Legislature(1995 - 1996)
01/30/1995 03:03 PM House L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
January 30, 1995
3:03 p.m.
MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Norman Rokeberg, Vice Chairman
Representative Brian Porter
Representative Jerry Sanders
Representative Beverly Masek
Representative Kim Elton
Representative Gene Kubina
MEMBERS ABSENT
None
OTHER HOUSE MEMBERS PRESENT
Representative Eldon Mulder
Representative Mark Hanley
COMMITTEE CALENDAR
* HB 99:"An Act extending the Alaska Public Utilities Commission;
and relating to regulatory cost charges."
PASSED OUT OF COMMITTEE
* HB 115:"An Act relating to settlement and payment of
claims for minimum wage and overtime
compensation claims and to liquidated damages
and attorney fees for minimum wage and
overtime compensation claims."
HEARD AND HELD
WITNESS REGISTER
JIMMY JACKSON, Attorney
General Communications Inc.
2550 Denali No. 1000
Anchorage, AK 99503
Telephone: (907) 265-5545
POSITION STATEMENT: Testified in favor of HB 99.
JIM ROWE, Director
Alaska Telephone Association
4341 B. Street, Suite. 304
Anchorage, AK 99501
Telephone: (907) 563-4000
POSITION STATEMENT: Testified in favor of HB 99.
JIM ARNESEN
Commercial Refuse
1825 Ship Avenue
Anchorage, AK 99501
Telephone: (907) 277-3725
POSITION STATEMENT: Testified in favor of HB 99.
DAVE HUTCHENS, Executive Director
Alaska Rural Electric Cooperative Association, Inc.
703 W. Tudor Rd., Suite 200
Anchorage, AK 99503
Telephone: (907) 561-6103; 463-3636
POSITION STATEMENT: Testified in favor of HB 99 and amendments.
DON SCHRAER, Chairman
Alaska Public Utilities Commission
1016 W. 6th Avenue, No. 406
Anchorage, AK 99501
Telephone: (907) 276-6222
POSITION STATEMENT: Testified in favor of HB 99
BOB LOHR, Executive Director
Alaska Public Utilities Commission
1016 W. 6th Ave. No.406
Anchorage, AK 99501
Telephone: (907) 276-6222
POSITION STATEMENT: Provided information regarding HB 99
ROBERT P. BLASCO, Attorney
Robertson, Monagle and Eastaugh
Box 21211
Juneau, AK 99801
Telephone: (907) 586-3340
POSITION STATEMENT: Testified in favor of HB 115.
KEN LEGACKI
425 G. Street, Suite 760
Anchorage, AK 99501
Telephone: (907) 258-2422
POSITION STATEMENT: Testified against HB 115.
ED FLANAGAN, Assistant Commissioner
Department of Labor
P.O. Box 21149
Juneau, AK 99802-1149
Telephone: (907) 465-2700
POSITION STATEMENT: Provided information regarding HB 115.
PREVIOUS ACTION
BILL: HB 99
SHORT TITLE: APUC EXTENSION & REGULATORY COST CHARGE
SPONSOR(S): LABOR & COMMERCE
JRN-DATE JRN-PG ACTION
01/20/95 101 (H) READ THE FIRST TIME - REFERRAL(S)
01/20/95 101 (H) L&C, FIN
01/30/95 (H) L&C AT 03:00 PM CAPITOL 17
BILL: HB 115
SHORT TITLE: DAMAGES & ATTY FEES FOR UNPAID WAGES
SPONSOR(S): LABOR & COMMERCE
JRN-DATE JRN-PG ACTION
01/25/95 130 (H) READ THE FIRST TIME - REFERRAL(S)
01/25/95 130 (H) L&C, JUD
01/30/95 (H) L&C AT 03:00 PM CAPITOL 17
ACTION NARRATIVE
TAPE 95-2, SIDE A
Number 000
CHAIRMAN PETE KOTT called the meeting of the House Labor and
Commerce Standing Committee to order at 3:03 p.m. Members present
were Representatives Kott, Rokeberg, Sanders, Masek, Kubina,
Porter, and Elton.
