03/25/2024 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB203 | |
| SB200 | |
| SB153 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 203 | TELECONFERENCED | |
| *+ | SB 200 | TELECONFERENCED | |
| *+ | SB 153 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 25, 2024
1:32 p.m.
MEMBERS PRESENT
Senator Jesse Bjorkman, Chair
Senator Click Bishop, Vice Chair
Senator Kelly Merrick
Senator Forrest Dunbar
MEMBERS ABSENT
Senator Elvi Gray-Jackson
COMMITTEE CALENDAR
SENATE BILL NO. 203
"An Act relating to business license fees; and providing for an
effective date."
- HEARD & HELD
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 200
"An Act relating to employer contributions in the teachers'
retirement system; relating to supplemental employee benefits;
and providing for an effective date."
- HEARD & HELD
SENATE BILL NO. 153
"An Act exempting certain employees from overtime pay
requirements; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 203
SHORT TITLE: BUSINESS LICENSE FEES
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/24/24 (S) READ THE FIRST TIME - REFERRALS
01/24/24 (S) L&C, FIN
03/11/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/11/24 (S) Scheduled but Not Heard
03/18/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/18/24 (S) -- MEETING CANCELED --
03/25/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 200
SHORT TITLE: TRS CONTR RATE; PERS SOC SECURITY OR SBS
SPONSOR(s): STEDMAN
01/22/24 (S) READ THE FIRST TIME - REFERRALS
01/22/24 (S) L&C, FIN
02/15/24 (S) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS
02/15/24 (S) L&C, FIN
03/18/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/18/24 (S) -- MEETING CANCELED --
03/25/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 153
SHORT TITLE: OVERTIME PAY EXEMPTION
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
05/16/23 (S) READ THE FIRST TIME - REFERRALS
05/16/23 (S) L&C, FIN
03/25/24 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
MICAELA FOWLER, Deputy Commissioner
Department of Commerce, Community and Economic Development
(DCCED)
Juneau, Alaska
POSITION STATEMENT: Introduced SB 203 on behalf of the
administration.
SYLVAN ROBB, Director
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community and Economic Development
(DCCED)
Juneau, Alaska
POSITION STATEMENT: Provided a presentation on SB 203.
SENATOR BERT STEDMAN, District A
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 200.
ROSE FOLEY, Staff
Senator Bert Stedman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided the sectional analysis for SB 200.
CATHY MUNOZ, Commissioner Designee
Department of Labor and Workforce Development (DOLWD)
Juneau, Alaska
POSITION STATEMENT: Introduced SB 153 on behalf of the
administration.
JEREMY APPLEGATE, Chief Wage and Hour
Labor Standards and Safety Division
Department of Labor and Workforce Development (DOLWD)
Anchorage, Alaska
POSITION STATEMENT: Provided a presentation on SB 153.
ACTION NARRATIVE
1:32:13 PM
CHAIR JESSE BJORKMAN called the Senate Labor and Commerce
Standing Committee meeting to order at 1:32 p.m. Present at the
call to order were Senators Merrick, Dunbar, and Chair Bjorkman.
Senator Bishop arrived thereafter.
SB 203-BUSINESS LICENSE FEES
1:33:16 PM
CHAIR BJORKMAN announced the consideration of SENATE BILL NO.
203, "An Act relating to business license fees; and providing
for an effective date."
1:33:40 PM
MICAELA FOWLER, Deputy Commissioner, Department of Commerce,
Community and Economic Development (DCCED), Juneau, Alaska,
introduced SB 203 on behalf of the administration. She said that
over the past year and a half, the department has had
discussions with the business community about interest in the
ways the state can do more to promote industries that do not
have a promotional entity (e.g. the Alaska Seafood Marketing
Institute (ASMI) and Alaska Travel Industry Association (ATIA)).
She said that in 2023, the legislature provided $5 million in
the capital budget to start doing some of this work. The
Division recognizes that requesting an Unrestricted General
Funds (UGF) appropriation on an ongoing basis is difficult in
the present economy. The Division has been seeking a small fee
increase (impacting the population that would benefit from that
activity).
1:35:18 PM
MS. FOWLER explained that the business license fees have been
set at $50 per year since 2008. Prior to this, the fees were
$100 per year. SB 203 proposes returning to the $100 licensing
fee. The intention is that the funds could be appropriated to
support business marketing should the legislature choose to do
so. She gave a brief overview of the $5 million received in
2023. She expressed gratitude for the funds and said that the
Department has a contract with the Alaska Chamber to determine
where Alaskans would like to see that money invested. This would
also offer information on where appropriate market research can
be done and allow the division to offer appropriate support to
thriving or emerging industries. Prior administrations saw
promotional activities around peonies - which helped grow this
industry. She noted that additional promotional activities
occurred around that time - this is providing data on where the
greatest interest is going forward.
