03/16/2005 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB33 | |
| HB182 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 182 | TELECONFERENCED | |
| += | HB 147 | TELECONFERENCED | |
| += | HB 33 | TELECONFERENCED | |
| += | HB 180 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 16, 2005
3:52 p.m.
MEMBERS PRESENT
Representative Tom Anderson, Chair
Representative Pete Kott
Representative Gabrielle LeDoux
Representative Bob Lynn
Representative Norman Rokeberg
Representative Harry Crawford
Representative David Guttenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 33
"An Act relating to the effect of regulations on small
businesses; and providing for an effective date."
- MOVED CSHB 33(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 182
"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
basis."
- MOVED CSHB 182(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 147
"An Act relating to the regulation of insurance, insurance
licensing, surplus lines, insurer deposits, motor vehicle
service contracts, guaranteed automobile protection products,
health discount plans, third-party administrators, self-funded
multiple employer welfare arrangements, and self-funded
governmental plans; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 180
"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; establishing a division of workers'
compensation within the Department of Labor and Workforce
Development, assigning certain Alaska Workers' Compensation
Board functions to the division and the 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."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 33
SHORT TITLE: EFFECT OF REGULATIONS ON SMALL BUSINESSES
SPONSOR(s): REPRESENTATIVE(s) MEYER
01/10/05 (H) PREFILE RELEASED 12/30/04
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) L&C, JUD
02/16/05 (H) L&C AT 3:15 PM CAPITOL 17
02/16/05 (H) Heard & Held
02/16/05 (H) MINUTE(L&C)
03/04/05 (H) L&C AT 3:15 PM CAPITOL 17
03/04/05 (H) Heard & Held
03/04/05 (H) MINUTE(L&C)
03/16/05 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 182
SHORT TITLE: WAGE & HOUR ACT: EXEC/PROF/ADMIN/SALES
SPONSOR(s): REPRESENTATIVE(s) ROKEBERG
02/28/05 (H) READ THE FIRST TIME - REFERRALS
02/28/05 (H) L&C, FIN
03/16/05 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
MICHAEL PAWLOWSKI, Staff
to Representative Kevin Meyer
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 33 on behalf of Representative
Meyer, sponsor.
CHRIS KENNEDY, Senior Assistant Attorney General
Environmental Section
Civil Division
Alaska Department of Law
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding HB 33.
JOHN SEDOR
Alaska Restaurant and Beverage Association;
Alaska Hotel Lodging Assocation;
Society for Human Resource Management, Alaska State Council;
Anchorage Society for Human Resource Members Management
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 182 and answered
questions regarding the bill.
WAYNE STEVENS, President,
Alaska State Chamber of Commerce
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 182.
RANDY CARR
Anchorage, Alaska
POSITION STATEMENT: Suggested changes to HB 182.
ROBERT MORRIS, Director
Human Resources
Alaska Children's Services;
Legislative Co-Chair
Anchorage Society of Human Resource Management
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 182.
CARA FOX, Director
Human Resources and Administration
Hawaiian Vacations;
Legislative Co-Chair
Anchorage Society of Human Resource Management
POSITION STATEMENT: Testified in support of HB 182.
JACK AMON, Partner
The Marx Bros. Cafe
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 182.
KEN LEGACKI
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 182.
ACTION NARRATIVE
CHAIR TOM ANDERSON called the House Labor and Commerce Standing
Committee meeting to order at 3:52:05 PM. Representatives
Anderson, Crawford, Lynn, LeDoux, and Guttenberg were present at
the call to order. Representatives Kott and Rokeberg arrived as
the meeting was in progress.
HB 33-EFFECT OF REGULATIONS ON SMALL BUSINESSES
3:52:16 PM
CHAIR ANDERSON announced that the first order of business would
be HOUSE BILL NO. 33, "An Act relating to the effect of
regulations on small businesses; and providing for an effective
date."
REPRESENTATIVE LYNN moved to adopt the committee substitute for
HB 33, Version 24-LS0239\L, Bannister, 3/14/05, as a working
draft. There being no objection, Version L was before the
committee.
MICHAEL PAWLOWSKI, Staff to Representative Kevin Meyer, Alaska
State Legislature, presented HB 33 on behalf of Representative
Meyer, sponsor. He explained that Version L addresses the
concerns of the committee. He turned to page 3, lines 21-22,
and said, "While the process described in HB 33 doesn't create a
grounds for traditional review of regulation, judicial review
for unrelated provisions are still warranted under the existing
administrative procedure." The second change is on page 4, line
2-3, which he explained excludes emergency regulations from the
definition of regulation where it applies to this bill. The
third change is on page 4, line 7, which changes the definition
of small business to a business that employs fewer than 100
employees.
