Legislature(2005 - 2006)BELTZ 211

03/17/2005 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
Bills Previously Heard/Scheduled
Moved CSSB 124(L&C) Out of Committee
Moved HB 102 am Out of Committee
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         March 17, 2005                                                                                         
                           1:35 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Con Bunde, Chair                                                                                                        
Senator Ralph Seekins, Vice Chair                                                                                               
Senator Johnny Ellis                                                                                                            
Senator Bettye Davis                                                                                                            
MEMBERS ABSENT                                                                                                                
Senator Ben Stevens                                                                                                             
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 102 am                                                                                                           
"An Act  relating to the  licensure of foreign  medical graduates                                                               
and  to applications  for  a license  to  practice medicine;  and                                                               
providing for an effective date."                                                                                               
     MOVED HB 102 am OUT OF COMMITTEE                                                                                           
SENATE BILL NO. 124                                                                                                             
"An  Act  relating  to  requirements to  obtain  and  maintain  a                                                               
fisheries  business license;  relating  to  security required  of                                                               
fish processors  and primary  fish buyers;  and providing  for an                                                               
effective date."                                                                                                                
     MOVED CSSB 124(L&C) OUT OF COMMITTEE                                                                                       
SENATE BILL NO. 131                                                                                                             
"An Act  amending the Alaska Wage  and Hour Act as  it relates to                                                               
the  employment of  a person  acting in  a supervisory  capacity;                                                               
providing  definitions for  persons  employed in  administrative,                                                               
executive, and  professional capacities,  for persons  working in                                                               
the capacity of  an outside salesman, and for  persons working in                                                               
the  capacity of  a salesman  employed on  a straight  commission                                                               
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 138                                                                                                             
"An  Act relating  to a  motor vehicle  dealer's selling  certain                                                               
motor vehicles as new model motor  vehicles or as new model motor                                                               
vehicles having a manufacturer's warranty."                                                                                     
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 130                                                                                                             
"An Act relating  to a special deposit  for workers' compensation                                                               
and  employers' liability  insurers;  relating  to assigned  risk                                                               
pools; relating  to workers'  compensation insurers;  stating the                                                               
intent  of   the  legislature,   and  setting   out  limitations,                                                               
concerning the  interpretation, construction,  and implementation                                                               
of workers'  compensation laws; relating  to the  Alaska Workers'                                                               
Compensation   Board;    assigning   certain    Alaska   Workers'                                                               
Compensation  Board   functions  to  the  division   of  workers'                                                               
compensation   in  the   Department   of   Labor  and   Workforce                                                               
Development and to that department,  and authorizing the board to                                                               
delegate administrative  and enforcement duties to  the division;                                                               
establishing   a   Workers'  Compensation   Appeals   Commission;                                                               
providing for workers' compensation  hearing officers in workers'                                                               
compensation  proceedings;  relating   to  workers'  compensation                                                               
medical benefits and  to charges for and payment of  fees for the                                                               
medical benefits; relating to  agreements that discharge workers'                                                               
compensation   liability;  relating   to  workers'   compensation                                                               
awards;  relating to  reemployment benefits  and job  dislocation                                                               
benefits; relating  to coordination of workers'  compensation and                                                               
certain  disability benefits;  relating to  division of  workers'                                                               
compensation records;  relating to release of  treatment records;                                                               
relating to an  employer's failure to insure and  keep insured or                                                               
provide  security;   providing  for  appeals   from  compensation                                                               
orders; relating to  workers' compensation proceedings; providing                                                               
for  supreme  court jurisdiction  of  appeals  from the  Workers'                                                               
Compensation Appeals  Commission; providing for a  maximum amount                                                               
for  the  cost-of-living  adjustment  for  workers'  compensation                                                               
benefits;   relating  to   attorney  fees;   providing  for   the                                                               
department to  enter into contracts with  nonprofit organizations                                                               
to  provide  information  services and  legal  representation  to                                                               
injured  employees; providing  for  administrative penalties  for                                                               
employers  uninsured or  without adequate  security for  workers'                                                               
compensation; relating to fraudulent  acts or false or misleading                                                               
statements in  workers' compensation  and penalties for  the acts                                                               
or  statements;  providing for  members  of  a limited  liability                                                               
company to  be included as  an employee for purposes  of workers'                                                               
compensation;  establishing  a   workers'  compensation  benefits                                                               
guaranty  fund;  relating  to  the  second  injury  fund;  making                                                               
conforming amendments;  providing for a  study and report  by the                                                               
medical services review committee; and providing for an                                                                         
effective date."                                                                                                                
     HEARD AND HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 102                                                                                                                  
SHORT TITLE: MEDICAL LICENSE: APPLICATION/FOREIGN GRAD                                                                          
SPONSOR(s): REPRESENTATIVE(s) STOLTZE                                                                                           
01/21/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/21/05       (H)       L&C, FIN                                                                                               
02/04/05       (H)       L&C AT 3:15 PM CAPITOL 17                                                                              
02/04/05       (H)       Moved Out of Committee                                                                                 
02/04/05       (H)       MINUTE(L&C)                                                                                            
02/09/05       (H)       L&C RPT  3DP 2NR                                                                                       
02/09/05       (H)       DP: KOTT, LEDOUX, ANDERSON;                                                                            
02/09/05       (H)       NR: LYNN, GUTTENBERG                                                                                   
02/14/05       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
02/14/05       (H)       Moved Out of Committee                                                                                 
02/14/05       (H)       MINUTE(FIN)                                                                                            
02/16/05       (H)       FIN RPT 10DP                                                                                           
02/16/05       (H)       DP: WEYHRAUCH, HAWKER, JOULE, CROFT,                                                                   
                         HOLM, KELLY, FOSTER, STOLTZE, MEYER,                                                                   
02/16/05       (H)       CHENAULT                                                                                               
02/24/05       (H)       TRANSMITTED TO (S)                                                                                     
02/24/05       (H)       VERSION: HB 102 AM                                                                                     
02/28/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/28/05       (S)       L&C, FIN                                                                                               
03/08/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/08/05       (S)       Heard & Held                                                                                           
03/08/05       (S)       MINUTE(L&C)                                                                                            
03/17/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: SB 124                                                                                                                  
SHORT TITLE: FISHERIES BUSINESS LICENSE; BOND                                                                                   
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
03/02/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/02/05       (S)       L&C, FIN                                                                                               
03/08/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/08/05       (S)       Heard & Held                                                                                           
03/08/05       (S)       MINUTE(L&C)                                                                                            
03/17/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: SB 131                                                                                                                  
SHORT TITLE: WAGE & HOUR ACT: EXEC/PROF/ADMIN/SALES                                                                             
SPONSOR(s): LABOR & COMMERCE                                                                                                    
03/04/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/04/05       (S)       L&C, FIN                                                                                               
03/17/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: SB 138                                                                                                                  
SHORT TITLE: MOTOR VEHICLE DEALER SALES                                                                                         
SPONSOR(s): LABOR & COMMERCE                                                                                                    
03/08/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/08/05       (S)       L&C, FIN                                                                                               
03/17/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: SB 130                                                                                                                  
