Legislature(2025 - 2026)GRUENBERG 120
04/02/2025 01:00 PM House JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| HB97 | |
| Presentation(s): Alaska Court System – Limits on Pretrial Delays | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 97 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HB 97-ORG. RETAIL THEFT/FUND;MKTPLACE SALES TAX
1:02:30 PM
CHAIR GRAY announced that the first order of business would be
HOUSE BILL NO. 97, "An Act relating to theft; relating to
organized retail theft; relating to property crimes; relating to
aggravating factors at sentencing; establishing a statewide
marketplace facilitator sales tax; and establishing the
organized retail theft fund in the general fund." [Before the
committee, adopted as the working document on 3/26/25, was the
proposed committee substitute (CS) for HB 97, Version 34-
lS0109\T, C, Radford, 3/25/25 ("Version T").]
1:03:57 PM
The committee took a brief at-ease at 1:03 p.m.
1:04:06 PM
BRONSON FRYE, President, Building & Construction Trades Council
of Southcentral Alaska, stated that the Department of Labor &
Workforce Development (DLWD) only investigates wage claims if
they are brought forward by the bereaved employee themselves,
which means the state incentives unscrupulous contractors to
utilize workers who may not be willing to come forward with
those complaints. Consequently, undocumented workers won't ever
file a complaint with DLWD, and honest contractors who pay their
employees the proper prevailing wage and overtime cannot compete
against contractors who are using an underpaid workforce. He
applauded HB 97 for offering another resource, which would not
reward dishonest contractors and maintain parity and honesty in
the bidding process.
CHAIR GRAY sought to confirm that DLWD does not allow third-
party complaints.
MR. FRYE answered yes, that is correct.
1:08:20 PM
CHAIR GRAY asked how unfair bids impacts the union's ability to
secure jobs for its members.
MR. FRYE explained that all unions ensure members are paid
lawful wages and abide by all the laws of the state; however,
they are unable to compete with dishonest contractors because of
the construction bidding process, as labor costs are the only
real variable. This in turn, incentivizes unscrupulous
employers to cut labor costs far below the legal requirements
while knowing that workers won't complain and that third-party
complaints aren't allowed. Furthermore, there is no real
recourse, which is why the bill is so powerful.
1:11:11 PM
MICHAEL GOULD, Owner/President, Excel Construction, said a
number of contractors pay their employees as independent
contractors or off-book, and don't pay payroll taxes or workers'
compensation, for example, which significantly reduce their cost
per hour giving them a competitive advantage. He added that
jobs would be more competitive if this wasn't happening and
spoke to how this behavior is impacting the industry, as more
contractors in the commercial space engage in these practices.
CHAIR GRAY asked what types of wage theft are the most common.
MR. GOULD said the misclassification of employees as independent
contractors is one type, which allows them to be paid a
specified price for specified work despite how many hours they
work.
1:17:20 PM
JESSE SUMNER, representing self, conveyed that wage theft is
pervasive in residential construction, and spoke to the
misclassification of employees as independent contractors, as
well as off-the-books payments. He pointed out that this could
cause significant issues if someone were to get injured without
proper insurance coverage. He said he supports the bill and
would like to see it go further by addressing the failure to pay
payroll taxes.
CHAIR GRAY asked how this makes it unfair for employers who are
following the law.
MR. SUMNER explained that by complying with the law, employers
who are paying workers' compensation rates and payroll tax are
at an estimated 16-20 percent disadvantage for labor costs
compared to employers who do not follow the law.
1:21:30 PM
REPRESENTATIVE VANCE asked about the prevalence of these issues.
MR. SUMNER estimated that at least 25 percent of residential
construction labor are engaging in these practices; furthermore,
he suspected that human trafficking issues are at play as well.
CHAIR GRAY asked whether there are barriers to current
enforcement mechanisms and whether they are easily accessible.
MR. SUMNER shared his understanding that DLWD has said its not
their concern if undocumented immigrants are being paid under
the table with gift cards.
1:24:31 PM
BILL DOSS, representing self, stated that the bill would
implement measures to incentivize contractors to follow the
rules with stiffer penalties. He spoke to the bidding process
and how consistently low bids may illuminate companies that are
circumventing the Davis Bacon wage rate and overtime payments.
He said [wage theft] is far too prevalent. He asked whether
there is a statute of limitations for wage and hour complaints
in Alaska.
CHAIR GRAY deferred the question to Mr. Applegate.
1:28:21 PM
JEREMY APPLEGATE, Program Manager, Wage and Hour, Division of
Labor Standards and Safety, Department of Labor & Workforce
Development (DLWD), said yes, the statute of limitations is two
years for minimum wage and overtime claims.