1:37:28 PM
SYLVAN ROBB, Director, Division of Corporations, Business and
Professional Licensing, Department of Commerce, Community and
Economic Development, Juneau, Alaska, offered a presentation on
SB 203 and advanced to slide 2:
[Original punctuation provided.]
What Does SB 203 Do?
• Increases regular business license fees from $50
to $100 per year
• Increases business license fees for sole
proprietorships owned by a disabled veteran or
individual who is 65 years of age or older from
$25 to $50 per year
• Increases tobacco endorsement fees from $100 to
$200 per renewal
1:38:22 PM
MS. ROBB advanced to slide 3:
[Original punctuation provided.]
Why Increase These Fees?
• All funds received each fiscal year in excess of
what's required to run the business licensing
program are deposited into UGF
• Increasing business licensing fees is a way to
generate additional revenue for the State of
Alaska without heavily impacting one profession
or industry over another
MS. ROBB noted that the impact for a single business would be a
$50 increase. She stated that the estimated revenue from this
increase is $2.7 million. She added that Alaska would remain in-
line with other states' business license fees, which range from
$20 to $500. She stated that the intention behind the increase
is to use the funds to promote the businesses that are
requesting promotional assistance.
1:39:14 PM
MS. ROBB advanced to slide 4:
[Original punctuation provided.]
When is a Business License or Tobacco Endorsement
Required?
• A business license is required for the privilege
of engaging in a business in the State of Alaska
(AS 43.70.020(a))
• "Business" means a for-profit or non-profit
entity engaging or offering to engage in a trade,
a service, a profession, or an activity with the
goal of receiving a financial benefit in exchange
for the provision of services, or goods, or other
property. (AS 43.70.110(1))
• A person who sells cigarettes, cigars, products
containing tobacco, electronic smoking products,
or products containing nicotine as a retailer
must have a business license and a [tobacco]
endorsement. (AS 43.70.105(b))
1:39:49 PM
MS. ROBB advanced to slide 5:
[Original punctuation provided.]
When is a Business License Not Required?
Business license exemptions (AS 43.70.105):
• Fisheries business
• Sale of liquor under a license issued under AS
04.11
• Insurance business
• Mining business
• Supplying services as an employee
• Furnishing goods or services by a person who does
not represent to be regularly engaged in
furnishing goods or services
• Activities of an investment club as defined in AS
43.70.105(7)
• Bank organized under AS 06.05 or the laws of
another state
• National bank chartered by the U.S.
• Credit union organized under AS 06.45 or the laws
of another state
• Credit union regulated by the National Credit
Union Administration
• Mutual savings bank chartered under AS 06.15 or
organized under the laws of another state
1:40:37 PM
SENATOR DUNBAR asked why insurance businesses and financial
businesses are exempt from this requirement and if they have
separate fees to pay.
MS. ROBB answered that this is correct. She explained that
insurance businesses are licensed through the Division of
Insurance and alcohol businesses are licensed through Alcohol &
Marijuana Control Office (AMCO), both of which are in the
Department of Commerce, Community and Economic Development
(DCCED).
SENATOR DUNBAR asked about financial institutions.
MS. ROBB replied that these are licensed through Banking and
Securities in DCCED.
SENATOR DUNBAR surmised that these licenses are not free.
MS. ROBB answered no.
1:41:36 PM
CHAIR BJORKMAN commented that oftentimes, banks require business
licenses before they will open a business banking account -
including those listed as exempt from licensing. He asked if
there is a short cut by which businesses that are not required
to obtain a business license can provide other supporting
documents to open an account.
MS. ROBB stated she could not speak in depth to this question.
She commented that some exempt businesses choose to get a
business license for various reasons.
1:42:53 PM
MS. ROBB advanced to slide 6, displaying a graph of the scope of
new business licenses and endorsements from 2014 through 2023.
She pointed out that these numbers reached a high point during
the COVID-19 pandemic. She noted that this includes the number
of endorsements for tobacco and related products. In addition,
there are around 100 thousand licensed businesses.
1:43:38 PM
SENATOR DUNBAR asked what caused the spike in business licenses
during the COVID-19 pandemic.
MS. ROBB replied that from April 3, 2020 to February 1, 2023
there was no charge for business licenses. She surmised that
this may have been a factor. She speculated that during the
pandemic, work was disrupted, and people may have taken that
opportunity to open businesses; however, the division does not
keep data on the reasons for obtaining business licenses.
1:44:42 PM
MS. ROBB advanced to slide 7, displaying a graph of FY2014
through FY2023 business licenses - new, renewed, and current.
She explained that "current business license" applies to those
who have purchased a two-year business license. (This does not
include a monetary discount but saves the business owner from
reapplying each year.) She noted that this brings the total to
roughly $100 thousand.
