or may not be living                      
  together.  He stated SSHB 307 tries to simplify both the                     
  intested, and will situation, so there is an emphasis on                     
  executing the intent of the person with the will.  Secondly,                 
  for those without a will, SSHB 307 tries to determine what                   
  the decedent would most want to have happen to their                         
  property.  He noted SSHB 307 does not specifically point out                 
  illegitimate children, but it does define "children" as                      
  including adopted children, and in a single parent situation                 
  a "child" is still defined as a child.                                       
  Number 469                                                                   
  REPRESENTATIVE G. DAVIS inquired if there had been any                       
  attempts to ensure that residents of a state do have a will                  
  in trying to reduce the amount of probate problems that                      
  MR. PETERSON did not know of a state that has made the                       
  making of wills an official state policy by some state                       
  agency.  He knew Bar Associations around the country are                     
  encouraging people to get wills and make their intent clear.                 
  (REPRESENTATIVE SANDERS returned to the meeting at 8:27                      
  Number 483                                                                   
  CHAIRMAN VEZEY asked what changes there are in circumstances                 
  that would trigger a person's estate going to the state.                     
  Number 487                                                                   
  MR. PETERSON did not believe there were significant changes                  
  by SSHB 307 in the circumstances.  An estate goes the state                  
  when there is no will and there is no identifiable                           
  descendant or antecedent who could inherit from the                          
  Number 495                                                                   
  REPRESENTATIVE JERRY SANDERS referred to AS 13.12.108 on                     
  page 11, which states,"after born heirs, an individual in                    
  gestation at a particular time is treated as living."  He                    
  inquired as to the definition of "a particular time."                        
  Number 500                                                                   
  MR. PETERSON assumed "particular time" means the time of                     
  death of the decedent.  In the case of the woman who dies                    
  while a child is in gestation, typically the child would                     
  also die.  He stated the example of a father who dies and                    
  his will speaks before his child is born.  AS 13.12.108                      
  attempts to address this problem if the individual lives 120                 
  hours more after the birth.                                                  
  Number 511                                                                   
  REPRESENTATIVE SANDERS clarified the newborn child could not                 
  be disinherited.                                                             
  Number 515                                                                   
  MR. PETERSON said the child would be treated as a living                     
  child if it survived 120 hours after birth.  He noted the                    
  120 hours were similar to the provisions in the Simultaneous                 
  Death Act, which Alaska now has and is slightly modified by                  
  SSHB 307.                                                                    
  Number 521                                                                   
  REPRESENTATIVE BETTYE DAVIS asked if there had not been any                  
  changes to the Uniform Probate Code since it was enacted 20                  
  years ago.                                                                   
  Number 525                                                                   
  MR. PETERSON answered there had been no comprehensive                        
  Number 526                                                                   
  REPRESENTATIVE B. DAVIS questioned if there was a mandate                    
  for the changes, or were the Uniform Probate Code changes                    
  reviewed and the states were left to decide if they should                   
  implement them.                                                              
  Number 530                                                                   
  MR. PETERSON answered there was not a federal mandate for                    
  the Uniform Probate Code changes, although there is an                       
  international convention in effect which the United States                   
  has not signed onto yet.  He stated if states were to adopt                  
  the international wills provisions in SSHB 307, it would                     
  encourage the federal government sign on.                                    
  Number 535                                                                   
  REPRESENTATIVE B. DAVIS clarified the changes started on a                   
  state by state basis.                                                        
  Number 536                                                                   
  MR. PETERSON affirmed REPRESENTATIVE B. DAVIS.                               
  Number 542                                                                   
  MR. PETERSON pointed out in Article II there are some random                 
  amendments, but basically the Uniform Code in the 1972                       
  version.  He stated the Joint Editorial Board for the                        
  Uniform Probate Code is comprised of several component                       
  organizations that bring the topics together.  The Uniform                   
  Laws Conference then creates a drafting committee who then                   
  works for a minimum of two, or more years to reach the final                 
  stages.  The drafting committee then brings the draft to the                 
  floor of the National Uniform Laws Conference where it is                    
  debated by the entire group for two separate years.                          
  Number 557                                                                   
  CHAIRMAN VEZEY introduced JOHN GEORGE as the next individual                 
  to testify.                                                                  
  Number 561                                                                   
  concerns about SSHB 307.  He stated life insurance agencies                  
  are very concerned about SSHB 307 because the beneficiary to                 
  a life insurance policy is designated by the person buying                   
  the policy, or there are contingent beneficiaries, assuming                  
  the named beneficiary is deceased.  He noted SSHB 307 might                  
  change the beneficiary of the life insurance policy to                       
  someone other than designated.  Insurance would be pulled                    
  into probate, whereas before life insurance policies have                    
  been excluded from probate.                                                  
  Number 583                                                                   
  CHAIRMAN VEZEY clarified the American Council of Life                        
  Insurance is asking for more time to review SSHB 307.                        
  Number 587                                                                   
  MR. GEORGE felt MR. PETERSON and other researchers should                    
  review SSHB 307 with them.  He noted SSHB 307 had a number                   
  of committee referrals and there would probably be time to                   
  go over SSHB 307 and deal with any problems they may find in                 
  another committee.                                                           
  Number  596                                                                  
  REPRESENTATIVE B. DAVIS asked MR. PETERSON to speak to MR.                   
