Legislature(1993 - 1994)

03/23/1994 01:15 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
               HOUSE JUDICIARY STANDING COMMITTEE                              
                         March 23, 1994                                        
                            1:15 p.m.                                          
  MEMBERS PRESENT                                                              
  Rep. Brian Porter, Chairman                                                  
  Rep. Jeannette James, Vice-Chair                                             
  Rep. Pete Kott                                                               
  Rep. Gail Phillips (arrived at 1:30 p.m.)                                    
  Rep. Joe Green                                                               
  Rep. Cliff Davidson (arrived at 1:30 p.m.)                                   
  Rep. Jim Nordlund                                                            
  MEMBERS ABSENT                                                               
  COMMITTEE CALENDAR                                                           
  HB 376:   "An Act relating to services for and protection of                 
            vulnerable adults; and providing for an effective                  
            MOVED OUT OF COMMITTEE                                             
  HB 420:   "An Act relating to limited liability companies;                   
            amending Alaska Rules of Civil Procedure 20 and                    
            24; and providing for an effective date."                          
            HEARD AND HELD                                                     
  HB 392:   "An Act relating to the confidentiality of                         
            permanent fund dividend application information;                   
            relating to the permanent fund dividend program;                   
            and providing for an effective date."                              
            MOVED OUT OF COMMITTEE                                             
  HB 459:   "An Act relating to liquidated damages and                         
            attorney fees for minimum wage and overtime                        
            compensation claims."                                              
            MOVED OUT OF COMMITTEE                                             
  HB 367:   "An Act relating to the control of outdoor                         
            NOT HEARD                                                          
  SB 186:   "An Act relating to state agency publications."                    
            NOT HEARD                                                          
  WITNESS REGISTER                                                             
  DANIELLA LOPER, Committee Counsel                                            
  House Judiciary Committee                                                    
  Alaska State Legislature                                                     
  Capitol Building, Room 118                                                   
  Juneau, Alaska  99811                                                        
  Telephone: 465-6841                                                          
  POSITION STATEMENT: Testified regarding HB 376                               
  REP. GENE THERRIAULT                                                         
  Alaska State Legislature                                                     
  Capitol Building, Room 421-C                                                 
  Juneau, AK  99801-1182                                                       
  Telephone: 465-4797                                                          
  POSITION STATEMENT: Sponsor of HB 420                                        
  CHARLES SCHUETZE, Attorney                                                   
  Davis & Gordon                                                               
  405 W. 36th Avenue                                                           
  Anchorage, AK 99503                                                          
  Telephone: 561-4420                                                          
  POSITION STATEMENT: Testified via teleconference from                        
                      Anchorage in  support of HB 420.                         
  BRIAN DURRELL, Attorney                                                      
  Bogle & Gates; Certified Public Accountant                                   
  1031 W. 4th Street, Suite 600                                                
  Anchorage, AK   99501                                                        
  Telephone: 257-7828                                                          
  POSITION STATEMENT: Testified via teleconference from                        
                      Anchorage in  support of HB 420.                         
  BOB MANLEY, Attorney                                                         
  Hughes Thorsness Gantz Powell & Brundin                                      
  324 G St. Cook                                                               
  Anchorage, AK 99501                                                          
  Telephone: 263-8251                                                          
  POSITION STATEMENT: Testified via teleconference from                        
                      Anchorage in support of HB 420.                          
  CRAIG INGHAM                                                                 
  Alaska Bankers Association                                                   
  P.O. Box 73880                                                               
  Fairbanks, AK  99707                                                         
  Telephone: 452-1751                                                          
  POSITION STATEMENT: Testified via teleconference from                        
                      Fairbanks in opposition to HB 420.                       
  WILLIS KIRKPATRICK, Director                                                 
  Division of Banking, Securities and Corporations                             
  Department of Commerce and Economic Development                              
  9th Floor, State Office Building                                             
  P.O. Box 110807                                                              
  Juneau, AK 99811-0807                                                        
  POSITION STATEMENT: Testified in support of HB 420.                          
  RICHARD VITALE, Staff                                                        
  Rep. Sean Parnell, Sponsor of HB 392                                         
  Capitol Building, Room 513                                                   
  Juneau, AK  99801                                                            
  Telephone: 465-2995                                                          
  POSITION STATEMENT: Testified in support of HB 392.                          
  TOM WILLIAMS, Director                                                       
  Permanent Fund Dividend Division                                             
  Department of Revenue                                                        
  11th Floor, State Office Building                                            
  P.O. Box 110460                                                              
  Juneau, AK 99811-0460                                                        
  Telephone: 465-2323                                                          
  POSITION STATEMENT: Testified in support of HB 392.                          
  REP. ELDON MULDER                                                            
  Alaska State Legislature                                                     
  State Capitol, Room 116                                                      
  Juneau, AK  99801-1182                                                       
  Telephone:  465-2647                                                         
  POSITION STATEMENT: Sponsor of HB 459                                        
  HOWARD JOYCE, Staff                                                          
  Rep. Eldon Mulder                                                            
  State Capitol, Room 116                                                      
  Juneau, AK  99801-1182                                                       
  Telephone: 465-2647                                                          
  POSITION STATEMENT: Testified in support of HB 459.                          
  PARRY GROVER, Attorney                                                       
  550 W. 7th Avenue, Suite 1450                                                
  Anchorage, AK  99501                                                         
  Telephone: 257-5300                                                          
  POSITION STATEMENT: Testified via teleconference from                        
                      Anchorage in support of HB 459.                          
  BRUCE WEYHRAUCH, Attorney                                                    
  Faulkner, Banfield, Doogan & Holmes                                          
  302 Gold Street                                                              
  Juneau, AK  99801                                                            
  Telephone: 586-2210                                                          
  POSITION STATEMENT: Testified in opposition to HB 459.                       
  C.J. ZANE, Lobbyist                                                          
  Holland America Line-Westours, Inc.                                          
  880 H Street, #201                                                           
  Anchorage, AK  99501                                                         
  Telephone: 274-9019                                                          
  POSITION STATEMENT: Testified in support of HB 459.                          
  KEN LEGACKI, Attorney                                                        
  425 G. Street, Suite 260                                                     
  Anchorage, AK  99501                                                         
  Telephone: 258-2422                                                          
  POSITION STATEMENT: Testified via teleconference from                        
                      Anchorage in  opposition to HB 459.                      
  RANDY CARR, Chief                                                            
  Wage & Hour                                                                  
  Department of Labor                                                          
  P.O. Box 107021                                                              
  Anchorage, AK  99510-7021                                                    
  Telephone: 269-4913                                                          
  POSITION STATEMENT: Testified regarding HB 459.                              
  PREVIOUS ACTION                                                              
  BILL:  HB 376                                                                
  SHORT TITLE: ASSIST & PROTECT VULNERABLE ADULTS                              
  SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                 
  JRN-DATE     JRN-PG               ACTION                                     
  01/14/94      2066    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/14/94      2066    (H)   HES, JUDICIARY, FINANCE                          
  01/14/94      2067    (H)   -4 FNS (3-DHSS, ADM)  1/14/94                    
  01/14/94      2067    (H)   -ZERO FISCAL NOTE (ADM) 1/14/94                  
  01/14/94      2067    (H)   GOVERNOR'S TRANSMITTAL LETTER                    
  02/09/94              (H)   HES AT 03:00 PM CAPITOL 106                      
  02/09/94              (H)   MINUTE(HEB)                                      
  02/09/94              (H)   MINUTE(HES)                                      
  02/11/94      2341    (H)   HES RPT  4DP 3NR 1AM                             
  02/11/94      2341    (H)   DP:  BUNDE, TOOHEY, B.DAVIS,                     
  02/11/94      2341    (H)   NR:  KOTT, G.DAVIS, OLBERG                       
  02/11/94      2341    (H)   AM:  VEZEY                                       
  02/11/94      2342    (H)   -ZERO FISCAL NOTE (DPS) 2/11/94                  
  02/11/94      2342    (H)   -4 PREVIOUS FNS (ADM, 3-DHSS)                    
  02/11/94      2342    (H)   -PREVIOUS ZERO FISCAL NOTE(ADM)                  
  03/11/94              (H)   JUD AT 01:00 PM CAPITOL 120                      
  03/11/94              (H)   MINUTE(JUD)                                      
  03/14/94              (H)   MINUTE(JUD)                                      
  03/16/94              (H)   MINUTE(JUD)                                      
  03/23/94              (H)   JUD AT 01:00 PM CAPITOL 120                      
  BILL:  HB 420                                                                
  SHORT TITLE: LIMITED LIABILITY COMPANIES                                     
  SPONSOR(S): REPRESENTATIVE(S) THERRIAULT,Mulder                              
  JRN-DATE     JRN-PG               ACTION                                     
  01/31/94      2206    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/31/94      2206    (H)   L&C, JUDICIARY, STATE AFFAIRS                    
  02/24/94      2522    (H)   SPONSOR SUBSTITUTE                               
  02/24/94      2522    (H)   L&C, JUDICIARY, STATE AFFAIRS                    
  03/08/94              (H)   L&C AT 03:00 PM CAPITOL 17                       
  03/09/94      2676    (H)   L&C RPT  1DP 3NR                                 
  03/09/94      2676    (H)   DP:  MULDER                                      
  03/09/94      2676    (H)   NR:  WILLIAMS, SITTON, HUDSON                    
  03/09/94      2676    (H)   -ZERO FISCAL NOTE (DCED) 3/9/94                  
  03/09/94      2703    (H)   COSPONSOR(S):  MULDER                            
  03/18/94              (H)   JUD AT 01:15 PM CAPITOL 120                      
  03/21/94              (H)   MINUTE(JUD)                                      
  03/23/94              (H)   JUD AT 01:00 PM CAPITOL 120                      
  BILL:  HB 392                                                                
  SHORT TITLE: PERMANENT FUND DIVIDEND PROGRAM                                 
  SPONSOR(S): REPRESENTATIVE(S) PARNELL                                        
  JRN-DATE     JRN-PG               ACTION                                     
  01/21/94      2125    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/21/94      2125    (H)   STATE AFFAIRS,JUDICIARY,FINANCE                  
  02/22/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  02/22/94              (H)   MINUTE(STA)                                      
  03/03/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  03/03/94              (H)   MINUTE(STA)                                      
  03/03/94              (H)   MINUTE(STA)                                      
  03/03/94              (H)   MINUTE(STA)                                      
  03/04/94      2605    (H)   STA RPT  CS(STA) 2DP 3NR                         
  03/04/94      2605    (H)   DP:  VEZEY, G.DAVIS                              
  03/04/94      2605    (H)   NR:  KOTT, OLBERG, SANDERS                       
  03/04/94      2605    (H)   -ZERO FISCAL NOTE (REV) 3/4/94                   
  03/18/94              (H)   JUD AT 01:15 PM CAPITOL 120                      
  03/21/94              (H)   MINUTE(JUD)                                      
  03/23/94              (H)   JUD AT 01:00 PM CAPITOL 120                      
  BILL:  HB 459                                                                
  SHORT TITLE: DAMAGES & ATTY FEES FOR UNPAID WAGES                            
  SPONSOR(S): LABOR & COMMERCE                                                 
  JRN-DATE     JRN-PG               ACTION                                     
  02/09/94      2321    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/09/94      2321    (H)   L&C, STATE AFFAIRS, JUDICIARY                    
  02/22/94              (H)   L&C AT 03:00 PM CAPITOL 17                       
  02/22/94              (H)   MINUTE(L&C)                                      
  02/23/94      2495    (H)   L&C RPT  2DP 4NR                                 
  02/23/94      2495    (H)   DP:  PORTER, MULDER                              
  02/23/94      2496    (H)   NR:  SITTON, WILLIAMS, GREEN,                    
  02/23/94      2496    (H)   -ZERO FISCAL NOTE (LABOR)                        
  03/10/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  03/10/94              (H)   MINUTE(STA)                                      
  03/11/94      2719    (H)   STA RPT  CS(STA) 3DP 3NR                         
  03/11/94      2719    (H)   DP:  VEZEY, KOTT, OLBERG                         
  03/11/94      2719    (H)   NR:  SANDERS, G.DAVIS, B.DAVIS                   
  03/11/94      2719    (H)   -ZERO FISCAL NOTE (LAW) 3/11/94                  
  03/11/94      2719    (H)   -PREVIOUS ZERO FISCAL NOTE                       
                              LABOR 2/23                                       
  03/23/94              (H)   JUD AT 01:00 PM CAPITOL 120                      
  BILL:  HB 367                                                                
  SHORT TITLE: PROHIBITED HIGHWAY ADVERTISING                                  
  SPONSOR(S): REPRESENTATIVE(S) OLBERG                                         
  JRN-DATE     JRN-PG               ACTION                                     
  01/13/94      2052    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/13/94      2052    (H)   TRANSPORTATION, JUDICIARY                        
  02/23/94              (H)   MINUTE(ECO)                                      
  03/01/94              (H)   TRA AT 05:00 PM CAPITOL 17                       
  03/01/94              (H)   MINUTE(TRA)                                      
  03/11/94      2716    (H)   TRA RPT  CS(TRA) NEW TITLE  4DP                  
  03/11/94      2717    (H)   DP:  VEZEY, G.DAVIS, HUDSON,                     
  03/11/94      2717    (H)   NR:  MULDER                                      
  03/11/94      2717    (H)   -ZERO FISCAL NOTE (DOT) 3/11/94                  
  03/12/94              (H)   MINUTE(ECO)                                      
  03/23/94              (H)   JUD AT 01:00 PM CAPITOL 120                      
  BILL:  SB 186                                                                
  SHORT TITLE: STATE AGENCY PUBLICATIONS                                       
  SPONSOR(S):  SENATOR(S) FRANK                                                
  JRN-DATE     JRN-PG               ACTION                                     
  04/07/93      1221    (S)   READ THE FIRST TIME/REFERRAL(S)                  
  04/07/93      1221    (S)   STATE AFFAIRS                                    
  04/14/93      1354    (S)   STA RPT  3DP                                     
  04/14/93      1354    (S)   ZERO FISCAL NOTE (ADM)                           
  04/14/93              (S)   STA AT 9:00 AM BUTROVICH RM 205                  
  04/14/93              (S)   MINUTE(STA)                                      
  04/14/93              (S)   MINUTE(RLS)                                      
  04/26/93      1761    (S)   RULES 4 CALENDAR   4/26/93                       
  04/26/93      1762    (S)   READ THE SECOND TIME                             
  04/26/93      1762    (S)   AM NO  1  ADOPTED UNAN CONSENT                   
  04/26/93      1763    (S)   AM NO  2  ADOPTED UNAN CONSENT                   
  04/26/93      1764    (S)   AM NO  3  FAILED  Y10 N10                        
  04/26/93      1764    (S)   ADVANCE TO THIRD READING FAILED                  
                              Y11 N9                                           
  04/26/93      1764    (S)   THIRD READING 4/27 CALENDAR                      
  04/27/93      1842    (S)   READ THE THIRD TIME SB 186 AM                    
  04/27/93      1842    (S)   PASSED Y20 N-                                    
  04/27/93      1842    (S)   DONLEY  NOTICE OF                                
  04/28/93      1891    (S)   RECONSIDERATION NOT TAKEN UP                     
  04/28/93      1893    (S)   TRANSMITTED TO (H)                               
  05/06/93      1661    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  05/06/93      1661    (H)   L&C, STATE AFFAIRS, JUDICIARY,                   
  02/17/94              (H)   L&C AT 03:00 PM CAPITOL 17                       
  02/17/94              (H)   MINUTE(L&C)                                      
  02/18/94      2455    (H)   L&C RPT  5DP                                     
  02/18/94      2455    (H)   DP:PORTER,SITTON,MULDER,                         
  02/18/94      2455    (H)   -ZERO FISCAL NOTE (ADM) 2/18/94                  
  03/05/94              (H)   STA AT 08:00 AM CAPITOL 102                      
  03/05/94              (H)   MINUTE(STA)                                      
  03/08/94              (H)   MINUTE(STA)                                      
  03/08/94              (H)   MINUTE(STA)                                      
  03/09/94      2681    (H)   STA RPT HCS(STA) 6DP                             
  03/09/94      2681    (H)   DP:VEZEY,KOTT,SANDERS,G.DAVIS                    
  03/09/94      2681    (H)   DP:OLBERG, B.DAVIS                               
  03/09/94      2681    (H)   -PREVIOUS ZERO FISCAL NOTE(ADM)                  
  03/09/94      2681    (H)   REFERRED TO JUDICIARY                            
  03/23/94              (H)   JUD AT 01:00 PM CAPITOL 120                      
  ACTION NARRATIVE                                                             
  The House Judiciary Standing Committee was called to order                   
  at 1:13 p.m. on March 23, 1994.  A quorum was present.                       
