Legislature(2005 - 2006)BELTZ 211
03/17/2005 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB102 | |
| SB124 | |
| SB131 | |
| SB138 | |
| SB130 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 131 | TELECONFERENCED | |
| *+ | SB 138 | TELECONFERENCED | |
| += | SB 124 | TELECONFERENCED | |
| += | HB 102 | TELECONFERENCED | |
| += | SB 130 | TELECONFERENCED | |
SB 131-WAGE & HOUR ACT: EXEC/PROF/ADMIN/SALES
CHAIR CON BUNDE announced SB 131 to be up for consideration.
SENATOR SEEKINS moved to adopt CSSB 131(L&C), version G. Senator
Ellis objected for an explanation.
JOHN SEDOR, Anchorage Society for Human Resource Management,
said the changes were proposed by the Department of Labor and
Workforce Development.
GREY MITCHELL, Director, Division of Labor Standards and Safety,
Department of Labor and Workforce Development (DOLWD), explained
the differences in the CS. Two sections were left off the
particular exemption that exists currently in the definitions of
what a professional employee is. Those are on page 3, lines 17 -
22, and essentially include teachers and people who are working
as teachers in schools and other educational establishments and
computer-related occupations that have been exempt from overtime
under the professional exemption for a while.
CHAIR BUNDE asked if that language was left out inadvertently.
1:48:25 PM
MR. MITCHELL replied yes. He further elucidated that language on
page 3, line 26, related to the question of whether someone who
spent most of their time sweeping the floor, but spent a little
time making sales, would qualify as an outside salesperson. That
would be confusing without the primary duty language. It was not
the intent of the sponsor to include them if it isn't their
primary duty. On page 4, line 6, the primary duty element was
also added for straight-commission sales workers.
1:50:51 PM
SENATOR ELLIS asked about section 1 that deletes the exemption
for supervisory work from AS 23.100.60(a).
CHAIR BUNDE clarified that the CS doesn't change section 1. The
only changes are in section 3.
MR. SEDOR explained how it applies to all salaried employees
over time, but does not impact anyone earning an hourly wage.
1:54:14 PM
He said the federal Fair Labor Standards Act (FLSA) looks at
whether an employee is exempt because of his primary duties or
not. The State Department of Labor and Workforce Development
used that regulation, which had two tests - the primary duties
component and the 80/20 component.
1:54:59 PM
The 80/20 component is a time-based analysis of a person's daily
duties and was originally put in to address lower-end employees.
So, it applied to people who were making $159 - $249 per week.
That original 80/20 test has not been applicable in Alaska for a
long time, because even minimum wage is above that.
And yet under the state system, it still does apply.
So, in essence, what you have if you're a business
owner in the State of Alaska or an employee, what you
have is ambiguity and you have confusion, because you
have the same words - administrative, professional,
executive - and yet you have two different tests. One
a duties test and one a time-based test. The problem
with a time-based test, among others, is that the way
a business is organized. It does not provide for the
oversight necessary to ensure that the 80/20 is being
met and what the 80/20 is is that you cannot spend
more than 20 percent of your time doing non-exempt
duties.
If you have an employee who you have hired in your
organizational system to be a manager, an
administrator, an executive - you are not overseeing
him by definitions. So, for instance, there's a
national non-profit that has an Alaska chapter, also,
that had a director of marketing. That director of
marketing oversaw seven stores.... By definition, that
individual didn't have somebody sitting in the car
next to him or following him around to each store
detailing and overseeing to determine what they were
doing each and every day. So, when a dispute arose on
other aspects of their employment, that individual,
that director says, 'I've been working more than
20percent of my time on non-exempt duties' - whether
it's making a pot of coffee, whether it's unlocking a
door, whatever it is they may say. That is a difficult
thing for an employer to address in a situation where
the person is not in a position where they get the
oversight.
1:59:05 PM
The FLSA applies to everyone in the country and the committee
should consider why Alaska has two separate systems for overtime
and require employers to apply two different systems to each of
their exempt employees. One thing that might be Alaskan is the
rate of pay, which historically has been higher. That is
addressed in the bill by requiring two times the minimum wage.
This has never been the case before. Currently, a bill last year
made some changes, but historically there has been no
requirement other than when making a 60/40 test, a separate
issue.
Alaska has not had any wage requirements. So, you
could previously had paid somebody - or even currently
- paid somebody minimum wage and still qualify them
for the exemption. But, what this bill does is say no,
'If you're going to meet one of these exemptions, you
are going to pay a level of pay that would be higher
than what the federal minimums are.' - which the
federal minimums right now are $455 per week. Two
times minimum wage in Alaska would be more than that.
SB 131 doesn't push into the new frontiers in the state in
general. Thirty-two of the 51 jurisdictions in the country
follow lock-step with the FLSA. Eight other jurisdictions follow
a short test with the primary duties component that tracks
closely. "Alaska is only one of seven jurisdictions that still
uses the old test - the long test - the 80/20 test."