  GEORGE's concern.                                                            
  CHAIRMAN VEZEY added he had received communication from five                 
  attorneys in the Fairbanks area who practice probate and                     
  have asked for time to review SSHB 307.  They stated the                     
  Probate Committee for the Alaska Bar Association had not                     
  reviewed SSHB 307.                                                           
  Number 604                                                                   
  MR. PETERSON responded the Alaska Bar Association, Probate                   
  Section, has had the opportunity to study and review SSHB
  307.  The Bar Association puts out a monthly newsletter                      
  listing the different sections of the bar, and in that                       
  schedule for 1992-1993, they were taking up Article II                       
  revisions in several meetings.  He noted the Bar Association                 
  has had SSHB 307 in their formal study system for nearly two                 
  years.  He said the chair of the probate section advised him                 
  that some members expressed serious concerns to him (the                     
  chair).  He wrote back, October 4, 1993, and asked them for                  
  their concerns so they could get them straightened out.  In                  
  the same letter he gave an example of a concern and offered                  
  alternative approaches to solve the problem.  MR. PETERSON                   
  said he still has not received a response to his October 4,                  
  1994, letter and he doubted the seriousness of their                         
  MR. PETERSON referred to Former Attorney General, Charlie                    
  Cole, who supported SSHB 307.  He stated in reference to the                 
  section on spousal share, Mr. Cole supported a more extreme                  
  version which gave the spouse even more.                                     
  MR. PETERSON would like to know the specific comments by the                 
  Fairbanks attorneys because he felt they had had time to                     
  study SSHB 307.                                                              
  MR. PETERSON did not quite understand MR. GEORGE'S                           
  statement, therefore, he felt it would be good to meet with                  
  his organization and discuss their concerns.                                 
  Number 647                                                                   
  CHAIRMAN VEZEY commented the letters received by the                         
  attorneys would become public record and MR. PETERSON would                  
  have access to them.  Due to the complex nature of SSHB 307,                 
  CHAIRMAN VEZEY decided to hold SSHB 307 in committee and it                  
  would be rescheduled at a later date.                                        
  HB 489 - OVERTIME COMPENSATION                                               
  CHAIRMAN VEZEY opened HB 489 for discussion.  The House                      
  State Affairs Committee filed HB 489, and it has a referral                  
  to the House Labor & Commerce Committee.                                     
  CHAIRMAN VEZEY, in order to give the sponsor statement on HB
  489, turned the gavel over to VICE CHAIRMAN KOTT.                            
  Number 661                                                                   
  VICE CHAIRMAN KOTT asked CHAIRMAN VEZEY to address HB 489.                   
  Number 665                                                                   
  CHAIRMAN VEZEY addressed HB 489 for the House State Affairs                  
  Committee.  He stated HB 489 would adjust Alaska's overtime                  
  laws to allow workers to work longer workdays and shorter                    
  work weeks.  The inability to do this has been a frequent                    
  complaint, CHAIRMAN VEZEY had heard.  Alaska currently has                   
  an entire section in statute which deals with the number of                  
  hours in a workday.  In drafting HB 489, he thought making                   
  more statutes would nullify other current statutes;                          
  therefore, the most flexible approach would be to adopt the                  
  federal standard and repeal Alaska's current overtime                        
  statutes.  The federal standard states if a person works                     
  more than 40 hours a week, they will be paid overtime.                       
  Collective bargaining agreements are also clarified by the                   
  federal standard, whereby the employer/employee can agree                    
  upon their own terms as long as they do not require                          
  individuals to work over 40 hours a week without overtime.                   
  CHAIRMAN VEZEY stated the second part of HB 489 addresses                    
  the area in Alaska statute which regulates the failure to                    
  pay overtime.                                                                
  TAPE 94-26, SIDE B                                                           
  Number 000                                                                   
  CHAIRMAN VEZEY explained current statute states if overtime                  
  is not paid, for any reason, the employer accrues a 100                      
  percent liquidated damage penalty.  He stated a vast                         
  majority of employers act in good faith and there are                        
  misunderstandings, whereby overtime may not have been paid.                  
  He felt a 100 percent penalty may not be in the best                         
  interest of promoting employer/employee relationships.  He                   
  suggested this portion of the statute be amended to clarify,                 
  if the matter is settled administratively, that liquidated                   
  damages would not apply.  CHAIRMAN VEZEY felt this would be                  
  the simplest approach.                                                       
  Number 032                                                                   
  REPRESENTATIVE B. DAVIS asked who requested the drafting of                  
  HB 489.                                                                      
  CHAIRMAN VEZEY stated there was not a specific request, but                  
  he has had several employers and employees confront him with                 
  the issue that they would like to work short workweeks,                      
  allowing them longer weekends.                                               
  Number 042                                                                   
  REPRESENTATIVE B. DAVIS inquired if employers were not                       
  already working with employees to allow them longer work                     
  CHAIRMAN VEZEY responded Alaska has two pages of statutes                    
  regarding the "8-hour workday."  Rather than add more pages                  
  of exceptions to the "8-hour workday," he advocated the                      
  federal standard of a 40-hour workweek be adopted.                           