1:30:45 PM
CHRIS DIAMOND, Lead Representative, Western States Regional
Council of Carpenters, said [the construction industry]
experiences a lot of human trafficking, which hasn't been seen
in Alaska until recent years. Generally, the workers'
identification is taken from them, and they are paid
sporadically on a card while being transported back and forth
from hotel to job site. He explained that "coyotes" will show
up with a crew of 50-100 undocumented immigrants who don't know
who they work for and are being paid pennies on a dollar
compared to American workers via 1099s. Often, they are paid
far less than promised, if at all, and their illegal status used
as leverage to discourage them from making complaints. He
described a job on Joint Base Elmendorf-Richardson (JBER)
involving wire fraud, worker misclassification, and wage theft.
which is stealing from everyone. He reiterated that this is a
prevalent issue in the construction industry and commended the
legislature for addressing it in the bill. In 2023, The Century
Foundation estimated that 15 percent of Alaska carpenters are
misclassified. He pointed out that there are no worker
protections for filing a complaint, which involves filling out
paperwork and getting it notarized, and suggested that an
anonymous tip line and enforcement mechanisms would be helpful.
CHAIR GRAY asked how members are being educated on reporting
wage theft.
MR. DIAMOND said the first step would be determining whether the
employee is being miscategorized as an independent contractor.
After that, he would help the individual fill out the paperwork
and get it notarized.
CHAIR GRAY asked whether he had seen this problem resolved.
MR. DIAMOND recalled a project in Sitka, in which the workers
received backpay after only making $15 per hour on a prevailing
wage job.
1:41:54 PM
REPRESENTATIVE EISCHEID referenced the volunteer labor
compliance officer program and asked how it would help the
enforcement of wage theft.
MR. DIAMOND said any construction worker with 5 years of
experience and Occupational Safety and Health Administration
(OSHA) 10 training could volunteer to assist the DLWD with wage
checks and help gather information.
1:44:51 PM
CHAIR GRAY asked whether DOL would investigate an allegation of
criminal wage theft.
JOHN SKIDMORE, Deputy Attorney General, Criminal Division,
Department of Law (DOL), said DOL does not conduct criminal
investigations into any area except Medicaid fraud. Currently,
DLWD has its own investigators for wage theft issues and have
the ability to refer criminal cases to DOL.
CHAIR GRAY asked what would happen if the bill were to pass.
MR. SKIDMORE declined to comment on behalf of DLWD in terms of
their needs. Nonetheless, he referred to AS 23.10.140, which
states that failure to pay overtime or minimum wage is
punishable by a $100-$2,000 fine and 10-90 days in jail for
every day of conduct. Conversely, the structure in the bill
would change the law from the number of days to the amount of
violations.
CHAIR GRAY asked how many employers had been sent to jail for
2.4 years for 10 days of wage violations.
MR. SKIDMORE did not know the answer, adding that he is unaware
of any criminal prosecution under these particular statutes
during his time at DOL.
1:51:22 PM
REPRESENTATIVE COSTELLO asked whether this could be addressed
through the human trafficking angle.
MR. SKIDMORE acknowledged that some cases could be used in that
way, but not the vast majority.
1:56:58 PM
REPRESENTATIVE VANCE referred to page 5, line 7, which talks
about the value of unpaid wages within "the preceding 10 years."
Based on the previous comments about the statute of limitations
being 2-3 years, she asked how this language would align with
that.
MR. SKIDMORE acknowledged that it would be broader than anything
allowed under current law under Title 23 or Title 11.
REPRESENTATIVE VANCE asked whether this would help or hinder the
prosecutor.
MR. SKIDMORE said it wouldn't hinder or help the prosecution; it
would change the scope.
CHAIR GRAY pointed out that "the preceding 10 years" language
only refers to repeat offenders with three or more convictions
or sentences.
1:59:47 PM
REPRESENTATIVE COSTELLO asked about the volunteer labor
compliance officer program and whether it would be viable.
MR. SKIDMORE said he was not in the position to offer comments
on this program, as he did not have enough available
information.
2:00:59 PM
MR. APPLEGATE directed attention to a PowerPoint presentation
titled, "Wage and Hour: Unpaid Wage Processes," [hard copy
included in the committee packet]. He began on slide 2, "Scope
of Wage Investigations," which read as follows [original
punctuation provided]:
Title 23
Wage and Hour Act
Right to Return Transportation
Title 36
Alaska's Prevailing Wage
2:02:29 PM
MR. APPLEGATE continued to slide 3, "Alaska's Wage and Hour
Act," which read as follows [original punctuation provided]:
Alaska's Wage and Hour
Minimum Wage
Overtime
2:04:00 PM
MR. APPLEGATE continued to slide 4, "Return Transportation,"
which read as follows [original punctuation provided]:
If an employer furnishes, finances, or agrees to
furnish or finance transportation of the employee, the
employer must pay to return the employee to the place
of hire.
Upon Request of the employee withing 45 days
Upon Termination
Upon the end of the contract
Subsistence: $100 per day, for ten days
2:05:19 PM
MR. APPLEGATE turned to slide 5, "Alaska's Prevailing Wage,"
which read as follows [original punctuation provided]:
Public Construction
"Public Construction" or "public works" means the on-
site field surveying, erection, rehabilitation,
alteration, extension or repair, including painting or
redecorating of buildings, highways or other
improvements to real property under contract for the
state, a political subdivision of the state, or a
regional school board.