  Chairman Brian Porter announced that the committee would                     
  begin with HB 376.                                                           
  TAPE 94-49, SIDE A                                                           
  Number 037                                                                   
  HB 376 - ASSIST & PROTECT VULNERABLE ADULTS                                  
  CHAIRMAN PORTER said, "I would ask that the committee take                   
  the CS on HB 376 in hand.  This represents, basically, the                   
  committee substitute that incorporated the items we had                      
  questions on last meeting, and one other item which I will                   
  explain.  Section one is new between last meeting and the                    
  development of this CS.  This was another section that was                   
  found in the statutes that deals with this issue where we                    
  wanted to change the `elder abuse' to `vulnerable adult,'                    
  which, of course, this bill incorporates.  On page six,                      
  which I think is what we do have, on line 18, we have added                  
  verbiage so that the entire sentence says, beginning on the                  
  last of 17, `The Department or its designee shall conduct a                  
  face to face interview with the vulnerable adult, who is the                 
  subject of the report.'  We wanted to make sure, just for                    
  clarification, that that's the person of whom we were                        
  speaking.  I'll not discuss page seven, because you don't                    
  have it yet [Ed. Note: it was distributed shortly                            
  thereafter.].  On page nine, at the top, line one, we have                   
  added `life threatening' and the word `temporary,' and in                    
  line two, the word `temporarily.'  This is the section that                  
  deals with the ability of the department to determine that                   
  an individual is within an emergency situation and takes                     
  steps without permission, without consent, to protect that                   
  vulnerable adult.  Obviously, this is one of the sections of                 
  the bill that is of the consideration of this committee and                  
  we thought that it would be appropriate to make sure that                    
  was done in only very serious temporary situations where a                   
  department could, in effect, control someone's life without                  
  otherwise due process or permission."                                        
  REP. JOE GREEN:  "Did you want to discuss these now or                       
  CHAIRMAN PORTER:  "We can discuss them now if you like."                     
  Number 110                                                                   
  REP. GREEN:  "Just a point of clarification:  By adding                      
  `life threatening,' does that modify the temporary nature to                 
  the point that the department will probably minimize that                    
  time in order to stay in context with this life-threatening                  
  Number 115                                                                   
  CHAIRMAN PORTER:  "That would be my impression, yes. On line                 
  11 of page seven, we have added `procedural status' as                       
  opposed to just `status'.  The entire thing, then...`Upon                    
  request of person who made a report to the department under                  
  this statute number regarding a vulnerable adult shall be                    
  notified, shall be notified of the procedural status of the                  
  investigation conducted under (a) of this section regarding                  
  that vulnerable adult.'  We wanted to make sure that this                    
  was not interpreted to mean that otherwise confidential                      
  information would be relayed to the person who made the                      
  report, but recognizing it's appropriate for that person to                  
  know the status of that report."                                             
  Number 147                                                                   
  REP. CLIFF DAVIDSON:  "So, in effect, the new word                           
  `procedural' just means that the person who made the report                  
  shall be notified of where in the procedure the status of                    
  that vulnerable adult is.  Is that correct?"  Chairman                       
  Porter replied in the affirmative.                                           
  REP. DAVIDSON asked further:  "The department - are they in                  
  full support of all these amendments?"                                       
  CHAIRMAN PORTER:  "It's my understanding that they are.                      
  Connie is nodding in the affirmative."                                       
  Number 170                                                                   
  REP. PETE KOTT:  "Just for clarification here.  If there is                  
  some type of action that would require the appointment of                    
  counsel on any matter that would be brought before the                       
  court, who would that be?  I don't see a real provision                      
  there.  If I understand the system correctly, the Office of                  
  Public Advocacy would be the one that would be representing                  
  as counsel in these matters.  And if that's the case, I                      
  don't see a fiscal note."                                                    
  Number 185                                                                   
  CHAIRMAN PORTER:  "The appointment of counsel for a                          
  vulnerable adult initially would be determined by the                        
  financial status of that individual.  If that person has, as                 
  we've listed in the bill, and I can't remember exactly which                 
  section, but we've listed that the department can seek                       
  assistance and guidance for these kinds of determinations,                   
  from relatives and spouses or even close associates.  Those                  
  people would be in a position to know whether or not there                   
  are funds with which to hire their own attorney, which                       
  obviously is the law, or have to appoint a guardian                          
  (indiscernible.)  If a guardian (indiscernible) is                           
  appointed, there would be a fiscal impact, but I don't think                 
  that this bill would create an additional impact; it's just                  
  defining the process for doing that which has already been                   
  Number 214                                                                   
  REP. KOTT:  "My only question was, at least if I understand                  
  the system correctly, that if you do have appointed counsel                  
  representing these types of cases - either commitment or                     
  guardian cases - it would come from the Office of Public                     
  Advocacy.  So I was just suggesting that perhaps there                       
  should be some kind of fiscal impact.  I think the office                    
  also falls within the Department of Administration, if I'm                   
  correctly stating that, and that might bring about some form                 
  of conflict."                                                                
  HOUSE JUDICIARY COMMITTEE, to comment.                                       
  Number 241                                                                   
  MS. LOPER said and reiterated several times that the issue                   
  raised by Rep. Kott did not relate to the bill.  She said                    
  only one particular section discussed petitioning the court                  
  for certain protective services by the agency.                               
  Number 250                                                                   
  REP. KOTT:  "If I might add, maybe, for counsel to perhaps                   
  address...I'm looking at the original bill, page seven,                      
  lines 26 and 27; it deals with surrogate decision makers.                    
  It talks about...it has no attorney or guardian, in fact, to                 
  serve as the vulnerable adult's surrogate, we're covered                     
  there as well, then?  That's my question."                                   
  CHAIRMAN PORTER:  "What's the question again?"                               
  REP. KOTT:  "Well, the comments that were made earlier - I'm                 
  still looking at whether or not we're going to have to                       
  appoint counsel under this particular provision in Section                   
  three on page seven; Where there is no guardian or attorney                  
  (indiscernible) to serve as the vulnerable adult's decision-                 
  maker, will that person then have to acquire perhaps                         
  appointed counsel from the Office of Public Advocacy?"                       
  Number 291                                                                   
  MS. LOPER:  "This section on surrogate decision makers for                   
  vulnerable adults is only honing in on the issue of whether                  
  they are going to receive protective services or not.  It                    
  goes on to say that the vulnerable adult spouse is going to                  
  be the first on the priority that's going to be looked at,                   
  and on down the line to sisters and brothers and close                       
  relatives and friends.  It only relates to the issue of                      
  whether there's going to be protective services or not,                      
  whether they can go ahead and do that or not.  Under this                    
  bill, they don't have to petition the court at all."                         
  Number 310                                                                   
  CHAIRMAN PORTER:  "From that standpoint, I think it would be                 
  fair to say that there is a cost reduction involved in this                  
  process, as opposed to a cost increase, because we didn't                    
  have the ability to make these kinds of decisions previously                 
  at the administrative level.  Any other questions?  What is                  
  the wish of the committee?  Rep. James?"                                     
  Number 315                                                                   
  REP. JEANNETTE JAMES:  "I move to adopt the CS that is                       
  before us."                                                                  
  CHAIRMAN PORTER:  "The CS being for HB 376 dated 3/17/94-E.                  
  Is there objection?  I see no objection."                                    
  REP. JAMES:  "I move that we send this bill out of committee                 
  with attached fiscal notes and individual recommendations                    
  and ask for unanimous consent."                                              
  Number 324                                                                   
  CHAIRMAN PORTER:  "Motion to move and ask for unanimous                      
  consent. Is there discussion?  Objection?  I see none.                       
  Thank you, the bill is moved."                                               
  HB 420 - LIMITED LIABILITY COMPANIES                                         
  Number 332                                                                   
  CHAIRMAN PORTER:  "The next bill for consideration is HB
  420.  We are in teleconference for this bill, and we have,                   
  initially, the bill sponsor, Rep. Therriault.  Welcome, Rep.                 
  Therriault.  Please tell us about your bill."                                
  Number 353                                                                   
  REP. GENE THERRIAULT, SPONSOR OF HB 420, said, "I do have a                  
  sponsor statement that I'd like to read into the record, and                 
  then on teleconference we have a number of people that have                  
  worked extensively on drafting the language of the bill and                  
  can talk to the specific legal questions that you might                      
  have.  For the record, my name is Gene Therriault, I am a                    
  State Representative to House District 33.                                   
  "HB 420 proposes a new hybrid form of business structure                     
  called a limited liability company that combines the tax                     
  advantages of a partnership and the liability safeguards of                  
  a corporation.  Although a combination of these two business                 
  structures is currently allowed in statute through formation                 
  of an S corporation, this structure has limitations that are                 
  avoided by LLCs.  For example, S corporations do not allow                   
  ownership by certain types of shareholders.                                  
  "Under current law, corporate earnings are subject to double                 
  taxation through the payment of corporate taxes and personal                 
  taxes after distribution of dividends.  LLCs avoid this                      
  double taxation by allowing earnings to flow through to                      
  individual owners in the same manner partnership income is                   
  handled.  Although businesses can be organized through an S                  
  corporation to avoid double taxation and encompass some of                   
  the advantages of partnerships, they do not enjoy all the                    
  advantages of partnerships when it comes to allocating                       
  income and deductions.                                                       
  "One of the greatest advantages is, as the name implies, the                 
  limited liability offered by the LLC structure.  With LLCs,                  
  as with regular corporations, only the company's assets and                  
  not the owner's personal assets, are at risk in business-                    
  related lawsuits.  In partnerships, so-called limited                        
  partners enjoy such protection, but general partners don't.                  
  And limited partners face restrictions on how active they                    
  can be in the business.  LLCs are designed to protect all                    
  members while imposing no limits on their involvement in                     
  operation of the business.                                                   
  "Thirty-four states now permit limited liability companies,                  
  and passage in most of the remaining states is expected.                     
  Wyoming passed the first LLC act in 1977.  Other states                      
  slowly followed suit until 1988, when the Internal Revenue                   
  Service issued Rev. Rul. 88-76, which classified a Wyoming                   
  LLC as a partnership for federal tax purposes, even though                   
  none of the members or managers were personally liable for                   
  any debts of the company.  Following the ruling, formation                   
  of LLCs burgeoned, with two states adopting LLC acts in                      
  1990, four in 1991, 10 in 1992 and more than 20 states                       
  introducing measures in 1993.                                                
  "LLCs have tended to be family businesses, professional                      
  service firms, venture capital companies, real estate                        
  businesses and start-ups.  I believe the LLC will provide                    
  these business owners with an efficient and flexible                         
  investment vehicle that allows both limited liability and                    
  federal income tax treatment as a partnership.  I introduced                 
  the bill, which is based on a prototype American Bar                         
  Association draft, with the intention of generating                          
  discussion on this topic."   Rep. Therriault added to this                   
  prepared statement:  "Since that time, I did introduce a                     
  sponsor substitute which adopted a lot of work that was done                 
  by a subcommittee of the Alaska Bar Association.  I believe                  
  some of the people that are on teleconference to be                          
  available to make comments and answer questions were                         
  involved in that re-drafting which basically took the                        
  American Bar Association draft and kind of Alaskanized it.                   
  With that, Mr. Chairman, I am available to answer any                        
  questions or we can go right to the teleconference."                         
  Number 418                                                                   
  REP. GAIL PHILLIPS:  "Rep. Therriault, would you please tell                 
  me who was on that subcommittee?  What groups were                           
  represented on the subcommittee?"                                            
  REP. THERRIAULT:  "I think it was a subcommittee of the                      
  Alaska Bar Association."                                                     
  Number 427                                                                   
  REP. JIM NORDLUND:  "Gene, I think this is a good bill,                      
  actually.  I considered introducing it myself, although--I                   
  understood--what I was looking into was limited liability                    
  partnership instead of limited liability company, and I'm                    
  just wondering - maybe you, or maybe somebody who is going                   
  to testify here could explain, if there is a difference."                    
