Legislature(2003 - 2004)
04/16/2003 03:20 PM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 16, 2003
3:20 p.m.
MEMBERS PRESENT
Representative Tom Anderson, Chair
Representative Bob Lynn, Vice Chair
Representative Nancy Dahlstrom
Representative Carl Gatto
Representative Norman Rokeberg
Representative Harry Crawford
Representative David Guttenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 250
"An Act relating to protests of state contract awards, to claims
on state contracts, to the arbitration of certain state
construction contract claims, and to hearings and appeals under
the State Procurement Code; making conforming amendments in the
State Procurement Code; and providing for an effective date."
- MOVED CSHB 250(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 251
"An Act exempting certain foreign pleasure craft from the
mandatory pilotage requirement."
- HEARD AND HELD
HOUSE BILL NO. 255
"An Act amending the Alaska Wage and Hour Act as it relates to
flexible work hour plans, the provision of training wages, and
the definitions of certain terms; and repealing the exemption in
the Act from the payment of minimum wages for learners."
- MOVED CSHB 255(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 259
"An Act relating to public school transportation, and to the
minimum wages for school bus drivers; and providing for an
effective date."
- BILL HEARING POSTPONED
PREVIOUS ACTION
BILL: HB 250
SHORT TITLE:STATE CONTRACTS
SPONSOR(S): REPRESENTATIVE(S)HOLM
Jrn-Date Jrn-Page Action
04/07/03 0818 (H) READ THE FIRST TIME -
REFERRALS
04/07/03 0818 (H) L&C, STA
04/16/03 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 251
SHORT TITLE:MARINE PILOT FOR FOREIGN PLEASURE CRAFT
SPONSOR(S): REPRESENTATIVE(S)DAHLSTROM
Jrn-Date Jrn-Page Action
04/07/03 0819 (H) READ THE FIRST TIME -
REFERRALS
04/07/03 0819 (H) L&C, FIN
04/16/03 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 255
SHORT TITLE:WAGES:TRAINING/FLEX-TIME/DEFINITIONS
SPONSOR(S): REPRESENTATIVE(S)ROKEBERG
Jrn-Date Jrn-Page Action
04/09/03 0868 (H) READ THE FIRST TIME -
REFERRALS
04/09/03 0868 (H) L&C, FIN
04/14/03 (H) L&C AT 3:15 PM CAPITOL 17
04/14/03 (H) Heard & Held
MINUTE(L&C)
04/16/03 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
REPRESENTATIVE JIM HOLM
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as sponsor of HB 250.
DICK CATTANACH, Executive Director
Associated General Contractors of Alaska
Anchorage, Alaska
POSITION STATEMENT: Explained reasoning behind HB 250;
encouraged members' support and answered questions.
MARK O'BRIEN, Chief Contracts Officer
Contracting, Procurement and Appeals
Office of the Commissioner
Department of Transportation & Public Facilities
Juneau, Alaska
POSITION STATEMENT: Explained reasoning behind HB 250 and the
department's fiscal note; answered questions.
MICHAEL SWALLING, President
Swalling Construction Company
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 250.
REX SHATTUCK, Staff
to Representative Nancy Dahlstrom
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As staff to the bill's sponsor, presented
information on HB 251.
KATE TESAR, Lobbyist
for Alaska Yacht Services and Provisioning
Juneau, Alaska
POSITION STATEMENT: Testified in favor of HB 251.
CAPTAIN ROBERT WINTER, Marine Pilot
Southeast Alaska Pilots' Association
Juneau, Alaska
POSITION STATEMENT: Testified that he could not support HB 251
as written but expects compromise language to be introduced in a
future CS will meet his concerns.
HEATHER NOBREGA, Staff
to Representative Norman Rokeberg
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions on HB 255.
DON ETHERIDGE, Lobbyist
for Alaska State AFL-CIO
Juneau, Alaska
POSITION STATEMENT: Voiced complete opposition to HB 255.