SHORT TITLE: WORKERS' COMPENSATION                                                                                              
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
03/03/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/03/05       (S)       L&C, FIN                                                                                               
03/08/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/08/05       (S)       Heard & Held                                                                                           
03/08/05       (S)       MINUTE(L&C)                                                                                            
03/10/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/10/05       (S)       Heard & Held                                                                                           
03/10/05       (S)       MINUTE(L&C)                                                                                            
03/15/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
03/15/05       (S)       Heard & Held                                                                                           
03/15/05       (S)       MINUTE(L&C)                                                                                            
03/17/05       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
WITNESS REGISTER                                                                                                              
BEN MULLIGAN                                                                                                                    
Staff to Representative Stoltze                                                                                                 
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on HB 102.                                                                                      
CHUCK HARLAMERT, Juneau Section Chief                                                                                           
Department of Revenue                                                                                                           
PO Box 110400                                                                                                                   
Juneau, AK  99811-0400                                                                                                          
POSITION STATEMENT: Commented on SB 124.                                                                                      
JOHN SEDOR                                                                                                                      
Anchorage Society for Human Resource Management                                                                                 
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supports SB 131.                                                                                          
KAREN ROGINA                                                                                                                    
Alaska Hospitality Alliance                                                                                                     
Alaska Hotel and Lodging Association                                                                                            
Alaska Restaurant and Beverage Association                                                                                      
No address provided                                                                                                             
POSITION STATEMENT: Supports SB 131.                                                                                          
GREY MITCHELL, Director                                                                                                         
Division of Labor Standards and Safety                                                                                          
Department of Labor & Workforce                                                                                                 
PO Box 21149                                                                                                                    
Juneau, AK 99802-1149                                                                                                           
POSITION STATEMENT: Supports SB 131.                                                                                          
BOSCO BALDWIN, Vice President                                                                                                   
Human Resources and Logistics                                                                                                   
Alaska Commercial Company                                                                                                       
No address provided                                                                                                             
POSITION STATEMENT: Supports SB 131.                                                                                          
JACK AMON                                                                                                                       
Alaska Restaurant and Beverage Association (ARBA)                                                                               
Marks Brothers Café and Catering                                                                                                
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supports SB 131.                                                                                          
BARBARA HUFF-TUCKNESS, Director                                                                                                 
Governmental and Legislative Affairs                                                                                            
Teamsters Local 959                                                                                                             
520 E 34 Ave.                                                                                                                   
Anchorage AK 99503                                                                                                              
POSITION STATEMENT: Opposes SB 131.                                                                                           
ED SNIFFEN                                                                                                                      
Department of Law                                                                                                               
PO Box 110300                                                                                                                   
Juneau, AK  99811-0300                                                                                                          
POSITION STATEMENT: Commented on SB 138.                                                                                      
STEVE ALLWINE                                                                                                                   
Alaska Automobile Dealers Association                                                                                           
Juneau AK                                                                                                                       
POSITION STATEMENT: Supports CSSB 138(L&C).                                                                                   
MR. ARPINO, Affordable Used Cars                                                                                                
Fairbanks AK                                                                                                                    
POSITION STATEMENT: Supported CSSB 138(L&C).                                                                                  
ART HOUSER                                                                                                                      
Alaska Park And Sell                                                                                                            
Fairbanks AK                                                                                                                    
POSITION STATEMENT: Commented on CSSB 138(L&C).                                                                               
RICK MORRISON                                                                                                                   
Auto Dealers Association                                                                                                        
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supports CSSB 138(L&C).                                                                                   
WAYNE BANNOCK                                                                                                                   
Division of Motor Vehicles                                                                                                      
Department of Public Safety                                                                                                     
PO Box 111200                                                                                                                   
Juneau, AK  99811-1200                                                                                                          
POSITION STATEMENT: Had concerns with CSSB 138(L&C).                                                                          
MIKE JENSEN, Attorney                                                                                                           
Anchorage AK                                                                                                                    
POSITION STATEMENT: Commented on SB 130.                                                                                      
MARK KLINE                                                                                                                      
Fairbanks AK                                                                                                                    
POSITION STATEMENT: Opposes SB 130.                                                                                           
LANCE BUSH                                                                                                                      
Anchorage AK                                                                                                                    
POSITION STATEMENT: Opposes SB 130.                                                                                           
ACTION NARRATIVE                                                                                                              
CHAIR CON BUNDE called the Senate Labor and Commerce Standing                                                                 
Committee meeting to order at 1:35:38 PM. Present were Senators                                                               
Seekins, Ellis and Chair Con Bunde.                                                                                             
      HB 102 AM-MEDICAL LICENSE: APPLICATION/FOREIGN GRAD                                                                   
CHAIR CON BUNDE announced HB 102 AM to be up for consideration.                                                                 
BEN MULLIGAN,  staff to Representative Stoltze,  briefly recapped                                                               
the main  points of the  bill saying that allowing  licensure for                                                               
foreign  medical  school graduates  to  practice  in Alaska  will                                                               
allow the state to fill some needed positions.                                                                                  
     Also, we're not looking to lower standards in any way,                                                                     
        shape or form. We're going to maintain the same                                                                         
     standards we have for doctors right now.                                                                                   
1:37:16 PM                                                                                                                    
SENATOR  SEEKINS moved  to pass  HB  102 AM  from committee  with                                                               
individual  recommendations and  attached  fiscal note.  Senators                                                               
Seekins, Ellis  and Chair Bunde  voted yea;  and HB 102  AM moved                                                               
from committee.                                                                                                                 
            SB 124-FISHERIES BUSINESS LICENSE; BOND                                                                         
CHAIR CON BUNDE announced SB 124 to be up for consideration.                                                                    
SENATOR SEEKINS  moved to adopt  CSSB 124(L&C), version  Y. There                                                               
were no objections and it was so ordered.                                                                                       
CHUCK  HARLAMERT, Juneau  Section Chief,  Department of  Revenue,                                                               
explained that  the CS  adds to  the list  of obligations  that a                                                               
processor must be current on in  order to obtain a license. A new                                                               
section 2 on  page 3, line 24, covers the  security that needs to                                                               
be provided for estimated tax.  He explained that fish processors                                                               
don't have to pay their tax  until March 31 of the year following                                                               
the year they  incurred it. In exchange for  that privilege, they                                                               
have to provide  security of some sort to guarantee  that it will                                                               
