Legislature(1997 - 1998)

04/29/1998 03:22 PM House L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 347 - OVERTIME WAGE EXEMPTION FOR MECHANICS                                 
Number 0121                                                                    
CHAIRMAN ROKEBERG announced the committee's next order of business             
would be HB 347, "An Act relating to an exemption from overtime                
wage requirements for certain motor vehicle mechanics."                        
Number 0122                                                                    
REPRESENTATIVE JOHN COWDERY said the Department of Labor (DOL), the            
mechanics and the shop owners had worked on this bill for some                 
time.  He said they had come to an agreement, suggesting "somebody             
from labor or somebody from here" might like to speak to the last              
amendment, and then the committee could hear from Mr. Allwine.                 
CHAIRMAN ROKEBERG stated the chair would entertain a motion to                 
adopt the proposed committee substitute for HB 347, Version F,                 
labeled 0-LS1390\F, Cramer, dated 4/24/98.                                     
REPRESENTATIVE HUDSON made a motion to adopt Version F.  There                 
being no objection, Version F was adopted.                                     
CHAIRMAN ROKEBERG asked Representative Cowdery if he would speak to            
the proposed committee substitute.                                             
REPRESENTATIVE COWDERY indicated he would prefer to have Mr.                   
Allwine of the Alaska Auto Dealers Association (AADA) testify on               
Version F, noting they had worked out the proposed committee                   
Number 0137                                                                    
STEVE ALLWINE, Vice President, Alaska Auto Dealers Association,                
came forward to testify.  He stated he wished to read a statement              
which clarified what the association believed to be everyone's                 
understanding and offered copies to the committee.                             
CHAIRMAN ROKEBERG indicated the statement would be entered into the            
record, asking Mr. Allwine to describe it briefly as best he could             
instead of reading it.                                                         
Mr. Allwine's written statement reads:                                         
     It is the intent of this amendment to the Alaska Wage and                 
     Hour Act to simplify the computation of the regular rate                  
     of pay for flat rate mechanics.  When a flat rate                         
     mechanic is paid an amount equal to or in excess of                       
     his/her straight time hours (up to 8 hours in a workday                   
     or 40 hours in a workweek) at the flat hourly rate                        
     defined in subsection (B) of the bill, and is paid for                    
     all hours worked in excess of 8 hours in a workday or 40                  
     hours in a workweek, whichever is greater, at 1.5 time                    
     such flat hourly rate the mechanic is exempt from the                     
     overtime requirements of the Alaska Wage and Hour Act.                    
     This is true whether the flat hourly rate earnings                        
     (billable hours times the mechanic's flat hourly rate)                    
     are less than or greater than the mechanic's compensation                 
     computed in accordance with subsections (C) and (D).  If                  
     the flat rate mechanic's billable hours times his/her                     
     flat hourly rate are greater than the amount computed                     
     under subsections (C) and (D) then the billable hours                     
     amount shall be paid as the employee's gross pay for the                  
     workweek and no overtime premium, daily or weekly, is                     
     due.  Two examples follow using a flat hourly rate of                     
     Example One                                                               
     The mechanic works 9 clock hours and bills 9 hours each                   
     day Monday through Friday.  The minimum amount due the                    
     mechanic per 23.10.060(d)(17)(C) and (D) is 40 straight                   
     time hours (five 8 hour days) at $15.00 [75 percent of                    
     $20.00 is $15.00 or twice the Alaska minimum wage of                      
     $5.65 ($11.30), so that $15.00 is used] or a total of                     
     $600.00 regular time plus five hours in excess of 8 hours                 
     in a day or 40 in a week, figured on a weekly basis, at                   
     1.5 times $15.00 or $22.50 for overtime pay of $112.50                    
     which yields $712.50.  The mechanic's flat rate pay is                    
     $900.00 (45 billable hours times $20.00) so that the                      
     employee is paid $900, because this amount exceeds the                    
     minimum compensation due under the (d)(17) exemption no                   
     additional overtime premium is due.                                       
     Example Two                                                               
     The mechanic works 9 clock hours and bills 8 hours on                     
     Monday and Tuesday and works 8 clock hours and bills 4                    
     hours on Wednesday through Friday.  The minimum amount                    
     due the mechanic under the (d)(17) exemption is 40                        
     straight time hours (five 8 hour days) times $15.00 [75                   
     percent of $20.00 is $15.00 or 2 times Alaska minimum                     
     wage is $11.30 so that $15.00 is used] or $600 of                         
     straight time hours plus 2 hours in excess of 8 hours in                  
     a day or 40 in a week figured on a weekly basis times                     
     $22.50 (1.5 times $15.00) or $45.00 which yields $645.00.                 