HL&C - 01/30/95
Number 015
HB 99 - APUC EXTENSION AND REGULATORY COST CHARGE
CHAIRMAN KOTT stated that HB 99 is a committee bill and read the
following sponsor statement for HB 99:
"The Alaska Public Utilities Commission (APUC) is charged with the
task of regulating public utilities and pipeline carriers in the
State of Alaska. It does so with the goal of promoting the public
interest by enhancing the reliable delivery of affordable utility
services. It also does so with the objective of achieving minimal
impact on the economic coffers of the state by passing on its costs
to the utilities it regulates.
"The APUC is in its sunset year, and unless the legislature extends
its existence, there soon will be no state entity regulating
utilities. Because of the unique nature of utility service, this
would result in anarchy, conflict among providers, and the
possibility of interruptions in utility services. This would not
be wise and would ill serve the public. HB 99 acts to avoid this
danger in two important respects.
"First, it extends the APUC for an additional four years, until
June 30, 1999. This ensures that a public body, responsible to
Alaska's citizens, will continue to regulate and control the
delivery of vital utility services.
"Second, HB 99 enacts regulatory cost charges for both traditional
utilities and pipeline carriers. The mechanism that is employed is
tailored to adjust the charges so as to reflect the amounts
appropriated by the legislature. Said charges are collected by the
Department of Revenue and go into the General Fund. Utilities may,
but need not, pass the charges along to their customers. In the
event that regulatory cost charges lapse into the general fund at
the end of the fiscal year, the amount of said lapsed funds is
determined by the Department of Administration. Thereafter, the
Legislature may, but need not, appropriate the amount of lapsed
funds into the next fiscal year budget. When that occurs, the APUC
must adjust downward regulatory cost charges by an equal amount.
"HB 99, by extending the APUC and concomitantly providing for a
funding mechanism, acts to ensure the delivery of uninterrupted,
affordable utility services to Alaska's people and businesses.
Your support is appreciated."
Number 089
JIMMY JACKSON, testifying via teleconference from Anchorage, stated
that he is an attorney from General Communications Corporation
(GCI). He testified that GCI believes it is very important to
extend the APUC and to pass the legislation authorizing the
extension of the APUC and the regulatory cost charge as soon as
possible. He urges this committee and others to pass it through
quickly. He hopes that the other issues that arose last year and
any others that arise now can be handled in a bill separate from
the extension. He said that the extension is unanimous and should
be passed as soon as possible.
JIM ROWE, testifying via teleconference from Anchorage, stated that
he is also very interested in seeing a speedy reauthorization of
APUC. He stated that his organization does agree that the
regulatory cost charges (RCC) should run concurrent with the time
of the Commission. He stated that they will pursue other ventures
after re authorization.
Number 151
JIM ARNESEN, representing Commercial Refuse, reiterated that he is
also in favor of the APUC. He stated that he thinks that many
utilities need to be regulated, but that the refuse industry needs
to be regulated to the same degree. He stated that he will send
written testimony. He said that the refuse industry does not share
the characteristics of the natural monopoly because of it's lack of
heavy investment required for the high degree of infrastructure as
is seen in other utilities. He concluded that Alaska is one of the
few states that still regulates refuse at all.
Number 183
CHAIRMAN KOTT asked for testimony from Juneau.
DAVE HUTCHENS, Executive Director, Alaska Rural Electric
Cooperative Association, came to the table. He restated the two
subjects of the bill and thanked the Committee that the version was
the same as the one that failed to make it to the floor last year.
He pointed out that this version is different from previous
legislation in that it reallocates the RCC slightly by having the
electrics deduct the cost of generating their power from their
revenues. He gives the example that this bases the charge for
electrics and telephones on the provision of local services rather
than the cost of generating the product. The second point he
mentions is that his organization, Alaska Rural Electric
Cooperative Association, Inc. (ARECA) supports the extension of
APUC because APUC stopped the territorial wars of the 1960s. He
submitted two amendment proposals. The first amendment has two
sections; the first of which amends section 221 by adding a new
subsection. He stated that it would read, "A certificate issued
under this section to a public utility providing electric service
establishes an exclusive service area for the public utility
providing the service." He stated that the corrected version is
the one that he is discussing.
Number 283
CHAIRMAN KOTT clarified that he would call this corrected version
Amendment 1 and the amendment that has to do with AS 42.05.141 will
be called Amendment 2.
MR. HUTCHENS stated that the second part of Amendment 1 proposes to
amend AS 42.05.990(3) by removing the phrase "presently or formerly
served by." This deletion is also needed to define service areas.