  Number 446                                                                   
  REP. THERRIAULT:  "I believe there is a working group in the                 
  Commerce Department, somewhere in the Administration that is                 
  working on limited liability partnerships.  It's a different                 
  animal yet than this, but might be another business                          
  structure that people would have to choose from.  My wife is                 
  an attorney up in Fairbanks and she has told me that she has                 
  had a number of clients come to her and have said, `We                       
  understand there is a new form of business.  Is it available                 
  in the state of Alaska?'  So, when people go to form                         
  businesses they have a number of options of what the                         
  business structure can be.  It can be a full partnership or                  
  a sole proprietorship, limited partnership, a number of                      
  things.  This would just add one more option for them to                     
  consider when forming the business structure."                               
  REP. NORDLUND:  "Maybe somebody who was going to testify                     
  could explain.  I just wanted to know the difference between                 
  the two."                                                                    
  CHAIRMAN PORTER:  "That was one of the questions I was going                 
  to ask, myself, so we'll hope to be edified by the                           
  REP. DAVIDSON:  "Rep. Therriault, I can certainly understand                 
  the need for favorable tax treatment at the federal level.                   
  My question is, why is this limited liability company                        
  necessary?  For example, would it allow for less responsible                 
  actions by companies that do not now have that option?                       
  Could you expand on why this additional option [is                           
  proposed], as far as forming a company is concerned, and how                 
  it would it affect the responsibilities or actions of such a                 
  Number 453                                                                   
  REP. THERRIAULT:  "Well, it would allow no more or no less                   
  of liability than a corporate structure does.  But the                       
  corporate structure has a disadvantage in the tax                            
  consequences.  So what we're doing is blending the liability                 
  advantages that you can get through a corporate structure                    
  with the tax benefit that you can get through a partnership.                 
  We're just melding those two together, basically."                           
  Number 468                                                                   
  REP. DAVIDSON:  "And how is the public treasury impacted by                  
  this efficiency?"                                                            
  Number 469                                                                   
  REP. THERRIAULT:  "I don't believe that the public treasury                  
  would be impacted at all.  I think there was some concern                    
  expressed at the earlier committee that maybe we would be                    
  prompting corporations who pay a corporate tax to dissolve                   
  themselves and go into an LLC structure.  If they did that,                  
  there would be some fairly serious capital gains                             
  consequences, which I think would actually preempt people                    
  from doing that.  What we're really going to do, is just                     
  give those people who are thinking of forming a new company                  
  one more option.  Now, they may have chosen a corporate                      
  structure, but I don't know that there's any way that you                    
  can really quantify what people may have done in the future                  
  when selecting those different business forms and what the                   
  potential impact could have been on the treasury."                           
  Number 482                                                                   
  REP. JAMES:  "Is it possible to determine that a lot of                      
  people that may have filed corporations will now file this                   
  LLC, and so therefore we as a state might be deprived of any                 
  corporate income tax?"                                                       
  REP. THERRIAULT reiterated that this would be difficult to                   
  quantify.  He was skeptical that corporations already in                     
  existence would be dissolving in large numbers to reform as                  
  CHAIRMAN PORTER introduced the teleconference testimony from                 
  Number 501                                                                   
  CHARLES SCHUETZE, ATTORNEY, DAVIS & GORDON, testified via                    
  teleconference from Anchorage in support of HB 420.  Mr.                     
  Schuetze was present as a member of the legislative drafting                 
  committee for the tax section of the Alaska Bar Association.                 
  MR. SCHEUTZE said, "The primary purpose of the bill is to                    
  enable these companies to reorganize to have the tax                         
  characteristics of a partnership combined with the limited                   
  liability of a corporation.  In the past when business                       
  organizations have been organized they've had to make a                      
  significant compromise.  If they wanted to have all the                      
  entire panoply of tax [options of] a partnership they'd                      
  choose to be general partners but then they would be                         
  unlimitedly liable.  If they wanted to have most of the type                 
  of characteristics of a partnership they could organize a                    
  limited ownership, but still there would be a general                        
  partner who would be unlimitedly liable.  If they wanted to                  
  have most of the type of characteristics of a partnership,                   
  they could organize a limited partnership, but still there                   
  would be a general partner who would be unlimitedly liable.                  
  With S corporations, as it's been discussed, certain                         
  restrictions are imposed, on the number, the nationality,                    
  etc., and it's not exactly treated like a partnership.  C                    
  corporations of course gave unlimited liability, but the                     
  corporations could be taxed as corporations."                                
  MR. SCHUETZE went on to analyze HB 420 in detail.  Testimony                 
  was often difficult to discern due to paper shuffling and                    
  other background noise.  Included in his discussion was a                    
  delineation of the characteristics of an LLC as well as the                  
  advantages for estate planning for families in its use.  He                  
  concluded by introducing Brian Durrell from Anchorage for                    
  continued discussion.                                                        
  CHAIRMAN PORTER thanked Mr. Schuetze for his testimony.                      
  Chairman Porter requested that any teleconference                            
  participants in Anchorage who had written testimony forward                  
  a copy to the committee via telefax, 465-3834.                               
  Number 577                                                                   
  REP. THERRIAULT acknowledged that the length of the bill                     
  might give committee members pause.  He explained in detail                  
  how the bill provides default language for the formation and                 
  operation of limited liability companies.                                    
  Number 600                                                                   
  PUBLIC ACCOUNTANT, testified via teleconference from                         
  Anchorage in support of HB 420.  Noting that he has served                   
  as one of the members of the working group of the joint tax                  
  and business section of the Alaska Bar Association that                      
  drafted the legislation, Mr. Durrell championed the bill as                  
  being very good for business in Alaska.  He said it would                    
  help streamline and stimulate business activity in Alaska.                   
  Mr. Durrell said the LLC would not be a substitute for                       
  partnerships or corporations but rather a choice appropriate                 
  for certain circumstances.                                                   
  MR. DURRELL characterized the primary distinction between an                 
  LLC and a partnership as the ability of the LLC to enjoy                     
  limited liability.   He acknowledged SB 348 which deals with                 
  the formation of a limited liability partnership but whose                   
  principles are different.  Mr. Durrell described limited                     
  partnerships in relation to LLCs.  "There are                                
  differences...primarily that a limited partnership always                    
  must have at least one general partner who would not enjoy                   
  those limitations of liability, and secondly, the management                 
  of a limited partnership would be much different because a                   
  limited partner to enjoy the benefits of the limited                         
  liability cannot be involved in the management of the                        
  limited partnership and an LLC would allow for management by                 
  the members who would also enjoy the limited liability.                      
  MR. DURRELL went on to contrast LLCs and corporations.  He                   
  said, "To distinguish [LLCs] from corporations, setting                      
  aside for the moment S corporations, so we're talking about                  
  a normal corporation, C corporation subject to taxation, the                 
  primary distinction is the double taxation issue.  Limited                   
  liability.  Companies would not be subject to the double                     
  taxation. If they are properly formed they are going to be                   
  taxed as a partnership with flow-through taxation and avoid                  
  the double tax that is paid by corporations.  And the last                   
  type of entity, the S corporation, which is for state law                    
  purposes no different than any other corporation, it's                       
  merely an election that is made under the federal tax code,                  
  to be taxed as a corporation, that has a flow-through tax                    
  structure much like a partnership.  But there are                            
  limitations on who can form S corporations, the number and                   
  types of shareholders; there can not be more than 35                         
  shareholders in an S corporation; the corporation                            
  shareholders cannot be nonresident aliens.  Those types of                   
  individuals, corporations, can be members of LLC.  So it has                 
  distinctions from each one of these existing business                        
  entities, and again in some instances, it may be better; in                  
  others, one of these existing entities may be a better                       
  choice.  We're simply trying to provide the business                         
  community a full array of options that should be available                   
  to them in selecting the manner in which they want to                        
  structure their business."                                                   
  Number 678                                                                   
  CHAIRMAN PORTER:  "Is it your understanding that the bill                    
  that we are considering is without significant difference                    
  from the bills that have been introduced in other states in                  
  the past?"                                                                   
  Number 689                                                                   
  MR. DURRELL:  "Well, I have not reviewed each of those 34                    
  bills that have been passed in the other states, so I can't                  
  speak from personal knowledge.  My understanding is this is                  
  very similar.  I think if we looked at each one of those                     
  bills that every state made minor variations into the bill,                  
  but the general concept is the same.  The concept being the                  
  limitation of liability afforded to members and the                          
  partnership tax attributes."                                                 
  Number 711                                                                   
  BRUNDIN, testified via teleconference from Anchorage in                      
  support of HB 420.  "Thank you for letting us testify, and I                 
  mean that seriously, because after running through tort                      
  reform, I imagine you guys are just sick and tired of                        
  lawyers.  I'd like to say that we're different.  We're CPAs,                 
  tax and estate planning and business lawyers that are                        
  interested in the development of the law.  We want to make                   
  more and better options available to our clients.                            
  "Last week I went to a legal seminar outside, and the                        
  speaker was discussing various business entities that you                    
  could offer to your client.  He indicated that the count was                 
  now with 37 states with limited liability company statutes,                  
  and he boldly predicted that by 1995 we'd have all 50 states                 
  with LLC legislation.  The California senate just passed an                  
  LLC bill expected to be on the governor's desk very                          
  shortly."  Mr. Manley went on to express concern that                        
  Alaskans would lose business to other states from                            
  individuals desiring the formation of LLCs.                                  
  "Our drafting committee worked from the ABA prototype act.                   
  That was put together by a national panel with the American                  
  Bar Association business law section, and basically, all the                 
  LLC acts throughout the country are substantially similar.                   
  And I think the ABA prototype distills the best of all of                    
  these various bills.  We've got a fair amount of experience                  
  with LLC.  The first was Wyoming in 1977, then Florida in                    
  1982, so we've got a certain amount of history even though                   
  this is happening relatively rapidly.                                        
  "To explain:  An LLC has a blend of corporate and                            
  partnership characteristics with a flexible operating                        
  system.  It meets the needs of Alaska business and provides                  
  a federal tax advantage.  And, as Mr. Durrell pointed out,                   
  it facilitates foreign investment because foreign investors,                 
  nonresident aliens, cannot be in an S corporation.  So                       
  accordingly, they are either subject to general partnership                  
  rules regarding liability or, in the alternative, subject to                 
  corporate double tax."                                                       
  MR. MANLEY posited a hypothetical Japanese consortium                        
  seeking a location to set up a timber mill in either Alaska,                 
  Washington or Oregon.  He described the negative response of                 
  consortium accountants to Alaska upon learning that only                     
  Oregon and Washington offered the option of an LLC, with                     
  "pure individual one-bite taxation, and limited liability."                  
  He concluded that LLC legislation was necessary from an                      
  international point of view in order to keep up with                         
  developments in the law.                                                     
  Turning to the subject of revenue, Mr. Manley said he did                    
  not believe LLC legislation would have "any impact on Alaska                 
  state corporate income tax, because existing C corporations                  
  are not going to dissolve because of the tax and transfer                    
  costs.  And, really, this is primarily going to replace, for                 
  the appropriate people, partnerships and S corporations that                 
  don't pay tax right now."  [Concurrent conversation in                       
  hearing room reduces testimony sound quality.].  Mr. Manley                  
  finished his testimony by opining it would be a rare                         
  situation in which someone forming a corporation who had                     
  been seriously considering a C corporation, which pays                       
  corporate income tax, would elect a limited liability                        
  Number 780                                                                   
  CRAIG INGHAM, ALASKA BANKERS ASSOCIATION, testified via                      
  teleconference from Fairbanks in opposition to HB 420.  "I                   
  represent the Alaska Bankers Association.  I am not an                       
  attorney.  I am a business person and the Alaska Bankers                     
  Association opposes this bill.  We oppose it for some very                   
  fundamental reasons and some technical reasons as well."                     
  MR. INGHAM discussed the very broad spectrum of entities to                  
  be affected by the legislation, including sole                               
  proprietorships, where the risk factors in start-up are                      
  enormous.  He addressed the situation of third party vendors                 
  who must sustain considerable losses in the failure of new,                  
  and especially small and sole-proprietor, businesses; the                    
  vulnerability of these vendors provided reason, he said, for                 
  sole proprietorships and partnerships to be liable                           
  personally for the debts of their business.                                  
  MR. INGHAM went on to discuss management aspects of the                      
  bill.  He explained that "...in a corporation, the                           
  shareholders or owners of a corporation are prohibited, are                  
  not allowed to manage the affairs of a corporation.  They in                 
  turn have to elect directors who manage the affairs.  And                    
  the directors manage those affairs by appointing officers of                 
  the corporation to act as agent.  And they're given specific                 
  authority to corporate resolutions and so forth that carry                   
  on the business at hand for the corporation.  In a                           
  partnership or a sole proprietorship, the owner is the                       
  MR. INGHAM said, "Now, when you mix the two worlds together,                 
  you give the owner limited liability and not unlimited                       
  liability, you are allowing for the manager, basically to                    
  provide, from a management standpoint, the duties and                        
  responsibilities of carrying out the business of the entity                  
  without having to worry about any personal liability.  That                  
  could be very confusing.  Especially to other businesses                     
  that are trying to do business with this new entity.  If you                 
  look at this, just look at the first paragraph under                         
  management, Section 10.51.10 on page seven, it says, `Except                 
  as otherwise provided by this chapter, the members of a                      
  limited liability company manage the affairs and make the                    
  decisions of the company unless an operating agreement of                    
  the company names a manager for the company.  Management by                  
  members is subject to a provision in an operating agreement                  
  or this chapter limiting or increasing the management rights                 
  and duties of the members, including limits or increases                     
  placed on a class of members or individual members.'                         
  "So now we have this operating agreement saying who can                      
  manage the affairs of the company and what they can and                      
  cannot do.  And this is for small business, that we're                       
  talking about here, as well as big business.  If you go                      
  further through the section as it deals with management and                  
  you go over to page nine, at the top of the page, line                       
  three, under subsection (b), it says, unless otherwise                       
  provided in that operating agreement of the company, or by                   
  this chapter, if an operating agreement of a company means                   
  more than one manager for the company -- in other words, now                 
  we can have the operating agreement saying, well, instead of                 
  just one person appointed by the members, we can now have,                   
  you know, five or ten managers; the consent of more than one                 
  half of the number of managers of a limited liability                        
  company is required to decide the affairs of the company.                    
  Does that mean if I do business with one of these entities I                 
  better make sure that the manager has gone out there and                     
  gotten a majority rule on doing business with him?                           