     The mechanic's flat rate of pay is 28 (8+8+4+4+4)                         
     billable hours times $20.00 or $560.00.  Therefore the                    
     employee is paid $645.00 of which $45.00 was pay for the                  
     2 overtime hours which includes half-time overtime                        
     premium of $15.00.                                                        
     [Tables for Example 1 and Example 2 listing hours, days                   
     of the week and dollar amounts were attached to Mr.                       
     Allwine's statement.  The bracketed [] or parenthesed                     
     text () in Mr. Allwine's statement is part of his                         
     original text.]                                                           
Number 0144                                                                    
MR. ALLWINE said they have, essentially, through the auspices of               
the committee and Representative Cowdery, the bill sponsor, worked             
with the DOL at the chairman's direction.  He said they have                   
reached what they believe is a reasonable compromise.  At the                  
outset they did not feel this was what the automobile dealers or               
the technicians wanted, but after lengthy discussions and with the             
help of a number of people, he said they have reached something                
they believe they can support.  He stated, "This bill will remove              
a restriction that we, as employers are faced to place on our                  
employees.  It will permit them to work overtime in such a way                 
that's reasonable, and in the same vein, it will give us an                    
opportunity to not be encumbered with an additional liability that             
currently the Department of Labor is required to work under.                   
That's kind of it in a nutshell.  We do support the committee                  
substitute.  My understanding is there is a clarification amendment            
to go with this substitute that clarifies a couple of technical                
issues.  We also support that."  He thanked the bill sponsor, the              
chairman, and the individuals at DOL and the AFL-CIO who helped                
them reach this agreement.                                                     
CHAIRMAN ROKEBERG asked if Mr. Allwine could speak to the                      
amendment, confirming the amendment was technical in nature.                   
MR. ALLWINE agreed that was its nature.                                        
Number 0159                                                                    
ED FLANAGAN, Deputy Commissioner, Department of Labor, came forward            
to testify.  He stated, in brief, "You have before you a [AS]                  
23.10.060(d)(17) that the Department of Labor can live with."  Mr.             
Flanagan said there has been a lot of work by a lot of people, and             
the department feels this addresses the need expressed by the                  
industry but still maintains a "floor" and the concept of time and             
a half after 8 [hours per day] and after 40 [hours per week].  He              
said the amendment may be "belt and suspenders kind of protection"             
but it is to make it clear the intention, as was discussed all a               
long between the parties, is that it's figured on a weekly basis.              
He said, "Somebody doesn't pick and choose if one day they do                  
better under the flat rate and the next day they do better under               
the minimum.  The minimum owed is figured at the end of the week on            
a weekly basis against what they earned under the flat rate."  Mr.             
Flanagan said the department appreciated the cooperation of                    
everyone involved, particularly the chairman, the committee and the            
sponsor, and he stated the department withdrew its objection to the            
bill as reflected in the proposed committee substitute and the                 
CHAIRMAN ROKEBERG said, "So briefly then, you gross it up and then             
you make sure that they've met the minimums, is that how the                   
formula works, or is...?"                                                      
MR. FLANAGAN said that was correct, stating, "You figure what they             
get under the flat rate, sir, and then do this calculation as a                
minimum check."                                                                
Number 0172                                                                    
CHAIRMAN ROKEBERG said, "If you put the hours in, it will not be               
paid less than the minimum base that you've agreed to under the                
formulation."  He asked if that was correct.                                   
MR. FLANAGAN stated, "They will not be paid less on a weekly amount            
figured on the hours worked."                                                  
CHAIRMAN ROKEBERG asked if there was anyone else who wished to                 
testify on HB 347.  There being no one, he stated the public                   
hearing was closed and asked the will of the committee.                        
REPRESENTATIVE HUDSON indicated the committee needed to amend the              
proposed committee substitute.                                                 
Number 0176                                                                    
REPRESENTATIVE RYAN made a motion to adopt Amendment 1, on page 2,             
line 7.  There being no objections, Amendment 1 was adopted.                   
Amendment 1 read:                                                              
     Page 2, Line 7                                                            
     After "paragraph" replace ";" with "."                                    
     Delete the remainder of lines 7,8, & 9.                                   
     Insert new subsection to read:                                            
     "(E) The minimum amount due the employee under (C) and                    
     (D) of this section shall be figured on a weekly basis."                  
Number 0180                                                                    
REPRESENTATIVE HUDSON made a motion to move the proposed committee             
substitute for HB 347, Version F, as amended, with individual                  
recommendations and zero fiscal note, asking unanimous consent.                
There being no objections, CSHB 347(L&C) was moved out of the House            
Labor and Commerce Standing Committee.                                         

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