Legislature(1995 - 1996)
02/09/1995 01:35 PM Senate L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SL&C 2/9/95
SB 45 DAMAGES & ATTY FEES FOR UNPAID WAGES
CHAIRMAN KELLY called the Labor and Commerce meeting to order at
1:35 p.m. and announced SB 45 to be up for consideration. He said
this legislation went through both houses last year, but died in
the Senate waiting for concurrence. It was controversial at the
time.
SHERMAN ERNOUF, Legislative Aide to Senator Kelly said SB 45 seeks
to remedy four main problems with the current system of awarding
punitive damages in claims for payment of overtime compensation and
statutory minimum wages under the Alaska Wage and Hour Act. The
first problem is with the Kinney Shoe decision that ruled
liquidated damages are mandatory. The second problem is that the
court ruled private settlements that do not include liquid damages
clauses are invalid. The third problem is that only the plaintiff
is allowed to recover attorney's fees and costs. The fourth problem
is that the Commissioner of Labor has no authority to settle wage
or overtime compensation claims.
Presently an employer who makes an honest mistake is punished as
severely as an employer who knowingly and willingly violates the
act, Mr. Ernouf said. If passed, Section 3d would reverse current
law and would provide for complete or partial waiver of the liquid
damages requirement if it could be shown that an employer acted in
good faith and on reasonable grounds. This language is almost
identical to the language in the Federal Labor Standards Act.
MR. ERNOUF said that SB 45 would allow the court to award
liquidated damages in an amount less than required. Section 3 f
encourages private out of court settlements of these claims,
stipulating criteria for the written agreement. Section 2c would
award attorneys fees and costs to the prevailing party in a law
suit - similar to Civil Rule 82.
PAM NEAL, President, Alaska State Chamber of Commerce, supported SB
42. As the law now stands the employer is automatically saddled
with liquidated damages even if there was no intent.
Number 187
SENATOR SALO asked how a person could accidentally breach the Wage
and Hour Act. MS. NEAL replied that particularly in overtime
payments the laws can be complicated and you don't even realize
that you are breaking them. She thought there should be the
opportunity for some judgement in these matters.
Number 217
ED FLANAGAN, Assistant Commissioner, Department of Labor, said he
supported the intent of SB 45, but it actually goes much further
than taking the situation back to what it was before the Kinney
Shoe decision of the Supreme Court. He said the State Wage and
Hour Act was working good for 32 years before the Kinney decision.
He believes there should be a way to settle before going to court.
This flexibility was removed from the Department with that
decision.
He explained that there is an inherent imbalance in the
employer\employee relationship and this is not the only law in
federal or state statute that allow for prevailing attorney's fees.
The Alaska Wage and Hour Act is not that confusing. Indeed there
are many other codes that employers comply with that are more
complex like the IRS code and Worker's Compensation.
Giving attorney fees to the defendant or reducing fees that are out
there is going to have a severe chilling effect on the ability of
the employee to make a claim. There are very little funds within
the Department of Labor to enforce this and other laws. If there
is a deterrent and they know the possibility of liquidated damages
is out there, they will inform themselves and obey the law like
they did for years.
Number 250
BOB BLASCO, Attorney representing Holland America, said there is no
prohibition to modifying this law as long as it doesn't restrict
benefits that are provided under federal law. Saying you can't
modify attorney fees is not accurate, because the federal law
indicates you cannot modify benefits that are provided to the
employee. Attorney fees are not benefits to the employee. This
bills is very expansive in its protection of the employee and the
goal of the federal and state law is to prevent over-reaching.
SENATOR KELLY asked if he was a registered lobbyist. MR. BLASCO
answered that he was. SENATOR KELLY asked who had retained him on
this issue. MR. BLASCO said Holland America had retained his firm.
Number 300
SENATOR SALO asked him to explain "over-reaching." MR. BLASCO
explained that it means the employer is in a situation of being
able to take advantage of the employee.
SENATOR SALO asked him if the provisions in the bill allow for
over-reaching. MR. BLASCO responded no.