He explained that because of the history of this phrase it is now
misleading. In the past, this phrase was needed to refer to a
person who has never taken services from the existing utility.
Today, this same phrase has been interpreted to mean that a new
facility going into a service area assigned to an electric utility
was exempt from doing their business with that utility. Therefore,
a new provider could come in and prevent the utility from having
the growth in that area. This loophole needs to be eliminated by
striking this phrase.
MR. HUTCHENS then introduced Amendment 2 that has to do with
eliminating the phrase "and the powers of the commission shall be
liberally construed to accomplish its stated purpose." His
organization felt that this gave too much authority and they have
proposed language that limits this power a small amount. They
would like to amend the bill by adding that the Commission may "do
all things necessary or proper to carry out the purposes and
exercise the powers expressly granted or reasonably implied in this
chapter." He then stated his key point is that every time the APUC
needs to be extended, it should be the business of the legislature
and not the courts. He reaffirmed that this amendment passed the
Senate last year and he wants this reinserted again.
CHAIRMAN KOTT clarified that Amendment 2 was part of the bill last
year.
REPRESENTATIVE BRIAN PORTER questioned whether these were additions
or amendments.
MR. HUTCHENS clarified that it would be a new section in the bill,
but the section of law would be amended.
Number 358
VICE CHAIRMAN NORMAN ROKEBERG asked to clarify if the bill includes
that any utility that purchases power from a wholesaler gets to
deduct that amount form their base and how the RCC is calculated.
He asked if an electric utility in this state that does not
generate any power and buys all of its power on a wholesale basis
would charge their consumers no RCC?
MR. HUTCHENS explained that the RCC is based on the retail sales
for the power less their cost of power, regardless of whether the
utility obtained their's wholesale or generated their own. He
offered the example of the Matanuska Electric Association (MEA)
consumers and estimated their reduction at 45 percent. He states
that the cost of furnishing the service is therefore roughly
comparable to other services, like local telephone services as an
example.
VICE CHAIRMAN ROKEBERG asked if this bill meant that the MEA
consumers would get a 45 percent reduction in the RCC, and 55
percent would apply to their distribution lines and other expenses.
MR. HUTCHENS answered "yes."
Number 433
VICE CHAIRMAN ROKEBERG asked if the effect of the amendment meant
a shift away from electric utility consumers to other consumers of
other types of utilities? He asked why the money would be
reallocated?
MR. HUTCHENS explained that the work load for electrics was 34
percent during a three year study period, and they were paying for
39 percent of the cost through RCC. Last year's data showed that
a 13 percent differentiation rather than a 5 percent.
Number 468
CHAIRMAN KOTT asked Mr. Hutchens if he meant that his organization
was paying for services that were supposed to be forthcoming but
were never received because they weren't needed.
MR. HUTCHENS explained that the view from his membership was that
they were thankful that they were not getting all of the regulation
that they were paying for.
REPRESENTATIVE PORTER asked if a double charge exists now and this
bill would eliminate that.
MR. HUTCHENS said no that this would eliminate the cost of the
product itself out of the RCC, so that what is left is the RCC
being based on the provision of local service.
VICE CHAIRMAN ROKEBERG asked if Mr. Hutchens was suggesting that
his constituents would have an increase in their electric bill,
while people from another area would have a decrease because the
RCC is shifting?
MR. HUTCHENS answered, "no." He clarified that all of the
electrics in the state would be treated similarly, and there would
be a shift away from electric to other kinds of utilities.
VICE CHAIRMAN ROKEBERG restated his question, asking if certain
utilities, more commonly found in an urban areas will experience a
net increase in this reallocation of the RCC, whereas more rural
areas will have a decrease?
MR. HUTCHENS continued by saying that Vice Chairman Rokeberg's
constituents in Anchorage would pay close to the same thing after
this legislation, but they would pay more to other utility bills
and less to electric.
Number 500
REPRESENTATIVE KIM ELTON asked if subsection E would give the
commission the ability to reallocate costs with money
reappropriated back to APUC?
MR. HUTCHENS said that he could not answer that because he does not
understand "E" to read that way, but that "E" would be a credit to
the utilities in proportion to the RCC that they paid.
REPRESENTATIVE ELTON clarified that Mr. Hutchens reads "E" as
saying that reallocation is not based on cost but on the amount
paid in by the utility.