REPRESENTATIVE COSTELLO questioned the definition of "prevailing
wage" and how it's identified.
MR. APPLEGATE explained that a survey is sent out every six
months to look for market penetration in each industry to
determine the prevailing wage rate for each classification.
Once the DLWD commissioner reviews the findings, they are
published in a pamphlet and workers must be paid according to
the identified wage.
2:07:34 PM
MR. APPLEGATE resumed the presentation on slide 6, "Prevailing
Wage (continued)," which read as follows [original punctuation
provided]:
Prevailing Wage (continued) Covered projects subject
to the prevailing wage require: • Weekly payment •
Payment based on the classification within which the
work was performed • Submission of Certified Payroll
to the Department Employers who do not comply to the
requirements of Title 36 are subject to debarment for
3 years.
2:08:37 PM
MR. APPLEGATE described the wage claim and public construction
claim processes on slides 7-8.
2:10:16 PM
CHAIR GRAY asked who investigates the misclassification of
employees as independent contractors.
MR. APPLEGATE said each agency has their own definition of
independent contractor. Wage and Hour does some investigation
into the proper payment of employees using the Jeffcoat Decision
by the Alaska Supreme Court to determine who has control of the
employment relationship and whether the independent contractor
is truly independent.
REPRESENTATIVE VANCE asked whether there is a tip line for
people to report their concerns or complaints.
MR. APPLEGATE said they are looking at setting up an anonymous
tip line, but currently, there is an investigator who answers
calls coming into the main line.
2:14:03 PM
CHAIR GRAY sought to confirm that third-party complaints are not
acceptable.
MR. APPLEGATE asserted that third-party complaints are
investigated; however, to pursue a claim, it must be filed by
the claimant.
2:16:26 PM
MR. APPLEGATE continued the presentation on slides 7-8 by
continuing his explanation of wage claim and public construction
claim processes.
2:22:11 PM
MR. APPLEGATE summarized slides 9-12, which showed the number of
wage claims per fiscal year and the outcomes by percentage.
CHAIR GRAY asked why 180 cases were cleared in 2020 and only
were cleared in 2024.
MR. APPELGATE pointed out that COVID-19 was a significant factor
in 2020. He offered to follow up with a more thorough answer in
writing.
2:23:46 PM
MR. APPLEGATE concluded on slide 12, which showed the number of
months to resolution.
REPRESENTATIVE VANCE asked how people being paid under the table
are investigated without a paper trail.
MR. APPLEGATE said those cases are typically reassigned because
there's no way to pursue them.
REPRESENTATIVE VANCE asked what happens when the case is
reassigned.
MR. APPLEGATE said without evidence to establish that the law
was violated, Wage and Hour cannot proceed with the case.
REPRESENTATIVE VANCE pointed out that people who are here
illegally are less likely to make a complaint. She asked
whether Wage and Hour investigators are law enforcement
officers, and whether they are required to report someone who is
undocumented.
MR. APPLEGATE answered no, they are not criminal enforcers;
further, the Wage and Hour office is not tasked under statute
with investigating human trafficking. However, if they uncover
employees being leverage based on their immigration status by
force, fraud, or coercion, the case would be referred to law
enforcement.
2:27:56 PM
REPRESENTATIVE EISCHEID suggested making the Wage and Hour
office phone number more visible on the website.
CHAIR GRAY asked why so few people are making complaints.
MR. APPLEGATE did not know the answer.
2:30:00 PM
CHAIR GRAY opened public testimony on CSHB 97, Version T.
2:30:20 PM
PATRICK FITZGERALD, Political Coordinator, Teamsters 959,
testified in support of Version T and spoke to wage theft in
terms of consecutive, incorrect payments to an employee's
paycheck. He opined that the habitual practice of making pay
corrections on a case-by-case basis rather than correcting the
payroll error itself is wage theft. He urged passage of Version
T with wage theft penalties included to ensure that Alaskans
receive the wages they have earned.
2:32:56 PM
RYAN MCGOVERN, Union Representative, United Association Local
Number 375, testified in support of Version T and shared his
personal experience with wage theft, particularly related to
overtime issues and the misclassification of employees as
independent contractors. He expressed his hope that the bill
would help manage and correct these issues.
2:39:34 PM
CHAIR GRAY closed public testimony. He announced that CSHB 97,
Version T, was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Supreme Court Order 2038.pdf |
HJUD 4/2/2025 1:00:00 PM |
Pretrial Delays - Supreme Court Order 2038 |
| HB 97 Supporting doc Underground Economy Wage Theft.pdf |
HJUD 4/2/2025 1:00:00 PM |
HB 97 |
| Wage Hour Presentation to (H) Judiciary 4-2-25.pdf |
HJUD 4/2/2025 1:00:00 PM |
Wage Theft |