3:55:21 PM
REPRESENTATIVE GUTTENBERG asked for clarification regarding a
handout in the committee packet that illustrates the steps in
the regulation adoption process under HB 33.
MR. PAWLOWSKI explained that on the handout, anything that is
not shaded is in the existing drafting manual for administrative
regulations, and the shaded parts are what HB 33 would add. He
noted that he underlined a few parts for emphasis.
REPRESENTATIVE GUTTENBERG commented that he would like to know
how easy it would be to comply with the changes made in the
bill.
CHRIS KENNEDY, Senior Assistant Attorney General, Environmental
Section, Civil Division, Alaska Department of Law, replied:
We agree with Representative Meyer that this process
can be fitted into the regulatory steps the way he has
outlined them, and that it doesn't present impossible
logistical problems. Certainly ... it does add a
step, and there is a cost to it in terms of involving
the [Department of Commerce, Community, and Economic
Development (DCCED)] in the process and so, we've
addressed the cost in our fiscal notes, although those
relayed to a slightly earlier version of the bill.
But no, I don't think there's a concern that it makes
an impossible addition to the regulatory adoption
process.
3:59:46 PM
CHAIR ANDERSON noted, "The drafting manual for administrative
regulations isn't codified; it's an instructional list of
elements and areas in which the regulation drafter can follow."
Returning to the handout, he stated that the shaded portions
indicate what would be codified.
MR. KENNEDY agreed that the manual is not law, but is simply a
guide. He said that the steps that are in the manual now are
mostly prescribed by statute, and the shaded portions on the
handout indicate the additional steps that would be prescribed
by HB 33.
4:01:01 PM
REPRESENTATIVE GUTTENBERG turned to the handout that lists the
four things that the economic effect statement must provide, and
he commented that numbers one, two, and four are common sense.
However, he opined that number three, which says, "A statement
of the probable effect that the proposed regulation would have
on small businesses whose conduct would be governed by the
proposed regulation," is a little problematic. He said that
every small business is different, and he didn't see how to
reconcile those differences in regulation.
4:02:04 PM
MR. KENNEDY speculated that the statement of effect would be a
page or two of "thoughtful discussion" that would be prepared by
the particular department with the aid of the Department of Law
and the DCED employee who would be assigned to manage the small
business consultation. He noted, "I don't think the intent, as
we read this bill, is to produce an elaborate study."
REPRESENTATIVE CRAWFORD stated that the committee has heard past
testimony that these things are already being done. He asked
Mr. Kennedy if [the bill] is a useful exercise, and if there is
a "good reason to put on more people and expend more effort to
do this...?"
MR. KENNEDY replied that the question may be getting into a
policy choice that he may not be qualified to speak to. He
commented:
I can tell you that it's true that quite a lot of this
process is already happening today in an informal way,
and that's one of the reasons that it doesn't create
an impossible burden. However, ... as we've said, it
would add a cost and we're still discussing with the
sponsor whether that cost is worthwhile in many
contexts. ... We're concerned that this process really
might not be terribly useful in the context of
regulations, for example, that are only making
technical amendments....
REPRESENTATIVE CRAWFORD asked Mr. Kennedy if it would be useful
to reach a consensus on whether the bill is beneficial rather
than moving it to another committee.
MR. KENNEDY replied that the Department of Law doesn't have an
objection to moving the bill to another committee because it
feels that it is working well with the sponsor and making steady
progress.
REPRESENTATIVE LEDOUX opined that the bill appears to be an
attempt to create a business-awareness in the regulatory
process, and she asked why the bill is limited to small
businesses.
MR. PAWLOWSKI responded:
Business-awareness in the regulatory process can add
to the process and make the process better. That's
the idea behind the bill. The idea in limiting it to
a small business is that that's a focused area that
... you can make an actual effect. Large businesses,
through the public comment process, often have people
that they can devote to following regulations, whereas
a small businessman who's just trying to do their job
wakes up the next day and all of a sudden has to
comply with a whole new host of paperwork that they
never thought that they were going to have to do. But
this puts someone in the process that looks out for
their interest.