Number 522
DON SCHRAER, Chairman, APUC, then testified and introduced Bob Lohr
who could answer technical questions. Mr. Schraer suggested that
the APUC have a ten year extension rather than a four year
extension. He stated that the time crunch that is caused by the
present extension may cause him to have to refuse business in the
future. He then asked if the amendments suggested by Mr. Hutchens
could be added onto another bill to expedite passing their
extension. He said that there is already a second bill in the
Senate regarding the exclusive service area. He said that he did
not understand why the reallocation was necessary because it makes
no difference to the consumer whether he pays the amount to one
utility or the other. Mr. Schraer said that he did not have a
position on the amendment concerning exclusive service area because
he had not reviewed that yet.
Number 562
REPRESENTATIVE GENE KUBINA asked why APUC is a $5 million
commission?
MR. SCHRAER corrected that they have a $3.7 million budget and that
over $3 million of that is personnel and contract costs. He said
the payroll is $2 million and contracts are $900,000, and then
office expenses are added to that. He said that they are getting
more efficient and that inflation is largely responsible for the
large cost.
REPRESENTATIVE KUBINA said that with everybody else cutting back,
it bothers him that in five years APUC expects to increase their
budget $1.3 million, and this would come out of the peoples'
pockets.
Number 582
BOB LOHR, Executive Director, APUC, answered this question that the
increase is based on a two percent population growth and an
inflation factor of between three and four percent. The increase
in staff is to meet the needs of increase in population.
REPRESENTATIVE KUBINA asked for a breakdown as to what each utility
would pay?
MR. LOHR replied that he did not have that kind of information
because that kind of itemization has not been required to date. He
stated that this has been recommended, but it would have a
substantial fiscal impact to produce this itemization.
CHAIRMAN KOTT asked if Mr. Lohr had any firm estimate as to when
the APUC would have to shut its doors?
MR. SCHRAER replied that the actual deadline date is June 13, 1995,
but he would estimate that after April 1, the crunch would come.
MR. LOHR supplemented his answer stating that this would be the
impact relating to APUC's ability to process new filings. He then
asked if opening a new regulatory proceeding makes sense given that
the new regulations could not possibly take effect before June 13,
unless they were emergency regulations. He said that there is a
clear impact on staff retention. He said as a result of the
sunset, they have already lost employees who could find more stable
work elsewhere. They have also had difficulty recruiting for their
key positions because they can only assure work for up to three
months. He said therefore, they are having difficulty obtaining
the right people for the job.
Number 643
CHAIRMAN KOTT then asked how APUC was able to operate this year
with an expired ability to collect their regulatory charges?
MR. SCHRAER replied that they collected the full annual charge in
December, for the full fiscal year.
TAPE 95-2, SIDE B
Number 000
MR. LOHR explained that it was creative financing that allowed them
to operate.
Number 056
VICE CHAIRMAN ROKEBERG questioned the dollar impact on the
consumer?
MR. LOHR answered that the reallocation was immaterial, because the
RCC, itself, is nearly immaterial. He estimated that it is in the
range of $10 a year.
VICE CHAIRMAN ROKEBERG asked about the accuracy of the workload for
collecting utilities.
MR. LOHR said that this estimate is definitely accurate, that he
personally determined it. He said that essentially it is hard to
argue that anyone is significantly overpaying for the amount of
regulatory services they are receiving.
Number 089
CHAIRMAN KOTT agreed with Mr. Schraer about the need for a longer
period of extension, but stated that very few boards and
commissions have more than a four year extension.
MR. SCHRAER restated that APUC has been meeting its public purpose
and that no one is testifying that they should be sunsetted.
CHAIRMAN KOTT closed public testimony and opened the debate of the
committee.
Number 147
REPRESENTATIVE JERRY SANDERS moved Amendment 1, as proposed by the
ARECA.
VICE CHAIRMAN ROKEBERG objected and asked for the purpose of
discussion.
REPRESENTATIVE SANDERS clarified that this is the amendment for
"exclusive service areas." He stated that he believes now is the
time to add this amendment, because the chances of this being done
after the APUC extension are very slim.
VICE CHAIRMAN ROKEBERG said that he would like more time to look
over these amendments, and he did not want to hold up the APUC
extension. Therefore, he did not support either of the amendments.
REPRESENTATIVE PORTER expressed his concern that Amendment 1 is new
this year, and he would like this amendment and Amendment 2 to be
handled with the Senate bill.
