Legislature(1997 - 1998)
04/10/1997 04:30 PM Senate L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE
April 10, 1997
4:30 P.M.
MEMBERS PRESENT
Senator Loren Leman, Chairman
Senator Jerry Mackie, Vice Chairman
Senator Mike Miller
Senator Tim Kelly
Senator Lyman Hoffman
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 162
"An Act relating to payment of minimum wages to tipped employees;
and providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 18
"An Act extending to certain partnerships and corporations the 10
percent procurement preference currently given to certain sole
proprietorships who are Alaska bidders and owned by persons with
disabilities."
- MOVED HB 18 OUT OF COMMITTEE
HOUSE BILL NO. 138
"An Act relating to the Board of Storage Tank Assistance; and
providing for an effective date."
- BILL POSTPONED
PREVIOUS SENATE COMMITTEE ACTION
SB 162 - No previous action to consider.
HB 18 - No previous action to consider.
HB 138 - No previous action to consider.
WITNESS REGISTER
Ms. Annette Kreitzer, Staff
Senate Labor and Commerce Committee
State Capitol Bldg.
Juneau, AK 99801-1182
POSITION STATEMENT: Staff to sponsor of SB 162.
Mr. Jack Amon
Marx Brothers Cafe
Anchorage, AK
POSITION STATEMENT: Supported SB 162.
Mr. Chris Anderson
Glacier Brew House
Anchorage, AK
POSITION STATEMENT: Supported SB 162.
Mr. Bob Gill
Local 878
Anchorage, AK
POSITION STATEMENT: Opposed SB 162.
Mr. Fred Rosenberg
Restaurant Management, Inc.
Red Robin Alaska
Anchorage, AK
POSITION STATEMENT: Supported SB 162.
Representative Jeannette James
State Capitol Bldg.
Juneau AK 99801-1182
POSITION STATEMENT: Sponsor of HB 18
Mr. Vern Jones, Chief Procurement Officer
Division of General Services
Department of Administration
P.O. Box 110210
Juneau, AK 99811-0210
POSITION STATEMENT: Supported HB 18.
Mr. Duane French, Director
Division of Vocational Rehabilitation
Department of Education
801 West 10th, Ste. 200
Juneau, AK 99801-1182
POSITION STATEMENT: Supported HB 18.
ACTION NARRATIVE
TAPE 97-17, SIDE A
Number 001
SB 162 MINIMUM WAGE FOR TIPPED EMPLOYEES
CHAIRMAN LEMAN called the Senate Labor and Commerce Committee
meeting to order at 4:30 p.m. and announced SB 162 to be up for
consideration.
MS. ANNETTE KREITZER, Staff to Senate Labor and Commerce Committee,
said this bill would allow employers to apply a tip credit to wages
due an employee. The federal government and 43 other states allow
for a tip credit. Alaska is one of seven states to specifically
exclude a tip credit. Alaska statute requires employers pay tipped
employees fifty cents more than the federal minimum wage whatever
that minimum wage is. SB 162 does not change that. Alaska's
current minimum wage is $5.25 which is the federal minimum wage of
$4.75 plus the fifty cent requirement for Alaska statute. She
explained that a second phase federal minimum wage increase will
take effect in September, bumping the minimum wage to $5.65.
CHAIRMAN LEMAN asked if this would help alleviate some of the
disparities that occur in the restaurant business, especially for
tipped employees where the tipped employees are making
substantially more than the minimum wage of the non-tipped
employees. MS. KREITZER replied that is her understanding from
talking to some in the restaurant industry.
MR. JACK AMON , Marx Brothers Cafe, said he also represents Cabaret,
Hotel, and Restaurant and Retailers Association (CHARR) and the
Alaska Restaurant Association. He explained that a unique
situation regarding compensation exists in their industry. While
minimum wage is set up to guarantee a floor of income for working
people, in the restaurant industry minimum wage employees are
generally tipped employees, who because of their tipped income, are
substantially over minimum wage and often are among the most highly
compensated personnel in the restaurant.
MR. AMON explained that the federal government has for some years
considered tipped income as wages. Because they feel the minimum
wage of the Alaskan employees is considerably over the minimum
wage, they have asked for a freeze in the cash part of the wage
which is currently $5.25 per hour. This still leaves Alaskan
people among the highest paid in the country.
When the federal government increased the minimum wage last year,
it froze the cash portion of the wage under federal guidelines at
$2.13 per hour, providing a tip credit of $2.67 per hour. He is
only looking for a .40 per hour tip credit in September. He is not
in any way trying to cap the minimum wage. Under statute the
employer would always be responsible for making sure that the
employee earned at least the State's minimum wage. They have
documentation showing that tipped employees make $9 - $20 per hour.
He didn't know of any other industry that had people on that kind
of wage scale that was mandated by the government to give them a
minimum wage that was not an across the board wage for everyone.
CHAIRMAN LEMAN asked if he could respond to his question to Ms.
Kreitzer. MR. AMON explained that dish washers and kitchen help do
not benefit at all from this minimum wage increase since their pay
scales always put them above minimum wage scales ($6.50 - $8.50 per
hour) and actually creates a disparity in the back of the house.
SENATOR KELLY said he understands that this legislation would allow
as the minimum wage goes up, that everyone would receive the
current minimum wage, but tip credit would kick in at $5.25. They
would always get the current minimum wage. MR. AMON explained that
was correct, and since the tipped income is counted as wages
employers are allowed to use that. He said should a tipped
employee not generate sufficient income in their tips to meet the
minimum wage standards, the employer is still responsible to make
up that difference.