  "So if we move on, here, to the section that I think is most                 
  important of all, article seven, `Relationship to Third                      
  Parties,' that's who these people will be doing business                     
  with.  Their customers and other businesses.  At the top of                  
  page 14:  `Agency Power of Members and Managers.'  It goes                   
  on to say, `Except as provided in (b) and (c) of this                        
  section, a member of a limited liability company is an agent                 
  of the company for the purpose of conducting the company's                   
  affairs.  A member that, including the execution of an                       
  instrument in the name of the company, that appears to be                    
  performed in the usual way of conducting the affairs of the                  
  company, binds the company.'  Well, does that mean now I                     
  need to know what is usual and customary as far as the                       
  affairs of the company?  I guess I'm running out of time                     
  "But the big issue here is, there are a lot of big questions                 
  that have not been asked by the business community, and the                  
  people that are going to have to do business with this new                   
  entity as to how it's going to work when it comes down to                    
  relating to third party interests.  And let's not think that                 
  we're treading over something brand new here.  This was                      
  tried one hundred years ago, in what was called the Business                 
  Trust.  And the Business Trust was originated to obtain                      
  certain advantages of corporate status, such as limited                      
  liability.  It was very popular in the few years it was in                   
  existence in the 1900s.  However, a number of states ruled                   
  that the partners should be held personally liable.  The                     
  state legislature enacted laws requiring that.  I wonder why                 
  they would do that?"  [Tape ends abruptly.]                                  
  TAPE 94-49, SIDE B                                                           
  Number 000                                                                   
  REP. DAVIDSON asked Mr. Ingham if he had any other points.                   
  Number 007                                                                   
  MR. INGHAM:  "I do have other points, and I would like to                    
  have a few more minutes of time if I may."  Chairman Porter                  
  invited him to continue.  "I talked about the management                     
  problems here, how that could be confusing to deal with                      
  other business entities out there as far as this new                         
  business entity.  Well, let's talk about the access of a                     
  particular company, or, you know the property that company                   
  owns.  If you go now to ownership and transfer of property,                  
  which is Article 10, it basically says that the limited                      
  liability company can hold property in either the name of                    
  the company or the name of the individual member or manager.                 
  That could be extremely dangerous, for the simple reason                     
  that it enables someone to move assets around fairly easily.                 
  There certainly should be language prohibiting property                      
  being held in any other manner but the company's name.                       
  That's pretty clear.  If you have a corporate structure and                  
  you go out there and you have vehicles or real estate, it's                  
  in the name of the corporation.  It can't be in the name of                  
  the officers of the corporation or the managers.  In a                       
  partnership, sure, the assets of a partnership can be                        
  flexible, but that's because those partners are personally                   
  liable for their business actions and their business                         
  dealings.  That's a very important issue.  And when you                      
  really sit down and look at this bill, from a business                       
  standpoint, I am sure it has all the tax benefits that they                  
  say it does have.                                                            
  "But if you're looking to come up with a new kind of                         
  business structure, I think it's very, very critical that                    
  not only the legal profession should be brought into this                    
  equation, but the business profession be brought in as well,                 
  and that a good amount of time is spent going through these                  
  issues and coming up with some of the fire walls that you                    
  have in a corporate structure to make sure that assets can't                 
  be moved around and the lines of management are clear and                    
  concise, people doing business with this entity can feel                     
  comfortable doing business with it.  And I know we may not                   
  be the first state to adopt this sort of legislation, but                    
  I'd rather be the last state than the first state to adopt                   
  something that changes the way we've done business for the                   
  last three or four hundred years.  And I'll just leave it on                 
  that note."                                                                  
  Number 107                                                                   
  ECONOMIC DEVELOPMENT, testified in support of HB 420.  "I                    
  would encourage the committee to consider HB 420 and pass it                 
  out."  Describing his division, Mr. Kirkpatrick observed,                    
  "...we look at and view it as one of our goals to make                       
  Alaska one of the most easiest places in which to do                         
  business.  We feel that is a paramount responsibility of the                 
  Department of Commerce and Economic Development."                            
  MR. KIRKPATRICK noted that the Department of Commerce "...is                 
  a member of what we call the International Association of                    
  Corporation Commissioners.  That includes other countries                    
  besides the United States, but it primarily has to do with                   
  the old British Crown corporation type of formation.  And we                 
  became aware of limited liability companies and the Wyoming                  
  experience.  And so we had been looking at it and how it                     
  might be beneficial to the state of Alaska, especially with                  
  some of the activity that we've been trying to do in the Far                 
  East and eastern Russia."                                                    
  MR. KIRKPATRICK continued, "In early 1992 we were approached                 
  by members of the Alaska Association of Certified Public                     
  Accountants to encourage us to consider drafting a limited                   
  liability company law.  We got a hold of those states that                   
  did have those provisions and tried to seek out what                         
  problems they had.  There was a little bit of confusion                      
  because of the IRS ruling as to what is a corporation type                   
  of organization or a partnership type of an organization.                    
  We then took a look at the state of Wyoming, which is what                   
  is called a bullet-proof state, because they were the only                   
  state at that time that had an IRS ruling, so most of the                    
  states early on then following Wyoming's law which meant                     
  that if you had the characteristics of the Wyoming law, then                 
  you were assured a proper ruling from the IRS, relying upon                  
  Wyoming's ruling.                                                            
  "We then were approached by members of the Alaska Bar                        
  Association and we told them of our efforts and they                         
  indicated that they were interested in working on such                       
  legislation, so we sent them our draft.  What has resulted                   
  from their effort is a little different from our draft - not                 
  substantially - but they included in their draft language of                 
  our draft that had to do with the administration of the Act.                 
  So, what has been, as a Sponsor Substitute, includes those                   
  items of administration ability that we had in exercising                    
  this type of law."                                                           
  Noting that he himself was not a lawyer, Mr. Kirkpatrick                     
  went on to describe the extensive history of the origins of                  
  the legislation at hand.  Mr. Kirkpatrick discussed the                      
  origins of the Alaska Corporation Code and the evolution of                  
  corporation law in Alaska and acknowledge a need to                          
  recognize the risks of doing business.                                       
  Number 249                                                                   
  REP. DAVIDSON:   "Mr. Kirkpatrick, you heard Mr. Ingham's                    
  comments and concerns.  Could you take say one or two or                     
  three of those concerns and give us your perspective as far                  
  as - you seem to be very much for the bill and don't see any                 
  downsides.  Mr. Ingham, of course, who is a banker, saw                      
  considerable downsides.  I was wondering if you could give                   
  us return fire."                                                             
  Number 266                                                                   
  MR. KIRKPATRICK responded, "I think Mr. Ingham has some very                 
  good points."  He compared the process of drafting the                       
  legislation at hand with protracted formulation of the                       
  controversial Alaska Corporation Code and noted there would                  
  always be room for debate in determining the nature of                       
  proposed business structures.  "Maybe," Mr. Kirkpatrick                      
  suggested, "there should be somebody else taking those                       
  points [to] debate them on the other side.... I don't have                   
  any problem at all with some of the suggestions that he                      
  makes in tightening up property ownership...."                               
  MR. KIRKPATRICK recommended that some issues raised in HB
  420 requiring further discussion be considered at a later                    
  date in amendments.  He stated that he did not feel that in                  
  a business organization law the law could be structured to                   
  protect creditors and went on to describe the criteria                       
  courts could use in evaluating the responsibilities of                       
  debtors.  Mr. Kirkpatrick concluded by reiterating that he                   
  did not see how one could structure a corporate organization                 
  that would protect creditors from risk, but that he did                      
  understand and appreciate Mr. Ingham's concerns.                             
  Number 350                                                                   
  REP. THERRIAULT:  "I am certainly willing to consider any                    
  proposed changes to the bill.  I know there have been                        
  negotiations and discussions going on between the regulator,                 
  the regulatees, the people that want to be involved in                       
  forming these new business ventures.  I think one thing                      
  that's important to point out, the previous speaker just                     
  brought up, that creditors can require personal assurances,                  
  just like they can with corporations.  I was involved in a                   
  business.  We wanted to get a bank loan, and they required                   
  personal guarantees.  They can do that, they do that right                   
  now with corporations because of the limited liability, and                  
  some concern, and being risk adverse.  They can do that same                 
  thing with limited liability.  So we're not forming a new                    
  structure that has any more of an ability to leave creditors                 
  hanging out there than existing business structures.  I                      
  understand that Mr. Ingham represents a trade group that is                  
  severely risk averse.  I think they have means at their                      
  disposal to protect themselves."                                             
  MR. INGHAM asked if he might respond to that; Chairman                       
  Porter first recognized Rep. Davidson's question.                            
  Number 378                                                                   
  REP. DAVIDSON posed a question concerning the possibility of                 
  providing some protections under law for smaller business                    
  entities to mitigate the risk of new business organizations.                 
  Number 395                                                                   
  CHAIRMAN PORTER, acknowledging the extensive information and                 
  analysis yet to be prepared before the bill could be                         
  properly evaluated, referred HB 420 to a subcommittee to be                  
  chaired by Rep. James and to include Representatives Kott                    
  and Davidson.  He noted, moreover, that while in general he                  
  was supportive of the legislation, he wished to know the                     
  effects of removing extant limitations of businesses -                       
  limitations for which reasons existed-before seeing them                     
  Number 425                                                                   
  REP. DAVIDSON:  "Mr. Chairman, thank you.  In view of what                   
  you've just said, it seems to me that we are a different                     
  kind of state.  We are a resource rich state.  And one of                    
  the problems we see, and it's not always a problem, but we                   
  have a tremendous amount of foreign investor ownership in                    
  our state, already.  For comparative purposes, it seems                      
  we're more like a third world country in terms of business                   
  practices, than part of more up to date modern societies or                  
  states, but that is a concern that I have.  And I was                        
  wondering, you know, if in fact a bill like this is going to                 
  encourage additional foreign ownership of our resources.                     
  Where does that leave us protection to ensure that our                       
  children and their grandchildren are going to be in a                        
  position to control the picture up here?  And that's one of                  
  my main concerns."                                                           
  CHAIRMAN PORTER responded that he would refer this inquiry                   
  to the subcommittee and suggest to them that they consult                    
  with Mr. Ingham and Mr. Manley on this and other aspects of                  
  HB 420.  This was acceptable to the committee.                               
  HB 392 - PERMANENT FUND DIVIDEND PROGRAM                                     
  Number 459                                                                   
  CHAIRMAN PORTER introduced discussion on HB 392, Permanent                   
  Fund Dividend Program and welcomed Richard Vitale from Rep.                  
  Parnell's office.                                                            
  Number 462                                                                   
  392, testified in support of that bill.  [Chronic background                 
  noise diminishes sound quality.]  Mr. Vitale described HB
  392 as a bill his office had been working on in cooperation                  
  with the Permanent Fund Dividend Division of the Department                  
  of Revenue at their request to address needs that have                       
  arisen over the years.  Mr. Vitale said the bill was divided                 
  in three parts:  (1) to address a recent court case                          
  nullifying the piggyback rule and affecting about 1600                       
  Alaskans' dividends for the past two years; (2) to roll over                 
  into statute regulations which currently exist; and (3) to                   
  address loopholes.  He noted that Tom Williams of the                        
  Permanent Fund Division was present to respond to questions.                 
  Number 489                                                                   
  REP. DAVIDSON:  "Which are the loopholes that we're going to                 
  be dealing with and who's going to be on our back if we                      
  close them?"                                                                 
  Number 496                                                                   
  DEPARTMENT OF REVENUE, testified in support of HB 392.  He                   
  said there were a variety of loopholes as well as areas                      
  requiring "cleaning up."  Mr. Williams discussed in detail a                 
  loophole in the provision allowing a child born out of state                 
  in the first two years of its life to remain eligible for                    
  the dividend, even though the child has never been in the                    
  MR. WILLIAMS made reference to the situation of individuals                  
  who have received suspended impositions of sentences who are                 
  currently permanently banned from future participation in                    
  the program.  He also discussed the impact of felony                         
  convictions of PFDs.                                                         
  MR. WILLIAMS discussed the question of limiting or                           
  prohibiting assignments of PFDs, and if permitted, under                     
  what circumstances, to individual parties or government                      
  agencies.  He described an amendment clarifying the language                 
  in regulating government agency or court ordered restitution                 
  with regard to PFDs.                                                         
  CHAIRMAN PORTER asked if there were further questions of Mr.                 
  Williams or Mr. Vitale.  Chairman Porter referred the                        
  committee to Amendment #1 and recognized Rep. Kott, who                      
  moved Amendment #1.  Rep. Kott moved Amendment #1 and began                  
  to describe its intent, which was to address the needs and                   
  rights of Alaskans obliged to be out of state on excused                     
  absences, such as military personnel, who nevertheless stood                 
  to lose their PFDs after five years.  He rescinded the                       
  motion at Chairman Porter's request, however, until another                  
  amendment could be discussed first.                                          
  CHAIRMAN PORTER:  "And we will make yours Amendment #2.  I'm                 
  taking this on faith.  You have in front of you another                      
  amendment that is not numbered.  It says `Alaska Department                  
  of Revenue, suggested language.'  Would you mark that                        
  Amendment #1, please.  Tom, this is the one that you've just                 
  MR. WILLIAMS:  "Yes, that's correct, and that's requested by                 
  the court system."                                                           
  Number 620                                                                   
  REP. DAVIDSON:  "I would move Amendment #1, and ask for                      
  unanimous consent."                                                          
  CHAIRMAN PORTER:  "Amendment #1 has been moved.  Is there                    
  discussion?  Is there objection?"  There being no further                    
  discussion or objection, Amendment #1 of HB 392 was adopted                  
  by the committee.                                                            
  Number 625                                                                   
  REP. KOTT:  "I'll move Amendment #2."   At Chairman Porter's                 
  request, Rep. Kott went on to reiterate the scope of this                    
  amendment.  He explained that the amendment would eliminate                  
  the five year rule limit for individuals outside on                          
  allowable absences.                                                          
  REP. DAVIDSON:  "Mr. Chairman, I speak against the                           
  amendment.  I think, if we really want to solve this problem                 
  of who gets a dividend, I think we have to get tough.  And                   
  getting tough means that you draw the line, and I think that                 
  Alaska permanent fund dividends should go to people who                      
  reside in Alaska.  And for purposes of this Act, it seems to                 
  me a resident should be defined as one who spends not more                   
  than ninety days outside the state of Alaska in any given                    
  calendar year.  So, while I certainly understand the need                    
  for the group of people of which Rep. Kott speaks, I think                   
  you still have to draw the line somewhere.  And I think this                 
  one goes too far."                                                           
  Number 646                                                                   
  REP. KOTT:  "In response to the way the bill is currently                    
  written, then we are now discriminating against two classes                  
  of individuals, which I think would be unconstitutional.                     