1:45:20 PM
MS. ROBB advanced to slide 8, displaying a graph of FY2014
through FY2023 business licenses with endorsements. She said
that this shows the number of businesses that have a tobacco
endorsement - along with the number of actual endorsements. A
business may have a number of endorsements, as each location
selling nicotine products needs its own endorsement.
1:45:45 PM
MS. ROBB moved to slide 9 displaying a graph of business license
revenue deposited into the general fund for FY2017 through
FY2023. She explained that, currently, the money generated
through business license fees exceeds the cost of operating the
program. The excess funds flow into the general fund. The graph
shows the amount generated through business licenses as well as
the amount that has lapsed into the general fund in the past.
1:46:22 PM
MS. ROBB moved to slide 10, which listed business license and
endorsement reports and resources. She offered to present the
sectional analysis if it was the will of the committee.
1:46:46 PM
CHAIR BJORKMAN stated that the committee understood the concept
and would forego the sectional analysis.
1:47:04 PM
CHAIR BJORKMAN held SB 203 in committee.
1:47:10 PM
At ease
SB 200-TRS CONTR RATE; PERS SOC SECURITY OR SBS
1:48:34 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SPONSOR SUBSTITUTE FOR SENATE BILL NO. 200, "An
Act relating to employer contributions in the teachers'
retirement system; relating to supplemental employee benefits;
and providing for an effective date."
1:49:08 PM
SENATOR BERT STEDMAN, District A, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 200, explained that this is the
beginning of a discussion of three options to address the
inequities in the retirement system. With respect to the
education system, he stated that there is concern about the wage
level and savings for retirement. However, when compared to the
average state worker, there is a considerable retirement value
discrepancy. Education workers feel they should be accumulating
more value towards their retirement. He shared his belief that
education workers should be treated the same as state workers.
1:51:20 PM
SENATOR STEDMAN gave a brief overview of the three areas of
consideration. One is an increase in the contribution to the
retirement system to make it equal to the contribution of the
average state worker. Another option would be for all educators
to join the Supplemental Benefits System (SBS) He explained that
this is a replacement for social security (which the average
state worker does not participate in). He said that, in lieu of
social security, employee and employer equally contribute 6.13
percent of the employee's salary to SBS. Teachers do not have
this option. Allowing educators to participate in SBS would
create equal footing among state employees with respect to
retirement. The third option would ask employers that are not
participating in social security or SBS and are in the state
retirement system to ensure that all employees are covered by
either social security, SBS, or an equivalent program. This
would ensure that the employee is not shorted on their ability
to accumulate retirement. He added that many state employees do
not have social security, SBS, or a replacement option and are
therefore not able to accumulate retirement funds. He shared his
belief that this is unacceptable.
1:54:18 PM
SENATOR STEDMAN advanced to slide 2:
[Original punctuation provided.]
Teachers' Retirement System (TRS) Basics
• The Teachers' Retirement System (TRS) was the
first Alaska retirement system, developed by the
Territory of Alaska in the 1940s to encourage
teachers to live and work in Alaska
• Tiers I and II are defined benefit plans that
closed to new employees 6/30/2006
• Tier III is a defined contribution plan, and is
the plan offered to employees hired after
6/30/2006
• TRS employees are in neither SBS nor Social
Security
SENATOR STEDMAN stated that in the 40s, 50s, 60s, and 70s, the
average teacher in Alaska had substantially more salary growth
than those in the lower 48. He stated that this information is
not disputable and referenced a report that offered data on this
issue. However, this is not the case today. He encouraged
members of the committee to keep this in mind when considering
SB 200. What was reasonable in the past is not reasonable today;
therefore, review is necessary. He briefly explained Tiers I and
II, which ensured that employees get a percentage of their
salary for the remainder of their life after retirement. He
emphasized that these payments continue regardless of the
state's economic status. He briefly explained Tier III and the
way it differs from tiers I and II. He pointed out that teachers
were not in SBS or social security during this time.
1:57:06 PM
SENATOR STEDMAN advanced to slide 3:
[Original punctuation provided.]
History of Social Security in Alaska
1935
• Social Security established by the federal
government, available to federal employees only
1940s
• Teachers' Retirement System (TRS) created in the
Territory of Alaska
1950s
• A series of amendments to the Social Security Act
allowed states and local governments to enroll
employees in Social Security by enacting "Section
218 agreements"
1961
• The Public Employees' Retirement System (PERS)
established for State of Alaska employees, all of
whom were also enrolled in Social Security
1980
• The State of Alaska created the SBS system and
terminated its Section 218 agreement, moving all
state (PERS) employees from Social Security into
the SBS program
SENATOR STEDMAN reiterated that during this time, average
teacher salaries were substantially higher in Alaska. Because
teachers were adequately compensated and had a defined benefit
plan, it was not necessary for them to be a part of the SBS or
social security program. However, times have changed.