CHAIR ANDERSON noted that the larger businesses not only have
legal counsel and accountants but they also have associations
that can defend their interests, whereas the small
businessperson or the sole proprietor may not have that.
4:08:11 PM
CHAIR ANDERSON added that he agreed with Representative
Guttenberg regarding numbers one, two, and four, but commented
that he didn't think number three was intangible or difficult.
He stated, "I think that ... the need of the bill outweighs
holding the bill in committee."
4:09:14 PM
REPRESENTATIVE ROKEBERG moved to report [CSHB 33, Version 24-
LS0239\L, Bannister, 3/14/05,] out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHB 33(L&C) was reported from the House Labor and
Commerce Standing Committee.
HB 182-WAGE & HOUR ACT: EXEC/PROF/ADMIN/SALES
4:09:40 PM
CHAIR ANDERSON announced that the next order of business would
be HOUSE BILL NO. 182, "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 basis."
REPRESENTATIVE ROKEBERG, sponsor of HB 182, explained:
[House Bill 182] sets forth some clarifications to the
Alaska Wage and Hour Act by basically clarifying and
redefining to a limited degree the definitions of
executive capacity, administrative capacity, and
professional capacity within our code. The primary
step of this bill before us eliminates what's known as
the long test or the 80:20 test or, in the retail
trade, the 60:40 test. This is an antiquated method
of determining eligibility. It's been set aside in
most states. And I think Alaska is overdue in taking
this up. Also ... it does delete the one regulatory
definition of supervisory capacity. This is done so
because it's pretty unworkable right now, and ... the
definition is subsumed under the other categories
right now. So this is really a cleanup step. And in
addition it does conform with a standard for
qualification of payment of two-times the Alaska
minimum wage, which is a distinction from the Federal
Wage and Hour Act that was more recently adopted last
year. That particular provision was worked on in the
past by the 23rd Legislature, and this bill merely
reflects that as a matter of policy here.
REPRESENTATIVE ROKEBERG continued:
In your packet is a side-by-side comparison of the
current law and the provisions provided in [HB 182].
There's also a statement that shows the state-by-state
jurisdictional applications of the various forms of
Wage and Hour Act, showing [the] 32 states that
currently have adopted the federal standards, eight
other states have ... a short test, such as this bill
provides. ... So what we're doing in this bill is more
closely conforming, but not exactly, to some 40 other
states in the United States. This is an important
fact because it puts Alaska closer to interpretation
of what the Wage and Hour Acts are on a interstate
level or basis. ... Also in [the committee packet] is
a letter from Anchorage attorney Bill Evans that
explains the current legal situation we have in the
State of Alaska, so it's very informative. ... Also
there's a news article that explains the impact of
legislation on small businesses.
4:14:47 PM
REPRESENTATIVE KOTT moved to adopt the committee substitute for
HB 182, Version 24-LS0507\F, Craver, 3/10/05, as the working
document. There being no objection, Version F was before the
committee.
JOHN SEDOR, Alaska Restaurant and Beverage Association; Alaska
Hotel Lodging Association; Society for Human Resource
Management, Alaska State Council; Anchorage Society for Human
Resource Members Management, testified in support of HB 182. He
commented that HB 182 would address salaried private sector
employees, but not hourly employees. He added that the bill
deals with one aspect of overtime law, found under both the
federal Fair Labor Standards Act (FLSA) and the Alaska Wage and
Hour Act, which are the exemptions for qualification for
salaried basis. He stated:
One of the problems with the current state of the law
in this state is that the exemptions use the same
words, so under both the federal law and the state law
we have exemptions for administrative, executive, and
professional [employees].... It's the same exemption
under federal law as state law, but they're
deceptively similar, so there's two wholly different
tests that apply to each of them. Under the FLSA, you
use basically a primary duties test. ... Forty
jurisdictions use either the current FLSA regulations
or use what's called the short-test, which uses a
primary duties concept.
4:18:23 PM
MR. SEDOR explained that Alaska regulations incorporated the
long-test from federal regulations; under the long test, the
employer has the obligation of showing that 80 percent of an
exempt employee's work time is spent performing exempt duties.
He opined that this is difficult to do because it would require
that the employer have someone watching the employees. He noted
that the federal system now has a duties-based test, where "we
look at what the person is doing [and] what their duties are, as
opposed to the time they are spending on a particular task." He
then pointed out that currently under federal law, employees who
now earn less than $455 per week must receive overtime pay, and
under HB 182 that wage limit would be two times the minimum
wage. He also noted that under current regulations, "outside of
service retail sector, there is no minimum that you have to
pay."