SENATOR SALO commented that provision #1 removed great
disincentives to breach the Wage and Hour Act by eliminating the
potential of liquidated damages. If there is no potential of
liquidated damages, all that's being done is deferring wages. MR.
BLASCO responded that the only change in the liquidated damage
provision is to allow a good faith exception allowed under federal
law. He continued that protections are built in along the way.
For instance, if a judge or jury determines that the good faith
burden is not met by the employer, then there's no change in
liquidated damages.
SENATOR SALO asked why the potential of private settlements doesn't
allow for intimidation by the employer. She said she didn't agree
that the employer/employee relationship is a level playing field.
She also wanted more information on bogus claims.
MR. BLASCO said there is not a level playing field between the
employer and employee. That's why the extensive protections are
built in. The only thing this bill does is specify a long list of
protections in a situation where there can be a settlement. There
is nothing that would compel a settlement. In general, he said,
they are trying to present more options to deal with the kinds of
cases that come up.
SENATOR SALO asked how many bogus claims there were in Alaska. MR.
BLASCO said he couldn't give her figures, but he had an example of
someone who came up with many sheets of overtime which was all done
on the same day with the same pen on the same form. SENATOR SALO
asked if that person wouldn't lose the case anyway. MR. BLASCO
said that was right, but if they allow someone to bring a
fabricated case with no down-side risk, which creates all of the
loss of time and expense before court, in court, and through the
whole case, that person and their attorney can just walk away.
He stressed there wasn't a prohibition in the federal law, but it
was just silent on the subject.
Number 412
SENATOR DUNCAN said the provision about the attorney's fees bothers
him because most of the people involved in this sort of case are
lower paid individuals. Even if they think they have a claim, they
will be very hesitant to hire an attorney and go to court knowing
that Westmark Hotels or Holland American have a lot of money and
can hire top notch attorneys. Applying Civil Rule 82 to very low
paid employees seems to deter them from going to court and
collecting what is rightfully theirs.
MR. BLASCO said that should be a concern if you were talking about
attempting to prevent good cases and marginal cases. This
provision matters where someone has essentially no case, but is
attempting to get something through the system.
SENATOR DUNCAN asked to see language stating that the only cases
it's going to impact are those that don't have merit. MR. BLASCO
said it wouldn't say that anywhere. He said chances are if a low
paid individual has a claim, it would be on a contingency basis,
and the attorney would not be paid until the claim was paid.
Number 450
SENATOR KELLY asked if there were any plaintiff's attorneys
present.
KEN LEGECKI said he was an attorney and did this kind of work and
wished strongly to testify. While he wasn't representing anyone
specifically he felt so strongly about this bill that he had to
testify against it. He perceives this as another attempt by big
corporations to try to exploit little people.
MR. LEGECKI held up a free pamphlet from the Federal and Alaska
Department of Labor explaining the terms of the Fair Wage and Hour
Act. He invoked stories of less pay and longer hours that took
place during the depression. He emphasized that it was the
Legislature's job to make sure that there is a level playing field
between employer and employee.
MR. LEGECKI suggested getting an opinion on the bill from the
Attorney General. He didn't see how an employer could have read
that pamphlet and not know that he was to pay overtime for over 8
hours in a day and 40 hours in a work week.
He asked if Holland America and other similar firms had consulted
with the Department of Labor to find out if they were in
compliance.
He said he represents people who work for an hourly wage and they
cannot afford an attorney. The Kinney case did not change the law
he said; it was their outrageous behavior in that particular case
that forced it to go to the Supreme Court.
The question is, how does an employee who makes an hourly rate
fight an employer without worrying about how to protect his job?
He has not heard of one horror story of one employer getting sued
unfairly, but he has many stories from people he has represented
who have been treated unfairly. He pointed out also, that it is
difficult for underpaid people to get representation, because they
might not be able to pay the attorney even if he prevails in his
claim. This means the law will not be followed.
SENATOR MILLER asked him if he had lost any of these cases. MR.
LEGECKI answered that he had lost only one, and he disagreed
strongly with the court on that one.