1:59:08 PM
SENATOR STEDMAN moved to slide 4:
[Original punctuation provided.]
Employee Retirement Savings Comparison: PERS v. TRS
PERS TIER IV
• Employee Contribution: 8 percent
• Employer Contribution: 5 percent
• SBS Employee Contribution: 6.12 percent
• SBS Employer Contribution: 6.12 percent
• Total Retirement Savings: 25.24 percent
TRS TIER III
• Employee Contribution: 8 percent
• Employer Contribution: 7 percent
• SBS Employee Contribution: --
• SBS Employer Contribution: --
• Total Retirement Savings: 15.0 percent
SENATOR STEDMAN explained that PERS Tier IV includes those
employed after 2006. He explained that the employer contribution
is two percent higher for TRS because teachers do not
participate in SBS. He drew attention to the inequity between
the PERS 25.24 percent total retirement savings and the TRS 15
percent and emphasized that there would be no way for teachers
to close the gap. He said that it is not uncommon to see values
of $750,000 to $1 million in the employees SBS account. He
stated that this is a significant retirement savings.
2:01:50 PM
SENATOR STEDMAN advanced to slide 6 and posed the question, "How
do we make it fair?" He shared his belief that employers should
be contributing the same amount of money. He suggested that
there is no difference between a teacher and someone working at
the airport or in any other state employment position. He
emphasized that all employees should be treated equally. He
explained that one concept was to take the seven percent
contribution and add 2 percent - or even 3 percent - to it.
However, he stated that allowing teachers to join SBS would be
an even better choice. This would mean both employer and
employee pay in 6.12 percent (SBS), and the regular employer
contribution would be adjusted down to 5 percent, thus creating
the same 25.24 percent as state employees receive. This would
level retirement savings capability throughout the state
employment system. He reiterated that the potential savings is a
significant amount of funds and added that SBS funds are passed
along to the employee's beneficiaries after death.
2:03:23 PM
SENATOR BISHOP joined the meeting.
2:04:05 PM
SENATOR MERRICK asked which option is preferred by teachers.
SENATOR STEDMAN answered that, over the past two years, he has
spoken to NEA representatives about this concept and shared his
understanding that they would take whatever was given. However,
SB 200 would potentially increase the retirement potential by
the hundreds of thousands of dollars (not by tens of thousands).
He surmised that getting this issue on the table would germinate
the necessary discussion.
2:05:00 PM
SENATOR STEDMAN advanced to slide 6:
[Original punctuation provided.]
SB 200 Key Provisions
GOAL: Equalize retirement savings between State
employees and nonstate PERS and TRS employees
Increase the TRS Employer Contribution Rate
• Raises the employer contribution rate by 2
percent, from 7 percent to 9 percent of gross
salary
• Increases the cap on employer contributions from
12.56 percent to 14.56 percent to account for the
increased contribution
Require PERS and TRS Employers Provide a Supplemental
Annuity Plan
• Requires participation in either SBS or Social
Security
• Opens the SBS statute to allow TRS employers to
participate in the program alongside PERS
employers
SENATOR STEDMAN commented that a Base Student Allocation (BSA)
increase is a top-down way to fund this increase. He said that
the legislature can decide what fiscal lever is best suited to
benefit both the state and the employee. He questioned whether
the intention is for educators to receive what other state
employees get or to truly level the system. He argued that the
system needs to be level.
2:07:10 PM
SENATOR STEDMAN advanced to slide 7:
[Original punctuation provided.]
Full Implementation of SB 200
FOR ILLUSTRATIVE PURPOSES ONLY
PERS TIER IV
• Employee Contribution: 8 percent
• Employer Contribution: 5 percent
• SBS Employee Contribution: 6.12 percent
• SBS Employer Contribution: 6.12 percent
• Total Retirement Savings: 25.24 percent
TRS TIER III
• Employee Contribution: 8 percent
• Employer Contribution: 9 percent
• SBS Employee Contribution: 6.12 percent
• SBS Employer Contribution: 6.12 percent
• Total Retirement Savings: 27.24 percent
If both the employer contribution and SBS
participation were enacted, a TRS Tier III employee
would be saving more for retirement that a PERS Tier
IV employee this is not the intent.
SENATOR STEDMAN explained that these numbers would need to be
rearranged by the Senate Finance Committee so that the total
contribution is equal to 25.24 across the board. He reiterated
that BSA would need to be adjusted to accommodate the additional
employer contribution and added that this would ensure the
responsibility does not fall to city governments. He opined that
it is the state's responsibility to fund education.
2:08:29 PM
SENATOR STEDMAN advanced to slide 8:
[Original punctuation provided.]