  Number 056                                                                   
  REPRESENTATIVE B. DAVIS felt employees already have the                      
  opportunity to work long days, and asked how HB 489 make the                 
  system any different.  Would HB 489 make it easier to have                   
  longer workdays?                                                             
  CHAIRMAN VEZEY said REPRESENTATIVE B. DAVIS was correct.                     
  Number 063                                                                   
  REPRESENTATIVE B. DAVIS asked if HB 489 would eliminate                      
  overtime for any of the individuals who work more than 40                    
  Number 065                                                                   
  CHAIRMAN VEZEY said no, HB 489 adopts the mandate that                       
  overtime has to be paid after 40 hours a week, by federal                    
  law.  He could not see the point of duplicating federal law;                 
  therefore, he opted to adopt federal law and repeal Alaska's                 
  overtime regulations.                                                        
  Number 074                                                                   
  REPRESENTATIVE B. DAVIS clarified liquidated damages would                   
  be settled on an employer/employee basis and the employees                   
  would not be paid the liquidated damages.                                    
  Number 084                                                                   
  CHAIRMAN VEZEY affirmed REPRESENTATIVE B. DAVIS.  If the                     
  employee has to adjudicate the matter, however, there would                  
  be a mandated 100 percent liquidated damages.                                
  Number 089                                                                   
  REPRESENTATIVE B. DAVIS asked how HB 489 would allow a                       
  person to work longer hours in order to have a three-day                     
  Number 093                                                                   
  CHAIRMAN VEZEY answered there would not be two pages of                      
  Alaska statutes to comply with in order to exceed the 8-hour                 
  work day.                                                                    
  Number 098                                                                   
  REPRESENTATIVE B. DAVIS asked for an example of things                       
  needed to be done to comply with the statutes.                               
  CHAIRMAN VEZEY replied currently each employer, for each                     
  project, has to submit a specific plan to the Department of                  
  Labor and have it approved.                                                  
  REPRESENTATIVE B. DAVIS clarified HB 489 eliminates this                     
  requirement and an employee need only fulfill the 40-hour                    
  workweek in some way, in order to get a three day weekend.                   
  Number 108                                                                   
  CHAIRMAN VEZEY stated collective bargaining agreements would                 
  still have to be honored.                                                    
  Number 110                                                                   
  REPRESENTATIVE B. DAVIS stated Department of Labor did not                   
  have a statement of disagreement with HB 489.  She clarified                 
  the 40 hours could be worked in any way the                                  
  employer/employee decide, unless there would be a labor                      
  bargaining agreement setting the standards.                                  
  Number 120                                                                   
  CHAIRMAN VEZEY stated the bargaining agreement would be                      
  between the employer and the employee.                                       
  Number 122                                                                   
  REPRESENTATIVE G. DAVIS thought it was apparent federal law                  
  did not recognize a 4-day, 10-hour workweek.   He questioned                 
  if current state law states a person who works 10 hours a                    
  day would receive overtime for the extra two hours.                          
  Number 129                                                                   
  CHAIRMAN VEZEY responded the requirement to pay that                         
  overtime is in state statute, and the two hours would be                     
  paid as overtime, unless there was a work plan approved by                   
  the Department of Labor.                                                     
  Number 137                                                                   
  VICE CHAIRMAN KOTT introduced RANDY CARR as the next to                      
  Number 145                                                                   
  LABOR (DOL), answered questions on HB 489 and the impact it                  
  will have.  The DOL opposed HB 489.  He stated, in current                   
  law, there is an exemption from the overtime statutes that                   
  provide for an employer to submit a flexible work hour plan                  
  request to the DOL.  The statutes define fairly specific                     
  criteria that the request can contain, and it is essentially                 
  a 4-day, 10-hour workweek.  He said current law was written                  
  in the early 1980s as a result of a legislature's attempt to                 
  do what HB 489 is now trying to do.  The banking and airline                 
  industry was concerned that their employees were not able to                 
  work 4-day, 10-hour workweeks to receive a 3-day weekend.                    
  He pointed out the current laws were the resolution to these                 
  concerns.  A plan need only be submitted to the DOL for                      
  approval.  After approval, the employer and employee can                     
  enter into voluntary arrangements to work under the approved                 
  MR. CARR stated the elimination of a state overtime                          
  requirement will have a negative impact on Alaska employers.                 
  Because Alaska has been enforcing its overtime law, greater                  
  than the federal standard, the U.S. DOL has taken action in                  
  enforcing the Federal Labor Law.  The Fair Labor Standards                   
  Act (FLSA) has a provision which states if there is a state                  
  law with a higher standard, the state law prevails.  He                      
  noted if Alaska's overtime is completely eliminated, the                     
  federal government will have no alternative but to begin                     
  enforcing the FLSA.  The FLSA enforces the payment of                        
  overtime after 40 hours differently than state law with a                    
  civil money penalty.  A civil money penalty is like a                        
  ticket, MR. CARR stated, with the potential of up to $1000                   
  for each violation an employer is found guilty of.  The                      
  state would have to write tickets on top of collecting the                   
  unpaid overtime and assessing punitive liquidated damages.                   
