Legislature(1999 - 2000)
03/06/2000 03:28 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
HB 370 - EXEMPTION FROM MINIMUM WAGE FOR TEENAGERS CHAIRMAN ROKEBERG announced the next order of business would be HOUSE BILL NO. 370, "An Act relating to a short-term exemption from the minimum wage for newly hired young employees." CHAIRMAN ROKEBERG called for a brief at-ease, then called the meeting back to order. CHAIRMAN ROKEBERG, speaking as the sponsor of HB 370, stated that the intent of the bill is to permit an employer to pay an employee a training wage. There are two theories, he said, in relation to minimum wage. One camp believes that higher minimum wages reward workers; while another camp believes that minimum wages are artificial and uneconomical so that it hurts the job market by becoming a barrier of entry for youngsters who don't have any training or experience. The sponsor of the bill falls into the latter camp. A large number of states have provisions that allow for a training wage for persons under the age of 20. Alaska, however, does not have that statutory foundation, which is why he brought the bill forward. He noted that such a provision would provide for consistency with the federal Wage and Hour Act. Number 1864 JOHN BROWN, President, Fairbanks Central Labor Council, testified via teleconference from Fairbanks. He said a minimum wage law was established because it's the right thing to do. A civil society needs to protect workers from exploitation for profit. House Bill 370 would allow employers to pay less than what has been established as the minimum wage. He pointed out that the vast majority of training involves minutes or hours at the most. In that regard, he can't see a justification for allowing an employer to pay less than minimum wage for persons under the age of 20 for jobs that don't have many training requirements. Number 1980 CHAIRMAN ROKEBERG asked, "Well, Mr. Brown, don't you think it's the American way to make a profit?" MR. BROWN replied: I ... do, but in a civil society I think there ... should be a minimum that employers should be allowed to extract a profit from somebody from. You know, I know there should be. I mean, the minimum wage levels already, if you're raising a family, [are] well below the poverty level in this country. And I don't understand why anybody would think that that's an okay thing to do, to ... have somebody working at that kind of a wage. Number 2027 CHAIRMAN ROKEBERG asked Mr. Brown whether he believes that profit is good but shouldn't be made on exploiting people's labor. MR. BROWN said he believes that there should be a minimum to what somebody should be working for. He said: If ... we didn't have minimum wage laws, I mean, you see it in California here in our own country people working in bondage still. We need some language on the books that say, you know, enough is enough. You can't have slave labor. You can't have forced labor. You can't pay less than this. It puts everybody on an equal footing. They're competing based on how well they run their business, not on how little they can pay their people. Number 2097 CHAIRMAN ROKEBERG said he's sure that there is language on the books. MR. BROWN said there is language on the books, but HB 370 talks about lowering the standard when it's already low enough. CHAIRMAN ROKEBERG asked Mr. Brown whether he thinks that every wage paid should put a "chicken in every pot" and a "car in every garage." This is not, he said, a living wage bill; this is a minimum wage bill. MR. BROWN replied that HB 370 talks about lowering the minimum wage, and he can't agree with that. He believes that if a person comes to work every day and works hard that person should be able to make a descent living. Number 2178 DWIGHT PERKINS, Deputy Commissioner, Office of the Commissioner, Department of Labor & Workforce Development, came before the committee to testify. He noted that AS 23.10.070 allows for an exemption from minimum wage for a training wage upon the approval of the commissioner. The department appreciates the working relationship with the chairman of the House Labor and Commerce Committee and the committee, but today the department would like to respectfully agree to disagree in relation to HB 370. The main reason is because there are provisions already in statute dealing with the issue of a training wage. He referred to the following sections: AS 23.10.055(11) - "Exemptions." AS 23.10.340 - "Children under 16." AS 23.10.350 - "Employment of person under 18." MR. PERKINS said under state statute, a person under the age of 18 but not under the age of 16 can work six days a week and five hours a day, and [an employer] is not required to pay