Legislature(1993 - 1994)
03/10/1994 08:00 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 489 - OVERTIME COMPENSATION CHAIRMAN VEZEY opened HB 489 for discussion. The House State Affairs Committee filed HB 489, and it has a referral to the House Labor & Commerce Committee. CHAIRMAN VEZEY, in order to give the sponsor statement on HB 489, turned the gavel over to VICE CHAIRMAN KOTT. Number 661 VICE CHAIRMAN KOTT asked CHAIRMAN VEZEY to address HB 489. Number 665 CHAIRMAN VEZEY addressed HB 489 for the House State Affairs Committee. He stated HB 489 would adjust Alaska's overtime laws to allow workers to work longer workdays and shorter work weeks. The inability to do this has been a frequent complaint, CHAIRMAN VEZEY had heard. Alaska currently has an entire section in statute which deals with the number of hours in a workday. In drafting HB 489, he thought making more statutes would nullify other current statutes; therefore, the most flexible approach would be to adopt the federal standard and repeal Alaska's current overtime statutes. The federal standard states if a person works more than 40 hours a week, they will be paid overtime. Collective bargaining agreements are also clarified by the federal standard, whereby the employer/employee can agree upon their own terms as long as they do not require individuals to work over 40 hours a week without overtime. CHAIRMAN VEZEY stated the second part of HB 489 addresses the area in Alaska statute which regulates the failure to pay overtime. TAPE 94-26, SIDE B Number 000 CHAIRMAN VEZEY explained current statute states if overtime is not paid, for any reason, the employer accrues a 100 percent liquidated damage penalty. He stated a vast majority of employers act in good faith and there are misunderstandings, whereby overtime may not have been paid. He felt a 100 percent penalty may not be in the best interest of promoting employer/employee relationships. He suggested this portion of the statute be amended to clarify, if the matter is settled administratively, that liquidated damages would not apply. CHAIRMAN VEZEY felt this would be the simplest approach. Number 032 REPRESENTATIVE B. DAVIS asked who requested the drafting of HB 489. CHAIRMAN VEZEY stated there was not a specific request, but he has had several employers and employees confront him with the issue that they would like to work short workweeks, allowing them longer weekends. Number 042 REPRESENTATIVE B. DAVIS inquired if employers were not already working with employees to allow them longer work hours. CHAIRMAN VEZEY responded Alaska has two pages of statutes regarding the "8-hour workday." Rather than add more pages of exceptions to the "8-hour workday," he advocated the federal standard of a 40-hour workweek be adopted. Number 056 REPRESENTATIVE B. DAVIS felt employees already have the opportunity to work long days, and asked how HB 489 make the system any different. Would HB 489 make it easier to have longer workdays? CHAIRMAN VEZEY said REPRESENTATIVE B. DAVIS was correct. Number 063 REPRESENTATIVE B. DAVIS asked if HB 489 would eliminate overtime for any of the individuals who work more than 40 hours. Number 065 CHAIRMAN VEZEY said no, HB 489 adopts the mandate that overtime has to be paid after 40 hours a week, by federal law. He could not see the point of duplicating federal law; therefore, he opted to adopt federal law and repeal Alaska's overtime regulations. Number 074 REPRESENTATIVE B. DAVIS clarified liquidated damages would be settled on an employer/employee basis and the employees would not be paid the liquidated damages. Number 084 CHAIRMAN VEZEY affirmed REPRESENTATIVE B. DAVIS. If the employee has to adjudicate the matter, however, there would be a mandated 100 percent liquidated damages. Number 089 REPRESENTATIVE B. DAVIS asked how HB 489 would allow a person to work longer hours in order to have a three-day weekend. Number 093 CHAIRMAN VEZEY answered there would not be two pages of Alaska statutes to comply with in order to exceed the 8-hour work day. Number 098 REPRESENTATIVE B. DAVIS asked for an example of things needed to be done to comply with the statutes. CHAIRMAN VEZEY replied currently each employer, for each project, has to submit a specific plan to the Department of Labor and have it approved. REPRESENTATIVE B. DAVIS clarified HB 489 eliminates this requirement and an employee need only fulfill the 40-hour workweek in some way, in order to get a three day weekend. Number 108 CHAIRMAN VEZEY stated collective bargaining agreements would still have to be honored. Number 110 REPRESENTATIVE B. DAVIS stated Department of Labor did not have a statement of disagreement with HB 489. She clarified the 40 hours could be worked in any way the employer/employee decide, unless there would be a labor bargaining agreement setting the standards. Number 120 CHAIRMAN VEZEY stated the bargaining agreement would be between the employer and the employee. Number 122 REPRESENTATIVE G. DAVIS thought it was apparent federal law did not recognize a 4-day, 10-hour workweek. He questioned if current state law states a person who works 10 hours a day would receive overtime for the extra two hours. Number 129 CHAIRMAN VEZEY responded the requirement to pay that overtime is in state statute, and the two hours would be paid as overtime, unless