Legislature(1999 - 2000)

03/06/2000 03:28 PM House L&C

Audio Topic
* first hearing in first committee of referral
+ 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                                                              
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                                                              
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-                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
REPRESENTATIVE  SHARON CISSNA  said, "Well,  I don't  care.   It's                                                              
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                                                              
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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