be paid.                                                                                                                        
The processors  that operate between  January 1 and March  31 end                                                               
up  in a  position  of having  to supply  security  to cover  two                                                               
years-worth  of  tax  and this  can  present  difficulties.  This                                                               
amendment  allows them  to use  the same  security simultaneously                                                               
for the taxes in both periods.                                                                                                  
1:40:41 PM                                                                                                                    
SENATOR DAVIS arrived.                                                                                                          
1:41:00 PM                                                                                                                    
A third change on page 6,  line 13, says, "The commissioner shall                                                               
waive the  filing of a  performance bond under  this section...."                                                               
The  original bill  used the  term "may",  which left  discretion                                                               
with the commissioner on whether  or not to accept real property.                                                               
That  is thought  to be  a restriction  above and  beyond current                                                               
CHAIR BUNDE  thanked him  for his  comments and  established that                                                               
there was no further discussion.                                                                                                
1:42:55 PM                                                                                                                    
SENATOR SEEKINS  moved CSSB 124(L&C),  version Y,  from committee                                                               
with  individual   recommendations  and  attached   fiscal  note.                                                               
Senators Davis,  Ellis, Seekins  and Chair  Bunde voted  yea; and                                                               
CSSB 124(L&C) moved from committee.                                                                                             
         SB 131-WAGE & HOUR ACT: EXEC/PROF/ADMIN/SALES                                                                      
CHAIR CON BUNDE announced SB 131 to be up for consideration.                                                                    
SENATOR SEEKINS moved to adopt  CSSB 131(L&C), version G. Senator                                                               
Ellis objected for an explanation.                                                                                              
JOHN  SEDOR, Anchorage  Society  for  Human Resource  Management,                                                               
said the  changes were  proposed by the  Department of  Labor and                                                               
Workforce Development.                                                                                                          
GREY MITCHELL, Director, Division  of Labor Standards and Safety,                                                               
Department of Labor and  Workforce Development (DOLWD), explained                                                               
the  differences  in the  CS.  Two  sections  were left  off  the                                                               
particular exemption that exists  currently in the definitions of                                                               
what a professional employee is. Those  are on page 3, lines 17 -                                                               
22, and essentially  include teachers and people  who are working                                                               
as teachers  in schools and other  educational establishments and                                                               
computer-related occupations that have  been exempt from overtime                                                               
under the professional exemption for a while.                                                                                   
CHAIR BUNDE asked if that language was left out inadvertently.                                                                  
1:48:25 PM                                                                                                                    
MR. MITCHELL replied yes. He  further elucidated that language on                                                               
page 3, line  26, related to the question of  whether someone who                                                               
spent most of  their time sweeping the floor, but  spent a little                                                               
time making sales, would qualify  as an outside salesperson. That                                                               
would be confusing without the  primary duty language. It was not                                                               
the  intent of  the sponsor  to include  them if  it isn't  their                                                               
primary duty.  On page 4,  line 6,  the primary duty  element was                                                               
also added for straight-commission sales workers.                                                                               
1:50:51 PM                                                                                                                    
SENATOR ELLIS  asked about section  1 that deletes  the exemption                                                               
for supervisory work from AS 23.100.60(a).                                                                                      
CHAIR BUNDE clarified  that the CS doesn't change  section 1. The                                                               
only changes are in section 3.                                                                                                  
MR.  SEDOR explained  how it  applies to  all salaried  employees                                                               
over time, but does not impact anyone earning an hourly wage.                                                                   
1:54:14 PM                                                                                                                    
He  said the  federal Fair  Labor Standards  Act (FLSA)  looks at                                                               
whether an  employee is exempt  because of his primary  duties or                                                               
not.  The State  Department  of Labor  and Workforce  Development                                                               
used that  regulation, which had  two tests - the  primary duties                                                               
component and the 80/20 component.                                                                                              
1:54:59 PM                                                                                                                    
The 80/20 component is a  time-based analysis of a person's daily                                                               
duties and was originally put  in to address lower-end employees.                                                               
So, it  applied to people who  were making $159 -  $249 per week.                                                               
That original 80/20 test has not  been applicable in Alaska for a                                                               
long time, because even minimum wage is above that.                                                                             
     And yet  under the state  system, it still  does apply.                                                                    
     So,  in essence,  what you  have if  you're a  business                                                                    
     owner in the  State of Alaska or an  employee, what you                                                                    
     have is  ambiguity and you have  confusion, because you                                                                    
     have  the same  words  - administrative,  professional,                                                                    
     executive - and  yet you have two  different tests. One                                                                    
     a duties  test and one  a time-based test.  The problem                                                                    
     with a time-based  test, among others, is  that the way                                                                    
     a business  is organized. It  does not provide  for the                                                                    
     oversight necessary  to ensure that the  80/20 is being                                                                    
     met  and what  the 80/20  is is  that you  cannot spend                                                                    
     more  than 20  percent  of your  time doing  non-exempt                                                                    
     If  you have  an employee  who you  have hired  in your                                                                    
     organizational   system    to   be   a    manager,   an                                                                    
     administrator, an  executive -  you are  not overseeing                                                                    
     him  by  definitions.  So,   for  instance,  there's  a                                                                    
     national non-profit  that has an Alaska  chapter, also,                                                                    
     that  had a  director  of marketing.  That director  of                                                                    
     marketing oversaw seven  stores.... By definition, that                                                                    
     individual  didn't have  somebody  sitting  in the  car                                                                    
     next  to him  or  following him  around  to each  store                                                                    
     detailing and  overseeing to  determine what  they were                                                                    
     doing each and  every day. So, when a  dispute arose on                                                                    
     other  aspects of  their  employment, that  individual,                                                                    
     that  director  says,  'I've  been  working  more  than                                                                    
     20percent of  my time on  non-exempt duties'  - whether                                                                    
     it's making a  pot of coffee, whether  it's unlocking a                                                                    
     door, whatever it is they  may say. That is a difficult                                                                    
     thing for an  employer to address in  a situation where                                                                    
     the  person is  not in  a position  where they  get the                                                                    
1:59:05 PM                                                                                                                    
The FLSA  applies to  everyone in the  country and  the committee                                                               
should consider why Alaska has  two separate systems for overtime                                                               
and require employers  to apply two different systems  to each of                                                               
their exempt  employees. One thing  that might be Alaskan  is the                                                               
rate  of  pay,  which  historically  has  been  higher.  That  is                                                               
addressed in  the bill by  requiring two times the  minimum wage.                                                               
This has never been the case  before. Currently, a bill last year                                                               
made   some  changes,   but  historically   there  has   been  no                                                               
requirement  other than  when  making a  60/40  test, a  separate                                                               
     Alaska  has  not had  any  wage  requirements. So,  you                                                                    
     could previously had paid somebody  - or even currently                                                                    
     -  paid somebody  minimum wage  and still  qualify them                                                                    
     for the exemption. But, what  this bill does is say no,                                                                    
     'If you're going  to meet one of  these exemptions, you                                                                    
     are going  to pay a level  of pay that would  be higher                                                                    
     than  what  the  federal  minimums are.'  -  which  the                                                                    
     federal  minimums  right now  are  $455  per week.  Two                                                                    
     times minimum wage in Alaska would be more than that.                                                                      