there was a work plan approved by the Department of Labor. Number 137 VICE CHAIRMAN KOTT introduced RANDY CARR as the next to testify. Number 145 J.R. `RANDY' CARR, CHIEF WAGE & HOUR DIVISION, DEPARTMENT OF LABOR (DOL), answered questions on HB 489 and the impact it will have. The DOL opposed HB 489. He stated, in current law, there is an exemption from the overtime statutes that provide for an employer to submit a flexible work hour plan request to the DOL. The statutes define fairly specific criteria that the request can contain, and it is essentially a 4-day, 10-hour workweek. He said current law was written in the early 1980s as a result of a legislature's attempt to do what HB 489 is now trying to do. The banking and airline industry was concerned that their employees were not able to work 4-day, 10-hour workweeks to receive a 3-day weekend. He pointed out the current laws were the resolution to these concerns. A plan need only be submitted to the DOL for approval. After approval, the employer and employee can enter into voluntary arrangements to work under the approved schedule. MR. CARR stated the elimination of a state overtime requirement will have a negative impact on Alaska employers. Because Alaska has been enforcing its overtime law, greater than the federal standard, the U.S. DOL has taken action in enforcing the Federal Labor Law. The Fair Labor Standards Act (FLSA) has a provision which states if there is a state law with a higher standard, the state law prevails. He noted if Alaska's overtime is completely eliminated, the federal government will have no alternative but to begin enforcing the FLSA. The FLSA enforces the payment of overtime after 40 hours differently than state law with a civil money penalty. A civil money penalty is like a ticket, MR. CARR stated, with the potential of up to $1000 for each violation an employer is found guilty of. The state would have to write tickets on top of collecting the unpaid overtime and assessing punitive liquidated damages. MR. CARR did not believe CHAIRMAN VEZEY would be aware of this, because they had not met on the issue. MR. CARR addressed liquidated damages regarding having them not be assessed if the matter was settled administratively. The DOL did support this concept. In previous years, the payment of liquidated damages was variable and not mandatory; however, as the result of a 1993 court decision the payment of liquidated damages is now mandatory. He did not know if the language used in HB 489 would properly accomplish the desired end result. MR. CARR stated if overtime, under state law, is eliminated there will be a sector of employees in the state that will be totally disenfranchised. The FLSA applies to 75-80 percent of businesses in the state, but this will leave 20- 25 percent of businesses in state that are not subject to federal law; therefore, their employees would be disenfranchised. He noted these employees are not the type usually represented by collective bargaining, but the unions may seek these people to join into collective bargaining. MR. CARR related to the history of overtime as it began as a penalty levied against employers to encourage them to hire more workers, rather than work their existing work force longer hours. Employees now, however, view overtime as a reward for working longer hours. MR. CARR emphasized overtime is meant to be punitive, and with 10 plus percent of unemployment in Alaska, the law still has valid purpose. Number 311 REPRESENTATIVE OLBERG asked if the state of Alaska would cease enforcing any overtime provision with the passage of HB 489. Number 315 MR. CARR replied HB 489 would eliminate the word overtime from Alaska statutes, therefore the state would not have authority to enforce any overtime requirements because it would no longer have a state law. Number 319 REPRESENTATIVE OLBERG asked CHAIRMAN VEZEY if this was his intent. CHAIRMAN VEZEY responded he deliberately left the state's ability to pursue violations of federal overtime laws or collective bargaining agreements in statute. MR. CARR stated there is presently a serious doubt the state would be able to enforce the federal overtime requirement. The state has statutory power to enforce contracts, whereby if an employer violated its stated overtime policy, the state could enforce it. He did not believe it was plausible to think the state would be able to go to state court to enforce federal overtime requirements found in the FLSA. Number 341 CHAIRMAN VEZEY asked MR. CARR to describe groups of employees that would not be covered under the FLSA. Number 344 MR. CARR replied it would be easier to state what groups the FLSA does cover. The FLSA addresses enterprises, any business doing $500,000 gross business annually. Small businesses, doing less than $500,000 gross business annually, would not be subject to the FLSA. Businesses involved in interstate commerce, selling manufactured items which are transported across state lines, are also covered by the FLSA. He noted the service industry, which is rapidly growing in Alaska, generally falls into the small business category and those businesses would not be subject to the current FLSA. Number 366 REPRESENTATIVE OLBERG asked why the DOL did not supply a negative fiscal note for HB 489 if the bill meant the state of Alaska would be