REPRESENTATIVE ROKEBERG pointed out that [for the state to pay
two times the minimum wage], Alaska would have a $572 per week
minimum floor, as compared to the federal rate of $455. He
asked Mr. Sedor to expand on what the damages could be if there
was a failure to prove the 80:20 test provisions.
CHAIR ANDERSON asked Mr. Sedor also to explain the argument
against the bill.
MR. SEDOR replied that there are two types of damage that an
employer is exposed to. The first damage is the cost of
litigation. The second is the overtime back pay and the actual
reasonable attorney fees that the employer must pay if the
employee is successful. He commented, "What those significant
damages do is force resolution of cases without the employer
ever getting their chance to really argue their side of it
because of the risk."
REPRESENTATIVE LEDOUX asked, "Is this sort of thing even covered
by insurance?"
MR. SEDOR replied that sometimes it is. In response to Chair
Anderson's question, he answered, "I don't know what the
argument is on the other side."
4:27:27 PM
REPRESENTATIVE LEDOUX commented that even if the bill was passed
there still might be the possibility of litigation.
MR. SEDOR responded that this was true. He emphasized his
belief in the importance of looking at the duties of the exempt
employees rather than the breaking down the workday minute-by-
minute.
REPRESENTATIVE LEDOUX turned attention to the language on page
2, lines 21-22, referring to a person employed in an
administrative capacity:
whose primary duty includes the exercise of discretion
and independent judgment with respect to matters of
significance
REPRESENTATIVE LEDOUX remarked that the phrase "matters of
significance" sounds like it could be referring to a pension
plan for lawyers.
MR. SEDOR responded that there are interpretative aspects to the
bill, but some of this language is already in the regulations.
He reiterated that the bill does not affect employees that earn
an hourly wage. He opined that the federal regulations are
easier to understand than the state regulations.
REPRESENTATIVE LEDOUX asked, "Are you saying that under the
current statute, you've got these words basically ... and then
added to it is the 80:20 test?"
4:32:55 PM
MR. SEDOR explained that in the past there were two tests: a
long test and a short test. The long test contained the 80:20
concept while the short test contained the primary duties
concept. He then explained that the long test has been
eliminated from the federal regulations, but it remains in the
state regulations.
4:33:59 PM
CHAIR ANDERSON asked if [the state regulations] are a hybrid of
the two schemes.
MR. SEDOR replied negatively and clarified, "When you have the
80:20 test, that really eliminates the primary duties."
REPRESENTATIVE CRAWFORD asked if the bill would act as an
incentive for an employer to switch employees to a salary wage
rather than hourly wage. He presented an example of an employee
with multiple duties and noted that the employer might find it
cheaper to put the employee on a salary rather than pay him/her
for overtime work. He asked if there could be any unintended
consequence from the bill.
MR. SEDOR replied that he could not see any unintended
consequence from HB 182 because it is a multitiered test, and so
"paying somebody salary doesn't get you to the line; you still
have to ... establish the exemption through the duty. And
that's what I personally find very beneficial to our employers
and ... employees."
CHAIR ANDERSON asked, "Will you see a shift of employees going
from hourly to supervisory because now you will skip the
overtime payment?"
4:38:45 PM
MR. SEDOR replied, "I don't see that because it's one test of
several." He pointed out that the penalties are high and
therefore, he opined, no employer would try to get around the
FLSA regulations.
REPRESENTATIVE GUTTENBERG commented that there are employers who
attempt to get around regulation.
MR. SEDOR noted that the penalties in Alaska are more severe
[than in other states]. Therefore, he said, there are more
forced settlements, even when the employer would rather litigate
than settle.
4:43:18 PM
REPRESENTATIVE GUTTENBERG voiced concern that people making low
wages could be [taken advantage of] through this bill.
4:44:47 PM
MR. SEDOR responded that "hamburger flippers" would have to be
paid twice the minimum wage [to qualify as exempt]. He posited
that businesses will not want to pay an employee more just so
that the employee would be exempt. He noted that 40 states are
using the primary duties test, and he hasn't heard of any
problems associated with this change.
4:46:05 PM
WAYNE STEVENS, President, Alaska State Chamber of Commerce,
testified in support of HB 182. He pointed out that the minimum
wage in Alaska is $7.50 per hour.