SB 200 provides options to improve retirement savings
equity
Participation in SBS
• Could provide total additional savings of 12.24
percent
• Contributions are made equally by employer and
employee
Increased employer contribution to TRS
• Could provide an additional savings of 2 percent
• Contribution made by employer
SENATOR STEDMAN said that SB 200 would require all employers in
the state retirement system to contribute to SS or SBS. He
explained that this would ensure that no employers outside of
the state (but in the state's retirement system) are skating
their responsibility to pay into social security or SBS - or
replacing these monies with bargaining unit agreements. He
explained that when the state's retirement system was rewritten
in 2006, an oversight allowed employers to not fund social
security or SBS - and thus short-fund the retirement system. He
said that the retirement system is balanced - regardless of
whether members are in a defined benefit or a defined
contribution plan - with the supplemental benefits system (which
is roughly one-quarter to one-third of an employee's
retirement). He stated that one does not work without the other.
SB 200 is an attempt to begin the dialogue to level retirement
throughout the system. He commented that education employees
deserve these benefits just as other state employees do.
2:10:28 PM
SENATOR BJORKMAN referred to 12.56 - 14.56 in Section 1, line 6
and asked for clarification on what number this is adjusting and
how this increase for the employer relates to other sections of
SB 200.
SENATOR STEDMAN said that this was the first "lever" considered
to enhance the retirement system. He explained that this would
adjust TRS employer contributions so that this number matches
that received by state employees. He briefly explained the
reasoning behind this change. He gave a brief history of TRS and
explained the amount paid by the state and the amount paid by
city hall. He suggested that the paragraph in question be edited
to reflect the appropriate adjustments if SBS was added to TRS.
He clarified that this paragraph is one lever that leaves TRS
out of SBS but gets employees a bigger contribution. He opined
that the current contribution is too light to accumulate wealth
for retirement.
2:13:37 PM
CHAIR BJORKMAN commented that it is not clear that SB 200 is a
menu of options from section to section. He asked for
clarification that the sponsor's intent is that the sections can
be taken individually. He asked for more information.
2:13:59 PM
SENATOR STEDMAN commented that SB 200, Section 3 would apply to
businesses that are a part of the state's retirement system but
are not paying into the appropriate retirement programs. He
requested a brief at-ease.
2:14:25 PM
At ease
2:15:39 PM
CHAIR BJORKMAN reconvened the meeting.
2:16:05 PM
SENATOR STEDMAN suggested the committee hear the sectional
analysis.
2:16:27 PM
ROSE FOLEY, Staff, Senator Bert Stedman, Alaska State
Legislature, Juneau, Alaska, provided the sectional analysis for
SB 200:
[Original punctuation provided.]
Sectional Analysis
SB 200 TRS Employer Contribution Rate; Supplemental
Employee Benefits
Sponsor Substitute version S 2.23.24
Section 1: Increases the required employer
contribution to the Teachers' Retirement System from
12.56 percent of payroll to 14.56 percent of payroll,
to account for the increased contribution rate in
Section 2.
Section 2: Increases the employer contribution rate to
the Teachers' Retirement System defined contribution
retirement accounts from seven percent to nine
percent.
Section 3: Requires participation in the Supplemental
Annuity Plan (SBS) for employers in the Public
Employees' Retirement System and the Teachers'
Retirement System that do not participate in the
federal Social Security system.
Section 4: Adds employers within the Teachers'
Retirement System to the definition of "participating
employer" under the Supplemental Annuity Plan.
Section 5: Establishes an effective date of July 1,
2024.
MS. FOLEY noted that Section 3 is the second "lever" that is
available to adjust retirement savings.
2:18:13 PM
CHAIR BJORKMAN asked about the aggregate and total costs to
local municipalities and school districts based on these two
options.
SENATOR STEDMAN answered that the intent is to hold school
districts harmless. He added that funding would need to be
increased on the employer side, to cover the added contribution
(6.15 percent for both employee and employer if teachers were
added to SBS).
CHAIR BJORKMAN stated his understanding that this would be a cut
to what employees see on their check, putting this 6.15 percent
into a mandated savings account for them.
SENATOR STEDMAN said this is correct and pointed out that this
is matched by employer contributions, which is an instant 100
percent return. He acknowledged that this is an impact on
teachers' paychecks. He added that the intent of SB 200 is for
the state to fund this additional cost on the employer side,
making the cost identical for state employees and teachers. He
surmised that this would generate significant conversation due
to the potential savings, which could fall in the hundreds of
thousands per individual.
2:20:54 PM
SENATOR MERRICK stated that the fiscal note is incomplete.
CHAIR BJORKMAN stated that conversations would continue with
those impacted by SB 200. He shared the general industry
understanding that all sections would be enforced together,
rather than it being a choice. He opined that this is an
important distinction that requires clarification. He commented
on the high cost (more than $100 million) adding teachers to SBS
would place on school districts.