SENATOR KELLY asked if that applied to the new minimum wage. MR.
AMON replied yes, any minimum wage whatever it might be.
SENATOR KELLY asked if this was based on an individual rather than
pooling tips. MR. AMON replied yes, because even with pooling tips
each employee has their own individual reporting requirements to
the employer.
SENATOR KELLY asked how this would affect the employee's tax
reporting responsibility. MR. AMON replied it would have no affect
on their tax reporting.
SENATOR KELLY asked how the employer gets the cash to make up the
difference between the $5.25 and the $5.65. MR. AMON replied they
don't take the cash from them; it's just a paper exchange. There's
no financial impact on the employee.
Number 225
SENATOR KELLY asked if this is adding another exception to the
minimum wage law. CHAIRMAN LEMAN replied no and Mr. Perkins,
Department of Labor, could respond further on that.
MR. CHRIS ANDERSON , Glacier Brew House, explained a sheet comparing
wages that he sent the committee. He said they could see that the
risk of falling below the minimum wage standard was very slim; and
his people are well compensated. He currently estimates about
50,000 hours of tipped employee hours which means this will cost
him an additional $20,000 to pay for the increase in minimum wage
that will go to his top people and he would like to be able to
provide that $20,000 to the most needy people on his staff and
that's why he supports this legislation.
CHAIRMAN LEMAN summarized that the change in federal law
inadvertently creates a greater disparity between the better
compensated employees and the lesser compensated employees. MR.
ANDERSON agreed.
Number 317
MR. BOB GILL, Local 878, said he represents almost 2,000 people in
the hotel and restaurant industry. They vigorously oppose SB 162.
He explained that many servers are single mothers who must support
family who do not make $40,000 - $50,000 per year. Most
restaurants and eateries are more moderate priced restaurants than
the Glacier Brew Pub or the Marx Brothers Cafe. Many of the people
in this State work for less than $10 per hour when you figure in
their tips. Many servers are lucky to net between $20,000 -
$30,000 per year. Income statistics from the Department of Labor
show that a three person family that makes $25,000 per year is
considered very low income; $32,000 per year qualifies many for
government programs. He said it seems they are trying to get
people off the welfare rolls and this bill hurts working people,
single mothers, and young children. Servers would have their cash
wages reduced .40 per hour as of October 1 and their future wages
would be frozen at $5.25 per hour for the foreseeable future.
Forty cents an hour equates to $800 per year which could buy
diapers, meals, and school clothes for children.
MR. GILL said if they were just talking about employees, that he
represents, who work at better eateries that is one thing, but the
majority of people who spend money in restaurants in Alaska spend
it at moderately priced eateries. In that sense they don't have a
representative sampling of restaurants. He thought they should be
talking about raising the minimum wage and not lowering it, because
this, in effect, is another exception to the minimum wage.
CHAIRMAN LEMAN said his concern is for the employees who are not
tipped employees who may not get an increase or get a benefit
program because of this. He asked if he was hearing from people in
the back of the house. MR. GILL replied that the people in the
back of the house in their contracts are at higher rates of pay.
He agrees that they need more, but they do make greater salaries
and benefit packages than the unrepresented sector.
MR. FRED ROSENBERG, Restaurant Management, Inc. and Red Robin
Alaska, said he had submitted excerpts from payroll records showing
the dollar value of tips reported to them by individual employees.
Based on the reported tips, their servers are making on the low
side, $3.75 - $8.09 per hour in tips alone. He said the average
check for a person at lunch time is $8.50, and at night it's about
$10.50. He said we are one of the very few states that doesn't
have tip credit and very strongly supported this bill because it
allows business owners to allocate monies where they feel it's
appropriate like to people in the back of the house.
MR. DWIGHT PERKINS, Department of Labor, accepted the Chairman's
offer to come back the next time the bill is heard on Tuesday since
a quorum was not present.
MR. FRANK ROSE , Alaska Hotel/Motel Association, supported SB 162
because it would help people in the back of the house and other
hotel personnel, like desk people, as well.
CHAIRMAN LEMAN thanked everyone for their testimony and said SB 162
would be held over until next Tuesday.
HB 18 STATE PROCUREMENT DISABILITY PREFERENCES
CHAIRMAN LEMAN announced HB 18 to be up for consideration.
REPRESENTATIVE JEANNETTE JAMES, sponsor of HB 18, said existing law
for disabled people provides a bidder preference. There is a
preference for people who are identified as severely disabled by
the Division of Vocational Rehabilitation, but it doesn't allow
them a preference when they are a corporation or a partnership or
other organized entity. This gives them the option of determining
what fits their needs the best. There is a $0 fiscal note and
support from the impacted departments of Education and
Administration. She said she has heard of no opposition to this
bill.
MR. VERN JONES, Chief Procurement Officer, State of Alaska,
supported HB 18 because it corrects some inequities and has a $0
fiscal note.
MR. DUANE FRENCH, Director, Division of Vocational Rehabilitation,
said he supports HB 18 because it would be a more equitable system
for procurement for individuals with disabilities and will allow
partnerships where all partners are individuals with disabilities
to qualify under the bidders preference. It's very positive for
people with disabilities so they can move off the public assistance
rolls and into the work force.
CHAIRMAN LEMAN announced an at ease from 5:12 - 5:13.
Number 561
SENATOR MACKIE moved to pass HB 18 with individual recommendations
and the $0 fiscal note. There were no objections and it was so
ordered.
CHAIRMAN LEMAN adjourned the meeting at 5:14 p.m.
| Document Name | Date/Time | Subjects |
|---|