  MR. CARR did not believe CHAIRMAN VEZEY would be aware of                    
  this, because they had not met on the issue.                                 
  MR. CARR addressed liquidated damages regarding having them                  
  not be assessed if the matter was settled administratively.                  
  The DOL did support this concept.  In previous years, the                    
  payment of liquidated damages was variable and not                           
  mandatory; however, as the result of a 1993 court decision                   
  the payment of liquidated damages is now mandatory.  He did                  
  not know if the language used in HB 489 would properly                       
  accomplish the desired end result.                                           
  MR. CARR stated if overtime, under state law, is eliminated                  
  there will be a sector of employees in the state that will                   
  be totally disenfranchised.  The FLSA applies to 75-80                       
  percent of businesses in the state, but this will leave 20-                  
  25 percent of businesses in state that are not subject to                    
  federal law; therefore, their employees would be                             
  disenfranchised.  He noted these employees are not the type                  
  usually represented by collective bargaining, but the unions                 
  may seek these people to join into collective bargaining.                    
  MR. CARR related to the history of overtime as it began as a                 
  penalty levied against employers to encourage them to hire                   
  more workers, rather than work their existing work force                     
  longer hours.  Employees now, however, view overtime as a                    
  reward for working longer hours.  MR. CARR emphasized                        
  overtime is meant to be punitive, and with 10 plus percent                   
  of unemployment in Alaska, the law still has valid purpose.                  
  Number 311                                                                   
  REPRESENTATIVE OLBERG asked if the state of Alaska would                     
  cease enforcing any overtime provision with the passage of                   
  HB 489.                                                                      
  Number 315                                                                   
  MR. CARR replied HB 489 would eliminate the word overtime                    
  from Alaska statutes, therefore the state would not have                     
  authority to enforce any overtime requirements because it                    
  would no longer have a state law.                                            
  Number 319                                                                   
  REPRESENTATIVE OLBERG asked CHAIRMAN VEZEY if this was his                   
  CHAIRMAN VEZEY responded he deliberately left the state's                    
  ability to pursue violations of federal overtime laws or                     
  collective bargaining agreements in statute.                                 
  MR. CARR stated there is presently a serious doubt the state                 
  would be able to enforce the federal overtime requirement.                   
  The state has statutory power to enforce contracts, whereby                  
  if an employer violated its stated overtime policy, the                      
  state could enforce it.  He did not believe it was plausible                 
  to think the state would be able to go to state court to                     
  enforce federal overtime requirements found in the FLSA.                     
  Number 341                                                                   
  CHAIRMAN VEZEY asked MR. CARR to describe groups of                          
  employees that would not be covered under the FLSA.                          
  Number 344                                                                   
  MR. CARR replied it would be easier to state what groups the                 
  FLSA does cover.  The FLSA addresses enterprises, any                        
  business doing $500,000 gross business annually.  Small                      
  businesses, doing less than $500,000 gross business                          
  annually, would not be subject to the FLSA.  Businesses                      
  involved in interstate commerce, selling manufactured items                  
  which are transported across state lines, are also covered                   
  by the FLSA.  He noted the service industry, which is                        
  rapidly growing in Alaska, generally falls into the small                    
  business category and those businesses would not be subject                  
  to the current FLSA.                                                         
  Number 366                                                                   
  REPRESENTATIVE OLBERG asked why the DOL did not supply a                     
  negative fiscal note for HB 489 if the bill meant the state                  
  of Alaska would be taken out of overtime enforcement.  If HB
  489 were to pass, those individuals involved in the                          
  enforcement of overtime would then be unemployed.                            
  Number 371                                                                   
  MR. CARR responded overtime enforcement is only one element                  
  of nine programs the Division of Wage & Hour administers,                    
  and HB 489 would not have a great impact on the employees.                   
  The Wage & Hour work force would merely be redirected.                       
  Number 379                                                                   
  CHAIRMAN VEZEY interpreted the DOL zero fiscal note as                       
  though the state did not spend a lot of time pursuing                        
  overtime issues.                                                             
  Number 383                                                                   
  MR. CARR responded that the DOL handles approximately 800                    
  wage claims per year statewide.  Of these claims, 30 percent                 
  have some overtime element involved.                                         
  Number 390                                                                   
  CHAIRMAN VEZEY pointed out "some element involved," as                       
  stated by MR. CARR, and responded there is also other issues                 
  involved; therefore, the time in handling the case would not                 
  substantially change if overtime was not an issue.                           
  Number 392                                                                   
  MR. CARR said CHAIRMAN VEZEY was correct.  He clarified the                  
  DOL would still have enough work without overtime cases.                     