SB  131 doesn't  push  into the  new frontiers  in  the state  in                                                               
general.  Thirty-two  of  the 51  jurisdictions  in  the  country                                                               
follow lock-step with the FLSA.  Eight other jurisdictions follow                                                               
a  short  test with  the  primary  duties component  that  tracks                                                               
closely. "Alaska  is only one  of seven jurisdictions  that still                                                               
uses the old test - the long test - the 80/20 test."                                                                            
2:02:21 PM                                                                                                                    
This bill  puts Alaska on  the same  track as the  federal system                                                               
for clarity.                                                                                                                    
2:03:42 PM                                                                                                                    
CHAIR BUNDE  asked if this  only applies  to a wage  segment that                                                               
doesn't exist.                                                                                                                  
MR. SEDOR  replied that  in Alaska,  the 80/20  test is  used for                                                               
anybody. "You could  be paying somebody $100,000 a  year and they                                                               
have to pass the 80/20 test...."                                                                                                
2:05:19 PM                                                                                                                    
CHAIR BUNDE  asked if there  are existing lawsuits that  would be                                                               
addressed by this legislation.                                                                                                  
MR.  SEDOR replied  that  wage and  hour  litigation is  on-going                                                               
throughout the  state, including  issues pertaining  to exemption                                                               
2:05:47 PM                                                                                                                    
SENATOR SEEKINS asked  under current law, if he  were an employee                                                               
in supervisory  status, would there  be a requirement for  him to                                                               
time clock  by task so  his employer  could prove that  he didn't                                                               
have to pay him overtime.                                                                                                       
MR. SEDOR replied, "Correct."                                                                                                   
2:08:36 PM                                                                                                                    
KAREN ROGINA,  Alaska Hospitality  Alliance, said  she represents                                                               
the  Alaska   Hotel  and  Lodging  Association   and  the  Alaska                                                               
Restaurant and Beverage Association, said:                                                                                      
     This bill  transcends all industries and  addresses the                                                                    
     need  of  employers  to  be  able  to  employ  salaried                                                                    
     workers in  the correct  manner, because  it eliminates                                                                    
     the  time-based  80/20  rule  and  allows  for  primary                                                                    
It will impact employers of all  exempt workers. The good news is                                                               
that it  benefits both employers  and employees. On  the employer                                                               
side, it takes away the exposure  that an employer has today when                                                               
employing any salaried worker since  they aren't keeping track of                                                               
how that  person is spending  their time every hour.  Today, they                                                               
can't say for sure if that person is eligible to be exempt.                                                                     
The  reason this  benefits employees  is because  today a  lot of                                                               
employers chose not  to have any salaried employees  at all. They                                                               
will employ  managers as hourly  workers because they  are afraid                                                               
of the exposure from that employee coming back later.                                                                           
     This bill takes the employee  out of a class that would                                                                    
     have otherwise  provided them  with the  opportunity to                                                                    
     have  benefits; denies  employees benefits,  because an                                                                    
     employer  can segregate  employees as  exempt employees                                                                    
     or salaried profession, executive  staff and gives them                                                                    
     other  benefits  that they  wouldn't  have  to give  to                                                                    
     their entire  staff. By  allowing this  bill to  have a                                                                    
     segregated    group,   like    an   executive    staff,                                                                    
     professional exempt salaried  workers, since this group                                                                    
     is  now all  hourly, they're  not getting  the benefits                                                                    
     they would otherwise be afforded by their employer.                                                                        
2:12:32 PM                                                                                                                    
SENATOR ELLIS  asked if the  bill provides an opportunity  for an                                                               
employer  to  provide  benefits  for  professional  employees  as                                                               
opposed to a  salaried worker and is it still  up to the employer                                                               
in the hiring negotiating process to determine that.                                                                            
MS. ROGINA answered by giving an  example of a hotel that has 100                                                               
employees  and five  executive staff.  The owners  would like  to                                                               
reward the  executive staff  with health  insurance, but  if they                                                               
are  all hourly,  which many  of them  are, that  group can't  be                                                               
segregated for benefits.                                                                                                        
     Since they  are hourly, they  would have to give  it to                                                                    
     their other 100  employees and they can't  afford to do                                                                    
     that. As  a result, all  of their employees  are hourly                                                                    
     and none of them get health insurance....                                                                                  
2:14:50 PM                                                                                                                    
SENATOR ELLIS  asked if a  manager pitches in when  a housekeeper                                                               
doesn't show and that amounted  to 20percent of their time, would                                                               
an  employer  be obligated  to  pay  overtime for  those  duties.                                                               
"Isn't that the situation that gave rise to the bill?"                                                                          
MS. ROGINA replied  that type of situation occurred  and when the                                                               
employee left,  he presented a log  of extra things he  did while                                                               
managing. The owner didn't clock  those things and had no control                                                               
over the things the manager did.                                                                                                
SENATOR ELLIS asked  how that situation would be  handled if this                                                               
becomes law.  Would "pitching  in" just  be part  of professional                                                               
supervisory duties?                                                                                                             
MS. ROGINA  replied that a  manager would have  management skills                                                               
enough to hire  the right staff so they don't  have to do extras.                                                               
They could still fill in, but not on a regular basis.                                                                           
2:17:58 PM                                                                                                                    
SENATOR ELLIS asked  if there is any interplay  between the union                                                               
versus non-union situation using the hotel example again.                                                                       
MS. ROGINA replied  that this bill addresses  the private sector,                                                               
because unions  have their  own contracts  that deal  with hourly                                                               
SENATOR ELLIS  asked if she  means union versus non-union  in the                                                               
private sector.                                                                                                                 
MS. ROGINA responded, "Right."                                                                                                  
2:19:16 PM                                                                                                                    
BOSCO  BALDWIN, Vice  President, Human  Resources and  Logistics,                                                               
Alaska  Commercial Company,  agreed  with  previous testimony  in                                                               
support  of SB  131. He  disagreed, however,  with the  statement                                                               
that companies  don't get sued  for someone working four  or five                                                               
hours doing non-exempt work in a workweek.                                                                                      
     That's simply  not true. I  think you can find  lots of                                                                    
     case law up here that  will absolutely show that that's                                                                    
     the case. If you think  about that. If you have someone                                                                    
     who upon termination - and  this happens all the time -                                                                    
     someone  who  writes, documents  in  their  own book  -                                                                    
     whether  they create  it after  the fact  or not,  that                                                                    
     becomes fact.  Unless the employer,  on a  daily basis,                                                                    
     is sitting  there watching what this  employee is doing                                                                    
     on  his tasks.  If  you  take four  hours  a day  times                                                                    
     whatever their rate  of pay is times 52  weeks and then                                                                    
     you put  in punitive damages  over the course  of time,                                                                    
     you're  talking  about  a pretty  hefty  bill  that  an                                                                    
     employer would be  faced to pay. What  actually ends up                                                                    
     happening  is  employers  are forced  to  settle  these                                                                    
     cases,  because   it's  cheaper  to  settle   and  give                                                                    
     somebody money than to take  it to court. It would cost                                                                    
     you  $50,000 just  to  get to  the  point where  you're                                                                    
