Legislature(2005 - 2006)HOUSE FINANCE 519

04/13/2005 01:30 PM House FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 182 WAGE & HOUR ACT: EXEC/PROF/ADMIN/SALES TELECONFERENCED
Moved CSHB 182(FIN) Out of Committee
+ HB 169 REAL ESTATE LICENSEE EDUC TELECONFERENCED
Heard & Held
+ HB 98 NONUNION PUBLIC EMPLOYEE SALARY & BENEFIT TELECONFERENCED
Moved CSHB 98(STA) Out of Committee
+ HB 27 MUNI PROP TAX EXEMPTION FOR POLICE HOMES TELECONFERENCED
Scheduled But Not Heard
Bills Previously Heard/Scheduled
= HB 32 APPROP: GRANT TO ARCTIC POWER FOR ANWR
Moved CSHB 32(FIN) Out of Committee
+ HB 54 BAIL REVIEW TELECONFERENCED
Moved CSHB 54(FIN) 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."                                                                                                         
                                                                                                                                
Representative Foster  moved to adopt  the new CS for  HB 182                                                                   
labeled  24-LS0507\P,   Carver,  4/6/05.    There   being  NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
1:53:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NORM ROKEBERG,  sponsor,  explained that  the                                                                   
bill  adopts  federal  rules   for  the  Federal  Fair  Labor                                                                   
Standards  Act by  amending  the Alaska  Wage  and Hour  Act.                                                                   
This bill  will significantly  help small businesses  because                                                                   
it clarifies provisions of the Alaska Wage and Hour Act.                                                                        
                                                                                                                                
Representative  Rokeberg  explained  that the  new  amendment                                                                   
would provide a  "bright line" to the effective  date of this                                                                   
law, July 1, 2005.                                                                                                              
                                                                                                                                
1:56:38 PM                                                                                                                    
                                                                                                                                
JOHN SEDOR,  ANCHORAGE SOCIETY FOR RESOURCE  MANAGEMENT, (via                                                                   
teleconference)  spoke in support  of HB  182.  He  explained                                                                   
that  the  bill  would  eliminate   confusion  about  how  to                                                                   
determine overtime exemptions.                                                                                                  
                                                                                                                                
1:59:47 PM                                                                                                                    
                                                                                                                                
Representative  Weyhrauch  pointed   out  that  in  order  to                                                                   
understand  the various  occupations  in  this bill,  Federal                                                                   
Fair Labor Standards  Act regulations have to  be understood.                                                                   
He questioned the relevance of  certain classifications.  Mr.                                                                   
Sedor responded  that one  of the  benefits of moving  toward                                                                   
the  federal  system is  that  some  people in  the  computer                                                                   
industry qualify  due to the complexity  of their jobs.   The                                                                   
state  has  not  moved  forward to  clarify  which  jobs  are                                                                   
exempt.                                                                                                                         
                                                                                                                                
Representative  Rokeberg asked  Mr. Sedor  to comment  on the                                                                   
proposed amendment.   Mr. Sedor  related that the  bill would                                                                   
delete the  80/20 test and  sets forth definitions  which are                                                                   
much more understandable.   He gave an example.   The primary                                                                   
duties test is the only test now  in the federal system.  The                                                                   
amendment  states that  claims  brought after  July 1,  2005,                                                                   
would  be subject  to  statutory provisions  of  HB 182,  and                                                                   
claims  brought   before  that  date  would   be  subject  to                                                                   
conditions prior to HB 182.                                                                                                     
                                                                                                                                
2:07:46 PM                                                                                                                    
                                                                                                                                
Representative Croft asked if  primary duty is defined in the                                                                   
P  version.   Mr. Sedor  replied  it is  not  defined in  any                                                                   
version, only in  federal regulation.  He gave  an example of                                                                   
a position that  is exempt due to the importance  of the job.                                                                   
Representative  Croft rephrased  his  question to  ask if  an                                                                   
employer has to conform to both  state and federal laws.  Mr.                                                                   
Sedor  replied that  those  in  the private  sector  do.   He                                                                   
pointed  out  that  the  P  version   only  has  one  system.                                                                   
Representative Croft inquired  why the definitions differ and                                                                   
why  it is  not stated  that they  shall  be the  same as  in                                                                   
federal  law.   Mr. Sedor  replied that  "primary duties"  is                                                                   
only one  of several tests.   He indicated that  the statutes                                                                   
would be extremely large if all duties were spelled out.                                                                        
                                                                                                                                