2:22:01 PM
SENATOR DUNBAR commented that he has received documents from AML
and referred to the hold harmless provision for the employee and
asked if the salary increase would come from state funds, local
government, or from the school district.
2:22:37 PM
SENATOR STEDMAN clarified that the provision would hold the
employer (school districts, in this case) harmless, not the
employee. He explained that, if teachers were added to SBS,
employees and employer (i.e. the school district) would
contribute 6.13 percent. He explained that the legislature would
have to fund the school districts' cost.
SENATOR DUNBAR referred to the AML document and explained that
it includes a "hold-harmless salary increase". He said that this
sounds like something different from what is being described.
SENATOR STEDMAN replied that this likely refers to a nonteacher
employee who may work for city hall as a policeman or a fireman.
He opined that if city hall does not have employees in SBS or
social security with a bargaining agreement, "they are getting
off like skinflints."
2:23:38 PM
SENATOR DUNBAR shared his understanding that the total increase
as a result of SB 200 is $36.3 million and asked if the sponsor
has seen this number.
SENATOR STEDMAN replied that he has not seen the document in
question.
SENATOR DUNBAR said that the committee received it within the
last day. He asked for clarification that this does not include
some of the costs for the school districts.
SENATOR STEDMAN replied that he has not seen the document and is
not able to speak to its contents.
SENATOR BJORKMAN stated that this can be discussed further as
members develop a better understanding of the mechanics of SB
200 and its associated costs.
2:24:30 PM
SENATOR STEDMAN stated that a committee substitute to clearly
delineate the various options may make this easier. He
emphasized that the intent is not to overfund teachers (over 25
percent) but to place them on level ground with other state
employees. He shared his belief that 10 percent is significantly
light in terms of retirement savings ability. He agreed that
this is an expensive change and argued that it is a change that
should have happened a long time ago.
2:25:07 PM
SENATOR DUNBAR questioned if SBS is it like social security
(which is guaranteed until death) or if it is more like a 401K.
He briefly discussed "retirement failure" - i.e. people running
out of money during their retirement years. He surmised that the
intent of SB 200 is to reduce the number of individuals who
experience this. He asked if there is information on the impact
this legislation would have on the number of individuals who
experience retirement failure.
2:26:15 PM
SENATOR STEDMAN said that this is a question for an actuary. He
surmised that an additional $750,000 in retirement funds after
30 years of service would extend their retirement and their
assets for their children substantially. He clarified that this
is not a defined benefit and works like a defined contribution.
SBS (defined contribution) has the same portfolio selections as
TERS and deferred compensation. He said that these programs are
different levers that get the money into the retirement system
for employees. He surmised that SB 200 would help keep people
from running short on retirement and argued that the benefit of
SBS would also help the employee's spouse and children.
2:27:39 PM
SENATOR STEDMAN stated that this is not a small movement -
rather, it is a substantial change. Employees who work for 10 or
15 years and then change jobs would take the money with them. He
expressed willingness to work on a committee substitute and
acknowledged that this issue is complex. He added that this
issue has a huge impact on state employees and their ability to
retire and stay in Alaska.
2:28:33 PM
SENATOR MERRICK commented that there has been discussion of a
$680 BSA increase. She asked how much of that money would be
used to fund the changes made by SB 200, vs how much would be
spent on classes and associated expenses.
SENATOR STEDMAN said that he has been seeking fiscal notes for
SB 200 for the past year, but there have been delays. He said
that the basic question is - how much does it cost the state for
every one percent additional contribution for a teacher in
retirement. He added that from this number a broader discussion
can occur. He pointed out that SBS is a known number (6.13) and
therefore the cost can be determined. If the legislature chooses
to take that route, plans can be made on how to fund the
additional expense. He argued that there is no way for teachers
making 15 percent in retirement to close the gap between that
and the 25 percent made by state workers.
2:30:22 PM
CHAIR BJORKMAN held SB 200 in committee.
2:30:28 PM
At ease
SB 153-OVERTIME PAY EXEMPTION
2:35:44 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 156, "An Act relating to
commercial passenger vessel environmental compliance; relating
to commercial passenger vessel fees; establishing the wastewater
infrastructure grant fund; repealing the authority for citizens'
suits relating to commercial passenger vessel environmental
compliance; and providing for an effective date."
2:36:15 PM
CATHY MUNOZ, Commissioner Designee, Department of Labor and
Workforce Development (DOLWD), Juneau, Alaska, introduced SB 153
on behalf of the administration. She said that the purpose of
this legislation is to add a section AS 23.10.060 that creates
an exemption for overtime pay for full-time employees working a
flexible work schedule for up to 12 hours per day, three days
per week. She stated that eligible entities include ambulatory
surgical centers, child placement agencies, foster homes, birth
centers, hospices, nursing facilities, residential childcare
facilities, and residential psychiatric treatment centers. She
explained that, under statutory authority, overtime pay applies
to work performed over 40 hours in one week or over 8 hours in
one day.