REPRESENTATIVE ELTON agreed that he did not think the committee
should hold up the extension and that the amendments should be
addressed with the Senate bill.
REPRESENTATIVE KUBINA asked the intent of the Chair in reference to
moving this bill.
Number 232
CHAIRMAN KOTT expressed his intent to move the bill out of
committee today.
REPRESENTATIVE KUBINA stated that he supports both amendments.
Number 261
CHAIRMAN KOTT stated that Amendment 1 was moved and asked for a
roll call vote. Voting for the Amendment was Representative
Sanders, and Kubina. Voting in opposition were Representatives
Kott, Rokeberg, Masek, Porter, and Elton.
CHAIRMAN KOTT stated that Amendment 1 failed.
Number 262
REPRESENTATIVE SANDERS moved Amendment 2.
VICE CHAIRMAN ROKEBERG objected.
REPRESENTATIVE SANDERS stated that he thinks this amendment should
be passed because now is the time to tighten the language of this
bill.
VICE CHAIRMAN ROKEBERG again expressed his concern that he did not
have time to review this amendment and that he did not want to hold
up the extension.
REPRESENTATIVE SANDERS apologized that this amendment was offered
late, and proceeded to say that he thinks it needs to be done now
or it will not be done at all.
CHAIRMAN KOTT explained that this amendment is fairly innocuous and
called Mr. Schraer back to the table to address this amendment.
MR. SCHRAER restated that his intention was to keep the extension
free from any business that might hold up the extension. He said
that this issue is addressed in the Senate bill. He stated that
when this issue was brought to trial, the courts ruled in favor of
the APUC in the majority of the cases. He explained that the
phrase "liberally construed" has in the past allowed them to
conduct necessary business, and he considers that the language is
a matter for the attorneys.
CHAIRMAN KOTT asked if the proposed substitute phrase "necessary or
proper" would not allow them to conduct the same business.
Number 330
MR. SCHRAER answered that he personally thinks that it would, but
that he thinks it is necessary to ask an attorney.
CHAIRMAN KOTT asked for a roll call vote to change this language by
adopting Amendment 2. Voting for the amendment were
Representatives Kubina, Sanders, and Kott. Representatives
Rokeberg, Masek, Porter, and Elton voted against the amendment.
Number 353
CHAIRMAN KOTT affirmed that the amendment failed.
VICE CHAIRMAN ROKEBERG moved on page two, Section 1 (c), delete (3)
which is a reallocation away from electric utility users to other
utility users in the state.
CHAIRMAN KOTT offered this as amendment number three that deletes
lines nine through eleven on page two.
REPRESENTATIVE KUBINA notes that line seven reads that the APUC is
charging .8 percent. He stated that he believes this is an
increase, and that removing lines nine through eleven means that
more money would be collected than what the fiscal note says.
MR. SCHRAER said, "No, the APUC would not collect more money
because their budget is still set by the legislature." He called
Mr. Lohr to explain the technical difference between .61 percent
and .8 percent.
MR. LOHR affirmed that Representative Kubina was correct. He
continued the purpose in the increase of the cap from .61 percent
to .8 percent was precisely because of the cost of power exclusion.
He suggested that to be consistent, both lines my be changed to 6.1
percent.
MR. LOHR said that the APUC does not oppose the changes made in
this bill and he elaborated that the change is very minuscule in
the charge to any one family.
VICE CHAIRMAN ROKEBERG said that this is exactly his point. He
stated that he does not understand the need for a change when it is
already changed in the statute.
MR. LOHR again stated that his point is to accept what is in the
bill with no amendments, in order to expedite the extension.
REPRESENTATIVE ELTON reminded that the intent is to pass a clean
bill.
VICE CHAIRMAN ROKEBERG stated that the way this bill is presented
is a change and that by approving the bill the committee would be
changing the law as it currently stands. He stated that he wants
to go back to the status quo.
Number 438
MR. LOHR suggested that Vice Chairman's statement depends on the
baseline. He states that they are really starting from scratch
because the other act was automatically repealed December 31. He
stated that it would be a change from the two year period during
which the RCC operated.
VICE CHAIRMAN ROKEBERG then amended his amendment to include the
change to .61 percent.
CHAIRMAN KOTT stated that Amendment 3 has been amended to change
page 1, line 7 from .8 percent to 6.1 percent. He then objected
to the amendment as he stated that the amendment to the amendment
affects the regulatory charges in Section 3, page 4, line 2.