  Number 395                                                                   
  CHAIRMAN VEZEY asked why Alaska allowed for a 56-hour                        
  workweek for the mining industry.                                            
  MR. CARR replied there is a specific exemption in state law                  
  for small mining, whereby they can work up to 56 hours a                     
  week before overtime is incurred.  This exemption exists                     
  because there is a federal exemption for the mining                          
  VICE CHAIRMAN KOTT moved to the Anchorage teleconference                     
  Number 413                                                                   
  KEN LEGACKI, an attorney in Anchorage, expressed his                         
  concerns regarding HB 459 and HB 489 combined.  The analysis                 
  of HB 459 concerned him because it does not address how HB
  459 effectuates its purpose and policies.  He noted HB 459                   
  is in conflict with the work fare bill submitted by                          
  would help people get into the work force and off public                     
  assistance.   He felt HB 459 did not encourage employment                    
  and it would reward "unscrupulous employers who try to                       
  circumvent and escape the law."  He related to employers who                 
  avoid paying overtime and, when they are caught, then try to                 
  wager down the earnings to be paid in restitution.  MR.                      
  LEGACKI stated he was involved in a case against one of the                  
  worlds largest insurance companies "who bragged that their                   
  overhead is 5 percent lower than their competition."                         
  However, their overhead is low only because they force their                 
  employees to work long hours.  He noted this company is                      
  being sued in four states by the Federal Department of                       
  Labor.  This company is using the "good faith defense" and                   
  has been found in violation of the overtime law several                      
  times.  He felt Alaska's overtime laws are very important                    
  because it protects the employers, employees, and it                         
  encourages employment.  From his analysis, he believed if HB
  459 were to pass, several sections of the bill would be in                   
  violation with federal law and would then become nullified.                  
  Number 516                                                                   
  CHAIRMAN VEZEY asked MR. LEGACKI what bill he was testifying                 
  Number 518                                                                   
  MR. LEGACKI replied HB 459 and some of his comments related                  
  to HB 489.                                                                   
  Number 522                                                                   
  REPRESENTATIVE B. DAVIS commented the problems CHAIRMAN                      
  VEZEY intended to take care of with HB 489 would be taken                    
  care of in HB 459.  She asked if HB 459 would be listened to                 
  before action was taken on HB 489.                                           
  Number 529                                                                   
  VICE CHAIRMAN KOTT replied the committee intended to take                    
  action on HB 489 so it may proceed through the process with                  
  HB 459.  He noted if there is a duplication "they will be                    
  rolled by an amendment into one or the other."                               
  Number 533                                                                   
  REPRESENTATIVE B. DAVIS stated, since HB 489 only had one                    
  referral, she was not interested in moving it out of                         
  committee at that time.  She felt HB 489 deserved more                       
  consideration by the committee.                                              
  Number 538                                                                   
  and would like to hold HB 489 for further consideration.                     
  Number 543                                                                   
  VICE CHAIRMAN KOTT noted HB 489 also has a referral to Labor                 
  and Commerce.                                                                
  Number 549                                                                   
  REPRESENTATIVE G. DAVIS commented his copy of HB 489 only                    
  reads one referral to State Affairs.  He asked if the HB 489                 
  really did have a referral to Labor & Commerce.                              
  CHAIRMAN VEZEY said the Speaker has given HB 489 an                          
  additional referral to the Labor & Commerce committee.                       
  Number 554                                                                   
  REPRESENTATIVE B. DAVIS commented the bill should state the                  
  referrals it has and the problems may be able to be                          
  addressed in Labor & Commerce.                                               
  Number 557                                                                   
  REPRESENTATIVE OLBERG moved to pass HB 489 from committee                    
  with the accompanying fiscal note and individual                             
  Number 560                                                                   
  REPRESENTATIVE SANDERS objected to the motion.  He felt HB
  489 was not clearly a good bill and it should be reviewed                    
  Number 567                                                                   
  REPRESENTATIVE B. DAVIS added HB 489 should at least be held                 
  until HB 459 is heard.                                                       
  Number 570                                                                   
  VICE CHAIRMAN KOTT recognized the motion and asked the                       
  committee secretary to call the roll.                                        
       IN FAVOR:      VEZEY, KOTT, G. DAVIS, OLBERG.                           
       OPPOSED:       B. DAVIS, SANDERS.                                       
       ABSENT:        ULMER                                                    
  VICE CHAIRMAN KOTT announced HB 489 passed from the House                    
  State Affairs Committee with attached fiscal notes and                       
  individual recommendations.                                                  
  Number 582                                                                   
  CHAIRMAN VEZEY clarified, for technical purposes, if a                       
  quorum is present bills can be amended by the majority of                    
  those present.  Bills cannot move out of committee without a                 
  majority of the total committee, which is four votes.                        