  Because we have a group that was out there, that will, under                 
  the provisions of the committee substitute of State Affairs,                 
  continue to receive that for five years, and now, what you                   
  have suggested, we're going to cut everybody off, maintain                   
  that if you're not living in the state, then you don't get                   
  it.  In that sense, the current form that we have here in                    
  State Affairs, allows for a person to be outside for five                    
  years.  So, I'm not sure, if you have an amendment to the                    
  amendment, or you're just addressing the provision where we                  
  would draw the line."                                                        
  REP. DAVIDSON:  "I would like to hear what the agency has to                 
  say about this amendment."                                                   
  CHAIRMAN PORTER:  "Tom, for perspective, is it a fair                        
  characterization that Amendment #2 would return us to the                    
  status quo?"                                                                 
  MR. WILLIAMS:  "Yes, it would return us to the status quo.                   
  The language that is proposed to be deleted from this                        
  amendment was not included in the original bill, and what                    
  the original bill would have done would basically have                       
  maintained the status quo.  The language that is looked to                   
  be deleted was added by the House State Affairs Committee.                   
  REP. DAVIDSON:  "So, a question then to Rep. Kott:  the                      
  intent then was to, in fact, in State Affairs, to cut off                    
  these individuals, is that right?"                                           
  Number 670                                                                   
  REP. KOTT:  "That is the intent of the amendment to the                      
  original bill, the committee substitute of State Affairs                     
  basically established that after five years you wouldn't                     
  receive it.  I think we would perhaps be facing a                            
  constitutional issue, however, if we kept this particular                    
  provision in there, beyond some other considerations and                     
  concerns I have with it."                                                    
  Number 680                                                                   
  REP. NORDLUND:  "I am just wondering what the sponsor thinks                 
  of this amendment."                                                          
  Number 693                                                                   
  MR. PARNELL:  "The sponsor is in support of the amendment to                 
  withdraw the five-year clause out of the bill, although                      
  there is, definitely, concern about allowable absences and                   
  how to address the problem of abuses.  It's not the feeling                  
  that this does a good job of addressing it.  It gets some of                 
  those that may be abusing it; and some of those who don't                    
  abuse - students, if they're out on allowable absences,                      
  would lose their PFDs that really have intent to come back -                 
  and I think there's probably other ideas that would better                   
  address the problem of allowable absences.  The second point                 
  would be, we don't feel this is the proper vehicle to make a                 
  major policy change in the department.  This was viewed as a                 
  bill trying to clean up a lot of the loose ends that have                    
  occurred over the years and we're thinking of bringing on a                  
  major policy decision here into a bill that wasn't                           
  addressing anything like that before.  We prefer to see a 14                 
  page document not become a longer document, and so, we                       
  support this amendment."                                                     
  Number 697                                                                   
  REP. DAVIDSON asked Rep. Kott, "Was there discussion in                      
  State Affairs that if the class of person you're talking                     
  about, a person out on an excused absence due to service to                  
  the nation, I thought it was possible for at least every                     
  three years, those people get rotated and have an                            
  opportunity to go to their home state.  Is that not                          
  REP. KOTT:  "There were very few discussions involving this                  
  particular issue, but I will also say, as a former military                  
  member, that you can apply to come back to the state as                      
  often as you like, [but] during your military career there                   
  is no guarantee.... Just because you say, `I want to go to                   
  Alaska,' is no guarantee that you're going to get there."                    
  REP. DAVIDSON:  "But there's still, there are flights that                   
  come up here from all over, right?"                                          
  REP. KOTT:  "That's true.  We still have the requirement to                  
  come back to the state every two years.  That's still a                      
  provision.  But what I'm suggesting is that after five                       
  years, we're now segregating Alaskan citizens.  If you live                  
  in state, we'll give it to you.  If you're outside the                       
  state, we're not going to give it to you.  And I think we've                 
  got a constitutional problem there.  If we're going to                       
  segregate those classes in that category in that particular                  
  way.  We either treat 'em all the same, or -- "                              
  Number 720                                                                   
  REP. DAVIDSON:  "I'll withdraw my objection, then Mr.                        
  CHAIRMAN PORTER:  "Is there any further discussion of                        
  Amendment #2?  Is there any other objection?"  There being                   
  no further discussion or objection, Amendment #2 of HB 392                   
  was adopted by the committee.                                                
  Number 729                                                                   
  REP. NORDLUND asked Mr. Williams, "What this bill will do is                 
  take out the ability of the commissioner to determine what                   
  are allowable exemptions? "                                                  
  MR. WILLIAMS:  "Yes, that would be one effect of the bill.                   
  Because basically all of the currently allowable absences                    
  would be moved into statute and discretionary [indisc.]."                    
  REP. NORDLUND:  "Is that just a hot potato that you didn't                   
  want to have to handle anymore?  I'm just wondering...it                     
  seems to me like there might be situations, like the Olympic                 
  athletes one that came up that seemed reasonable, to allow                   
  an exemption, that you won't have that authority any more                    
  where you have to go back to the legislature to do that."                    
  MR. WILLIAMS:  "You must remember that when the original                     
  dividend program was enacted, there were five or six                         
  allowable absences listed there.  I think that the                           
  legislature said, well, we really don't know what all might                  
  come up.  I think the dividend program has matured                           
  sufficiently in the last 12 years to really consider a whole                 
  variety of allowable absences.  You're right that the                        
  commissioner did adopt, has recently adopted one other                       
  allowable absence, but I think as a practical matter, those                  
  are policy issues with regard to the expansion of allowable                  
  absences that are properly addressed by the legislature."                    
  Number 747                                                                   
  REP. KOTT made a motion for HB 392 to be moved out of                        
  Judiciary Committee with individual recommendations.                         
  CHAIRMAN PORTER:  "Is there further discussion?  Is there                    
  objection?"  There being no further discussion or objection,                 
  HB 392 was moved out of committee.                                           
  HB 459 - DAMAGES & ATTY FEES FOR UNPAID WAGES                                
  CHAIRMAN PORTER introduced discussion of HB 459, noting that                 
  testimony had been taken in the Labor and Commerce                           
  Committee.  He acknowledge that four people were present to                  
  testify before the Judiciary Committee and invited the                       
  bill's sponsor, Rep. Mulder, to discuss the bill.                            
  Number 763                                                                   
  REP. ELDON MULDER, SPONSOR OF HB 459, said he was unable to                  
  speak at length due to illness and requested that one of his                 
  staff be permitted to read the sponsor statement.  Prior to                  
  Mr. Joyce's presentation of the statement, Rep. Mulder did                   
  remark, "I would like to point out to the Committee that we                  
  have been working with members of organized labor, the                       
  Department of Labor, and representatives from the employer's                 
  groups to coalesce or come together on a compromise piece of                 
  legislation which you see before you as the proposed                         
  committee Judiciary substitute.  It has been a cooperative                   
  effort.  I'm glad that it's worked together and has come                     
  together and with that, I'll let Howard read the statement."                 
  HOWARD JOYCE of Rep. Mulder's office delivered the sponsor                   
  "This legislation addresses the awarding of punitive damages                 
  in claims of underpaid overtime compensation or statutory                    
  minimum wages under the Alaska Wage and Hour Act (AWHA).                     
  State statute imposes the payment of unpaid minimum wages or                 
  overtime compensation to an employee by an employer who has                  
  violated provisions of the AWHA.  In addition to this, the                   
  employer may be liable for mandatory liquidated damages of                   
  an equal amount (AS 23.10.110(a)).                                           
  "The Alaska Supreme Court in McKeown v. Kinney Shoe Corp.,                   
  820 P.2d 1068 (Alaska 1991), ruled that liquidated damages                   
  are mandatory and that any individual settlements out of                     
  court that did not include liquidated damages were invalid.                  
  "Prior to the Kinney Shoe ruling, an employee with a claim                   
  for underpaid overtime or minimum wages had a few options                    
  for redress.  One, they could file complaint with the Alaska                 
  Dept. of Labor, who was able to negotiate a settlement.                      
  Two, the employer could attempt to reach a private                           
  settlement with the employer in question.  In either of                      
  these cases, a settlement could be reached for an amount                     
  below full liquidated damages.  Finally, if a settlement                     
  could not be reached in the above options, the case could be                 
  taken to court, where liquidated damages would be awarded in                 
  full if the case was found for the plaintiff.                                
  "As the law stands currently, an employer who is in                          
  violation of the state's minimum wage or overtime                            
  compensation laws is automatically liable for liquidated                     
  damages, regardless of the circumstances.  Though this is                    
  intended as a deterrent to the employer in these instances,                  
  it creates an imbalance in certain situations.  Under the                    
  current law, an employer who makes an "honest mistake" is                    
  punished as severely as an employer who knowingly violates                   
  the law.  In these situations, the employer either takes his                 
  case to court, facing the possibility of paying full                         
  liquidated damages plus court costs or settling out of court                 
  for the claim plus full liquidated damages.                                  
  "The Federal Labor Standards Act, upon which AWHA is based,                  
  contains identical language to AS 23.10.110(a), but also                     
  contains the following language:                                             
       `....if the employer shows to the satisfaction of the                   
       court that the act or omission giving rise to such                      
       action was in good faith and that he had reasonable                     
       grounds for believing his act or omission was not in                    
       violation of the Fair Labor Standards Act, . . . the                    
       court may in its sound discretion, award no liquidated                  
       damages or award any amount thereof not to exceed the                   
       amount specified in [29 U.S. Code Section 216].'                        
  29 U.S. Code Section 260                                                     
  "This additional language in the FLSA creates some                           
  flexibility for employers when an honest mistake is made.                    
  The discretion is left to the courts to decide to award                      
  partial or no liquidated damages where the employee shows it                 
  acted in good faith and it had a reasonable basis for                        
  believing it was not violating the law.                                      
  "CSHB 459 (JUD) also adds a provision in Section 2 that                      
  provides the payment of court costs and attorney fees to the                 
  prevailing party in a claim decided by the court.  Previous                  
  statute only provided payment of these costs to the                          
  plaintiff (employee) in these cases.  This change would help                 
  to prevent erroneous claims against an employer from being                   
  brought to the court.  If the Commissioner of Labor was the                  
  prevailing party in an action under this section, any court                  
  or attorney fees awarded would be remitted to the Division                   
  of Revenue for deposit into the General Fund.  The House                     
  State Affairs committee added some further clarification to                  
  this provision in their committee substitute, by adding the                  
  word `recovered.'  (Page 1, line 14 now reads                                
  `..commissioner shall remit the recovered attorney fees to                   
  the Dept. of Revenue.')                                                      
  "CSHB 459 (JUD) would also provide some protection to the                    
  employee during a compensation claim in settlements that are                 
  not supervised by the Dept. of Labor or the courts.  In                      
  Section 3 (f), an employee may enter into a written                          
  settlement agreement with the employer waiving the right to                  
  receive full or any liquidated damages.  CSHB 459 (JUD)                      
  requires that this settlement meets five qualifications:                     
  (1) the settlement is written in a manner that is understood                 
  by the employee; (2) specifically waives the rights or                       
  claims in AS 23.10110(a); (3) advises the employee to                        
  consult with an attorney or with the Dept. of Labor before                   
  entering the agreement; (4) allows the employee seven days                   
  to consider the settlement and (5) gives the employee five                   
  days after they enter into the settlement to revoke                          
  "The goal of HB 459 is to change the state standards                         
  regarding the awarding of liquidated damages to be congruent                 
  with federal standards.  This results in a more equitable                    
  situation for both parties; protection is still provided to                  
  the employee and flexibility is afforded to the employer who                 
  makes a mistake in good faith, providing they meet the                       
  burden of proof."                                                            
  Number 845                                                                   
  REP. DAVIDSON:  "A couple of questions, if I may.  You                       
  talked about, on page One, line 14, that the fees shall be                   
  remitted to the Department of Revenue.  Is that because                      
  [it's] the Department of Revenue out of whose budget fees                    
  for the attorneys would have come?  Or does it come from the                 
  Department of Labor's budget?"                                               
  REP. MULDER:  "It comes from the Department of Labor's                       
  budget.  If the commissioner is the person who is the party                  
  who is the defendant, or the plaintiff [inaud.], as the case                 
  may be, if they are the ones who are found in their favor in                 
  court, it would just require that the funds that go to the                   
  commissioner go back to the General Fund simply because they                 
  are the ones who are expending the funds."                                   
  Number 857                                                                   
  REP. DAVIDSON stated that he was trying to ensure that the                   
  Department of Labor, in doing its job, was not caused to                     
  expend funds from its diminishing budget only to have them                   
  absorbed into the budget of another department.  He                          
  observed, "It appears to me that there are losers and                        
  gainers here, in terms of rights, who wins and who loses; in                 
  terms of dollars, who wins and who loses, in this                            
  REP. MULDER:  "The purpose of the bill is to make the                        
  playing field even or level as it was before, pre-Kinney.                    
  Certainly there is very little tolerance or forgiveness                      
  considered within this bill or within many people in the                     
  legislature that I see, for those employers who are                          
  knowingly trying to defraud employees out of overtime.                       
  That's not the folks we're trying to address in this                         
  legislation.  And those people are not addressed in this                     
  legislation.  If an employer is knowingly cheating his                       
  employees out of overtime, they ought to be punished through                 
  liquidated damages, which is double the claim for back                       
  overtime.  What is being attempted here is to cover those                    
  employers who are honest employers, who make a sincere                       
  mistake.  It was not intentional.  And they have to                          
  demonstrate that, through good faith, that they did not                      
  intentionally try to defraud or hurt or damage their                         
  employees.  So, in terms of winners and losers, I wouldn't                   
  put it really on that playing field as much as trying to say                 
  that we're trying to make the field level and equitable for                  
  those employers who made an honest mistake."                                 
  Number 884                                                                   
  REP. DAVIDSON:  "Then, are we trying to make it easier for                   
  these people to cover their mistakes?  Why aren't they more                  
  careful?  There's a lot of questions here about this bill,                   
  Mr. Chairman.  It makes me uneasy.  Thank you very much."                    