MR. SCHRAER confirmed that this line too must be changed to be
consistent.
Number 478
CHAIRMAN KOTT asked for clarification if the change from .8 percent
to .61 percent needed to be done in only Section 1 or does it need
to include the pipeline carrier regulatory cost charges as well?
MR. SCHRAER stated that the change would need to be made in both
areas.
REPRESENTATIVE PORTER recommended that neither change be made
because it appears that it is not simple to return to the way
things were because of other verbages, that now exist in the bill,
that are inconsistent with what the rates were before the change.
He says that attempting to quickly alter the bill now may change
the original intent, and that it is safer to pass the bill as it
was written.
VICE CHAIRMAN ROKEBERG agreed and offered to withdraw his amendment
if he could make another amendment to delete the words "and
purchased power reported to the commission," in Section 1 (c) (3)
lines 10 and 11.
CHAIRMAN KOTT clarified that Vice Chairman Rokeberg had withdrawn
Amendment 3 and submitted Amendment 4 which in essence deletes
these words on page 2.
REPRESENTATIVE ELTON objected and offered that these suggestions be
addressed in the Senate bill.
CHAIRMAN KOTT agreed with Representative Porter that the bill
should not be altered in bits and pieces at this point.
REPRESENTATIVE KUBINA stated that Amendment 4 would penalize one
segment over another.
CHAIRMAN KOTT asked for a roll call vote. Representative Rokeberg
voted for Amendment number four. Representatives Kott, Sanders,
Masek, Porter, Elton, and Kubina voted against the amendment.
Thus, Amendment 4 failed.
REPRESENTATIVE PORTER moved that HB 99 be moved from the committee.
Hearing no objection, CHAIRMAN KOTT stated that the HB 99 was
unanimously moved from the committee.
HL&C - 01/30/95
Number 435
HB 115 - DAMAGES AND ATTORNEY FEES FOR UNPAID WAGES
CHAIRMAN KOTT then introduced that HB 115 was the next order of
business. He then invited Representative Mulder to the table.
CHAIRMAN KOTT read the sponsor statement for HB 115. He stated the
following: "The Alaska Wage and Hour Act (AWHA) requires the
payment of minimum wage and overtime compensation under defined
conditions and contains procedures for the enforcement of these
requirements. The principal statute addressing remedies is AS
23.10.110(a), which provides that employers who violate AWHA are
liable to their employees for the amount of unpaid compensation as
well as an equal amount of `liquidated damages.'
"Until recently, aggrieved employees seeking to enforce their
rights to overtime compensation and minimum wage rates had several
avenues to obtain redress. They could settle the matter directly
with their employers. They could file a complaint with the
Department of Labor and obtain its assistance in effecting a
resolution. In addition, employees could sue their employers in
Superior Court.
"Employees who elected to settle their claims directly with their
employers had the option of waiving all or part of the liquidated
damages. Similarly, the Department of Labor could negotiate a
settlement containing terms waiving all or part of the liquidated
damages. This flexibility tended to encourage employers to settle
prior to the filing of a lawsuit because if their cases progressed
to court full liquidated damages were mandated.
"All of this was changed, though, as a result of a decision
rendered by the Alaska Supreme Court in McKeown v. Kinney Shoe
Company, 820 P.2d 1068 (Alaska 1991), which modified the law in an
extremely important respect. Full liquidated damages are now
required in all settlements, even when the employer acted
reasonably and in good faith. Furthermore, this is the case when
a settlement is negotiated by the Department of Labor.
"HB 115 acts to cure certain deficiencies in the law as it now
stands. First, it grants the court, in actions filed pursuant to
AWAH, discretion to award less than full liquidated damages. It
also may altogether decline to award liquidated damages. This
discretion may be exercised if, but only if, the employer proves
both that it acted in good faith and with reasonable grounds. The
employer has the burden of proof with respect to these elements
before the court can exercise its discretion. However, even
assuming both elements are proved, the court retains discretion as
to whether or not liquidated damages are awarded.
"Second, it permits the Department of Labor to negotiate
settlements omitting all or part of the liquidated damages. If
employee claimants agree to the terms of such negotiated
settlements, they waive their right to further assert their claims
for unpaid wages and liquidated damages.