CHIP WAGONER, Lobbyist
for Alaska Catholic Conference
Juneau, Alaska
POSITION STATEMENT: Urged the committee to drop Section 4,
Training wages, from HB 255.
BARBARA HUFF TUCKNESS, Director
of Legislative and Governmental Affairs
General Teamsters, Local 959, Alaska
Anchorage, Alaska
POSITION STATEMENT: Spoke in opposition to HB 255, noting that
businesses will not be able to find workers willing to work for
$5.15 an hour.
JOHN ZULEGER
Fairbanks, Alaska
POSITION STATEMENT: Testified against HB 255, saying it
benefits businesses but not blue collar workers.
KAREN PLESS, Apprentice
International Union of Operating Engineers, Local 302
Fairbanks, Alaska
POSITION STATEMENT: Opposed HB 255.
JOHN BROWN, President
Fairbanks Central Labor Council;
International Union of Operating Engineers, Local 302
Fairbanks, Alaska
POSITION STATEMENT: Testified against HB 255, saying it will
continue the erosion of wages for workers in Alaska.
JOHN DAVID RAGAN
Laborers International Union of North America, Local 942;
Ester Community Association;
Volunteer fire fighter
Ester Volunteer Fire Department
Ester, Alaska
POSITION STATEMENT: Spoke against HB 255, describing it as a
direct attack on the minimum wage and the 8-hour day.
MATTHEW SAMPSON
Fairbanks, Alaska
POSITION STATEMENT: Opposed HB 255, stating that no employee
will make better wages as the result of this bill.
CARL WEED
Fairbanks, Alaska
POSITION STATEMENT: Spoke against HB 255, arguing that it does
not help workers who are also consumers.
ACTION NARRATIVE
TAPE 03-36, SIDE A
Number 0001
CHAIR TOM ANDERSON called the House Labor and Commerce Standing
Committee meeting to order at 3:20 p.m. Representatives
Anderson, Dahlstrom, Gatto, Crawford, and Guttenberg were
present at the call to order. Representatives Lynn and Rokeberg
arrived as the meeting was in progress.
HB 250-STATE CONTRACTS
CHAIR ANDERSON announced that the first order of business would
be HOUSE BILL NO. 250, "An Act relating to protests of state
contract awards, to claims on state contracts, to the
arbitration of certain state construction contract claims, and
to hearings and appeals under the State Procurement Code; making
conforming amendments in the State Procurement Code; and
providing for an effective date." [In packets was a proposed
committee substitute (CS), Version H.]
Number 0095
REPRESENTATIVE JIM HOLM, Alaska State Legislature, sponsor,
explained that HB 250 attempts to alleviate problems that
contractors have been having in the extremely costly claims
process. The desire is to have expeditious resolution of
claims. However, the perception of the construction community
is that the process has slowly deteriorated and is no longer
fair or expeditious.
REPRESENTATIVE HOLM noted that the bill was worked on by the
Associated General Contractors of Alaska ("AGC of Alaska") and
that Dick Cattanach had negotiated with Mark O'Brien of the
Department of Transportation & Public Facilities (DOT&PF); they
went through the bill extensively. Representative Holm pointed
out that the sectional analysis [for Version H] mentions
recovery of attorney fees and how the process will be
maintained.
Number 0206
REPRESENTATIVE GATTO moved to adopt the proposed CS, Version 23-
LS0501\H, Bannister, 4/14/03, as a work draft. There being no
objection, Version H was before the committee.
REPRESENTATIVE HOLM explained that presently there is no
independent [third] party review in contract resolution with the
state, in either the purchasing departments or contracts with
DOT&PF; it is difficult for people who assert claims for less
than $250,000 to afford them because of litigation costs.
REPRESENTATIVE HOLM reported that AGC of Alaska and Mr. O'Brien
went through potential problems and "pretty much solved them."