  TAPE 94-50, SIDE A                                                           
  Number 003                                                                   
  PARRY GROVER, ATTORNEY, testified via teleconference from                    
  Anchorage in support of HB 459.  "I am an attorney                           
  practicing law in Anchorage.  I've practiced here for                        
  approximately 14 years.  Most of my practice is                              
  representation of management in all aspects of employment                    
  law, including wage and hour.  I also do some work for some                  
  public entities as a hearing officer, a neutral dispute                      
  resolver, if you will.                                                       
  "I'm speaking in favor of CS 459.  The reason I do it is                     
  this:  I have, over the years, had occasion to talk to my                    
  counterparts in other states, all over the United States.  I                 
  would say I've talked to maybe 12 to 15 labor law                            
  practitioners in other states.  I probably know that west                    
  coast states better than the other ones.  And what I found,                  
  through these discussions with other lawyers, and a few                      
  cases with judges, with labor law professionals, that our                    
  Alaska Wage and Hour Act is harsher for Alaska employers                     
  with respect to liquidated damages than the laws of most                     
  other states and the Federal Fair Labor Standards Act.  And                  
  it really has always been a mystery to me as to why Alaska                   
  should have a harsher law on liquidated damages.  For any                    
  reason, many of our businesses have a more difficult time                    
  keeping a stable, uniform workforce because of the seasonal                  
  fluctuations where they may be very busy in the summer                       
  months and just die for business in the winter.  And the                     
  seasonal fluctuation that other working conditions peculiar                  
  to Alaska, I think, have made compliance with the Wage and                   
  Hour Act more difficult in this state than it is in many                     
  other states where labor performance really doesn't vary                     
  from month to month significantly.  But the essence of this                  
  bill as I think Mr. Joyce and Rep. Mulder said, is not to                    
  really tip the scales, but to simply bring back a level                      
  playing field.  And I'd like to just talk about the four                     
  major substitute provisions and give you my view as to why I                 
  think that is the case.                                                      
  "In Section two, the existing law simply allows a prevailing                 
  plaintiff to recover attorney's fees.  The amendment would                   
  bring this legislation into compliance with what is more                     
  common in Alaska, Alaska Civil Rule 82, where the prevailing                 
  party recovers at least partial attorney's fees.  That's the                 
  rule that we're used to in Alaska.  Most litigation,                         
  including most employment litigation, is governed by Civil                   
  Rule 82.  And again, it just equalizes the playing field.                    
  If the plaintiff wins, he or she recovers at least partial                   
  fees.  If he loses, he may have to pay, at least partial                     
  attorney's fees.  That same rule applies to both sides.                      
  Right now the rule is one-sided.  That's one of the aspects                  
  of the law that is harsh.                                                    
  "In Section three of the CS, there are three substantive                     
  provisions.  Each of them accomplishes a distinct function I                 
  would like to mention.  Section three (e) we bring into                      
  Alaska law something that has never been here - and again, I                 
  don't know why that is the case.  But under the Federal Fair                 
  Labor Standards Act, which has been the law in the Federal                   
  Government since the 1930s, an employer who fails to pay                     
  overtime or minimum wages if they are due, is subject to                     
  liquidated damages.  But the federal government has for many                 
  years provided a limited defense - let me emphasize, limited                 
  defense - if the employer can show to the satisfaction of                    
  the court; and that means bear the burden of probing, that                   
  it acted in good faith and had reasonable grounds for                        
  believing that the person was not entitled to overtime, then                 
  the court may in its discretion, award no liquidated damages                 
  or partial liquidates damages.  Now, as I said, that is a                    
  limited defense.  The employer must show that it acted in                    
  good faith, which under Alaska law means honestly; that the                  
  employer actually honestly believed that the position of                     
  them not paying overtime was exempt.  And it must have                       
  reasonable grounds for believing that.  It can't just stick                  
  its head up in the air and say, well, I think this is a                      
  salary-exempt position so I won't pay overtime.   It would                   
  have to have some good reason for treating the position as                   
  being exempt.                                                                
  "Now, if the court, or the jury, later finds out that the                    
  person in the position was not exempt and that overtime is                   
  owed, the overtime is going to have to be paid.  The                         
  plaintiff is going to be the prevailing party.  So they are                  
  going to get at least partial attorney's fees.  They are                     
  also going to get prejudgment interest in Alaska, so they                    
  have a fairly substantial recovery.  But, again, if the                      
  employer can show-and this is true under federal law, and                    
  this is true under the law in many other states, that it had                 
  a good faith basis and acted reasonably in believing that                    
  the position was not entitled to overtime, then the court in                 
  its discretion can decide not to award liquidated damages.                   
  That's a very limited defense, but it's one that Alaska                      
  doesn't have, and it makes our playing field quite uneven                    
  when compared to other states under the federal government.                  
  "Subsection (e), Section three (e), [is] something that the                  
  Commissioner of Labor asked for early on when we proposed                    
  this legislation, and we thought this was fine.  In the                      
  Kinney Shoes case, or at least let's say by the time of the                  
  Kinney Shoes case, the Department of Labor concluded that it                 
  could no longer settle overtime claims brought to it out of                  
  the mandatory assessments of liquidated damages, that it had                 
  no discretion in light of Kinney, not to demand liquidated                   
  damages.  Prior to Kinney, it was the practice of the Alaska                 
  Department of Labor, to waive liquidated damages when in its                 
  judgment it thought they should be waived; it could not be                   
  required to do so.  But when in the commissioner's judgment                  
  the commissioner felt that liquidated damages should be                      
  waived, they could do so.  Since Kinney they haven't been                    
  able to do that.  Section (e) restores to the commissioner                   
  the power to take that action.  It doesn't require the                       
  commissioner to waive liquidated damages, but it allows them                 
  "Section (f) has to do with private settlements.  One of                     
  the, I think, unfortunate things about the Supreme Court's                   
  decision in Kinney is whoever drafted the decision may have                  
  used language a little more - I'm searching for the right                    
  word - but the point I'm going to make is, they said that                    
  all settlements are void.  They used the language a couple                   
  of times in the decision, that the type of settlements of                    
  overtime claims and liquidated damages claims are void.                      
  Now, I don't object to that, in the facts of the Kinney                      
  case, and if you apply that just in the facts of that case,                  
  that probably was a reasonable result.  The problem with the                 
  language is, they didn't limit it to the facts, they just                    
  said private settlements for these types of claims are void.                 
  "The result has been, and my office has actually had to                      
  participate in this, when we've had cases where we had                       
  competent counsel on the other side, a claim hadn't been                     
  filed but we had discussed the claim, reached a compromise,                  
  which included all or partial liquidated damages, and                        
  looking at Kinney Shoes, we did not think that the                           
  settlement would hold up if challenged unless we took it to                  
  court.  And we've actually had to tell in some cases the                     
  plaintiff to go file the complaint so we could turn around                   
  and settle it.  That sort of result I think is bad policy,                   
  because it simply encourages litigation where the parties                    
  have reached private settlement.  Section (f) will allow                     
  private settlement, and as you will notice in the CS, there                  
  were concerns raised by the Department of Labor on behalf of                 
  employees, that employees could be taken advantage of by                     
  their employers.  We recognized the validity of what the                     
  Department of Labor was saying, and we then built in to it                   
  five hurdles an employer must jump through to make a private                 
  "These hurdles are taken out of comparable federal                           
  legislation, specifically, the Age Discrimination and                        
  Employment Act, which requires a very clear settlement                       
  agreement, a clear waiver of liquidated damages, written                     
  advice to the employee that he or she should consult with an                 
  attorney or the Department of Labor, a period of seven days                  
  to consider the settlement agreement before it's signed, and                 
  five days after it to revoke it.  In other words, giving a                   
  lot of deference to the employee and encouraging the                         
  employee to get competent advice either to the Department of                 
  Labor or an attorney before a private settlement is entered                  
  into.  This will, again, allow private settlements, and I                    
  think at the same time, protect employees from being taken                   
  advantage of by those few employers who may not be so                        
  inclined.  Thank you."                                                       
  Number 245                                                                   
  REP. DAVIDSON:  "I have this image in my mind of the `equal                  
  playing field,' with a summer employee, part-time bus driver                 
  or waitress on one end of the field, and all the expertise                   
  of the legal beagles - and that very small company, the                      
  Holland America Line - on the other, and somehow it just                     
  doesn't seem like we're playing on an equal playing field                    
  CHAIRMAN PORTER:  "That's why we've got a Department of                      
  Number 262                                                                   
  HOLMES, representing a number of hourly workers, testified                   
  in opposition to HB 459.  After expressing appreciation for                  
  the efforts of those involved in the legislation he stated:                  
  "Alaska is very unique.  We are a seasonal state, we have a                  
  lot of seasonal workers, we're resource based, there's a lot                 
  of hourly workers here.  Why should Alaska have a harsher                    
  law than other states?  Because we are such a state, because                 
  we rely on hourly workers to do the work for businesses."                    
  MR. WEYHRAUCH cautioned against the constitutional issues                    
  which could be expected to rise if the legislation were                      
  deemed retroactive.  "If the intent is not to tip the scale                  
  here, this retroactive date on here would probably tip the                   
  scales significantly in favor of those who haven't been paid                 
  their wages and who are due them, and those who are owed                     
  wages.  And I think there may be significant constitutional                  
  problems with this retroactive date here.  We think that it                  
  should read, instead of application of the Act, this action                  
  will apply only to work performed after its effective date.                  
  "Also, this statute is intended to act like a private                        
  attorney general.  Instead of having to hire a bevy of                       
  bureaucrats and Department of Law investigators, it gives an                 
  incentive to the worker to get an attorney to pursue their                   
  claims for them.  It puts the rights right in the hand of                    
  the individual to pursue the claim.  That's why you have                     
  liquidated damages, to make sure that people get the wages                   
  that they're owed and you make it so that they don't go                      
  bankrupt pursuing their claims.  So instead of having                        
  reasonable attorney's fees or determined according to court                  
  rule on the first page in (c), if you make it according to                   
  prevailing party and make sure the prevailing party gets                     
  their actual attorney's fees, then both sides benefit.  If                   
  the person who says, `I have a wage that I'm owed,' and they                 
  in fact are owed that wage, they should get their actual                     
  attorney's fees, not reasonable fees set by court rule.                      
  Same way, if their claim isn't valid, then the prevailing                    
  party, which would be the employer, gets their actual fees.                  
  So it works both ways.  That seems to be a more level                        
  playing field.                                                               
  "Finally, we talked about who had input on this bill, the                    
  employer groups, organized labor, Dept. of Labor.  I think,                  
  at least I understood, that Mr. Carr from the Dept. of Labor                 
  would be here to testify, no one representing the hourly                     
  worker, Joe Doakes, was in on these negotiations, and we'd                   
  like an opportunity to participate in these negotiations.                    
  We think there could be language that adds a provision that                  
  if somebody is going to waive liquidated damages, that the                   
  amount of those liquidated damages being waived should be                    
  specified so that they fully understand what's going to be                   
  waived and that some language be put in the bill, that if a                  
  waiver is knowing and voluntary, that should depend on all                   
  the circumstances, not just these specific six or five                       
  provisions set forth in this bill.  I've provided your staff                 
  with those edits and also Rep. Mulder's staff, and we'd be                   
  glad to discuss that further with anyone that you wish, Mr.                  
  Number 331                                                                   
  REP. MULDER:  "Concerning Bruce's point that no one was                      
  there representing the interests of the Wage and Hour                        
  person, I take offense to that, because I think the                          
  Department of Labor does a very good job in that regard.                     
  They were an advocate, a very strong vocal advocate for the                  
  Wage and Hour individual.  And, as it currently exists, if                   
  you have a dispute with your employer, you can go to the                     
  Department of Labor free of charge, no attorney's fees, and                  
  ask for their assistance and their intervention, and they                    
  will help you.  So, there is representation, there is                        
  allowance here for the little guy, in fact."                                 
  REP. PHILLIPS:  "Mr. Weyhrauch, did you say you were an                      
  MR. WEYHRAUCH:  "Yes."                                                       
  REP. PHILLIPS:  "And are you an attorney lobbying on behalf                  
  of a specific group of people, or -- what is your                            
  relationship, if you wouldn't mind."                                         
  MR. WEYHRAUCH:  "We represent individual wage earners from                   
  around the state."                                                           
  REP. PHILLIPS:  "And how do you do that?  Through                            
  individual-I mean, are you representing them here today as a                 
  lobbyist on their behalf or are those legal cases that you                   
  are dealing with in your company?"                                           
  MR. WEYHRAUCH:  "Both.  There's one specific.  I'm                           
  registered for one specific person on this, but we represent                 
  numbers of people around the state."                                         
  REP. PHILLIPS:  "And who are you registered to lobby for?"                   
  MR. WEYHRAUCH:  "It's an individual, I can provide you that                  
  name after this..."                                                          
  REP. PHILLIPS:  "Well, it is a matter of public record,                      
  would you please state it for the record, who you are                        
  lobbying for."                                                               
  MR. WEYHRAUCH:  "I can't state it right now."                                
  REP. PHILLIPS:  "Okay.  I will get the information, and we                   
  will put it on public record.  The lobbyist record is a                      
  matter of public record."                                                    
  MR. WEYHRAUCH:  "Yes, it is."                                                
  Number 363                                                                   
  REP. NORDLUND:  "I'm just glad that Bruce has stepped                        
  forward and offered an opinion for a group of people who are                 
  affected by this legislation.  I think it's entirely                         
  appropriate that there is a representative for that person;                  
  whether they work for him or not, I think is irrelevant."                    
  REP. PHILLIPS:  "Nothing in this committee in debate is                      
  irrelevant.  Nothing.  That has been pointed out time after                  
  time after time in this committee by everybody."                             
  CHAIRMAN PORTER:  "No, but opinions can be stated, so...and                  
  they can be refuted."                                                        
  REP. PHILLIPS:  "Which I just did."                                          
  CHAIRMAN PORTER recognized Rep. James.                                       
  REP. JAMES:  "I just wanted to comment on the comment made                   
  by Rep. Mulder regarding the Department of Labor.  And since                 
  my business has been dealing with small businesses,                          
  accounting, I can verify that the Department of Labor does                   
  an excellent job of handling claims of people who have a                     
  problem.  They go to the end of the world to try to help                     
  them and do help them tenaciously, so I believe that if the                  
  Department of Labor was involved in this bill, that those                    
  people have been represented."                                               
  Number 387                                                                   
  testified in support of HB 459.  "My name is C.J. Zane.  I                   
  am registered to represent Holland America Line.  We are one                 
  of several corporations that have formed a coalition to                      
  support this legislation.  There are in your packets, I                      
  think there are letters of support from the Providence                       
  Hospital Group, from the State Chamber of Commerce, from the                 
  Carr-Gottstein food chain, from Tesoro Petroleum...the point                 
  is, we have a broad based range of Alaskan employers, and we                 
  count ourselves among the group of Alaska employers, and I                   
  am here to testify in favor of the bill, and in favor of the                 
  CS which we have worked out.  This bill has been around for                  
  several weeks now.  The process has been open.  We have                      
  negotiated with legislators, with staff, with the Department                 
  of Labor, with members of organized labor; we have had an                    
  open process.  And I want to assure the members of the                       
  committee that this compromise is a solid one, and one that                  
  does protect the employees in this state.                                    