2:13:41 PM                                                                                                                    
                                                                                                                                
Representative  Croft asked  if primary  duty is  one of  the                                                                   
tests   below    executive,   administrative,    professional                                                                   
capacity, and  all other definitions  are incorporated.   Mr.                                                                   
Sedor  replied correct.    Representative  Croft referred  to                                                                   
page 4,  (C) (1),  which allows  for state private  employers                                                                   
having to follow only one system.   Mr. Sedor replied that is                                                                   
exactly right,  and 41 other jurisdictions have  adopted that                                                                   
as well.                                                                                                                        
                                                                                                                                
2:14:52 PM                                                                                                                    
                                                                                                                                
Representative  Rokeberg drew  attention to  Section 5  where                                                                   
definitions  in federal  law are  mentioned.   Representative                                                                   
Croft  pointed  out  that  in other  areas  outside  of  that                                                                   
capacity   definition,   the   bill  allows   for   different                                                                   
definitions by the wording, "if not defined in this title".                                                                     
                                                                                                                                
Representative Croft asked Mr.  Sedor if the amendment states                                                                   
that claims filed previous to  the effective date of the bill                                                                   
are cut off.   Mr. Sedor responded that claims  brought after                                                                   
the date  are subject to  one statutory requirement,  HB 182.                                                                   
A two-year look-back applies to both time situations.                                                                           
                                                                                                                                
2:18:29 PM                                                                                                                    
                                                                                                                                
KARIN ROGINA,  ALASKA HOSPITALITY  ALLIANCE, ANCHORAGE,  (via                                                                   
teleconference) conveyed  full support for HB  182 because it                                                                   
provides  for  clear  exempt status  language.    It  defines                                                                   
exempt   status,  makes   it  workable,   and  will   prevent                                                                   
litigation.   She gave an example  of a hotel worker  with an                                                                   
exempt salary status issue.                                                                                                     
                                                                                                                                
2:23:27 PM                                                                                                                    
                                                                                                                                
JACK  AMON,  ALASKA  HOSPITALITY  ALLIANCE,  ANCHORAGE,  (via                                                                   
teleconference) testified  in support of HB 182.   He related                                                                   
the difficulties of operation under the older system.                                                                           
                                                                                                                                
Representative  Weyhrauch  quoted  the bill,  "an  individual                                                                   
employed  in an  executive, administrative,  or  professional                                                                   
capacity is  compensated on a salary  or fee basis at  a rate                                                                   
of not  less than two  times the state  minimum wage  for the                                                                   
first 40  hours of employment  each week, exclusive  of board                                                                   
or lodging".   He opined that  most people work more  than 40                                                                   
hours.   He asked about  the pay after  that period  of time.                                                                   
Representative Rokeberg  replied that exempt  employees would                                                                   
not receive extra compensation; they would be on salary.                                                                        
                                                                                                                                
HEATHER  NOBREGA, STAFF,  REPRESENTATIVE ROKEBERG,  clarified                                                                   
that their  salary would  be based on  a normal 40-hour  work                                                                   
week.  Representative  Weyhrauch asked if the  value of board                                                                   
and lodging  is not  included.  Ms.  Nobrega replied  that is                                                                   
correct.   Representative Rokeberg  added that because  there                                                                   
is  a unique  test in  Alaska, it  is two  times the  minimum                                                                   
wage, which is based on the 40-hour week.                                                                                       
                                                                                                                                
2:27:53 PM                                                                                                                    
                                                                                                                                
BARBARA  HUFF   TUCKNESS,  LOBBYIST,  TEAMSTERS   UNION  959,                                                                   
concurred  with  the  sponsor's  earlier  comments  regarding                                                                   
concerns and definitions.  She  responded to the comment that                                                                   
this  bill  impacts  the  highest   paid  workers.    In  the                                                                   
supervisory   and   administrative  categories,   there   are                                                                   
managers at  McDonald's that  flip hamburgers  and are  in an                                                                   
hourly, paid-with-overtime  compensation  or are exempt  from                                                                   
overtime  and have  to  be paid  at  least  double time.  She                                                                   
recalled  a bill from  last session  regarding minimum  wage.                                                                   
She  provided   a  history  of  definition   discussions  and                                                                   
maintained  that they  should be introduced  into state  law.                                                                   
The statute  serves to provide  information to  employers and                                                                   
employees.  She suggested that  it should all be incorporated                                                                   
into  statute.   She  voiced concern  about  the adoption  of                                                                   
regulations  and  made suggestions  about  how  to deal  with                                                                   
them.   She spoke of increasing  from double minimum  wage to                                                                   
2.2 percent and reasonable salary compensation.                                                                                 
                                                                                                                                