taken out of overtime enforcement. If HB 489 were to pass, those individuals involved in the enforcement of overtime would then be unemployed. Number 371 MR. CARR responded overtime enforcement is only one element of nine programs the Division of Wage & Hour administers, and HB 489 would not have a great impact on the employees. The Wage & Hour work force would merely be redirected. Number 379 CHAIRMAN VEZEY interpreted the DOL zero fiscal note as though the state did not spend a lot of time pursuing overtime issues. Number 383 MR. CARR responded that the DOL handles approximately 800 wage claims per year statewide. Of these claims, 30 percent have some overtime element involved. Number 390 CHAIRMAN VEZEY pointed out "some element involved," as stated by MR. CARR, and responded there is also other issues involved; therefore, the time in handling the case would not substantially change if overtime was not an issue. Number 392 MR. CARR said CHAIRMAN VEZEY was correct. He clarified the DOL would still have enough work without overtime cases. Number 395 CHAIRMAN VEZEY asked why Alaska allowed for a 56-hour workweek for the mining industry. MR. CARR replied there is a specific exemption in state law for small mining, whereby they can work up to 56 hours a week before overtime is incurred. This exemption exists because there is a federal exemption for the mining industry. VICE CHAIRMAN KOTT moved to the Anchorage teleconference site. Number 413 KEN LEGACKI, an attorney in Anchorage, expressed his concerns regarding HB 459 and HB 489 combined. The analysis of HB 459 concerned him because it does not address how HB 459 effectuates its purpose and policies. He noted HB 459 is in conflict with the work fare bill submitted by REPRESENTATIVE MARK HANLEY and SENATOR LOREN LEMAN, which would help people get into the work force and off public assistance. He felt HB 459 did not encourage employment and it would reward "unscrupulous employers who try to circumvent and escape the law." He related to employers who avoid paying overtime and, when they are caught, then try to wager down the earnings to be paid in restitution. MR. LEGACKI stated he was involved in a case against one of the worlds largest insurance companies "who bragged that their overhead is 5 percent lower than their competition." However, their overhead is low only because they force their employees to work long hours. He noted this company is being sued in four states by the Federal Department of Labor. This company is using the "good faith defense" and has been found in violation of the overtime law several times. He felt Alaska's overtime laws are very important because it protects the employers, employees, and it encourages employment. From his analysis, he believed if HB 459 were to pass, several sections of the bill would be in violation with federal law and would then become nullified. Number 516 CHAIRMAN VEZEY asked MR. LEGACKI what bill he was testifying on. Number 518 MR. LEGACKI replied HB 459 and some of his comments related to HB 489. Number 522 REPRESENTATIVE B. DAVIS commented the problems CHAIRMAN VEZEY intended to take care of with HB 489 would be taken care of in HB 459. She asked if HB 459 would be listened to before action was taken on HB 489. Number 529 VICE CHAIRMAN KOTT replied the committee intended to take action on HB 489 so it may proceed through the process with HB 459. He noted if there is a duplication "they will be rolled by an amendment into one or the other." Number 533 REPRESENTATIVE B. DAVIS stated, since HB 489 only had one referral, she was not interested in moving it out of committee at that time. She felt HB 489 deserved more consideration by the committee. Number 538 REPRESENTATIVE SANDERS agreed with REPRESENTATIVE B. DAVIS and would like to hold HB 489 for further consideration. Number 543 VICE CHAIRMAN KOTT noted HB 489 also has a referral to Labor and Commerce. Number 549 REPRESENTATIVE G. DAVIS commented his copy of HB 489 only reads one referral to State Affairs. He asked if the HB 489 really did have a referral to Labor & Commerce. CHAIRMAN VEZEY said the Speaker has given HB 489 an additional referral to the Labor & Commerce committee. Number 554 REPRESENTATIVE B. DAVIS commented the bill should state the referrals it has and the problems may be able to be addressed in Labor & Commerce. Number 557 REPRESENTATIVE OLBERG moved to pass HB 489 from committee with the accompanying fiscal note and individual recommendations. Number 560 REPRESENTATIVE SANDERS objected to the motion. He felt HB 489 was not clearly a good bill and it should be reviewed more. Number 567 REPRESENTATIVE B. DAVIS added HB 489 should at least be held until HB 459 is heard. Number 570 VICE CHAIRMAN KOTT recognized the motion and asked the committee secretary to call the roll. IN FAVOR: VEZEY, KOTT, G. DAVIS, OLBERG. OPPOSED: B. DAVIS, SANDERS. ABSENT: ULMER VICE CHAIRMAN KOTT announced HB 489 passed from the House State Affairs Committee with attached fiscal notes and individual recommendations. Number 582 CHAIRMAN VEZEY clarified, for technical purposes, if a quorum is present bills can be amended by the majority of those present. Bills cannot move out of committee without a majority of the total committee, which is four votes.
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