  "And what we sought to do was two very simple things with                    
  this legislation:  We wanted to, one, go back to the pre-                    
  Kinney Shoe decision as it related to private settlements                    
  and as it relates to the department's authority and ability                  
  to settle cases, not necessarily imposing liquidated                         
  damages.  They can still do that but in some cases where                     
  it's warranted this bill will allow them to waive some or                    
  all of that.                                                                 
  "The other thing that we sought to do was something that                     
  should be just very common sense, man or woman in the street                 
  kind of thing, which is the federal law upon which I don't                   
  think there's any disagreement that the state wage and hour                  
  law is largely based, does provide for something called a                    
  good faith and reasonable belief defense.  Not a defense                     
  against the original claim or the base amount of the claim;                  
  it's a limited defense that can be invoked on the issue of                   
  the doubling of liquidated damages, and that good faith and                  
  reasonable belief standard is not an easy one to meet, but                   
  it is one that is allowed under federal law and it is one                    
  that is allowed in all the Pacific coast states.  We have                    
  done research on this:  Washington State, Oregon and                         
  California; Idaho, we've subsequently found, also, provides                  
  for this basic sort of common sense, good faith reasonable                   
  belief defense.  With that, Mr. Chairman, I just want to say                 
  again that we have worked long and hard to reach a viable                    
  compromise, one that still protects the interests of                         
  employees and brings some measure of balance back to the                     
  equation as far as employers are concerned."                                 
  Number 448                                                                   
  KEN LEGACKI, ATTORNEY, testified via teleconference from                     
  Anchorage in opposition to HB 459.  "Obviously, there has                    
  been a lot of discussion about this bill.  I would like for                  
  the committee to try to envision an employee who makes                       
  $4.75/hr. or $5/hr. trying to negotiate with his employer.                   
  A wage earner who is dependant on the employer for his job,                  
  dependent on his employer to make payment, dependent on his                  
  employer to feed his children, and the employer hands him an                 
  agreement and says, `Here, sign this.' An employee has no                    
  choice but to sign that agreement.  If everybody is                          
  commenting about the Department of Labor being such an                       
  advocate, why don't we change that language in the bill and                  
  make it mandatory that the Department of Labor approve of                    
  the settlement?  If it's such a fair and honest deal, and if                 
  the employer is dealing in such good faith...if they have                    
  nothing to hide?"  He introduced three of his clients who                    
  were present with him.  "The employer of Mr. Pat Bliss told                  
  him to take seven and a half cents on the dollar.  When Mr.                  
  Bliss said, that's not fair, the employer then harassed him                  
  and terminated him.  What's his remedy?  He's been out of                    
  work for a year and a half.  He's a man in his fifties.  Mr.                 
  Stewart went to five attorneys.  They all said his claim was                 
  not worth enough money because `I only get a percentage of                   
  your claim, your claim's not that high.'                                     
  "I've looked at the federal law, which said that the                         
  employer has to pay attorney's fees if it's a good case.  We                 
  won at the Supreme Court, and that's the law they're now                     
  trying to change.  But try and imagine somebody who, like                    
  Mr. Stewart, who made $4.75/hr, going to an attorney who                     
  charges anywhere from $125 to $150/hr. to ask him to look at                 
  a piece of paper.  Is that fair to the employee?  Mr. Harris                 
  complained to the employer that they were violating the Wage                 
  and Hour Act.  The employer then told Mr. Harris that they                   
  were `downsizing' and asked if he would either be terminated                 
  or moved to California.  To keep his job he moved to                         
  California.  Shortly thereafter he was terminated by the                     
  MR. LEGACKI presented further testimony concerning workers                   
  who were being deprived of wages and who feared retaliatory                  
  treatment by employers in pursuing their claims. [Underlay                   
  of whispered conversation damages sound quality.]  He noted                  
  in particular one individual who was afraid to appear before                 
  the committee because his employer was a major proponent of                  
  the legislation.                                                             
  "There's a lot of people who would like to testify and tell                  
  stories on how this bill would impact.  It is not a level                    
  playing field.  If you have someone like Holland America                     
  Inc., or any big company, it is in their best interests to                   
  fight these cases tooth and nail, because they know if they                  
  have to pay one, they will probably  have to pay another                     
  one.  And it is a gamble that they take."  You're                            
  encouraging them to take a gamble....                                        
  "You'll hear a lot of stories about people who file                          
  complaints with the Wage and Hour, that the employers, even                  
  though the Department of Labor tells them they are in                        
  violation, still will not pay the wages.  So what you're                     
  encouraging for these big companies with the good faith                      
  defense is to try to gamble, and if they get caught, they                    
  can negotiate that.  It's a calculated risk, a business risk                 
  for them.                                                                    
  "There's a lot of work that has to be done with this bill, a                 
  lot of testimony, a lot of input that still needs to be                      
  done.... The Department of Labor's hands are tied, because                   
  they can only address certain issues.... I know lots of                      
  people who would like to put more input into this bill, and                  
  a lot of people who would like to testify.  I request that                   
  you hold up this bill...get more people to testify and tell                  
  you about their stories, tell you what it's like to be                       
  threatened.  As I said, I have Mr. Harris, Mr. Bliss and Mr.                 
  Stewart here with me, they'd be happy to tell you their                      
  experiences in dealing with their employers and the results.                 
  Thank you."                                                                  
  REP. JAMES:  "My question is, these three people that you're                 
  talking about there, that have had such bad luck, did each                   
  one of these people take their claim to the Department of                    
  Labor in the beginning?"                                                     
  Number 560                                                                   
  MR. LEGACKI:  "Yes, all three of them did."  Mr. Legacki                     
  described the saga of Mr. Harris, who had indeed gone to the                 
  Department of Labor but whose case had undergone some                        
  considerable, concealed manipulations by the national                        
  corporation for whom he had worked, and the story of Mr.                     
  Bliss, whose employer, in spite of a written ruling from the                 
  Department of Labor, had independently determined what it                    
  was willing to pay.                                                          
  CHAIRMAN PORTER interjected a question.  "Ken, before you                    
  leave the first one.  Are you saying that this bill would                    
  change the situation on that first case?  It seems to me                     
  that was certainly something less than good faith."                          
  MR. LEGACKI:  "Oh, absolutely.  But [the employee has] to                    
  hire an attorney.  And now you're saying that instead of                     
  paying my actual attorney's fees, for example...they have                    
  three attorneys in Chicago - "                                               
  CHAIRMAN PORTER again interrupted, saying, "Just a second,                   
  yes.  But that's a different issue, really, than                             
  compensation for your client."                                               
  MR. LEGACKI:  "Not necessarily.  Not if he has to pay his                    
  attorney out of his wages at the end of the rainbow."                        
  CHAIRMAN PORTER:  "Well, that's generally a court rule."                     
  MR. LEGACKI:  "Yes, the court has ruled and this bill will                   
  change [indisc.], the court has ruled that the employer has                  
  to pay the actual attorney's fees. [Underlay of conversation                 
  amongst committee members again detracts from sound                          
  quality.] Now, this employer has taken me all around the                     
  country, and costs and attorney's fees [increase].  Now, if                  
  the claim is only worth $100,000, after a while the attorney                 
  says, `I can't work any more for free and I'm going to take                  
  1/3 of your wages that you earned.'  The employee is left                    
  with less than what he is entitled to.  And that's one of                    
  the things [the] company is doing, it's trying to make an                    
  example, they're trying to push the gamble up as much as                     
  possible, make it as difficult as possible, so the employees                 
  will cave in.                                                                
  [Consider] the seasonal employees.  Look at a bunch of                       
  seasonal employees working for Holland America, for example.                 
  Now, at the end of the season if an employee fights, the                     
  company is going to put all of its resources against that                    
  employee because it does not want to set a precedent for the                 
  other employees.  They may even offer some of these kids,                    
  you know, 25, 50 cents on a dollar, than what they normally                  
  should pay them to go away.  If you take away the attorney's                 
  fees provision, the attorney has got to get paid out of the                  
  employee's wages, and that's wrong, because the employee                     
  earned that money, and he should be paid that money.   The                   
  attorney's fees are over and above what the wages should                     
  CHAIRMAN PORTER:  "Okay, Ken, thank you.  Are there any                      
  other questions?  Rep. Mulder?"                                              
  REP. MULDER:  "What Mr. Legacki doesn't point out to you is                  
  the fact that nothing in this bill prohibits employees or                    
  former employees who have wage disputes from taking it to                    
  court.  We're not restricting that ability at all.  If you                   
  have a gripe and cannot get it solved through DOL, your                      
  recourse is to take it to court.  And we're not prohibiting                  
  that option from you.  You're fully allowed to do that."                     
  MR. LEGACKI:  "First of all, the Department of Labor does                    
  not take claims over $5,000.  They have a policy there now,                  
  and I think there's a state statute that says to that                        
  effect, that the department claims jurisdiction only up to                   
  $5,000.  Second, you are forcing them to take it to court                    
  because you want to litigate the good faith issue.  And                      
  [indisc. - when?] we have to take that to court, you do not                  
  want to pay the full attorney's fee.  That's why this                        
  package that's being introduced, it's actually harmful to                    
  employees, and more beneficial to the employer because it                    
  gives the employer an advantage.  An employer who has a lot                  
  of money has an advantage to try to oppress the employee.                    
  This bill with the private settlement, as I mentioned                        
  before, if an employer hands a wage earner who is dependent                  
  upon that employer to feed his wife and children, what other                 
  option does the employee has?  He has to sign that.  That's                  
  the reality."                                                                
  CHAIRMAN PORTER:  "I saw some shaking of heads on that                       
  $5,000 plateau.  Is that - ? "                                               
  Number 633                                                                   
  ALASKA DEPARTMENT OF LABOR, responded to Chairman Porter's                   
  question.  "The representation by Mr. Legacki is correct,                    
  but misguided.  The statutes divide wage and hour authority                  
  into two sections.  One section deals solely with the Wage                   
  and Hour Act; that is, minimum wage and overtime violations.                 
  That section does not have a statutory limit with regards to                 
  the amount of claim that the Department of Labor may pursue.                 
  There is a separate section of the statutes that deals with                  
  general wage claims and contract enforcement.  That has a                    
  $5,000 cap.  So the only statutory limit applies to issues                   
  other than overtime.  The overtime cases that we take now                    
  are not limited in any way by statute, but we have practical                 
  limitations placed upon us by budgetary considerations."                     
  REP. DAVIDSON:  "You spoke about budgetary limitations,                      
  so...if someone were to try to get back wages for last                       
  summer, when could that person, with your backlog and                        
  diminishing resources with which to deal with these kinds of                 
  things, when could that person reasonably expect to resolve                  
  this dispute with their employer through your offices?"                      
  MR. CARR:  "We track our closure time frames on cases on an                  
  annualized basis, and the average length of time to process                  
  a case through collection now is six and one-half months,                    
  REP. DAVIDSON:  "Thank you."                                                 
  CHAIRMAN PORTER asked if there were further questions; there                 
  being none, he requested the wishes of the committee.                        
  Number 660                                                                   
  REP. NORDLUND:  "I have an amendment I would like to offer."                 
  Number 668                                                                   
  REP. KOTT:  "I would move that we adopt CS for HB 459 dated                  
  CHAIRMAN PORTER:  "We have a motion to adopt the CS.  Is                     
  there objection?  Seeing none, the CS is in front of us, and                 
  the amendment is coming around.  Will you mark this                          
  Amendment #1, please."                                                       
  Number 670                                                                   
  REP. NORDLUND:  "I drew up this amendment based on some of                   
  my conversations with Mr. Weyhrauch who testified for us                     
  today, and it's my understanding that the Department of                      
  Labor would not have any problem with these two changes to                   
  the bill.  What the first one would do is state that, under                  
  the conditions by which a waiver is written, the five points                 
  that are in the bill right now, the conditions of the                        
  waiver, would not be limited to those five points, but that                  
  other circumstances could be considered.                                     
  "My concern here is that you've got to keep in mind the                      
  intimidation that a large employer has over an employee.                     
  And where they might be willing to sign all of these things                  
  on a statement, that there might be other conditions or                      
  circumstances that the court might want to take into                         
  consideration that might be to the detriment of the employee                 
  or might be able to discern some way in which the employee                   
  was intimidated into signing such a statement.                               
  "The other part of that is adding a fifth element to that                    
  list that sets out the amount of liquidated damages that the                 
  employee would be waiving.  I think it's important that they                 
  know exactly how much money they would be giving up.  With                   
  that, Mr. Chairman, I would move the amendment."                             
  Number 703                                                                   
  REP. PHILLIPS:  "Object."                                                    
  Number 705                                                                   
  REP. DAVIDSON:  "I certainly support this amendment.  I                      
  think it's fair for people at this level of the economic                     
  ladder to understand more fully what it is they're giving up                 
  when they're competing on such an equal playing field."                      
  Number 708                                                                   
  REP. MULDER:  "I would speak against the amendment because,                  
  in a nutshell, all it's going to do is encourage further                     
  litigation, which is what we're attempting to diminish or                    
  overcome to begin with; second, in relation to--sets off the                 
  approximate amount of liquidated damages--there's really no                  
  way to determine that.  It's a very ill-defined term in                      
  relation to a quantifiable amount.  I think Mr. Grover could                 
  highlight that point if you will give him the opportunity to                 
  REP. NORDLUND:  "My understanding of liquidated damages is,                  
  it's just double.  It's again the amount that was owed.  So,                 
  if you know the amount that's owed, you know what the                        
  liquidated damages are."                                                     
  REP. MULDER inquired if Mr. Grover was still on-line.  Mr.                   