Referring to the written sponsor statement, he noted that it
lists six of the most important [modifications made by HB 250 to
current statute]: 1) if a procurement officer doesn't issue a
written decision by the due date, the contractor may seek
arbitration; 2) on appeals of all construction claims, the
parties can agree to binding arbitration; 3) the timelines for
decisions have been tightened and redundant requirements
eliminated; 4) an arbitrator or hearing officer who doesn't
issue a decision by the deadline is disqualified for a year; 5)
qualifications for arbitrators and hearing officers will be
established by the commissioner of the Department of
Administration in regulation; and 6) the contractor is entitled
to recover some of the claims costs incurred.
REPRESENTATIVE HOLM called this a balanced bill, and pointed out
that there are time constraints because of the coming
construction season. He mentioned that it has an indeterminate
fiscal note because of the inability to determine the costs of
claims resolution. He suggested that it would be less costly
and a better business situation, however, if people had an easy
way to rectify their problems without litigation.
Number 0455
DICK CATTANACH, Executive Director, Associated General
Contractors of Alaska, requested that Mr. O'Brien join him at
the witness table. Noting that they'd worked on the bill for
more than two years, he said about three months had been spent
getting input from the Department of Law. He noted that there
was input from the Department of Administration as well. Mr.
Cattanach told members that time is critical and noted that
DOT&PF's construction budget is roughly $400 million; without
passage of the bill, that $400 million will be under the
existing statute, rather than this bill.
MR. CATTANACH told members the bill is a compromise intended to
do three things: speed up the system, make it so the process is
viewed as more fair, and lower claims costs. First, with regard
to speeding up the system, he explained that a claim comes about
because the contractor and the owner - the parties in a
construction contract - disagree about whether certain work is
covered in the contact; the current claims process reputedly
takes upwards of two years to resolve in some cases. Second, he
reported that right or wrong, contractors have a perception of
unfairness because claims officers are selected by DOT&PF from a
list maintained by DOT&PF, based on criteria established by
DOT&PF; the bill changes the system, with a lot of it modeled
after the arbitration of AAA [American Arbitration Association].
Mr. Cattanach remarked, "We're going to be recommending the use
of arbitration more." Third, he noted that members have told
him a significant claim may cost $250,000 to prosecute; those
costs aren't recovered under the current statute. He said:
The theory that we're espousing is that the reason the
contractor has to spend that money is because the
claim that he ultimately ... gets was not the claim
that he was offered; therefore, he has to spend that
money to get what was reasonably his, as determined by
a third party. We recognize their difference of
opinion.
MR. CATTANACH explained that the bill addresses court rules -
Rules 68, 79, and 82 - with respect to how those costs are
determined. He deferred to Mr. O'Brien for details on the
fiscal note and related his belief that this bill will result in
a significant improvement. He encouraged members' support.
Number 0751
MARK O'BRIEN, Chief Contracts Officer; Contracting, Procurement
and Appeals; Office of the Commissioner; Department of
Transportation & Public Facilities, pointed out positive
benefits in terms of the three goals of being faster, more fair,
and less expensive. The bill shortens some existing timeframes
in statute and creates timeframes where none existed. It also
offers arbitration - generally considered less expensive and
onerous, and requiring less preparation and associated costs and
fees - as an alternative to the hearing process. He said it is
both faster and less expensive. The arbitration process is
final; there is no appeal to the courts unless there has been a
gross misrepresentation or fraud, for example, and thus normally
there won't be the additional costs and legal fees of going
through a court process. As for fairness, the bill requires
adoption of regulations to govern the selection process [for the
hearing officer]. "We look forward to working with the
Department of Administration to get those established and create
some specific guidelines on the selection," he remarked.
Number 0886
MR. O'BRIEN reported that [the state's] only disagreement with
AGC of Alaska was on the issue of costs and fees. Noting that
Rules 79 and 82 allow recovery of partial attorney fees and
costs for the prevailing party, he explained that it slices both
ways: if the state prevails, there is an opportunity to recover
some of its cost. Generally, though, the prevailing party is
defined as the person who receives any judgment. Historically,
[the claimant] almost always receives something. If someone
with a $200,000 claim is awarded $15,000 by the hearing officer,
[the state] may think it's a "win," but [the claimant] is the
prevailing party and thus receives attorney fess and costs, or a
portion of them.