2:32:43 PM                                                                                                                    
                                                                                                                                
Vice-Chair Stoltze  asked if the  employee has the  option of                                                                   
exempting  himself or  herself from overtime.   Ms.  Tuckness                                                                   
said that is determined by law.                                                                                                 
                                                                                                                                
2:34:27 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault closed public testimony.                                                                                      
                                                                                                                                
Representative Foster MOVED to ADOPT Amendment 1:                                                                               
                                                                                                                                
     Page 1, line 6, following "occupations;":                                                                                
     Insert  "directing  retrospective   application  of  the                                                                 
     provisions  of this  Act  to work  performed before  the                                                                 
     effective date of this Act  for purposes of claims filed                                                                 
     on  or  after  the  effective  date  of  this  Act,  and                                                                 
     disallowing  retrospective application  for purposes  of                                                                 
     claims  for   that  work  that  are  filed   before  the                                                                 
     effective date of this Act;"                                                                                           
                                                                                                                                
     Page 5, following line 30:                                                                                                 
     Insert a new bill section to read:                                                                                         
     "* Sec.  6.  The uncodified  law of the State  of Alaska                                                                 
     is amended by adding a new section to read:                                                                                
     APPLICATION  AS TO WORK  PERFORMED BEFORE THE  EFFECTIVE                                                                   
     DATE   OF   THIS  ACT.      (a)     This   Act   applies                                                                   
     retrospectively  to work performed before  the effective                                                                   
     date  of  this   Act  for  purposes  of   any  claim  or                                                                   
     proceeding  based on  AS 23.10.050  - 23.10.150  (Alaska                                                                   
     Wage  and  Hour Act)  that  is  filed  on or  after  the                                                                   
     effective date of this Act.                                                                                                
     (b)   This Act does not  apply to work  performed before                                                                   
     the  effective date  of  this Act  for  purposes of  any                                                                   
     claim or  proceeding based  on AS 23.10.050  - 23.10.150                                                                   
     that is filed before the effective date of this Act."                                                                      
                                                                                                                                
     Renumber the following bill section accordingly.                                                                           
                                                                                                                                
Co-Chair Chenault OBJECTED for discussion purposes.                                                                             
                                                                                                                                
Representative Rokeberg explained  that the amendment creates                                                                   
a bright  line of flexibility.   There  would be two  sets of                                                                   
rules, before and after the effective date of the bill.                                                                         
                                                                                                                                
2:36:39 PM                                                                                                                    
                                                                                                                                
Vice-Chair Stoltze asked if this  legislation was found in HB
255 last year.   Representative Rokeberg replied  that it was                                                                   
somewhat  similar.    Vice-Chair Stoltze  wondered  what  the                                                                   
Department of Labor's position is.                                                                                              
                                                                                                                                
2:38:59 PM                                                                                                                    
                                                                                                                                
GREY  MITCHELL,  DIRECTOR,  DIVISION  OF  LABOR  STANDARDS  &                                                                   
SAFETY,  DEPARTMENT  OF  LABOR   AND  WORKFORCE  DEVELOPMENT,                                                                   
related that the department has  had input on this bill.  The                                                                   
department remains neutral on the bill.                                                                                         
                                                                                                                                
Representative Kelly commended  the sponsor for bringing this                                                                   
bill forward.   He asked Mr. Mitchell if this  bill would cut                                                                   
down on  the cost  of administering  the hourly vs.  salaried                                                                   
worker  situation.    Mr.  Mitchell  agreed  that  it  would.                                                                   
Representative Kelly opined that  it would cut down on fraud.                                                                   
                                                                                                                                
Co-Chair Chenault  REMOVED his  OBJECTION to adopt  Amendment                                                                   
1.  There being NO OBJECTION, Amendment 1 was adopted.                                                                          
                                                                                                                                
2:42:46 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault announced that  HB 27 would not be taken up                                                                   
today.                                                                                                                          
                                                                                                                                
Representative Hawker summarized  the discussion.  He related                                                                   
that there is a valid parallel  to state corporate income tax                                                                   
regulations in this bill.                                                                                                       
                                                                                                                                
Representative Foster  MOVED to report CSHB 182  (FIN) out of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CSHB  182 (FIN)  was REPORTED  out  of Committee  with a  "no                                                                   
recommendation" recommendation  and with a zero fiscal impact                                                                   
note by the Department of Labor and Workforce Development.                                                                      
                                                                                                                                
2:46:15 PM                                                                                                                    
                                                                                                                                

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