RANDY CARR stated that he formerly worked for the Alaska
Department of Labor and Workforce Development for 28 years, and
is now a consultant with a private practice, and is testifying
on his own behalf. He pointed out that he had submitted his
testimony in writing. He commented:
The questions posed by Representative LeDoux as to the
meaning of "primary duty" go right to the heart of the
matter. This bill is actually adopting verbatim the
language found in the federal Fair Labor Standards Act
definitions, but it only grabs pieces of it. There
are component elements within those definitions that
are defined in the federal regulations that are either
not defined under state law or defined differently
under state law, which leaves the employer in the
position of either having two sets of definitions to
comply with, one of which will be more stringent than
the other, or just hoping that whatever he does under
federal law is going to satisfy the state. And the
prime example of that is the term, "primary duty." It
sounds as though "primary duty" means something that's
done 51 percent of the time, and that would be the
case under the state policy. The state has for years
enforced primary duty as that activity that's
performed more than 50 percent of the time. That is
not however the definition under the federal [FLSA].
And I have attached with my written submissions copies
of fact sheets from the [FLSA] Department of Labor web
page, which gives those definitions. ... [The fact
sheet says:] "The primary duty under federal law means
the principle, main, major, or most important duty
that the employee performs. Determination of an
employee's primary duty must be based on all the facts
of a particular case with a major emphasis on the
character of the employee's job as a whole."
4:49:37 PM
MR. CARR continued:
Under the old regulations there was an exemption known
as a sole charge exemption, which allowed an employee
who had a primary duty of an exempt nature in the
executive area to perform 90 percent nonexempt work
and still qualify for the exemption. That sole charge
exemption has gone away under the new regulations, but
the whole concept of the sole charge is still alive in
the definition of primary duty found in the federal
regulations.
MR. CARR noted that there are several other terms in the bill
that are defined in federal regulations but not in state
regulations, such as: "particular weight" on page 3, line 4;
"customarily and regularly" on page 2, line 30 and on page 3,
line 24; "discretion and independent judgment" on page 2, lines
21-22; and "matters of significance" on page 2, line 22. He
commented, "I'm hopeful that the state will take this
opportunity to considers those [terms] thoughtfully and adopt
those meanings that they intend in concert with this bill as
they move it forward." He continued:
One last thing, there is another exemption in the new
federal regulations that is not represented in this
bill, and that is the exemption for the highly paid
employee. It is referenced in the administrative and
executive and professional exemptions, but it's also
spelled out separately in the federal definitions.
And that is an individual who received $100,000 a year
who performs office or nonmanual work who receives as
part of that $100,000 a year a salary that has the
minimum established under the federal law, and they
customarily and regularly perform at least one of the
exempt duties of an administrator, executive, or
professional. Those individuals, under the federal
law, are just not eligible for overtime at all. And
that's an important exemption and it's spelled out as
part of the others as well. I think it needs to be
read in concert with the others because it makes the
package whole, and makes the package make more sense.
And I would hope the committee would consider that as
a possible addition to this bill.
4:52:43 PM
ROBERT MORRIS, Director, Human Resources, Alaska Children's
Services; Legislative Co-Chair, Anchorage Society of Human
Resource Management, remarked, "The current state statutes
relating to the Wage and Hour Act are difficult to interpret at
times and thereby open to misinterpretation. I would greatly
appreciate having clearer definitions of the classifications in
order to avoid making mistakes that impact my employees and my
agency." He remarked that many small to medium sized
organizations lack the resources to implement the 80:20 rule,
and if this rule were removed there would be fewer costly
mistakes impacting employees and employers alike.
CARA FOX, Director, Human Resources and Administration, Hawaiian
Vacations; Legislative Co-Chair, Anchorage Society of Human
Resource Management, testified in support of HB 182. She opined
that this is an important bill because most of the businesses in
Alaska are small businesses and generally do not have the number
of employees or financial ability to ensure that an exempt
employee meets the 80:20 rule that's currently in state law.
She noted that in the past state law has been more strict than
federal law, but with the new federal regulations that is no
longer the case, which means, she said, "we'll now have to
muddle through both laws trying to determine whether an employee
qualifies as exempt or not." She presented an example of an
exempt employee at a small business who also helps with
nonexempt duties when there is a lot of work to be done. Under
the 80:20 rule, the employee is putting his/her exempt level
status in jeopardy and the company takes a large risk. She
noted:
Being able to stay efficient with our human resources
and keep costs under control is what allows us to
survive as a small local business. But because of
current state law there is a possibility that an
employee could manipulate this 80:20 rule,
intentionally or unintentionally, and bring a very
damaging suit against us. We're constantly at risk
even though we make a very good faith effort to
classify our employees correctly. In addition, with
the current disparity between state and federal law,
many employers are confused about what they're
supposed to do, which makes compliance very difficult.