"Third, employees may directly settle with their employers,
provided that certain procedural safeguards are satisfied. Such
safeguards are specifically tailored to apprise employees of their
rights and the consequences of their actions. If all procedural
safeguards are satisfied, the resulting settlements constitute a
waiver of claims for unpaid compensation and liquidated damages.
"Fourth, HB 115 changes existing law with respect to the award of
attorney fees and costs. As the law now stands, reasonable
attorney fees and costs are awarded to prevailing plaintiffs.
Defendants, when they prevail, are not entitled to costs and
attorney fees. Obviously, this creates a climate whereby those
with extremely weak and bogus claims have no financial
disincentives to bringing lawsuits. HB 115 takes a different
approach. It awards attorney fees and costs to whichever party
prevails. Moreover, instead of requiring the payment of
"reasonable" attorney fees, this bill specifies that such fees are
to be determined according to court rule, thus bringing these types
of cases in line with the treatment accorded other civil actions.
"It respectfully is submitted that HB 115 constitutes a significant
improvement on existing law. As recognized by the Alaska Supreme
Court in Kenney, `liquidated damages' in the context of wage and
hour cases are in reality a type of punitive damages. That being
the case, it makes very little sense to punish those who act
reasonably and in good faith the same as those who callously and
purposefully violate the law. In that regard, it may be noted that
the corresponding federal statute grants discretion to federal
courts to award no liquidated damages, or partial liquidated
damages, when employers establish that they acted reasonably and in
good faith. Thus, this bill acts to bring Alaska law into
conformity with federal law.
"It is also submitted that according the parties flexibility in
negotiating settlements, either directly or through the Department
of Labor, is desirable. The preponderant majority of such cases
can be settled to the satisfaction of all parties before they enter
the judicial system, which would have the effect of relieving an
already overburdened court case load. Finally, awarding attorney
fees to all prevailing parties, and not just to prevailing
plaintiffs, will discourage the filing of bogus lawsuits, thus
reducing the drain on Alaska's judicial and economic resources.
"Your support is appreciated."
Number 617
CHAIRMAN KOTT opened the testimony to the teleconference lines.
Number 621
ROBERT BLASCO, Attorney, Robertson, Monagle, and Eastaugh,
testified, via teleconference, from Sitka. He reaffirmed that the
summary read by the Chair was accurate. He stated that he supports
HB 115 because it corrects and improves deficiencies in the law and
because of a general philosophy of fairness that applies to all of
our civil systems. He stated that the double damage provision is
a punitive measure.
TAPE 95-3, SIDE A
Number 000
MR. BLASCO continued by saying that the change in procedure created
by this bill is not dramatic but from a fairness standpoint, the
change is very dramatic. He stated that the second portion of the
bill is very necessary to eliminate the question of who is liable
for attorney fees.
KEN LEGACKI testified, via teleconference, from Anchorage. He
stated that HB 115 does not address the language set forth in the
state case of Webster vs. Bechtel, citation 621 Pacific 2nd 890.
Mr. Legacki stated that the Webster case did an analysis of the
relationship between the Fair Labor Standards Act and The Alaska
Wage and Hour Act. Mr. Legacki quoted the Webster case that states
on page 897, "The state statute is void to the extent that it
actually conflicts with the valid federal statutes. A conflict
will be found where compliance with both federal and state
regulations is difficult in possibility or the state law stands
(Indecif)... "At page 900 which it states, we must include that the
Alaska Act can only be "void" to the extent that it actually
conflicts with the valid federal statues. Mr. Legacki stated that
this past Monday, January 30, 1995, the United States Supreme Court
reiterated the importance of the mandatory awarding of attorney
fees. HB 115 that would adopt our ruling too, it is specifically
prohibited by the Fair Labor Standards Act. Mr. Legacki cited a
case McEnnon v. Nashville Banner Publishing Co., and said the
violation of that case was Section 29 USC 626 which stops remedial
provisions of the Fair Labor Standards Act regarding attorney fees.
On the other provision of this bill the court stresses the
importance of adding full mandatory attorney fees to employees.
Mr. Legacki furthered that the private settlement provision of HB
115 is prohibited by the FLSA, Brooklyn Savings Bank v. O'Neil the
U.S. Supreme Court stated that "private settlements are void as
against public policy", Mr. Legacki related that you cannot have
them under the Fair Labor Standards Act. Another case that
reiterated that position was Lynn's Food Stores Inc. v. the United
States, that citation 679 F.2d 1350 (Eleventhth Cir.) 1982. It
again reiterates that private settlements are prohibited. Mr.