TAPE 95-4, SIDE B
Number 587
SENATOR MILLER said he understood his frustration and thought it
was mostly toward big business, but noted this issue also applies
to small businesses in the State of Alaska. He said he is a small
business owner and he doesn't have the big money he is talking
about. He thought by and large that small Alaskan businesses were
"honest" and believed that if you are wrong, you pay.
MR. LEGECKI said that the nature of business is to try to make as
much money as possible, and he thought employers would skirt the
law if it made more money for them. He also asked if as a small
business owner obeying the law, would it be fair to you if your
competitor is allowed to violate the law and "get ahead of you."
SENATOR MILLER said the vast majority of businesses in this State
do not try to cheat their employees.
SENATOR DUNCAN asked if he represented his clients on a contingency
basis. MR. LEGECKI said yes, that his fee is usually 1/3 of the
gross or, if the court awards, a higher fee.
SENATOR DUNCAN commented that if they pass the bill in its current
form, section 2 that deals with Civil Rule 82, says that all
attorneys would go on a contingency basis. So the employee would
have to go to court to collect wages and might end up getting 60%
of what is due him which doesn't seem fair. MR.LEGECKI agreed and
added that there are costs involved like depositions that cost
anywhere from $500 - $1,000. He also said that employers fight
these claims vigorously, because it sets a precedent for the rest
of their employees.
Number 445
PERRY GROVER, Attorney from Anchorage, supported SB 45. He said he
is not representing anyone but himself, although the majority of
his experience is with representing employers. He also has served
as a neutral in resolving labor disputes. He said Alaska has the
harshest Wage and Hour Act of any of the states on the west coast.
He said that section 3 merely builds a defense that has existed
under the Federal Fair Labor Standard Act for many years. Many
cases that end up in court in Alaska would not get there under the
federal system.
He said he respects the opinions and abilities of the people in the
Department of Labor, but they are not always correct.
Mr. Grover said Section e was requested by the Commissioner of
Labor because he wanted the power to make settlements (taken away
in the Kinney Shoe decision) restored. He had no objection to
that.
Section f allows private settlements with safeguards taken from the
Federal Age Discrimination and Employment Act. Even if this bill
passes there are many ways in which the Alaska law will remain
harsher than the Federal Fair Labor Standards Act, he said.
Number 335
DENNIS BRANDON, Vice President, Westmark Hotels, said they are the
only non-union hotel chain in Alaska. He said they are in total
support of the SB 45. He said the Fair Labor Standards Act, on
which the Alaska Statute is based, provides the flexibility of the
federal law. Alaska businesses should not be placed under a more
burdensome standard than the thousands of businesses in other
states.
DARIO NOTTI, Intern for Senator Duncan, said he was representing
himself and said he had much construction experience. He commented
that he thought about a third of the companies he worked for had
some sort of a "scam" to reduce overhead. He related the times he
had worked overtime, through coffee breaks, and at other very
questionable times. He said he's been told this is a right to work
state and if you don't like it, we can lay you off tonight and have
another guy working in your place in the morning.
MR. NOTTI said that employees need protection that the current law
offers.
Number 209
C.J. ZANE, Holland America Line, said he believed that Alaskan
employers, big and small, make every effort to comply. Claims come
from areas where employees are hired in an exempt category who also
perform work outside of that employment that would have fallen
under Wage and Hour, and then produced some log that they kept.
Once the claim is made, the only option the employer has is to
defeat that claim outright which is very difficult; or pay double
what the claim is. There is nothing in between under Alaska law.
That is just not fair, he stated.
Regarding Rule 82, for instance, victims of sexual harassment are
certainly as outraged as people who are out some wages. Rule 82
applies to those very important bodies of cases in this state. It
just means that the attorney and his client need to think hard
about bringing the case.
Number 256
SENATOR DUNCAN requested a more definitive position paper by the
Department of Labor on this legislation. He was concerned with
subsection f on page 2. SENATOR KELLY concurred with that request
and said the Committee would take up the bill at a future date.
| Document Name | Date/Time | Subjects |
|---|