2:02:21 PM
This bill puts Alaska on the same track as the federal system
for clarity.
2:03:42 PM
CHAIR BUNDE asked if this only applies to a wage segment that
doesn't exist.
MR. SEDOR replied that in Alaska, the 80/20 test is used for
anybody. "You could be paying somebody $100,000 a year and they
have to pass the 80/20 test...."
2:05:19 PM
CHAIR BUNDE asked if there are existing lawsuits that would be
addressed by this legislation.
MR. SEDOR replied that wage and hour litigation is on-going
throughout the state, including issues pertaining to exemption
status.
2:05:47 PM
SENATOR SEEKINS asked under current law, if he were an employee
in supervisory status, would there be a requirement for him to
time clock by task so his employer could prove that he didn't
have to pay him overtime.
MR. SEDOR replied, "Correct."
2:08:36 PM
KAREN ROGINA, Alaska Hospitality Alliance, said she represents
the Alaska Hotel and Lodging Association and the Alaska
Restaurant and Beverage Association, said:
This bill transcends all industries and addresses the
need of employers to be able to employ salaried
workers in the correct manner, because it eliminates
the time-based 80/20 rule and allows for primary
duties.
It will impact employers of all exempt workers. The good news is
that it benefits both employers and employees. On the employer
side, it takes away the exposure that an employer has today when
employing any salaried worker since they aren't keeping track of
how that person is spending their time every hour. Today, they
can't say for sure if that person is eligible to be exempt.
The reason this benefits employees is because today a lot of
employers chose not to have any salaried employees at all. They
will employ managers as hourly workers because they are afraid
of the exposure from that employee coming back later.
This bill takes the employee out of a class that would
have otherwise provided them with the opportunity to
have benefits; denies employees benefits, because an
employer can segregate employees as exempt employees
or salaried profession, executive staff and gives them
other benefits that they wouldn't have to give to
their entire staff. By allowing this bill to have a
segregated group, like an executive staff,
professional exempt salaried workers, since this group
is now all hourly, they're not getting the benefits
they would otherwise be afforded by their employer.
2:12:32 PM
SENATOR ELLIS asked if the bill provides an opportunity for an
employer to provide benefits for professional employees as
opposed to a salaried worker and is it still up to the employer
in the hiring negotiating process to determine that.
MS. ROGINA answered by giving an example of a hotel that has 100
employees and five executive staff. The owners would like to
reward the executive staff with health insurance, but if they
are all hourly, which many of them are, that group can't be
segregated for benefits.
Since they are hourly, they would have to give it to
their other 100 employees and they can't afford to do
that. As a result, all of their employees are hourly
and none of them get health insurance....
2:14:50 PM
SENATOR ELLIS asked if a manager pitches in when a housekeeper
doesn't show and that amounted to 20percent of their time, would
an employer be obligated to pay overtime for those duties.
"Isn't that the situation that gave rise to the bill?"
MS. ROGINA replied that type of situation occurred and when the
employee left, he presented a log of extra things he did while
managing. The owner didn't clock those things and had no control
over the things the manager did.
SENATOR ELLIS asked how that situation would be handled if this
becomes law. Would "pitching in" just be part of professional
supervisory duties?
MS. ROGINA replied that a manager would have management skills
enough to hire the right staff so they don't have to do extras.
They could still fill in, but not on a regular basis.
2:17:58 PM
SENATOR ELLIS asked if there is any interplay between the union
versus non-union situation using the hotel example again.
MS. ROGINA replied that this bill addresses the private sector,
because unions have their own contracts that deal with hourly
workers.
SENATOR ELLIS asked if she means union versus non-union in the
private sector.
MS. ROGINA responded, "Right."
2:19:16 PM
BOSCO BALDWIN, Vice President, Human Resources and Logistics,
Alaska Commercial Company, agreed with previous testimony in
support of SB 131. He disagreed, however, with the statement
that companies don't get sued for someone working four or five
hours doing non-exempt work in a workweek.
That's simply not true. I think you can find lots of
case law up here that will absolutely show that that's
the case. If you think about that. If you have someone
who upon termination - and this happens all the time -
someone who writes, documents in their own book -
whether they create it after the fact or not, that
becomes fact. Unless the employer, on a daily basis,
is sitting there watching what this employee is doing
on his tasks. If you take four hours a day times
whatever their rate of pay is times 52 weeks and then
you put in punitive damages over the course of time,
you're talking about a pretty hefty bill that an
employer would be faced to pay. What actually ends up
happening is employers are forced to settle these
cases, because it's cheaper to settle and give
somebody money than to take it to court. It would cost
you $50,000 just to get to the point where you're
walking into a courtroom.
The way the law is set up today, in our case, with
Alaska Commercial Company, we span the whole state....
Our home offices are based out of Anchorage.... We
have 25 stores. We can't be everywhere at one time.
That puts us at a pretty unfair advantage when you
think about it - when we are forced...to be able to
identify what each of our management employees are
doing on a day to day basis - making sure that
80percent of the time they are actually performing
what their job description says.