     walking into a courtroom.                                                                                                  
     The way  the law  is set  up today,  in our  case, with                                                                    
     Alaska Commercial Company, we  span the whole state....                                                                    
     Our  home offices  are based  out  of Anchorage....  We                                                                    
     have 25  stores. We  can't be  everywhere at  one time.                                                                    
     That  puts us  at a  pretty unfair  advantage when  you                                                                    
     think about  it -  when we are  forced...to be  able to                                                                    
     identify  what each  of  our  management employees  are                                                                    
     doing  on  a  day  to  day basis  -  making  sure  that                                                                    
     80percent  of the  time  they  are actually  performing                                                                    
     what their job description says.                                                                                           
He related how a former employee sued his company as an example                                                                 
of what can happen.                                                                                                             
2:25:16 PM                                                                                                                    
JACK AMON, representing the Alaska Restaurant and Beverage                                                                      
Association (ARBA) and the Marks Brothers Café and Catering,                                                                    
supported SB 131 and previous testimony in its favor. He said:                                                                  
     The  changes  made  in  the   duties  test  for  exempt                                                                    
     employees  is a  great  stride  forward in  modernizing                                                                    
     Alaska's  labor laws  to  more  accurately reflect  the                                                                    
     current work place.                                                                                                        
Only two of  his 12 employees at the restaurant  would qualify as                                                               
exempt employees  in the new statute  - his chef de'  cuisine and                                                               
floor  manager.  He  disagreed  that one  would  give  an  hourly                                                               
employee a supervisory position.                                                                                                
     These are people  who are your supervisors  and who are                                                                    
     your top-level  employees. In my  mind, if one  has the                                                                    
     authority to hire  and fire and is  responsible for the                                                                    
     work,  they  are  managers  whether  they  manage  from                                                                    
     behind the  stove or  behind a  desk. I,  myself, often                                                                    
     manage with my hands in a dish sink.                                                                                       
     I'm afraid that opponents of  this bill will state that                                                                    
     it's  an  attempt  by  business  owners  to  cheat-hard                                                                    
     working  employees out  of the  overtime they  deserve.                                                                    
     Nothing could  be farther from  the truth. In  order to                                                                    
     run  a successful  business, it's  essential to  retain                                                                    
     your  top-quality  employees.  These top  workers  know                                                                    
     their  work and  there's demand  for their  skills. One                                                                    
     could not keep them long by taking advantage of them.                                                                      
     There  was constant  talk that  this is  going to  be -                                                                    
     there was some talk yesterday  that owners are going to                                                                    
     look for  ways to work  people 60  or 70 hours  a week.                                                                    
     You know,  we know  that the productivity  of employees                                                                    
     drop off  by working  those long hours.  There's really                                                                    
     no benefit  to doing that.  This change in  the statute                                                                    
     will   allow  more   flexibility   for  employers   and                                                                    
     employees  to make  compensation arrangements  that are                                                                    
     beneficial to both.                                                                                                        
2:28:22 PM                                                                                                                    
BARBARA  HUFF-TUCKNESS,  Director, Governmental  and  Legislative                                                               
Affairs,  Teamsters Local  959,  opposed SB  131  in its  current                                                               
form. She  referenced Senator Ellis' question  about whether this                                                               
affected unions or not saying:                                                                                                  
     We  looked at  this potential  impact on  every Alaskan                                                                    
     worker  in the  state,  whether they're  union or  non-                                                                    
     union. Our  biggest concern traditionally has  been the                                                                    
     impact  on  the   lower-paid,  not  the  professionals.                                                                    
     Technically,   I   don't   think  that   that's   where                                                                    
     traditionally  over  the  years that  there  have  been                                                                    
She related  how the 80/20 rule  came about because at  that time                                                               
there  were many  lawsuits on  the books  and a  lot of  abuse by                                                               
employers. The  80/20 legislation helped level  the playing field                                                               
with equitable treatment for workers in general.                                                                                
Her initial concern with the original  bill was the impact on the                                                               
low-paid  worker.  She   commended  Representative  Rokeberg  for                                                               
maintaining the double-minimum wage. She stated:                                                                                
     I will say on the  record that having still the double-                                                                    
     minimum  wage  we  do believe  will  help  protect  the                                                                    
     majority of those entry level  workers. I will use, for                                                                    
     example, the  McDonald's manager who does  flip burgers                                                                    
     and they put  a manager sign on him. I'm  sorry, but it                                                                    
     does  happen. At  least the  double  minimum wage  will                                                                    
     help discourage that.                                                                                                      
     What I  am here to talk  about and it is  a concern....                                                                    
     While  one of  the earlier  speakers addressed  federal                                                                    
     regulations, we  do have a  concern with the  fact that                                                                    
     the  primary duty  definition is  not addressed  in the                                                                    
     bill....  We  do  believe  that  definition  should  be                                                                    
     defined in state statute -  while we believe regulation                                                                    
     is  fine whether  it's on  a state  level or  a federal                                                                    
     level, for that matter. We  believe that having that in                                                                    
     our  state  law  will  actually help  clarify  for  the                                                                    
     employee  as  well  as  the  employers  when  they  are                                                                    
     reviewing our state laws so  that they don't have to go                                                                    
     from  a state  law and  then funnel  through the  FLSA,                                                                    
     which is literally a fact.                                                                                                 
     I also want  to go on record with respect  to a comment                                                                    
     made...that there  is a lot  of federal  case decisions                                                                    
     that  have been  made.  So, adopting  the  FLSA is  the                                                                    
     right  thing for  the State  of Alaska  to do.  I would                                                                    
     just caution everyone there's been  a drastic change in                                                                    
     the  Federal Labor  Standards Act  and I  don't believe                                                                    
     that there has  been near the litigation.  I mean, it's                                                                    
     been in  place less than  a year.  You are going  to be                                                                    
     challenged,  we're  concerned,  even with  the  primary                                                                    
     duty definition.  While it's  not clear, it  gives some                                                                    
     guidance out  there for the employers  and/or employees                                                                    
     when it's being applied. But,  we do believe that it is                                                                    
     somewhat ambiguous  and you will probably  see lawsuits                                                                    
     come out of the application of that as well....                                                                            
She  suggested  amending  the  bill to  include  a  primary  duty                                                               
definition. Other terms  used in the bill should  also be defined                                                               
in statute  including customarily  and regularly,  discretion and                                                               
independent judgment, and  matters of significance -  so they are                                                               
applied consistently regarding primary duties.                                                                                  
2:33:56 PM                                                                                                                    
Lastly, she  noted another  exemption for  employees who  make at                                                               
least $100,000 or more per  year in last year's implementation of                                                               
the FLSA that was strongly  supported by labor and management and                                                               
said she would like to see it in this bill.                                                                                     
CHAIR BUNDE  asked how replacing  "supervisory" with  three other                                                               
definitions - executive, administrative  and professional - would                                                               
be more workable and exact.                                                                                                     
MR. MITCHELL explained  that currently there is  an exemption for                                                               
an  employee  employed  in  a  supervisory  capacity.  This  bill                                                               