MS. MUNOZ explained that state law currently provides an
exemption of state overtime requirements in flexible 4/10 work
schedules - that is, ten hours per day for four days per week.
She noted that these are voluntary agreements between employer
and employee (a written, signed document is submitted to the
Department of Labor in order to authorize these agreements). She
stated that SB 153 would add an additional flexible work
schedule of 12/3 - that is, twelve hours a day, three days a
week. This would provide employers with a new recruitment tool
and prospective employees with the opportunity to enjoy
additional downtown during the week.
2:39:00 PM
JEREMY APPLEGATE, Chief Wage and Hour, Labor Standards and
Safety Division, Department of Labor and Workforce Development
(DOLWD), Anchorage, Alaska, offered a presentation on SB 203 and
advanced to slide 2:
[Original punctuation provided.]
Purpose
Increase the hours of flexible work hour plans from 10
hours to 12 hours per day for certain businesses.
Allow more flexibility in staffing for the following
entities:
• ambulatory surgical centers
• child placement agencies
• foster homes
• free standing birth centers
• hospices
• agencies providing hospice services or operating
hospice programs
• nursing facilities
• residential childcare facilities
• residential psychiatric treatment centers
MR. APPLEGATE stated that the covered entities are defined by AS
47.32.010.
2:40:22 PM
MR. APPLEGATE advanced to slide 3:
[Original punctuation provided.]
Overtime
• Employers must pay overtime to employees who:
• Work more than 8 hours per day
• Work more than 40 hours per week
Alaska Statute 23.10.060
MR. APPLEGATE explained that Alaska is a dual overtime state,
meaning there is a daily and weekly overtime. Federal overtime
is based on the week. He clarified that the changes made by SB
203 apply to the daily overtime, as state law cannot override
the federal requirement.
2:41:18 PM
MR. APPLEGATE advanced to slide 4 and explained that overtime
applies to all employees who are not otherwise exempt. The flex
time provides for a partial overtime exemption.
2:41:44 PM
MR. APPLEGATE advanced to slide 5:
[Original punctuation provided.]
Flexible Workhour Plans
• Allow employees to voluntarily work up to 10
hours without overtime (Alaska Statute
23.10.060(14))
• Are reviewed and approved by the Department of
Labor (8 AAC 15.102)
• Require overtime payment for hours worked outside
the agreement
MR. APPLEGATE emphasized that an employee must voluntarily enter
into a flexible workhour plan and briefly explained the process
of plan approval. He stated that employees can choose to opt out
of their flexible workhour plans (without employer approval)
between November 1 and December 31 (the standard yearly opt-out
period). The employer can allow the employee to opt out at any
time.
2:43:12 PM
MR. APPLEGATE stated that hours worked beyond the plan that are
considered incidental to employment are paid overtime; however,
if the employer schedules the employee beyond the ten hours
allowed by the plan, this is not considered incidental to
employment. In the latter case, the agreement would be
considered invalid, and the employer would be required to pay
overtime for all hours worked in excess of eight hours in a day.
The standard overtime pay (1.5 times the rate of pay) would
apply.
2:44:11 PM
MR. APPLEGATE moved to slide 6:
[Original punctuation provided.]
Summary
• The legislation would allow employees to work up
to 12 hours
• Require overtime for work over 12 hours in a day
• Remain voluntary on behalf of the employee
• Only apply to businesses licensed under Alaska
Statute 47.32.010(b)
2:45:24 PM
SENATOR MERRICK asked why this would be limited to 47.32.010.
MR. APPLEGATE answered that, to his understanding, this was the
industry asking for the change. He added that he has had
conversations with those in this industry and explained that
their need stems from the shift change standard of practice in
the medical industry and a need to have all staff on a similar
shift change schedule. This allows for continuity of care and
good communication. However, he added that this change could
easily be extended to all businesses in the state.
2:46:33 PM
SENATOR DUNBAR asked how employers would be prevented from
making these shifts a requirement for employment.
MR. APPLEGATE answered that there is no way to directly prevent
employers from making this a requirement of employment. He
stated that the Labor Standards and Safety Division is an
evidence based, fact finder agency. He explained that once a
violation has occurred, the division would look for evidence of
the violation and take the appropriate enforcement action. He
acknowledged that unless a violation is brought to their
attention - or if the investigation of a reported violation does
not turn up demonstrative evidence that a violation has occurred
- there would be no enforcement action.