  HB 459 - DAMAGES & ATTORNEY FEES FOR UNPAID WAGES                            
  CHAIRMAN VEZEY resumed control of the gavel and opened HB
  459 for discussion.  The HOUSE LABOR & COMMERCE COMMITTEE is                 
  the sponsor of HB 459.                                                       
  Number 602                                                                   
  COMMITTEE, addressed HB 459.  He stated HB 459 "addresses                    
  the awarding of punitive damages and claims of underpaid                     
  overtime compensation where, statutory minimum wages under                   
  the Alaska Wage & Hour Act, state statute imposes the                        
  payment of unpaid minimum wages that are overtime                            
  compensation to an employee, by an employer, who has                         
  violated provisions of the Alaska Wage & Hour Act."  The                     
  employer may be liable for mandatory liquidated damages of                   
  an equal amount, whereby if an employer is found in                          
  violation of not paying overtime, HB 459 would double that                   
  amount as a penalty.                                                         
  REPRESENTATIVE MULDER stated the 1991 Alaska Supreme Court                   
  case involving Kinney Shoes ruled that liquidated damages                    
  are mandatory, and that individual settlements out of court,                 
  that did not include liquidated damages were invalid.  Prior                 
  to the Kinney Shoes decision, an employee with a claim for                   
  underpaid overtime or minimum wages had two options:  1)                     
  They could file a complaint with the DOL who was able to                     
  negotiate a settlement; or 2) they could attempt to reach a                  
  private settlement with the employer in question.  With                      
  either option the settlement could be reached for an amount                  
  below full liquidated damages.                                               
  REPRESENTATIVE MULDER explained current law states an                        
  employer in violation of Alaska's Minimum Wage or Overtime                   
  Compensation Laws is automatically liable for liquidated                     
  damages, regardless of the circumstances.  Though intended                   
  to be a deterrent to employers, this law creates an                          
  imbalance in certain situations.  An employer who makes an                   
  unintentional mistake is treated as severely as the employer                 
  who was trying to cheat their employee.  In this case, the                   
  employer faces the possibility of paying full liquidated                     
  damages, plus court costs, or settling out of court for the                  
  claim, plus full liquidated damages.  The Federal Labor                      
  Standards Act (FLSA), upon which the Alaska Wage & Hour Act                  
  is based, contains identical language to AS 23.10.110 (a) in                 
  HB 459.  REPRESENTATIVE MULDER noted the FLSA also states if                 
  the employer shows to the satisfaction of the court, that                    
  the act or omission giving rise to such action, was in "good                 
  faith" and he had reasonable grounds for believing his act                   
  or omission was not in violation of the FLSA, the court may,                 
  in its sound discretion award no liquidated damages or award                 
  any amount thereof, not to exceed the amount specified in 29                 
  U.S. Code 216.  This language, he felt, allowed employers                    
  flexibility in overtime disputes.                                            
  REPRESENTATIVE MULDER stated the goal of HB 459 is to change                 
  state standards regarding the awarding of liquidated damages                 
  to be congruent with the federal standards as they currently                 
  exist.  There will still be protection for the employee to                   
  seek punitive damages and the employer who makes a mistake                   
  in "good faith" is allowed flexibility, provided they meet                   
  the burden of proof.  He emphasized "good faith" is                          
  contingent upon the proof that the employer demonstrated                     
  some sort of action to act in good faith.                                    
  CHAIRMAN VEZEY questioned the interpretation of section 2,                   
  subparagraph (c).  He interpreted "the prevailing party will                 
  be allowed cost according to court rule, and if the                          
  commissioner's the prevailing party, he will still pay the                   
  REPRESENTATIVE MULDER responded currently, if an employee                    
  takes their employer to court and prevails for liquidated                    
  damages, the employer is liable for both party's attorney                    
  fees.  However, in this instance if the employer had                         
  prevailed, the employer is not allowed any attorneys fees.                   
  He noted the employee has nothing to lose other than paying                  
  for his/her own attorney.  Section 2, subparagraph (c),                      
  allows whichever party prevails in the court case to seek                    
  attorneys fees.                                                              
  Number 688                                                                   
  CHAIRMAN VEZEY clarified under current law "plaintiff" is                    
  the only one to recover costs and HB 459, section 2,                         
  subparagraph (c), would change this to the "prevailing                       
  TAPE 94-27, SIDE A                                                           
  Number 000                                                                   
  CHAIRMAN VEZEY continued.  He felt HB 459 stated when the                    
  commissioner is the prevailing party, the commissioner shall                 
  remit the attorneys fees.                                                    
  Number 006                                                                   
  REPRESENTATIVE MULDER corrected the second sentence, of                      
  section 2, clarifies what is already in current statute.                     
  Current statute states, "to be paid by the defendant."  He                   
  explained when the commissioner is the prevailing party in                   
  an action, brought under section 2, the commissioner shall                   
  remit the attorneys fees to the Department of Revenue, into                  
  the general fund.                                                            
  CHAIRMAN VEZEY thought HB 459 may be clearer if words were                   
  added to clarify the commissioner shall remit the fees to                    
  the Department of Revenue.                                                   
  REPRESENTATIVE MULDER responded the operative words are,                     
  "When the commissioner is the prevailing party,..."                          
  Thereby, he shall remit the attorneys fees to the Department                 
  of Revenue, the general fund.  He felt HB 459, as written,                   
  is legally correct, however, it may be confusing in laymen                   
  Number 063                                                                   
  REPRESENTATIVE OLBERG felt section 2, lines 13-14, would be                  
  clearer if it stated, "recovered attorneys fees."                            
  Number 072                                                                   
  REPRESENTATIVE MULDER was amenable to REPRESENTATIVE                         
  OLBERG's revision.  He clarified HB 459 shall state, "The                    
  commissioner shall remit the recovered attorneys fees."                      
