Legislature(1999 - 2000)
02/10/2000 01:40 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
Number 001 SB 193-COLLECTION OF UNPAID WAGES AID WAGES CHAIRMAN MACKIE called the Senate Labor and Commerce Committee meeting to order at 1:40 p.m. and announced SB 193 to be up for consideration. SENATOR PEARCE, sponsor of SB 193, said a constituent from Anchorage called for help because her employer was illegally withholding final wages from her. Working with the Department of Labor, she found that the situation was not unique and because of the way our statutes are written there is a problem in being able to go to small claims court for the amounts in question. The Department of Labor suggested changes to the statutes that would help provide more accommodation for employees who are caught in this situation. MR. KRIS KNAUSS, Staff to Senator Pearce, explained SB 193 increased the amounts an individual can retain from the small claims cases from $7,500 to $20,000. As of now is also keeps it in small claims with the Department of Labor and Work Force Development rather than take it into the District Court. He further explained that attorneys are reluctant to take on cases where they can't make a profit on a contingency fee basis, such as $7,500. Number 2300 MR. DWIGHT PERKINS, Deputy Commissioner, Department of Labor and Work Force Development, said that this has been a problem in the past. The Wage and Hour Administration handles about 1,100 - 1,200 valid wage claims per year. About 95 percent of those are settled administratively without need of court action. The remaining five percent are filed in small claims courts. About one half of those are settled before trial. AS 23.05.220(c) limits the size of the wage claim that can be filed in small claims court to the maximum of $7,500. They are compelled to turn away any wage claimants with legitimate claims in excess of $7,500. They are told they must seek private attorneys to pursue their case or file their own in court. $7,500 is a lot of money to an individual. Some legal people are on line and concur with this. Number 2471 CHAIRMAN MACKIE asked how the claims process works. MR. RANDY CARR, Chief, Labor Standards and Safety, explained that presently, if someone presents a wage claim that is within their statutory limits, the claim is assigned to an investigator and is handled administratively. Contact is made with an employer and attempts are made through a series of processes to gather the facts, investigate the claim, and seek administrative resolution within the department. If a claim is found to be valid and they are unable to affect a resolution with the employer, their final steps of enforcement are to either file them in small claims court, if they are under $7,500 or refer them to the Department of Law which has been loath to take any of these cases. This restricts them to prosecuting cases in small claims court. As the assignee they are authorized to take those cases into court without benefit of Department of Law's support. CHAIRMAN MACKIE asked if they had a lot of inquiries from people who were not aware of the $7,500 cap in the statute. MR. CARR replied yes; they have found that they turn away around 10 percent or 100 cases per year. Some of those are in excess of $20,000. They need to be handled by private counsel, anyhow. CHAIRMAN MACKIE asked Mr. Perkins if he had any problems with the proposed amendment. MR. PERKINS replied that they have no problems with it. CHAIRMAN MACKIE asked Mr. Knauss to explain the amendment. MR. KNAUSS explained that it keeps the current language, but deletes the "shall" and leaves it as "may," giving the penalty more time. It's not mandatory. SENATOR LEMAN noted that the amendment adds another paragraph. Number 3255 MR. CARR said the amendment addresses concerns raised by private counsel regarding the original proposed change in Section 3 which would make all waiting time penalties mandatory by adding "shall." The concern was that penalty could be abusive in certain kinds of cases. They suggested removing the proposed amendment in Section 3 so the current language in (d) that leaves penalties in a discretionary state with the court would be unchanged. A new Section (e) would be added that states if the Department of Labor and Work Force Development brings a case forward successfully, that waiting time penalties "shall" be mandatory with those cases. There was a brief explanation of how the penalties would be calculated. MR. JAY SEYMOUR, labor and employment attorney, he has represented employers primarily. He is speaking for himself here, however. He doesn't have any problem with raising the jurisdiction of the Department of Labor to $20,000. It's been his experience that they have been very professional and easy to deal with. The portion of the bill that causes him concern is Section 3 which changes "may" to "shall." There is no law on the books that cause employers more aggravation and more consternation than the wage and hour clause. They are very technical and sometimes applied very vague and can sometimes result in very harsh penalties for technical violations. Often they will see in a wage and hour case, that claimants will win getting their overtime that they are due. They are awarded damages and on top of that they will get full and reasonable attorney's fees; and then plaintiffs lawyers always ask for waiting time penalties under AS 23.05.140. If he had input into the bill, he would request limiting that liquidated damages, if they are awarded, take the place of the penalties under AS 23.05.140. In other words, you wouldn't get them both, except if the Department of Labor was hearing the case. He wouldn't have any difficulty keeping the new Section 2 as it is proposed. CHAIRMAN MACKIE asked if they adopted the proposed amendment, would that alleviate his concerns. MR. SEYMOUR answered that it would alleviate his major concern about making the penalties "shall." He has concerns with current law because they always see claims of overtime cases where the penalties are added on top of damages for the claimant who prevailed. Sometimes that is a harsh penalty which is unjust in some cases. SENATOR KELLY pointed out that "shall" is not being taken out; they are just adding a modifier. CHAIRMAN MACKIE explained that they are taking out the "shall" and leaving the current section as it is in statute now. They are adding a new subsection, subsection (e), dealing with how it's calculated. Number 3250 SENATOR LEMAN moved to adopt amendment Cramer a 1. SENATOR DONLEY objected asking what affect this had on a private cause of action. It refers to an action brought on by the Department. MR. CARR explained that new section (e) will have no affect on private causes of action. They would remain as they are now under existing law where penalties are awarded at the discretion of the court. SENATOR DONLEY said it doesn't read that way. Existing law reads "when an employer violates" which would seem to cover both actions by the department and private causes of action. MR. CARR said he didn't have a copy of the actual amendment so he was at a disadvantage. SENATOR DONLEY said it looked like a step backwards the way this amendment was drafted. SENATOR LEMAN attempted to explain that subparagraph (d) would remain in the law, but it will remain as it is currently written and it will be there for private causes of action and for department actions. They only thing they will be doing is adding subparagraph (e) which modifies it for actions brought by the department. MR. CARR said that was correct. The language is (e) is taken from the liquidated damages penalties found in AS 23.10.110 where cases brought by the Department of Labor would result in a mandatory liquidated damage penalty while cases brought in the private sector would result in a penalty that was awarded at the discretion of the courts. This fairly well mirrors the intent and outcome of that penalty statute, as well. CHAIRMAN MACKIE asked Senator Donley if he maintained his objection. SENATOR DONLEY replied yes. CHAIRMAN MACKIE called for the roll. SENATORS LEMAN, KELLY, and MACKIE voted yea; and SENATOR DONLEY voted nay. The amendment was adopted. CHAIRMAN MACKIE asked if there was any further testimony and there wasn't. SENATOR LEMAN moved to pass CS SB193 (L&C)from committee with individual recommendations. There were no objections and it was so ordered.
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