proposes  to  remove that  exemption.  There  are also  currently                                                               
exemptions  for the  five categories:  administrative, executive,                                                               
professional  and  two  sales  jobs  -  straight  commission  and                                                               
outside  sales. They  are  defined in  regulation  and this  bill                                                               
takes those  definitions and  makes them  meaningless, basically,                                                               
and establishes statutory definitions for them.                                                                                 
CHAIR BUNDE asked if the definitions  are just being taken out of                                                               
regulation and being put into statute.                                                                                          
MR. MITCHELL replied:                                                                                                           
     No, the  terms are currently  in statute and  then they                                                                    
     are defined  in regulation. What  this bill does  is it                                                                    
     takes the  definitions that are in  regulation and uses                                                                    
     bits  and  pieces  of  them and  some  of  the  federal                                                                    
     regulations and  takes those definitions  basically out                                                                    
     of the regulations and put them into statute.                                                                              
CHAIR BUNDE thanked him for his  explanation and set SB 131 aside                                                               
for further consideration at a later date.                                                                                      
               SB 138-MOTOR VEHICLE DEALER SALES                                                                            
CHAIR CON BUNDE announced SB 138 to be up for consideration.                                                                    
SENATOR  SEEKINS moved  to adopt  CSSB 138(L&C),  version G,  for                                                               
discussion. There were no objections and it was so ordered.                                                                     
CHAIR BUNDE asked Mr. Sniffen to explain the differences.                                                                       
ED SNIFFEN, Department of Law (DOL),  said he is the attorney who                                                               
handles  all of  the consumer  protection issues  that come  with                                                               
automobiles in  the State of  Alaska. The reason the  language in                                                               
AS 08.66.015 is  the way it is currently is  because of a concern                                                               
with auto  brokers some years ago  who were selling used  cars as                                                               
new vehicles. A lot of those  problems are no longer prevalent in                                                               
auto transactions today, but there  is some question about when a                                                               
used  car  dealer  should  be allowed  to  obtain  a  low-mileage                                                               
vehicle and  sell if off  their used-car lot  as a used  car even                                                               
though it  might have  the appearance  of a  new car.  There were                                                               
concerns about  warranty and odometer  issues with  cars imported                                                               
from  Canada   and  the  lemon.  Those   were  addressed  through                                                               
amendments  to  another  statute  that require  auto  dealers  to                                                               
disclose those issues to consumers.                                                                                             
2:40:02 PM                                                                                                                    
He wanted a balanced fix to  the problem of allowing new and used                                                               
car  dealers to  sell products  and not  interfere with  the free                                                               
flow of commerce. He proposed in his report:                                                                                    
     The  first  one  was  to  simply  remove  the  language                                                                    
     "current model  vehicle" from the statute,  which would                                                                    
     essentially allow  anyone to sell  a vehicle as  a used                                                                    
     vehicle  as long  as  it  had been  sold  once and  the                                                                    
     vehicle  lost its  manufacturer's  statement of  origin                                                                    
     (MSO), which is a document  that comes from the factory                                                                    
     with a  new car that  is surrendered to  the Department                                                                    
     of  Motor Vehicles  (DMV) as  soon  as a  car has  been                                                                    
     titled  to a  first purchaser....  Then we  would leave                                                                    
     these  other issues  related  to  low mileage,  current                                                                    
     model vehicles showing up on  car lots - we would leave                                                                    
     that  to the  auto dealers  and their  manufacturers to                                                                    
     resolve, because  that really doesn't involve  too many                                                                    
     enforcement issues with our office.                                                                                        
     The second proposal I made  and, I think, the committee                                                                    
     substitute that you have before  you is premised on the                                                                    
     second proposal is  essentially adopted from Washington                                                                    
     State's DMV's approach to this  problem. They deal with                                                                    
     some related  issues being a  border state  with Canada                                                                    
     and  they have  decided  in their  code  to define  new                                                                    
     motor vehicles  to mean motor vehicles  that have 3,000                                                                    
     miles or less  or have been titled for 90  days or less                                                                    
     - and  you can't  sell a vehicle  unless it  meets that                                                                    
     requirement unless you are a  new car dealer. And there                                                                    
     is  an  exception to  that  rule  that allows  for  the                                                                    
     resale  of  a vehicle  if  it  was actually  a  vehicle                                                                    
     purchased by a bona fide  purchaser and that is defined                                                                    
     to mean someone  who actually bought the car  to use it                                                                    
     as opposed  to a  broker who is  actually buying  a car                                                                    
     just for the purpose of reselling it.                                                                                      
The  CS  has  language  that allows  for  that  arrangement.  The                                                               
department's concern is to fix  language in AS 08.66.015, because                                                               
now no  car dealer, new  or used, can  sell a used  current model                                                               
vehicle. He thought it was an oversight.                                                                                        
CHAIR BUNDE  asked if the  new definition of "new  vehicle" takes                                                               
care of that problem.                                                                                                           
MR. SNIFFEN replied yes.                                                                                                        
2:45:45 PM                                                                                                                    
STEVE ALLWINE,  Alaska Automobile Dealers  Association, supported                                                               
CSSB  138(L&C) and  agreed  with Mr.  Sniffen's  synopsis of  the                                                               
issue.  Currently, new  car dealers  who  sell used  cars are  in                                                               
violation of  this statute, which  was an  unintended consequence                                                               
to the legislation.                                                                                                             
2:49:26 PM                                                                                                                    
CHAIR BUNDE said that 3,000 miles is a lot of miles.                                                                            
STEVE ALLWINE said  that "demonstrators" are still  under the MSO                                                               
and it  must be disclosed  that it is demonstration  vehicle, but                                                               
they are still new vehicles.                                                                                                    
CHAIR BUNDE asked him to comment on the 90 days difference                                                                      
between 120 days and 30.                                                                                                        
MR. ALLWINE replied that 90 days is a compromise.                                                                               
     This precludes people  from manufacturing used cars....                                                                    
     In  other regions  of  the  country, manufacturers  may                                                                    
     pile on  some significant incentives because  they have                                                                    
     huge inventories.  If they put those  incentives on and                                                                    
     somebody walks  in there  to buy  one of  those cars...                                                                    
     those  incentives may  be  significant  enough that  it                                                                    
     allows  them to  manufacture a  used car,  bring it  to                                                                    
     this side of the world and dump here in Alaska.                                                                            
     Now, that vehicle, depending  on the manufacturer, also                                                                    
     may or  may not include any  manufacturers warranty. If                                                                    
     you put a 90-day or a 120,  or 150 or a 180-day time on                                                                    
     it, if  they want to  manufacture a used car,  they are                                                                    
     going  to  pay the  interest  on  that money  for  that                                                                    
     period of  time. What that  does is it slows  them down                                                                    
     from doing  that. That's the  reason we feel the  90 or                                                                    
     120 or 150  is more than appropriate. If  you went with                                                                    
     a  30-day  number, I  think  that  would be  a  cursory                                                                    
     number; it would have zero impact.                                                                                         
2:51:15 PM                                                                                                                    
SENATOR SEEKINS disclosed that he has been an automobile dealer                                                                 
in Alaska since 1977.                                                                                                           
2:52:07 PM                                                                                                                    
There are ways to obtain a  vehicle from the black market or from                                                               
another  country where  the exchange  rate is  different and  not                                                               