  CHAIRMAN VEZEY felt this revision would clarify the section.                 
  Number 082                                                                   
  REPRESENTATIVE OLBERG moved for an amendment to HB 459,                      
  whereby on line 14, after the word "the", insert                             
  Hearing no objection, CHAIRMAN VEZEY announced the amendment                 
  to HB 459 was adopted.                                                       
   Number 095                                                                  
  REPRESENTATIVE B. DAVIS asked the definition of "good                        
  Number 102                                                                   
  REPRESENTATIVE MULDER replied the definition of "good faith"                 
  is outlined through precedents within previous federal court                 
  cases.  He said they had tried to define "good faith," but                   
  they did not because they would have been establishing a                     
  standard which may not be congruent with the federal                         
  standard.  The purpose of HB 459 is to minimize litigation,                  
  but by creating a new definition of "good faith," he felt                    
  they would be encouraging more litigation.                                   
  Number 130                                                                   
  REPRESENTATIVE OLBERG clarified HB 459 gives the court an                    
  option by saying "the court may decline to award liquidated                  
  damages," if in fact, the employer had acted in "good                        
  Number 137                                                                   
  REPRESENTATIVE SANDERS stated he had trouble with HB 459 as                  
  both a laborer, and a businessman.  He felt overtime                         
  problems with honest employers were usually settled outside                  
  of court, one on one with employer/employee.   He believed                   
  overtime cases were not taken to court unless "you are                       
  trying to screw somebody."                                                   
  Number 148                                                                   
  REPRESENTATIVE MULDER responded, under the current                           
  interpretation of law, settling overtime disputes out of                     
  court was illegal.  The dispute with the employee could have                 
  only been settled by doubling the amount owed to them.  One                  
  on one settlements cannot be settled for anything less than                  
  double what that individual claims to be owed.                               
  Number 160                                                                   
  CHAIRMAN VEZEY clarified REPRESENTATIVE SANDERS point as the                 
  courts do not have the chance to enforce the law unless the                  
  action is brought before them.                                               
  Number 188                                                                   
  LABOR, answered questions on HB 459.  He stated the Kinney                   
  Shoes decision established a rule of law that no one had                     
  ever anticipated would exist.                                                
  MR. CARR said, the 1959 Liquidated Damage statute was first                  
  interpreted by the Supreme Court in 1979, in Musara v. AIA                   
  Industries.  In this case, the Supreme Court ruled that                      
  liquidated damages were a mandatory penalty; however, the                    
  jury waived the liquidated damages for this employer, found                  
  guilty of overtime violations.  On appeal, the Supreme Court                 
  clarified, if a matter goes to court and a judgment is                       
  rendered, the judgment must include a 100 percent penalty.                   
  He termed this law as a "competitive assistance to                           
  MR. CARR explained in the Kinney Shoe case, the employer was                 
  subject to a class action lawsuit; however, they approached                  
  the employees out of court and settled with them for about                   
  30 cents on the dollar, of the actual documented overtime                    
  they were due.  Kinney Shoes eroded the legal class being                    
  represented.  The employees' attorneys argued that the                       
  penalties were punitive and not compensatory; therefore, the                 
  penalties are not the employees' to give up.  The court                      
  agreed with this argument.                                                   
  MR. CARR stated prior to Kinney Shoes, most disputes were                    
  settled by the Department of Labor (DOL).  He believed every                 
  one of the cases were settled for less than the full amount                  
  of liquidated damages.  After Kinney Shoes, the DOL asked                    
  the Employment Law section of the Bar Association if they                    
  would play the DOL's past supervising approval authority                     
  role over settlements.                                                       
  MR. CARR clarified the DOL does support the concept of                       
  returning the law to the condition it was in pre-Kinney                      
  Shoes.  If this were to happen, both the DOL and specific                    
  parties could settle cases for less than liquidated damages,                 
  short of court judgment.  The DOL is willing to enter into a                 
  arrangement, whereby they can review and approve settlement                  
  agreements submitted to them by private council.  The DOL                    
  does, however, want to maintain the mandatory status of a                    
  liquidated damage as defined by the Musara v. AIA Industries                 
  decision.  The leverage gained by this decision has enabled                  
  the state to settle 100 percent of its overtime cases,                       
  because employers know they must deal fairly in settlements                  
  or they will have to go to court and pay an additional 100                   
  percent on top of the actual claim.                                          
  MR. CARR felt HB 459 goes beyond necessity.  Section 3 is a                  
  concern to the DOL because it deals with elements that                       
  exceed current federal law.  The DOL felt, because the                       
  commissioner could settle for less than liquidated damages                   
  and would not have the "good faith" exception, the dual                      
  status created with the private parties council would be                     
  found unconstitutional in the future.  If the dual status is                 
  found unconstitutional, the state will lose the ability to                   
  have the mandatory penalty and to settle cases short of 100                  
  percent liquidated damages.  The DOL believed section 3,                     
  subparagraph (e), to be the heart of the concept, whereby                    
  the chief labor official would have approval authority to                    
  oversee settlement agreements.  Section 3, subparagraph (f),                 
  was a concern because they felt parties, without                             
  representation, were "too unsophisticated to understand                      
  their rights and what they may be giving up..."                              
