Legislature(2005 - 2006)

02/22/2005 02:41 PM Senate L&C

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             SB 105-OVERTIME WAGES FOR FLIGHT CREW                                                                          
2:55:54 PM                                                                                                                    
MR. HOVE, staff  to Senator Seekins, sponsor SB  105, stated that                                                               
it  clarifies the  legislative  intent  of SB  54  from the  23rd                                                               
Legislature  by  retroactively  removing flight  crews  from  the                                                               
scope  of  statutory  overtime compensation  required  under  the                                                               
Alaska Wage  and Hour  Act (AS  23.10.060.)   Retroactivity would                                                               
apply to  work performed on  or after January  1, 2000.   He said                                                               
that the aviation  industry faces increasing cost  burdens as the                                                               
result of  growing security demands  and fuel prices and  that SB
105 would alleviate some of  this burden by eliminating the costs                                                               
of superfluous lawsuits.                                                                                                        
2:57:17 PM                                                                                                                    
MR. HOVE stated that until 2003  it was the Department of Labor's                                                               
(DOL) uncodified  policy that in-state  air carriers  were exempt                                                               
from the  Alaska Wage  and Hour  Act's overtime  provisions. This                                                               
policy was  rooted in  a 1980  attorney general's  opinion, which                                                               
cited  that  both  the  federal  Railway Labor  Act  and  the  US                                                               
Constitution's  commerce  clause   preempted  flight  crews  from                                                               
overtime compensation provided  in the Alaska Wage  and Hour Act.                                                               
He  continued   to  say  that   nevertheless,  five   years  ago,                                                               
uncertainty crept into the DOL's policy  as a result of a lawsuit                                                               
that sought  overtime compensation for  pilots.  SB 105  seeks to                                                               
fulfill the  original intent  of SB 54  by making  its provisions                                                               
retroactive to January 1, 2000.                                                                                                 
CHAIR BUNDE asked if he could  have some assurance that this bill                                                               
would cure the problem.                                                                                                         
MR.  HOVE responded  that in  his understanding,  the bill  would                                                               
address the problem in its entirety.                                                                                            
3:00:24 PM                                                                                                                    
THOMAS M.  DANIEL, representing  Hageland Aviation,  supported SB
105.  He  is currently representing Hageland Aviation  in a class                                                               
action  lawsuit asserting  overtime for  pilots, which  continues                                                               
despite the  exempting legislation  passed in 2003.  He explained                                                               
that  since 1949,  pilots of  commercial  aircraft carriers  have                                                               
been exempt  from overtime under  the federal Railway  Labor Act,                                                               
which  applies to  all  air carriers  engaged  in interstate  and                                                               
foreign commerce.   In Alaska  they transport the US  mail. Until                                                               
2003,  there   were  no  similar  exemptions   under  state  law.                                                               
However, the  Alaska attorney general  issued an opinion  in 1980                                                               
stating that Alaska air carriers  were exempt under state law and                                                               
that policy was  followed by the DOL until the  present time.  In                                                               
1986  the  DOL  sent  a   letter  to  the  Alaska  Air  Carrier's                                                               
Association  stating  that  pilots  were  exempt  from  overtime.                                                               
Based  on the  federal  exemption and  the  state's policy,  most                                                               
Alaska air carriers never paid  overtime to their pilots; instead                                                               
they have  used various methods  including payment by  the flight                                                               
hour,  fixed  monthly  salary,  payment   by  flight  day,  or  a                                                               
combination of these methods.   Despite the DOL's policy and lack                                                               
of  litigation, in  the late  1990's  some plaintiffs'  attorneys                                                               
argued  that  there  was,  in  fact,  no  exemption  under  state                                                               
overtime law and lawsuits began to be filed.                                                                                    
3:02:30 PM                                                                                                                    
MR. DANIEL  asserted that Hageland  Aviation and a  vast majority                                                               
of pilots  themselves do  not support the  lawsuit and,  in fact,                                                               
the pilot  that initiated  the lawsuit  stated in  his deposition                                                               
that he felt that he was  fairly paid.  His beef against Hageland                                                               
was that he  had been unfairly fired because of  his age, a claim                                                               
investigated and rejected by the  Alaska Human Rights Commission.                                                               
Only two  of the  approximately 60  pilots currently  working for                                                               
Hageland have  chosen to  participate in the  lawsuit and  out of                                                               
the 82 total class action members  who could assert claims, 56 of                                                               
them,  or  68  percent,  have  affirmatively  opted  out  of  the                                                               
3:06:49 PM                                                                                                                    
MR. DANIEL  said that Hageland pilots  are some of the  best paid                                                               
pilots in the airline industry in  Alaska and that there has been                                                               
no evidence that it failed to  pay its pilots, failed to pay them                                                               
on time or  that they engaged in any fraud,  deception, bad faith                                                               
or any intentional  evasion of the Alaska Wage and  Hour Act. The                                                               
lawsuit is  proceeding only because the  plaintiffs' lawyers have                                                               
seized  upon the  lack  of  any expressed  exemption  in the  law                                                               
before  2003  and  because  of two  technical  mistakes  made  by                                                               
Hageland in  the way that  pilots were compensated.   The purpose                                                               
of the retroactive  provision in the bill is to  ensure that such                                                               
lawsuits are stopped and that no more are brought.                                                                              