increase  the price.  However, the  manufacturer  takes a  lesser                                                               
profit than if they sold it to  a dealer in the United States. He                                                               
     As a result  of that, in the exchange  rates, there may                                                                    
     be automobiles that come into  the market that a broker                                                                    
     can  buy  and turn  around  and  sell at  a  reasonable                                                                    
     profit  for  less  money than  a  franchise  automobile                                                                    
     dealer  can buy  from their  own manufacturer.  In some                                                                    
     cases, for  some manufacturers, those vehicles  that do                                                                    
     cross  the  international  border  no  longer  carry  a                                                                    
     warranty  on  them  from  the   fact  that  -  Chrysler                                                                    
     Corporation was  one of them  that I'm aware of  - that                                                                    
     dropped the warranty. I believe  Daimler Benz may have,                                                                    
     Honda may  have, Chevrolet, General  Motors may  have -                                                                    
     I've  seen lists  and I  think that  those four,  maybe                                                                    
     Toyota, as  well have it, but  I'm not sure of  all the                                                                    
     manufacturers. I just  know that some of  them don't do                                                                    
     So, when  it comes  time, then, for  someone who  has a                                                                    
     used car license in a  temporary facility that's on the                                                                    
     corner of a  lot somewhere - will attempt  to sell that                                                                    
     vehicle  and  misrepresent  it  as  a  vehicle  with  a                                                                    
     warranty. Because  all automobiles in the  United State                                                                    
     that  are bought  in the  United  States, the  warranty                                                                    
     follows  that vehicle,  not  the owner.  And  all of  a                                                                    
     sudden,  the  person  finds  out   they  don't  have  a                                                                    
     warranty.  But  they  may  have  been  sold  a  service                                                                    
     contract  that  was  represented   as  a  warranty.  So                                                                    
     there's a lot of  misrepresentation that can take place                                                                    
     in that  process and I  think probably the  best police                                                                    
     that  are out  there  of other  dealers are  automobile                                                                    
     dealers, themselves.  When they see someone  who is not                                                                    
     living  up  to  the  standards of  the  law,  it's  not                                                                    
     unusual for  them to make  a phone call to  Mr. Sniffen                                                                    
     or someone  else in  the DMV or  Department of  Law and                                                                    
     say this dealer is not complying with the law....                                                                          
2:57:18 PM                                                                                                                    
Franchise  dealers who  feel they  must meet  the needs  of their                                                               
community by providing expensive  servicing are at a disadvantage                                                               
because of the loophole. There  are also problems with people are                                                               
buying cars without knowing for sure.                                                                                           
2:58:04 PM                                                                                                                    
MR.  ARPINO, Affordable  Used Cars,  said he  is located  in both                                                               
Fairbanks and Anchorage.  He supported the CS  with the timeframe                                                               
and mileage. He  said it would help clarify current  law which is                                                               
not working.                                                                                                                    
ART HOUSER, Alaska Park and  Sell, agreed that the loopholes have                                                               
to be  closed. The only  issue he has  is that using  3,000 miles                                                               
and 90-days for a new vehicle is that there are still loopholes.                                                                
     For  long-term  benefits,  the  bill  has  to  be  kept                                                                    
     simple.  If it's  got an  MSO, it's  a new  vehicle; if                                                                    
     it's got a title, it's a used vehicle.                                                                                     
2:59:44 PM                                                                                                                    
RICK  MORRISON, Auto  Dealers Association,  agreed  that the  law                                                               
needs to be  clarified or there could be a  class action suit. He                                                               
supported CSSB 138(L&C).                                                                                                        
3:03:24 PM                                                                                                                    
CHAIR BUNDE asked if he thought industry would be self-policing.                                                                
MR. MORRISON said he thought that  would help. The current law is                                                               
very vague.                                                                                                                     
     If you are in the new  car business and are a franchise                                                                    
     dealer, you  have paid thousands of  dollars for tools;                                                                    
     you've paid  thousands of dollars for  training; you've                                                                    
     paid  millions of  dollars for  a facility  and all  in                                                                    
     order to take care of the consumer....                                                                                     
He  concluded  saying  that  this  bill  gives  the  consumer  an                                                               
opportunity  to defend  himself and  gives other  dealers in  the                                                               
area something to stand on.                                                                                                     
WAYNE BANNOCK,  Division of  Motor Vehicles,  said he  works very                                                               
closely with  dealers and has  some concerns with version  G. His                                                               
comments were on  section (d)(2), but didn't  concern the mileage                                                               
or the timeframe.                                                                                                               
     DMV  believes  that  the  definition  of  a  new  motor                                                                    
     vehicle is  limited to that  of a vehicle  that retains                                                                    
     its MSO or MCO. Once a  vehicle has been converted to a                                                                    
     titled  vehicle,   it  is  a  used   vehicle.  What  is                                                                    
     described  in (d)(2)(b)(1)  and  (2) is  indeed a  used                                                                    
     vehicle. It is a very  slightly used vehicle, but it is                                                                    
     without exception  a used vehicle. Now  recognizing the                                                                    
     industry,  recognizing  some  of the  excellent  points                                                                    
     that have  been made  by the  speakers before  me, with                                                                    
     your  permission,  sir,  I would  like  to  propose  an                                                                    
     alternative  that  I think  may  solve  both the  DMV's                                                                    
     problem and adequately addresses  the other speakers as                                                                    
3:05:48 PM                                                                                                                    
     If the language  of (d)(2)(b)(1) and (2)  is written in                                                                    
     the  affirmative  and  is  placed  in  section  (c)(4),                                                                    
     (c)(4) would then read, 'The  vehicle has been operated                                                                    
     in excess  of 3,000 miles  or titled and  registered in                                                                    
     more than 90 days.'                                                                                                        
     Section (c) speaks  to what cars can be  sold. So, what                                                                    
     it says in section (c), if  that were to be adopted, is                                                                    
     that  it is  definitely a  used car.  We're recognizing                                                                    
     that it's  a used car  and it can  be sold if  it meets                                                                    
     that threshold of 3,000 miles or more than 90 days....                                                                     
     So,  I  believe  from  the speakers  we've  heard  from                                                                    
     before, it would accomplish the  exact same effect, yet                                                                    
     it would  not put  the State of  Alaska in  the awkward                                                                    
     position of  attempting to define  a slightly  used car                                                                    
     as a new car.                                                                                                              
CHAIR BUNDE thanked him for the suggestion. He said he would                                                                    
hold the bill for a further hearing.                                                                                            
                  SB 130-WORKERS' COMPENSATION                                                                              
CHAIR CON BUNDE announced SB 130 to be up for consideration.                                                                    
MIKE JENSON, attorney, said he exclusively represents injured                                                                   
workers with workers' compensation cases. He said his colleagues                                                                
had faxed the committee with their concerns today.                                                                              
MR. JENSON said he has heard a lot of testimony about premium                                                                   
increases, but he hasn't ever heard an explanation that accounts                                                                
for the increases.                                                                                                              
     When  you   look  at  the   annual  reports   that  the                                                                    
     commissioner and  the Governor  are relying  upon, they                                                                    
     show, in  fact, that  time-loss claims  have decreased.                                                                    
     Injuries  have decreased  over 5  percent  in the  last                                                                    
     annual report.  Employee legal expenses  have decreased                                                                    
     over  10  percent.   Incidentally,  we've  enjoyed  the                                                                    
     greatest  decrease in  expense  for  the workers'  comp                                                                    