SENATOR DUNBAR shared his experience working overtime as a
cannery employee and surmised that many interviewees do not know
that this statute exists - and are therefore not aware that they
are entitled to overtime for hours worked in excess of 8 hours a
day (unless they have signed a contract for a flexible workhour
plan). In addition, he surmised that employees are not aware
that they cannot be denied employment if they refuse to sign a
flexible workhour contract. He observed that the division has no
way to proactively enforce this statute and asked if the
division ever sends staff through the hiring process to test
these practices.
2:48:54 PM
MR. APPLEGATE answered that the division does not engage in this
type of activity. He explained that cases are brought to the
division via a wage claim process. He added that when employees
are presented with a flexible workhour plan, the forms contain
the relevant statutory information.
2:49:44 PM
SENATOR DUNBAR expressed concern with a request to massively
expand this program in a sophisticated industry with high-demand
professionals. He commented about the potential for abusive
labor practices and the ability for employees in high-demand
industries to find employment at less abusive locations;
however, this is not the case in every industry. He directed
attention to AS 47.32.010 (b) and shared his understanding that
the Municipality of Anchorage would like to expand this to
include behavioral health providers. He noted that the list of
allowed facilities includes residential psychiatric treatment
centers and subacute mental health facilities and asked if there
are any behavioral health providers that are not included in
this program.
MR. APPLEGATE replied that he would have to look into this more
closely to make a determination.
SENATOR DUNBAR suggested that this could be a question for
someone in the department to answer before the next hearing on
SB 153. He commented that drug treatment facilities where
patients require 24-hour monitoring is one example of when this
shift work would be appropriate. He suggested that reaching out
to behavioral health organizations to find out if they would
want to make this change and opined that these providers would
benefit from this.
2:52:11 PM
SENATOR DUNBAR asked if the department has spoken with employees
and bargaining units regarding this change.
2:52:41 PM
MS. MUNOZ answered that this was brought to the department's
attention a year ago by individuals involved with ambulatory
surgical centers as a means to boost recruitment opportunities.
She explained that this industry is experiencing labor
shortages, and this would be a recruitment incentive. She added
that, beyond this there has not been expansive discussion with
other employers or employees.
MS. MUNOZ stated that the division would gather additional
information regarding behavioral health providers that could
possibly be incorporated into the legislation and would provide
this to the committee.
2:54:11 PM
CHAIR BJORKMAN held SB 153 in committee.
2:54:46 PM
There being no further business to come before the committee,
Chair Bjorkman adjourned the Senate Labor and Commerce Standing
Committee meeting at 2:54 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SSSB200 ver S.pdf |
SL&C 3/25/2024 1:30:00 PM |
SB 200 |
| SSSB 200 Sponsor Statement ver S.pdf |
SL&C 3/25/2024 1:30:00 PM |
SB 200 |
| SSSB 200 Sectional Analysis ver S.pdf |
SL&C 3/25/2024 1:30:00 PM |
SB 200 |
| SB203 ver A.pdf |
SL&C 3/11/2024 1:30:00 PM SL&C 3/25/2024 1:30:00 PM |
SB 203 |
| SB203 Transmittal Letter 1.22.24.pdf |
SL&C 3/11/2024 1:30:00 PM SL&C 3/25/2024 1:30:00 PM |
SB 203 |
| SB203 Sectional Analysis ver A.pdf |
SL&C 3/11/2024 1:30:00 PM SL&C 3/25/2024 1:30:00 PM |
SB 203 |
| SB203 Fiscal Note-DCCED-CBPL-01.18.24.pdf |
SL&C 3/11/2024 1:30:00 PM SL&C 3/25/2024 1:30:00 PM |
SB 203 |
| SB203 Presentation for SL&C (Version A).pdf |
SL&C 3/11/2024 1:30:00 PM SL&C 3/25/2024 1:30:00 PM |
SB 203 |
| SB153 ver A.pdf |
SL&C 3/25/2024 1:30:00 PM |
SB 153 |
| SB153 Sponsor Statement Version A.pdf |
SL&C 3/25/2024 1:30:00 PM |
SB 153 |
| SB153 Sectional Analysis Version A.pdf |
SL&C 3/25/2024 1:30:00 PM |
SB 153 |
| SB153 Fiscal Note-DOLWD-WH-05.15.23.pdf |
SL&C 3/25/2024 1:30:00 PM |
SB 153 |
| SB200 Presentation to SLAC 03.25.24.pdf |
SL&C 3/25/2024 1:30:00 PM |
SB 200 |
| SB153 Fiscal Note-DOLWD-WH 03.22.24.pdf |
SL&C 3/25/2024 1:30:00 PM |
SB 153 |
| SB153 Presentation to SLAC 03.25.24.pdf |
SL&C 3/25/2024 1:30:00 PM |
SB 153 |