He related how a former employee sued his company as an example
of what can happen.
2:25:16 PM
JACK AMON, representing the Alaska Restaurant and Beverage
Association (ARBA) and the Marks Brothers Café and Catering,
supported SB 131 and previous testimony in its favor. He said:
The changes made in the duties test for exempt
employees is a great stride forward in modernizing
Alaska's labor laws to more accurately reflect the
current work place.
Only two of his 12 employees at the restaurant would qualify as
exempt employees in the new statute - his chef de' cuisine and
floor manager. He disagreed that one would give an hourly
employee a supervisory position.
These are people who are your supervisors and who are
your top-level employees. In my mind, if one has the
authority to hire and fire and is responsible for the
work, they are managers whether they manage from
behind the stove or behind a desk. I, myself, often
manage with my hands in a dish sink.
I'm afraid that opponents of this bill will state that
it's an attempt by business owners to cheat-hard
working employees out of the overtime they deserve.
Nothing could be farther from the truth. In order to
run a successful business, it's essential to retain
your top-quality employees. These top workers know
their work and there's demand for their skills. One
could not keep them long by taking advantage of them.
There was constant talk that this is going to be -
there was some talk yesterday that owners are going to
look for ways to work people 60 or 70 hours a week.
You know, we know that the productivity of employees
drop off by working those long hours. There's really
no benefit to doing that. This change in the statute
will allow more flexibility for employers and
employees to make compensation arrangements that are
beneficial to both.
2:28:22 PM
BARBARA HUFF-TUCKNESS, Director, Governmental and Legislative
Affairs, Teamsters Local 959, opposed SB 131 in its current
form. She referenced Senator Ellis' question about whether this
affected unions or not saying:
We looked at this potential impact on every Alaskan
worker in the state, whether they're union or non-
union. Our biggest concern traditionally has been the
impact on the lower-paid, not the professionals.
Technically, I don't think that that's where
traditionally over the years that there have been
abuses.
She related how the 80/20 rule came about because at that time
there were many lawsuits on the books and a lot of abuse by
employers. The 80/20 legislation helped level the playing field
with equitable treatment for workers in general.
Her initial concern with the original bill was the impact on the
low-paid worker. She commended Representative Rokeberg for
maintaining the double-minimum wage. She stated:
I will say on the record that having still the double-
minimum wage we do believe will help protect the
majority of those entry level workers. I will use, for
example, the McDonald's manager who does flip burgers
and they put a manager sign on him. I'm sorry, but it
does happen. At least the double minimum wage will
help discourage that.
What I am here to talk about and it is a concern....
While one of the earlier speakers addressed federal
regulations, we do have a concern with the fact that
the primary duty definition is not addressed in the
bill.... We do believe that definition should be
defined in state statute - while we believe regulation
is fine whether it's on a state level or a federal
level, for that matter. We believe that having that in
our state law will actually help clarify for the
employee as well as the employers when they are
reviewing our state laws so that they don't have to go
from a state law and then funnel through the FLSA,
which is literally a fact.
I also want to go on record with respect to a comment
made...that there is a lot of federal case decisions
that have been made. So, adopting the FLSA is the
right thing for the State of Alaska to do. I would
just caution everyone there's been a drastic change in
the Federal Labor Standards Act and I don't believe
that there has been near the litigation. I mean, it's
been in place less than a year. You are going to be
challenged, we're concerned, even with the primary
duty definition. While it's not clear, it gives some
guidance out there for the employers and/or employees
when it's being applied. But, we do believe that it is
somewhat ambiguous and you will probably see lawsuits
come out of the application of that as well....
She suggested amending the bill to include a primary duty
definition. Other terms used in the bill should also be defined
in statute including customarily and regularly, discretion and
independent judgment, and matters of significance - so they are
applied consistently regarding primary duties.
2:33:56 PM
Lastly, she noted another exemption for employees who make at
least $100,000 or more per year in last year's implementation of
the FLSA that was strongly supported by labor and management and
said she would like to see it in this bill.
CHAIR BUNDE asked how replacing "supervisory" with three other
definitions - executive, administrative and professional - would
be more workable and exact.
MR. MITCHELL explained that currently there is an exemption for
an employee employed in a supervisory capacity. This bill
proposes to remove that exemption. There are also currently
exemptions for the five categories: administrative, executive,
professional and two sales jobs - straight commission and
outside sales. They are defined in regulation and this bill
takes those definitions and makes them meaningless, basically,
and establishes statutory definitions for them.
CHAIR BUNDE asked if the definitions are just being taken out of
regulation and being put into statute.
MR. MITCHELL replied:
No, the terms are currently in statute and then they
are defined in regulation. What this bill does is it
takes the definitions that are in regulation and uses
bits and pieces of them and some of the federal
regulations and takes those definitions basically out
of the regulations and put them into statute.
CHAIR BUNDE thanked him for his explanation and set SB 131 aside
for further consideration at a later date.
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