     Our  colleagues on  the insurance  side,  on the  other                                                                    
     hand, have seen  an increase in legal  expenses and, in                                                                    
     fact,  received approximately  three times  as much  in                                                                    
     legal  expense  reimbursements   as  employees  do.  In                                                                    
     addition,   the   annual  report   shows   reemployment                                                                    
     benefits have decreased medical  costs. They have shown                                                                    
     an  increase,  but  that's only  8  percent  and  total                                                                    
     benefits are only up 7  percent. So, it's difficult for                                                                    
     me  as a  lay person  to understand  why employers  are                                                                    
     facing  up to  400 percent  premium increases  when the                                                                    
     total benefits have only gone  up 7 percent. I have not                                                                    
     heard   any   discussion   or  explanation   from   the                                                                    
     Governor's  office, the  commissioner or  the director,                                                                    
     which addresses that concern.                                                                                              
     In addition  to representing injured workers,  I'm also                                                                    
     an  employer   and  I  also  have   to  face  increased                                                                    
     premiums,  but as  an employer,  I would  like to  know                                                                    
     that if we are to  reform the compensation system, that                                                                    
     my premiums  are, in fact,  reduced. If  total benefits                                                                    
     are  only  up  7  percent, it's  difficult  for  me  to                                                                    
     comprehend  how   reforming  a   workers'  compensation                                                                    
     system will  address the problems that  other employers                                                                    
     are facing with as much as 400 percent increases.                                                                          
He wanted to address the creation of a commission in section 10                                                                 
that creates a court without calling it a court and creates                                                                     
judges without calling them judges.                                                                                             
     Judges will  be mere political appointees,  not subject                                                                    
     to the standards of  judicial conduct. Preemption would                                                                    
     not be allowed; the commission  would not be subject to                                                                    
     the  present  standards  of judicial  review.  It  will                                                                    
     decide  cases de  novo  and the  judges  will never  be                                                                    
     evaluated for their ability or fairness.                                                                                   
     Section  29, which  is  part of  this  creation of  the                                                                    
     commission, takes  away current  power of the  board to                                                                    
     determine the  credibility of medical reports.  A board                                                                    
     finding concerning  the weight  to be  accorded witness                                                                    
     testimony  including medical  testimony will  no longer                                                                    
     be   conclusive.    The   board's    determination   of                                                                    
     credibility  will be  exclusively limited  to testimony                                                                    
     presented  by  a  witness  at   a  hearing.  This  will                                                                    
     increase,  not  decrease,  the cost  of  litigation  to                                                                    
     employers  and employees  alike, since  medical reports                                                                    
     will no  longer have  the weight currently  accorded by                                                                    
     the  present act.  The board  will lose,  in fact,  its                                                                    
     power to  determine credibility  of medical  reports or                                                                    
     other evidence  not presented by a  witness at hearing.                                                                    
     In addition,  it makes clear  the commission,  since it                                                                    
     will  review  de novo  all  prior  board decisions,  it                                                                    
     makes clear that  instead of resolving a  case with one                                                                    
     hearing, now  all cases will require  two hearings. How                                                                    
     this will decrease litigation  costs that employers are                                                                    
     facing is  difficult for me  to comprehend.  It permits                                                                    
     parties to  present new or additional  evidence at this                                                                    
     second hearing. It permits an  easier granting of stays                                                                    
     without   requiring   any   bonds  -   increasing   the                                                                    
     likelihood of having two hearings.                                                                                         
     It makes certain that all  adverse board decisions will                                                                    
     be appealed by  the party who lost at  the board level.                                                                    
     All  of this  will greatly  increase litigation  costs.                                                                    
     Every party  who loses at  the board will  be compelled                                                                    
     to appeal for  a chance at two bites of  the apple. Me,                                                                    
     as an employer, would  be certainly troubled by hearing                                                                    
     a case that  went to a hearing in which  I prevailed. I                                                                    
     would only have  to face another hearing  where I would                                                                    
     have to defend, face  additional and new evidence. This                                                                    
     does  not benefit  employers and  it certainly  doesn't                                                                    
     benefit  injured  workers.  It creates  another  hurdle                                                                    
     that  both   employers  and  employees  have   to  jump                                                                    
     through. It certainly doesn't address,  in light of the                                                                    
     annual report  statistics, the increased  premiums that                                                                    
     employers here in Alaska face.                                                                                             
3:17:06 PM                                                                                                                    
MARK KLINE,  representing himself,  said reduced fees  in section                                                               
25  might reduce  the quality  of health  care already  available                                                               
through   existing  law.   Studies   done   during  the   Clinton                                                               
administration found  that regulation  of health care  to control                                                               
costs decreased the  quality of it. He also  thought the majority                                                               
of cost problems  employers are having is because of  the lack of                                                               
appropriate pursuit of  safety that in turn  causes a significant                                                               
quantity of  injuries and illnesses.  The national  estimate rate                                                               
is five  injuries per  hundred employees,  but Alaska's  is seven                                                               
injuries per hundred  employees. That makes it  40 percent higher                                                               
than  the  national average  according  to  the Bureau  of  Labor                                                               
This  higher incidence  could likely  cause  increased prices  in                                                               
insurance  premiums. He  favored increased  involvement by  OSHA,                                                               
employers and  employees who should  have meetings  pertaining to                                                               
safety issues.  This would keep  injuries and  insurance premiums                                                               
3:21:10 PM                                                                                                                    
Section 16 reduces the amount  of permanent impairment capital an                                                               
employee  is entitled  to, which  might  encourage employers  who                                                               
have  little or  no interest  in safety  to reduce  their efforts                                                               
even  further in  preservation of  the working  environment. They                                                               
could afford to  take more chances because of a  lesser amount of                                                               
penalty they would be subjected to.                                                                                             
CHAIR BUNDE thanked him for his testimony.                                                                                      
3:21:53 PM                                                                                                                    
LANCE BUSH  said he works at  Fred Meyer in Anchorage  and agreed                                                               
with  Mr. Kline.  A garage  door  came down  and hit  him on  the                                                               
shoulder  and  broke  his  foot  in six  places.  His  wife,  six                                                               
children and  he are  going through a  living hell.  Loopholes in                                                               
the law are being used against  him. He thinks the Legislature is                                                               
increasing corporate protection in  Alaska. He sees Alaskans with                                                               
injuries that require minimal medical attention and said:                                                                       
     But   seriously  injured   Alaskans  are   swept  under                                                                    
     corporate  America's   rug,  left  to  be   ignored  in                                                                    
     litigation  because the  liability  is  too costly  and                                                                    
     they don't  want to take accountability....  Now I feel                                                                    
     me and my family's American  dream is altered and we've                                                                    
     begun  to live  the workman's  comp nightmare.  I would                                                                    
     like  to  know when  we  are  going to  hold  corporate                                                                    
     Alaska,  corporate  America,  accountable  for  illegal                                                                    
     practices, bullying,  intimidation and outright  lies -                                                                    
     to us as truly proven cases of injured Alaskans....                                                                        
CHAIR BUNDE  thanked everyone  for their  testimony and  said the                                                               
committee ran  out of time  and adjourned the meeting  at 3:27:24                                                             

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