Legislature(1999 - 2000)

02/10/2000 01:40 PM Senate L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
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.                                                                                                                        

Document Name Date/Time Subjects