Legacki felt HB 115 would not survive judicial scrutiny. He
further stated that it didn't address the reasons behind the Wage
and Hour Act., which is to protect employees from overreaching
employers. He explained that the court has had to jump in because
the employee is economically dependent on the employer. He
detailed that if the employer tells the employee, take this
settlement or you're out of a job, the employee has no choice. Mr.
Legacki asked that this bill be re-thought, analyzed to see how it
helps the employee for which the policy of the act is mandated.
Number 160
CHAIRMAN KOTT asked if there were any more questions.
Number 165
REPRESENTATIVE BRIAN PORTER asked Mr. Legacki to fax the citations
stated.
Number 180
CHAIRMAN KOTT asked for testimony from Juneau.
ED FLANAGAN, Deputy Commissioner, Department of Labor, gave his
initial concern with HB 115, regarding its inflexibility with
settlements short of court. Mr. Flanagan believes department's
supervision is important so employees don't get coerced into
anything. Mr. Flanagan offered to work with committee on that
portion of HB 115. Mr. Flanagan stated that he had serious
concerns dealing with the change in attorney fees from the
plaintiff to the prevailing party. He mentioned that there was a
more recent case than that cited by Mr. Legacki, interpreting the
FSLA, that says plaintiffs can recover damages from defendants.
Mr. Legacki stated that it doesn't say either and that this has
been ruled by the Sixth Circuit Court of Appeals in D.C., to be
invalid. He further stated that this was an attempt to get damages
from the plaintiff. The issue is often minimum wage, and they
often can't find an attorney to take the case if they're faced with
prospect of a long drawn out case with the employer that has many
more resources at their command. This would eliminate a large
number of cases. Mr. Flanagan also had a concern with the
good-faith exception, and feels it would have to be much more
stringent than what was in the bill. If the exception is too
loose, ignorance of the law being permitted as defense, basically
then no employer has an incentive to obey the law. Mr. Flanagan
commented that all's he's going to pay in court is basically what
he should have paid in the first place. That is why the punitive
damages are in there. Also another concern of Mr. Flanagans was
Section 4, that states letter A section E, applies to agreements
entered into on or after the effective date of the act. Section B
F. 2310 110F applies to written agreement into on or after the
effective date. Letter C, except as provided in A and B of this
section both constitutionally permitted, this act applies to
actions commenced on or before the effective date of this act. In
the sectional analysis, what concerned Mr. Flanagan was that under
section 4C, to the extent constitutionally permitted the rest of
the act applies to actions in which a final judgment has not been
entered on the date the act takes effect. If this is to give
retroactivity to any actions that have been undertaken to try and
recover wages, he feels that it would be blatantly unfair to the
workers involved. Mr. Flanagan does not support this bill in the
present form but would work with the committee for changes.
Number 266
REPRESENTATIVE ELTON asked how long this hearing was to last. Are
we carrying this hearing over?
Number 275
CHAIRMAN KOTT stated there was another committee scheduled for 5:00
p.m., so they would continue questions with current witness, then
adjourn and hold the bill until Wednesday, at which point they
could bring the bill back.
Number 284
REPRESENTATIVE PORTER asked if HB 115 wouldn't be unfair to future
employees, then why is it unfair to present employees?
MR. FLANAGAN replied that because the present employees already
have actions going, they've engaged attorneys, exposed themselves
to retaliation and it seems it would be unfair to change the rules
after something is in effective. Mr. Flanagan also stated that he
had only seen this bill this morning.
Number 297
REPRESENTATIVE ELTON stated that he had made an assumption after
reading the sectional that maybe the provision in HB 115 changed
under Section 4, but the sectional may have been brought up from
last year and maybe they didn't change that provision in the
sectional. He further stated that this act would only apply to
actions that commence on or after the effective date and there
would not be any retroactivity.
CHAIRMAN KOTT stated that was also his understanding.
MR. FLANAGAN replied that he had last years bill, and that would
more accurately describe the last Section 4C of that bill, than the
current version.
CHAIRMAN KOTT asked if there were further questions or comments?
Seeing none, we will hold this bill over to the next committee
meeting of Wednesday.
ADJOURNMENT
The meeting adjourned at 5:01 p.m.
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