  MR. CARR expressed there are very few minimum wage                           
  complaints, compared to overtime complaints under the Wage &                 
  Hour Act.  The DOL would like all employers to have the same                 
  competitive advantage.  Employers acting in "good faith"                     
  should have an advantage, but confusing language such as                     
  "good faith" may be questioned in the future and increase                    
  Number 383                                                                   
  REPRESENTATIVE G. DAVIS asked the DOL proposed definition of                 
  "good faith" they may want to see incorporated into HB 459.                  
  Number 389                                                                   
  MR. CARR answered "good faith" need not be defined in HB
  459, because it is defined through previous decisions.  The                  
  problem is the facts are different for every case, and if a                  
  definition of "good faith" was supplied, the facts would                     
  still be arguable for every case.                                            
  Number 400                                                                   
  REPRESENTATIVE B. DAVIS questioned if MR. CARR had testified                 
  before the Labor & Commerce Committee.                                       
  Number 402                                                                   
  MR. CARR replied he was unavailable at the previous hearing.                 
  Number 403                                                                   
  REPRESENTATIVE MULDER stated the DOL had testified.                          
  Number 407                                                                   
  did not take the suggestions from the DOL because HB 459                     
  appeared unchanged.                                                          
  Number 409                                                                   
  REPRESENTATIVE MULDER responded he was still trying to                       
  pursue the definition of "good faith."  It was the Labor &                   
  Commerce Committee's opinion to not stop HB 459, with his                    
  assurance that HB 459 would not be put to the floor until                    
  they had come to an adequate solution about the definition                   
  of "good faith."                                                             
  Number 419                                                                   
  of the DOL's request to have the laws as they were pre-                      
  Kinney Shoes decision.  She thought the DOL's request may be                 
  Number 423                                                                   
  REPRESENTATIVE MULDER answered HB 459 does revert to pre-                    
  Kinney Shoes decision; however, it does supercede pre-Kinney                 
  Shoes by relating directly to "good faith," and the                          
  legislature's ability to determine what is "good faith."                     
  The inclusion of attorneys costs in HB 459 was an attempt to                 
  make a level playing field, whereby those who prevail are                    
  entitled to attorneys fees.  He emphasized the agreement on                  
  an adequate definition of "good faith" was very close.                       
  Number 440                                                                   
  MR. CARR agreed with REPRESENTATIVE MULDER that negotiations                 
  are still taking place to accomplish a suitable result.                      
  Number 442                                                                   
  REPRESENTATIVE KOTT commented HB 459 did have a Judiciary                    
  Committee referral, and as a member of that committee, he                    
  felt they would take care of the definition problem.                         
  Number 450                                                                   
  MR. CARR clarified the DOL does support amending the law, so                 
  that the mandatory penalties are somewhat reduced; however,                  
  a mandatory penalty is still required to maintain leverage.                  
  Number 456                                                                   
  REPRESENTATIVE MULDER agreed that those found guilty of                      
  purposeful negligent overtime compensation should be                         
  penalized.  He felt HB 459 is intended to help those who                     
  never intended to cheat their employees.                                     
  REPRESENTATIVE SANDERS responded the amount of those who do                  
  honestly make mistakes are already correcting the disputes                   
  internally.  He believed the laws should address those who                   
  intentionally continue to avoid overtime compensation over                   
  the years.                                                                   
  CHAIRMAN VEZEY asked the pleasure of the committee.  He                      
  stated he would not be opposed to bringing a committee                       
  substitute before the committee which incorporates the                       
  adopted amendment.                                                           
  Number 473                                                                   
  REPRESENTATIVE G. DAVIS commented he would like to see HB
  459 moved from committee.  He felt the DOL had a vested                      
  interest and they would follow HB 459 to the Judiciary                       
  Committee.  REPRESENTATIVE KOTT is also a member of                          
  Judiciary Committee and he would be able to convey the                       
  committee's interests.                                                       
  REPRESENTATIVE G. DAVIS moved to adopt CSHB 459 reflecting                   
  the amendment adopted in committee.                                          
  Hearing no objection, the House State Affairs Committee                      
  adopted CSHB 459, as amended.                                                
  REPRESENTATIVE G. DAVIS moved to pass CSHB 459 as amended                    
  from committee, with attached fiscal notes and individual                    
  Number 490                                                                   
  CHAIRMAN VEZEY asked the committee secretary to call the                     
  roll on REPRESENTATIVE G. DAVIS' motion.                                     
  IN FAVOR:      VEZEY, KOTT, B. DAVIS, G. DAVIS, SANDERS,                     
  OPPOSED;       NONE                                                          
  ABSENT:        ULMER                                                         
  CHAIRMAN VEZEY announced CSHB 459, as amended passed from                    
  the House State Affairs Committee.                                           
  CHAIRMAN VEZEY adjourned the meeting at 10:01 a.m.                           
  BILLS NOT HEARD                                                              
  HB 389 - INCREASED PENALTIES FOR JOY RIDING                                  
  HB 347 - STATE LONG TERM PLANS                                               

Document Name Date/Time Subjects