3:08:57 PM                                                                                                                    
MR. DANIEL  said that the  violations of  law cited by  the judge                                                               
presiding over the  class action are trivial  and demonstrate the                                                               
need  for legislation  such as  SB  105.   He said  that the  end                                                               
result  of the  lawsuit against  Hageland  would be  that a  good                                                               
corporate citizen  that has paid  its pilots fairly  and provided                                                               
an  essential  service  in  Bush  Alaska  would  face  bankruptcy                                                               
because  of  a  technical  violation  of a  law  that  was  never                                                               
intended to apply to its pilots.                                                                                                
CHAIR  BUNDE  noted, for  the  record,  that there  is  potential                                                               
conflict regarding his aviation experience  and his review of the                                                               
bill despite  the fact  that he  has not  worked in  the aviation                                                               
industry for several years and thus  could not be affected by the                                                               
3:14:11 PM                                                                                                                    
MIKE  HAGELAND, President,  Hageland  Aviation,  stated that  his                                                               
company has  always paid its pilots  well and noted that  all but                                                               
one  of his  current pilots  has either  opted out  of the  class                                                               
action lawsuit  or indicated  that he wanted  nothing to  do with                                                               
suing  the company.   Pilots  involved in  the class  action were                                                               
enticed by lawyers,  one of which he heard told  a pilot he could                                                               
gain as much as $80,000 in  a settlement.  Mr. Hageland supported                                                               
SB 105.                                                                                                                         
3:16:11 PM                                                                                                                    
MIKE BERGT,  General Manager, Alaska Central  Express (ACE), gave                                                               
a brief  description of his  company and its importance  to rural                                                               
communities in  Alaska.  He  described a current  lawsuit against                                                               
his company that  was brought about by a former  pilot to collect                                                               
overtime compensation.  He said  that his company believed itself                                                               
to be acting in accordance with  Alaska law and with a common and                                                               
accepted practice in Alaska while it  paid its pilots on a flight                                                               
time basis. He noted that ACE  had always paid its pilots in this                                                               
way, that  its pay scale  was competitive with other  carriers in                                                               
the state and  that it never once tried to  take advantage of its                                                               
pilots or employees.                                                                                                            
MR. BERGT  stated that he  never knew  of any grievances  made by                                                               
his pilots  regarding payment. He  supported SB 105  and asserted                                                               
that  the lawsuit  brought  against  ACE was  the  result of  the                                                               
lawsuit  brought against  Hageland Aviation.  Such lawsuits  pose                                                               
serious  financial  implications  for  both  his  own  and  other                                                               
financial carriers.                                                                                                             
3:19:48 PM                                                                                                                    
BRUCE MCGLASSON,  president and owner of  Grant Aviation, briefly                                                               
described his air  service and said that his company  also pays a                                                               
daily rate to its pilots and  had converted to a daily salary for                                                               
the same  reason as that  mentioned by  Hageland representatives.                                                               
Paying by  a daily rate  encourages safety since pilots  are paid                                                               
whether they  fly or  not so long  as they are  on schedule  on a                                                               
given day.   Paying on hourly  rate gives pilots an  incentive to                                                               
fly  when  they should  not  fly,  such  as  in bad  weather  and                                                               
believed  that the  success of  the aforementioned  lawsuit would                                                               
unjustly  bankrupt  Hageland Aviation  and  that  a similar  suit                                                               
could bankrupt his own company.                                                                                                 
CHAIR BUNDE asked  if single engine pilots were  still limited to                                                               
an eight-hour day by the FAA.                                                                                                   
MR.  MCGLASSON responded  that  pilots are  required  to have  an                                                               
uninterrupted rest period  every 24 hours and may  fly only eight                                                               
hours within a 14-hour duty day.                                                                                                
3:23:19 PM                                                                                                                    
JASON  WILSON, pilot,  Hageland Aviation,  stated that  pilots of                                                               
Hageland  feel they  are compensated  fairly and  that Hageland's                                                               
payment practices encourage safety  by not providing an incentive                                                               
for pilots to fly in unsafe  conditions.  Mr. Wilson supported SB
CHAIR BUNDE asked  him what the amount of the  hourly pay rate at                                                               
Hageland is.                                                                                                                    
MR. WILSON responded  that the average 207 pilot  makes about $90                                                               
per flight  hour and that the  company has pilots making  as much                                                               
as $150  per flight  hour.   Last year there  were very  few days                                                               
when Hageland pilots exceeded 10  hours of actual flight time and                                                               
that he  and many other  pilots believe  that there is  really no                                                               
need to be paid overtime when their flight hours are limited.                                                                   
BRETT  HARRIS,  pilot,  Hageland  Aviation, stated  that  he  has                                                               
worked  for  Hageland  for  six years  and  has  experienced  the                                                               
different  pay arrangements  over  the years.  He  said that  the                                                               
daily  pay rate  is fair  and encourages  safety.   Six hours  of                                                               
flight  time would  be considered  a busy  day and  four to  five                                                               