4:55:39 PM
JACK AMON, Partner, The Marx Bros. Café, testified in support of
HB 182. He commented:
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 workplace, a change, that I might add, the
federal government realized was long overdue and
adopted this past year. In many food service and
hospitality businesses the current duties test for
exempt employees does not match the reality of the
workplace. This is especially true in small
businesses where all employees and owners wear many
hats. The current 80:20 test used in Alaska is so
onerous and restrictive that it's forced most
operators to keep all employees, including those who
head departments or supervise others, hourly. This
can have a negative impact on both the employer and
the employee. The employees affected by this change
in the law represent our highest paid and highest
skilled workers. Due to the increased costs of
benefits such as health insurance, we as a small
business have changed our benefit plans to only
salaried employees because of the large number hourlys
we employ. And now we have employees we would like to
be able to move to exempt status so we could get them
under these plans, but can't.
4:58:54 PM
MR. AMON continued:
I'm afraid that opponents of this bill will state that
this is 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 is essential to retain
top quality employees. These top workers know their
worth and demand for their skills. One could not keep
them long by taking advantage of them. This change in
statute will allow more flexibility for both employers
and employees to make compensation arrangements that
are beneficial to both.
KEN LEGACKI testified against HB 182. He offered his belief
that the law should be to protect employees, such as single
parents. He questioned whether it was fair to compare an
employee in Kodiak with an employee in Alabama because Alaskans
have a higher cost of living. "Alaska's a unique state, and
since statehood our fathers have always recognized that and have
always recognized that workers in Alaska need special
protection," he said. He presented the example of an employee
with the title of manager but who is usually stocking shelves
and unloading trucks; this employee wouldn't receive overtime
pay because he/she is titled a manager. He opined that it is
not difficult to determine if an employee is exempt or not under
current law; he recommend that employers call the Alaska
Department of Labor and Workforce Development if they have
questions. He continued, "If you give an employer an excuse to
allow these employees to work 60-70 hours a week and still get a
salary, that harms the employee. We're not talking about one
hour or two hours or three hours of overtime a week; nobody
files suit for that. We're talking about a constant week of
[50-70] hours."
CHAIR ANDERSON closed public hearing.
5:06:40 PM
REPRESENTATIVE GUTTENBERG commented, "I don't see changing state
law on the back of working people, working families. A lot of
times people on the bottom end are single parents, single moms,
trying to make ends meet. Now we're going to try to make it
harder for them."
5:08:05 PM
REPRESENTATIVE CRAWFORD stated that he would like to [hold the
bill over] so that he could get more information about it. He
noted, "I don't know what unintended consequences we have here
yet. I'm concerned." He remarked that he didn't want
[employers] to take advantage of employees.
5:09:21 PM
REPRESENTATIVE ROKEBERG replied, "There's nothing in this bill
that's intended to hurt or injure Alaskan workers." He
reiterated that the bill would remove the 80:20 rule from law.
He opined that the employees will be better protected under this
bill. The goal of the bill, he continued, is to bring Alaska
code into greater conformance with the federal law so that
employers wouldn't have such difficulty when looking at two sets
of laws. He noted that he would be willing to consider some of
Mr. Carr's suggestions.
REPRESENTATIVE CRAWFORD recalled that last year the standard for
an exempt qualification of payment was two and a half times the
Alaska minimum wage, and was then changed to two times the
Alaska minimum wage instead. He remarked, "I don't see how
that's really a raise."
REPRESENTATIVE ROKEBERG replied, "It made it applicable to all
workers in the state not just that one category. So it actually
protected a lot more workers who didn't have that protection
previously."
A roll call vote was taken. Representatives Lynn, Kott,
Anderson, LeDoux, and Rokeberg voted in favor of reporting CSHB
182, Version 24-LS0507\F, Craver, 3/10/05, from committee.
Representatives Crawford and Guttenberg voted against it.
Therefore, CSHB 182(L&C) was reported out of the House Labor and
Commerce Standing Committee by a vote of 5-2.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:15:53.
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