minimum wage. CHAIRMAN ROKEBERG called for a brief at-ease in order to change the cassette tape, then called the meeting back to order. TAPE 00-27, SIDE A Number 0001 CHAIRMAN ROKEBERG asked whether AS 23.10.055(11), 23.10.340 and 23.10.350 are programs that have to be approved by the commissioner or whether they are programs that are self- actualizing. MR. PERKINS replied that the sections stand alone and are in addition to AS 23.10.070, "Exemptions from minimum wage." No, the sections do not have to be approved by the commissioner. CHAIRMAN ROKEBERG asked whether the exemptions are limited to persons under the age of 18 and 30 hours a week under the other program. MR. PERKINS replied that's correct. CHAIRMAN ROKEBERG pointed out that HB 370 raises the level to the federal standard of persons under the age of 19 [20] during the first 90 consecutive calendar days the employee is initially employed. MR. PERKINS stated the commissioner is concerned about a person working for the same employer who has three different businesses in which that person could theoretically work for each business for 90 days and fall within the purview of HB 370. There are also a lot of senior [citizens] who rely on this type of income to supplement their retirement. The department therefore sees this as a potential means to "put them out of work." Number 0126 CHAIRMAN ROKEBERG asked Mr. Perkins whether he is going to galvanize the AARP to try to stifle the bill. MR. PERKINS indicated that he would not. The commissioner feels that a person 19 years of age is more than likely out of high school and has entered the workforce. In that regard, the department thinks that that person ought to be paid at the very least the Alaska minimum wage. CHAIRMAN ROKEBERG indicated that it's harder to make that assumption anymore. Number 0213 CHAIRMAN ROKEBERG asked Mr. Perkins whether any program, that requires the commissioner's approval, has been applied for and approved. MR. PERKINS replied, to his knowledge, the exemption was applied to confectioners and bakers in the "old days." In recent history, to his knowledge, the department has not been involved with any apprenticeship type of program. CHAIRMAN ROKEBERG referred to AS 23.10.055(11) and noted that the exemption is for a person "under" 18 years of age. It's not for a person 18 years of age. Number 0291 MR. PERKINS replied it breaks down into categories. Provisions for 16-year-olds contain requirements in relation to school hours, while provisions for individuals under the age of 18 contain other requirements. [He did not specify the other requirements.] CHAIRMAN ROKEBERG stated that the commissioner and the legislature have decided that 18-year-olds are worthy of a training wage. MR. PERKINS stated that when he was 18 years old, he was in the workforce making a living. He can imagine that Chairman Rokeberg was also in the workforce. CHAIRMAN ROKEBERG replied that in many instances an 18-year-old would be pleased to have a job. That, he said, is the thrust behind HB 370. He's not trying to lower compensation for a person to "get by on the cheap." He's trying to allow those who have never had a job before to break into the workforce in order to develop some experience. He further noted that HB 370 is important because there are distinctions between the exemption and what the bill says. In that regard, he wants to know why the department does not meet the federal Wage and Hour Act. He understands that the reason is partially legislative. He further pointed out that HB 370 contains a sideboard of 90 days and allows for 85 percent of the Alaska minimum wage. He said, "You could have a youngster working from 15, 16 or 17 years of age for about some two to three years, potentially for 30 hours a week, at the coolie wages that aren't even 85 percent that's in my bill, as a matter of fact." Number 0491 MR. PERKINS said he's sure that the department would be interested in working with the sponsor to strengthen the minimum wage. Number 0518 CHAIRMAN ROKEBERG stated that if a person under the age of 18 works less than 30 hours a week, there is nothing in law to prevent an employer from paying less than minimum wage. That person could be paid $1 per hour. He asked whether that is correct. MR. PERKINS replied that is correct. CHAIRMAN ROKEBERG asked Mr. Perkins whether there is any time limit in law relating to how long a wage can be paid as long as a person is under the age of 18 and works less than 30 hours a week. Number 0575 MR. PERKINS replied, "No." The law reads, "(11) an individual under 18 years of age employed on a part-time basis not more than 30 hours in a week" [AS 23.10.055, "Exemptions"]. CHAIRMAN ROKEBERG asked