  Grover responded affirmatively.                                              
  REP. MULDER asked, "Parry, this is Eldon.  They have                         
  proposed the amendment first to, whether a waiver is knowing                 
  and voluntary depends on upon all of the circumstances,                      
  however a waiver is not knowing and voluntary unless the                     
  settlement agreement includes all the following; and then,                   
  also, the second part of the amendment, it sets up the                       
  approximate amount of liquidated damages that is being                       
  waived.  Could you talk about those two amendments?"                         
  Number 729                                                                   
  MR. GROVER:  "Sure.  As to the first one, I believe that's                   
  implicit.  It simply says that a waiver shall not be                         
  considered knowing and voluntary unless the five conditions                  
  are met.  You've got to meet those five conditions.  As I                    
  listened to Mr. Legacki talk, he talked about employer                       
  threats and intimidation.  I don't know of any court in                      
  Alaska that they found in fact that an employee was                          
  intimidated by the employer, in the manner that he                           
  described, would find that a knowing and voluntary waiver.                   
  So I think the existing language already addresses that.                     
  "Now, in terms of the second amendment that I heard                          
  described, about putting in the amount of liquidated                         
  damages, the amount may be uncertain.  In fact, it usually                   
  is because if the employer thinks they've acted in good                      
  faith and fairly, they may believe they owe no liquidated                    
  damages.  It's like any other claim.  If you have an                         
  employment discrimination claim, an employee may believe a                   
  very large figure, the employer may believe a small figure.                  
  And the whole essence of the settlement is, having those                     
  different points of view, they compromise.  And they reach a                 
  middle ground and settle.  The same thing is true here.  It                  
  could be as much as double or the employer could believe,                    
  `No, I've got an opinion from the Dept. of Labor, I thought                  
  the position was exempt, I owe you zero liquidated damages.'                 
  So we're just adding another factor that I don't think makes                 
  the settlement any fairer or makes it any more knowing and                   
  voluntary, but makes it more likely to be challenged by a                    
  lawyer who finds some defect in what the employer wrote                      
  Number 752                                                                   
  REP. NORDLUND:  "I thought it would be implicit also that if                 
  the employee is willing to sign an agreement, that they are                  
  signing an agreement on the amount of wages that they are                    
  owed.  That is a determined amount, and that they are just                   
  also being made aware of the fact that they are waiving the                  
  opportunity to collect double that amount, that specific                     
  amount.  The amount that was agreed upon."                                   
  MR. GROVER:  [Loud paper shuffling in foreground damages                     
  sound quality of Mr. Grover's testimony.]  "I have handled                   
  many, many cases in this category.  Quite often, there are a                 
  number of things that are uncertain.  Whether it be the                      
  Department of Labor - and most courts look at these                          
  exemptions on a week by week basis - there may be a question                 
  of whether the employee was exempt, say, during the summer                   
  months, throughout the winter months, how many hours he                      
  works; there can be all sorts of factual issues that bear                    
  upon how much is owed.  So frequently, just like any                         
  employment claim, be it a wrongful termination claim, a                      
  sexual harassment claim, there may be any number of factors                  
  which make the figure imprecise.  And that's to say that's                   
  true with wage and hour claims.  And that's certainly true                   
  with settlement of wage and hour claims with the Department                  
  of Labor.  So the parties may not know exactly the amount                    
  that is owed.  The employer may think it's low, the employee                 
  may think it's high.  That's the essence of a settlement, is                 
  a compromising of disparate views."                                          
  Number 774                                                                   
  REP. DAVIDSON:  "In the discussion by Mr. Grover, at the                     
  first part of this amendment - and I've learned to be very                   
  careful as far as dealing with these kinds of situations -                   
  he did say `a waiver shall not be considered to be' saying                   
  it was about the same.  I am pretty sure he meant to say, as                 
  the bill says, `a waiver may not be considered to be.'"                      
  MR. GROVER:  "Unless it makes the five criteria.  That's                     
  right. Thank you."                                                           
  CHAIRMAN PORTER:  "I think in that context `may' and `shall'                 
  are synonymous - but usually they're not, that's correct."                   
  Number 784                                                                   
  REP. NORDLUND:  "For Mr. Grover:  The first part of my                       
  amendment, then, you say it's implied.  What would be the                    
  danger in putting this language in there just so it's                        
  instructive to the attorneys as well as to the employee that                 
  those are not the only conditions?"                                          
  MR. GROVER:  "I don't really have any quarrel with that                      
  first change, sir.  Would you mind reading back that                         
  language?  I'm not sure I heard you, I want to make sure I                   
  understood exactly what that was."                                           
  CHAIRMAN PORTER:  "I think, if I may, if I understood Rep.                   
  Nordlund's first statement of explanation of the amendment,                  
  I don't know if it says what it is that you intended.  If I                  
  am not mistaken you want the ability to bring up any other                   
  criteria to determine whether or not the statement was                       
  knowing or voluntary, not just all of the five."                             
  REP. NORDLUND:  "That is correct."                                           
  CHAIRMAN PORTER:  "You want a sixth or a seventh or an                       
  eighth if you..."                                                            
  REP. NORDLUND:  "All of the circumstances that...yes, that's                 
  CHAIRMAN PORTER:  "Do you understand that, Parry?"                           
  MR. GROVER:  "Yes.  I believe that what Rep. Nordlund is                     
  talking about is language that Mr. Weyhrauch had proposed,                   
  and he had the other day presented language to us that reads                 
  as follows:  `Whether the waiver is knowing and voluntary                    
  depends on all of the circumstances,' and then it goes on                    
  and says, `but is not considered knowing and voluntary                       
  unless the settlement agreement...,' and then it's one, two,                 
  three, four, five.  If that's the language -"                                
  CHAIRMAN PORTER:  "That's substantially the language, yes."                  
  MR. GROVER:  "I think we're on the same plane."                              
  REP. MULDER:  "So, Parry, I'm still trying to get back from                  
  you, when we had discussed it earlier, your feeling was that                 
  it has the potential of leading to further litigation.  Is                   
  that still your point?  Or do you think that that's not a                    
  great concern."                                                              
  MR. GROVER:  "The language that I just read to you, I think,                 
  if the committee feels it's necessary, I think it would be                   
  acceptable.  What I object to is adding additional points to                 
  the laundry list of things that employers must do, the one,                  
  two, three, four, five.  I was objecting specifically to the                 
  proposal that you list the amount of liquidated damages, for                 
  the simple reason you're going to have different views on                    
  what those are.  And the figure may not be right.  It may                    
  simply open up another avenue for attack.  Frankly, ladies                   
  and gentlemen, lawyers are nitpickers.  Look at any kind of                  
  agreement, anything that's done, is to find one little thing                 
  that is wrong with it, blow it up and convince the judge to                  
  throw it all out.  I am very reluctant to see additional                     
  subpoints added.  I think that just increases the chance                     
  that the entire settlement will be thrown out."                              
  Number 825                                                                   
  REP. NORDLUND:  "I move that we divide the question so that                  
  we can vote separately on the additions to page two, line                    
  27, and then a separate question on the additions to page                    
  three, line two."                                                            
  CHAIRMAN PORTER:  "Is there objection to a motion to divide?                 
  Seeing none, we have before us then Amendment #1 as amended,                 
  which only would affect page two, line 27."                                  
  REP. NORDLUND:  "So I'll move Amendment #1A, do you want to                  
  call it that?"                                                               
  CHAIRMAN PORTER:  "We'll call it 1A."                                        
  REP. PHILLIPS and REP. JAMES objected.                                       
  CHAIRMAN PORTER:  "There is objection.  Is there further                     
  discussion?  Could we have a roll call vote, please?"                        
  A ROLL CALL VOTE WAS TAKEN by the committee.                                 
  REPRESENTATIVES NORDLUND, DAVIDSON VOTED YEA;                                
  VOTED "NAY.".Amendment #1A to HB 459 was therefore not                       
  adopted by the committee.  Chairman Porter asked for a                       
  motion on Amendment #1B.                                                     
  REP. NORDLUND:  "Mr. Chairman, I wish Mr. Weyhrauch was                      
  here, because I frankly don't have the knowledge to rebut                    
  Mr. Grover's comments about whether or not liquidated                        
  damages can be determined or not, so...I know, Rep. Davidson                 
  had the same amendment, unless you want to pursue that..."                   
  Number 844                                                                   
  CHAIRMAN PORTER:  "For what it's worth, these are                            
  settlements that would happen before that would be                           
  determined.  And the only way that would be determined                       
  really, would be by an outside agency, if there was                          
  agreement or if there was disagreement, on how much was                      
  owed.  We could be talking about a situation where he forgot                 
  to punch out but has a friend who said he really did work,                   
  and those kinds of things that, somebody would just have to                  
  make up their mind how much actual overtime was going to be                  
  considered, DOL or a court.  Then you'd have an absolute                     
  number for liquidated damages.  But if you're trying to                      
  settle it beforehand, that's the whole idea.  If there's a                   
  dispute, that you would not be able to know...at least,                      
  reach an agreement on what kind of damages it would be."                     
  Number 855                                                                   
  REP. NORDLUND:  "There might be a better way of arriving at                  
  this, then.  The point here is that to agree to sign a                       
  waiver like that without knowing within at least some range,                 
  let's say, of how much money that they're giving up, might                   
  make the person change their mind on signing the waiver.                     
  And that's the point of it.  And I don't have the expertise                  
  to know what the experience has been to determine what kind                  
  of range you're talking about."                                              
  Number 861                                                                   
  CHAIRMAN PORTER:  "I think it has to be a knowing waiver,                    
  and generally knowing that liquidated damages means twice                    
  the amount of disputed overtime, is part of knowing what                     
  you're waiving."                                                             
  REP. MULDER:  "Rep. Nordlund, your concern was one that we                   
  did discuss in great length and detail; in fact, did                         
  compromise on.  And those concerns related to the five                       
  points under Section (f).  And specifically, number three,                   
  under (f), says, part of that agreement, that settlement                     
  agreement, advises the employee to consult with an attorney                  
  or with the department before entering into an agreement.                    
  In other words, if they have any misunderstanding, any                       
  misgivings about it, talk to someone who may have better                     
  information.  If you are at all unclear about it, the                        
  department, you know, that's what they exist for in terms of                 
  that specific division.  So that was part of the give and                    
  take in this whole process.  To try and make adequate                        
  concern for the employee.  To make sure that they weren't                    
  being coerced, they weren't being hoodwinked in a sense of                   
  the way, shape or form, that they were being adequately                      
  informed about what they could potentially be owed."                         
  CHAIRMAN PORTER:  "I particularly like the fail-safe of five                 
  days after the signing."                                                     
  REP. NORDLUND:  "Just a point on hiring an attorney:  they'd                 
  probably have to pay the attorney more than they'd ever                      
  collect, in some cases, so -- I wish I could figure out a                    
  better way of structuring my intent here.  I can't do that,                  
  so at this point I guess I'll just withdraw the amendment,                   
  unless, Cliff, you want to go ahead with it?"                                
  REP. DAVIDSON:  "No, I agree."                                               
  CHAIRMAN PORTER:  "Amendment #1B is withdrawn.  What is the                  
  wish of the committee?"                                                      
  REP. JAMES:  "I move that we move - do we have the CS before                 
  REP. NORDLUND:  "Mr. Chairman, I do have one other                           
  amendment."  [Side A ends abruptly.]                                         
  TAPE 94-50, SIDE B                                                           
  Number 000                                                                   
  CHAIRMAN PORTER:  "...We're off teleconference."                             
  Number 004                                                                   
  REP. NORDLUND:  "This deals with the effective date of the                   
  Act and the retroactivity aspect of the bill, rather.  I                     
  have some concerns about that.  It seems to me that if we're                 
  going to create new legislation to put everybody on notice,                  
  that it should apply to cases that happen after the                          
  effective date of the Act.  To go ahead of that time, I                      
  think, causes possible constitutional problems regardless of                 
  the language in here, and even if it is constitutional, you                  
  can be absolutely sure that this is going to be a point                      
  that's going to be litigated in every case.  If the intent                   
  of this is to lessen the amount of litigation, I think                       
  making this basically a retroactive effective date is                        
  counter-productive to the intent of the bill."                               
  CHAIRMAN PORTER:  "Do you want to move the amendment?"                       
  REP. NORDLUND:  "I'll move the amendment."                                   
  Number 032                                                                   
  REP. PHILLIPS:  "Object.  Just on the point of                               
  retroactivity, certainly in the history of Alaska                            
  legislative deliberations and statutes being passed, etc.,                   
  etc., the issue of retroactivity has been constitutionally                   
  upheld time after time.   And it is argued on a case by case                 
  basis, but it has been upheld many times in many laws that                   
  we've written."                                                              
  Number 045                                                                   
  CHAIRMAN PORTER:  "If I could speak to it just quickly, this                 
  is even a different kind of situation than a standard                        
  retroactive provision, because the situation that requires                   
  the Department of Law to only settle with limited liquidated                 
  damages, has only come about as a result of this court case.                 
  Before that, that wasn't what they were doing.  So, we've                    
  had different standards.  And actually making it retroactive                 
  would give the department a little more leeway and employers                 
  and employees a little more leeway, than they have right                     
  now.  I would speak against the amendment."                                  
  REP. NORDLUND:  "You can see that this is inviting further                   
  litigation on the issue of constitutionality in those cases,                 
  and it doesn't seem like a good idea to me."                                 
  CHAIRMAN PORTER:  "The objection is maintained.  Could we                    
  have a roll call vote please on Amendment #2 - we will call                  
  this J.4, dated 3/23."                                                       
  A ROLL CALL VOTE WAS TAKEN by the committee.                                 
  VOTED NAY.  Amendment #2, J.4, of HB 459 was therefore not                   
  adopted by the committee.                                                    
  CHAIRMAN PORTER:  "We have in front of us then CS HB 459."                   
  Number 094                                                                   
  REP. JAMES:  "Mr. Chairman, I would move this bill out of                    
  committee, with individual recommendations, and ask for                      
  unanimous [indisc. due to paper shuffling noise --                           
  CHAIRMAN PORTER:  "And attached fiscal notes, which are                      
  REP. JAMES:  "And attached fiscal notes."                                    
  CHAIRMAN PORTER:  "The motion has been made to move.  Is                     
  there objection?  Seeing none, the bill is moved."                           
  No time was given in notes for adjournment.                                  
  BILLS NOT HEARD                                                              
  HB 367:   PROHIBITED HIGHWAY ADVERTISING                                     
  SB 186:   STATE AGENCY PUBLICATIONS                                          

Document Name Date/Time Subjects