hours  of  flight  time  would   be  considered  a  typical  day.                                                               
Hageland pilots only work for two  weeks out of the month and six                                                               
months out of the year and  are paid very good wages. Given these                                                               
conditions,  it is  unreasonable  for someone  to complain  about                                                               
unfair compensation.                                                                                                            
JIM  WILSON, President,  Coastal  Helicopters,  asserted that  if                                                               
such a lawsuit  were brought against his company,  it could cause                                                               
the  layoff  of  many  of  his employees  and  perhaps  even  its                                                               
3:28:31 PM                                                                                                                    
TOM NICOLOS,  Cape Smythe  Air Service,  stated that  his company                                                               
was sued  after SB 54  passed.  Cape  Smythe has paid  its pilots                                                               
fairly.  Cape  Smythe pays pilots by the block  hour with a small                                                               
monthly  guarantee  so  that  they  would  have  an  even  salary                                                               
throughout the year.   Cape Smythe even pays its  pilots time and                                                               
a quarter for every additional  hour flown over a certain amount.                                                               
He supported SB 105.                                                                                                            
3:29:52 PM                                                                                                                    
GRANT THOMPSON,  President, Cape  Smythe Air Service,  noted that                                                               
Cape Smythe  had been paying its  pilots just as Mr.  Nicolos had                                                               
described for  the past  25 years  and he  said that  the current                                                               
lawsuit could bankrupt his company. He supported SB 105                                                                         
KAREN   CASANOVAS,  Executive   Director,  Alaska   Air  Carriers                                                               
Association (AACA),  supported SB 105.   She said the  AACA fully                                                               
supports  the   positions  of   Hageland  Aviation,   ACE,  Grant                                                               
Aviation,  Coastal Helicopters,  and Cape  Smyth.   She read  the                                                               
following statement:                                                                                                            
     Without  the   passage  of  the   current  legislation,                                                                    
     economic burdens  of several  tiers will be  imposed on                                                                    
     carriers  that  perform  passenger and  cargo  handling                                                                    
     which are  so critical  to the transportation  needs of                                                                    
     Alaskan's   around   the    state.   Federal   aviation                                                                    
     regulations that regulate our  carriers require them to                                                                    
     take serious  responsibility for the work  they perform                                                                    
     for the  general public.   Those  carriers, as  well as                                                                    
     our industry  support safety, managing companies  in an                                                                    
     ethical  manner  and  addressing  the  needs  of  their                                                                    
     employees.  The  lawsuits   filed  against  our  member                                                                    
     airlines fail  to reach this  threshold.  A  ruling not                                                                    
     in  favor  of the  carriers  that  have lawsuits  filed                                                                    
     against  them would  impose  significant  new costs  on                                                                    
     companies outside the purview  of the original position                                                                    
     of the  Department of Labor  submitted in 1986.   These                                                                    
     carriers  that are  certificated as  airlines ensure  a                                                                    
     high level  of safety  and fairness to  their employees                                                                    
     and have operated under full  compliance with that 1986                                                                    
     position given to our member carriers.                                                                                     
     The economic  burdens may discourage many  passenger or                                                                    
     cargo  airlines from  continuing to  offer services  to                                                                    
     Alaskans  in  rural  communities  who  depend  on  them                                                                    
     throughout   the  state.      In   addition  it   could                                                                    
     dramatically impact  the contractual  relationships and                                                                    
     expectations  between government  agencies such  as the                                                                    
     US  Postal Service  and  other  service providers  that                                                                    
     these  cargo services  and passenger  airlines perform.                                                                    
     For  these reasons  the AACA  requests that  the Senate                                                                    
     Labor and Commerce Committee support our position.                                                                         
3:33:11 PM                                                                                                                    
BOB HAJDUKOVICH,  Frontier Aviation, supported  SB 105.   He said                                                               
that  Alaska  pilots  are compensated  well  compared  to  pilots                                                               
elsewhere  in the  country and  consequently issues  arising from                                                               
the  related  lawsuits are  surprising  to  him.   He  said  that                                                               
current pay policies encourage safety and fairness.                                                                             
MICHAEL CHARLIE, pilot, Hageland Aviation,  said that he has been                                                               
employed by  Hageland for  six years  and that  he had  been paid                                                               
fairly.  He  said that under the existing pay  structure he never                                                               
felt pressured  to fly in  bad weather to  make a quick  buck and                                                               
that he found being paid top dollar  to fly six months out of the                                                               
year  is totally  unbeatable.   He  claimed  that companies  like                                                               
Hageland are needed because they  are operated for people whether                                                               
to fly  them home or  to keep them employed  on the ground  or in                                                               
the air.   He said  that Hageland Aviaiton supports  local hiring                                                               
and sets  out to do  more than they have  to do. He  supported SB
CHAIR BUNDE Said that he would hold the bill for further work                                                                   
and adjourned meeting at 3:39:33 PM                                                                                           

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