Mr. Perkins how old a person has to be in order to get hired. MR. PERKINS replied that the minimum age is 16. The law reads: (a) A minor under 16 years of age may not be employed for more than a combined total of nine hours school attendance and employment in one day. If employed, the minor's work may be performed only between 5 a.m. and 9 p.m. Employment outside school hours may not exceed 23 hours in one week, domestic work and baby-sitting excepted" [AS 23.10.340]. CHAIRMAN ROKEBERG asked how old a person has to be in order to work 22 hours in a week. MR. PERKINS replied 14 years is the minimum age at which a person can be hired to work. Number 0675 CHAIRMAN ROKEBERG noted that, under the law, an employer can work a person for 22 hours a week at 14 years of age, and all year long pay 50 cents an hour. A 16-year-old and a 17-year-old can work up to 30 hours a week. MR. PERKINS indicated that is correct. CHAIRMAN ROKEBERG said he's sure that Mr. Brown would be very concerned about the exploitation of this potential situation. Number 0675 CHAIRMAN ROKEBERG referred to the exemption for persons under the age of 18. He asked Mr. Perkins whether the department thinks most 18-year-olds are out of high school, or substantially out of high school. MR. PERKINS replied, "Yes." CHAIRMAN ROKEBERG asked Mr. Perkins whether there is any legislative history in relation to the exemption for persons under the age of 18. MR. PERKINS said he couldn't answer off the top of his head. Number 0698 CHAIRMAN ROKEBERG explained that he had asked the question because the federal government refers to persons under the age of 20. REPRESENTATIVE SHARON CISSNA said, "Well, I don't care. It's wrong." Number 0720 REPRESENTATIVE HALCRO said, "Since Alaska has the lowest minimum wage of any West Coast state, even if we adopted this and paid people 85 percent of minimum wage, we're still going ... to be paying them less. They're already getting paid less." CHAIRMAN ROKEBERG pointed out that other states have another step in relation to minimum wage. Number 0781 REPRESENTATIVE HALCRO said he wasn't sure he understood the intent of HB 370. He asked Mr. Perkins how many people are working for minimum wage. MR. PERKINS replied that he can't answer the question. He doesn't have the numbers with him. CHAIRMAN ROKEBERG indicated there are many minimum wage workers in the state. He asserted that, under existing law, a person could be abused worse than what's under HB 370. He is, therefore, willing to fix his bill in order to allow for the 90- day provision to apply only once. REPRESENTATIVE CISSNA asked Chairman Rokeberg whether he means for the 90-day provision to apply towards a person's first time in the workforce. Number 0863 CHAIRMAN ROKEBERG replied, "Right." That, he said, is the whole idea of a training wage and the issue of HB 370. Under federal law, the 90-day provision could be used recurrently, and the same is true under state statute. Number 0888 RICH MASTRIANO, Investigator, Wage & Hour, Division of Labor Standards & Safety, Department of Labor & Workforce Development, testified via teleconference from Anchorage. He pointed out that according to statute, persons under the age of 18 cannot be paid less than the federal minimum wage of $5.15. He also pointed out that the use of a subminimum wage for persons under the age of 20 was added in 1996 when some provisions of the Fair Labor Standards Act were changed. Number 0985 REPRESENTATIVE HALCRO noted that the fast-food industry traditionally pays minimum wage and provides positions that do not require a lot of skills. In that regard, he's not sure why the sponsor of the bill would want to give an employer the provision to pay an employee subminimum wages for 90 days. To learn how to work the fryer does not take 90 days. It usually takes a few days. CHAIRMAN ROKEBERG replied that the 90-day provision came from the federal law. He reiterated that his first intention was to amend HB 370 to include a "don't kick me out more than 90 days once" provision, then "cool" it. But, in light of the discussion today, he wants to work with the department to provide some sideboards, and he wants to look at a minimum payment of 85 percent of the federal minimum wage. He fully anticipates that the state minimum wage will go up substantially via a federal enactment. Number 1138 REPRESENTATIVE BRICE pointed out that the House Labor and Commerce Committee has a piece of legislation within its grasp that would boost the state minimum wage. He would be more than happy to move it along. CHAIRMAN ROKEBERG announced that HB 370 would be held in the committee for further consideration.
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