MR. O'BRIEN explained the calculations for the fiscal note. He
said he'd looked at the last 11 years' records on claims and
used an example of a $2 million claim with a $.5 million
judgment by an arbitrator, based on actual cases in that range
for which costs and fees were typical; it was calculated that a
contractor who was the prevailing party would receive roughly
$73,000 for his/her portion of the costs and fees. He noted
that under almost any scenario, there will be a cost [to the
state]. Using that model and looking at the claims history for
11 years, applying roughly the same factors, Mr. O'Brien said it
had been averaged over the 11-year period, resulting in the
estimate in the fiscal note of $145,000 a year.
MR. O'BRIEN pointed out that $145,000 is the baseline estimate
of possible liability [to the state], since hearing officers and
arbitrators have the ability to enhance those fees based on a
number of factors including protracted litigation or associated
costs that are particularly high. Another key factor is that
Rule 79 and Rule 82 costs and fees aren't eligible for federal
aid through the federal highway bill. Most of [DOT&PF's]
contract appeals - the $400 million construction budget Mr.
Cattanach mentioned - are through the federal highway bill, he
noted, but those provisions don't allow reimbursement to the
state for costs and fees. Hence any judgment for costs and fees
will require a general fund payment from [DOT&PF] and any other
department that has "construction authority with federal
funding."
Number 1068
REPRESENTATIVE CRAWFORD asked what happens when there is a
contract for less than $25,000, and whether it is cost-effective
to go into arbitration for a few thousand dollars in dispute.
MR. O'BRIEN explained that something like 98 percent of the
claims brought forward by such contractors are settled before
ever becoming an appeal at the level of the commissioner's
office. In many cases, they're able to work it out with the
project manager on-scene as well as the prime contractor if it
is a subcontract situation. The appointment of hearing officers
and arbitrators applies to those 2-3 percent of the cases in
which the parties absolutely cannot come to an agreement.
Number 1150
REPRESENTATIVE CRAWFORD conveyed his understanding from talking
to contractors that some just give up because it isn't cost-
effective to pursue several thousand dollars when the contract
may only be for $25,000. He mentioned a contractor who built a
fence at Bethel airport; when DOT&PF changed the specifications,
the contractor was stuck with 3,000 feet of fencing that cost
too much to transport back to Anchorage. He reiterated that
many times people give up instead of being part of the 2 percent
who [appeal].
MR. O'BRIEN said he would argue that this arbitration process
offers a better opportunity, at less cost, than those people
have ever had.
REPRESENTATIVE CRAWFORD asked that the even smaller contracts be
looked after.
Number 1234
REPRESENTATIVE GUTTENBERG observed that page 6 of the bill
discusses the commissioner's ability to extend the timeline, but
also disciplines an arbitrator who doesn't make a decision in a
timely manner. He asked whether there has been a history of
that problem. If not, he asked why is it in the bill.
MR. O'BRIEN answered:
I've been doing this since 1998, and there have not
been a significant number of complaints. In fact, I
honestly don't remember a single complaint about the
length of time that a hearing officer had the
decision. Generally, the complaint is the length that
the contracting officer at the first level has the
decision. ... But there were some concerns addressed
by the AGC [of Alaska] during ... the discussions that
we had that there could well be an instance where
they're not getting a timely delivery by ... the
arbitrator of the decision after he's had it in his
hands for a final decision. And so they wanted to
build in kind of a punitive measure ... to try to
encourage a quick decision.
Number 1325
MR. CATTANACH also responded, saying contractors have a
perception that the timeline does "slip." He explained that the
contractor already would have paid the costs back before ever
filing a claim, and would want that money as quickly as
possible. "So we put some teeth into this," Mr. Cattanach said,
noting that an arbitrator now will have timelines; if those
aren't met, the arbitrator will be barred from participating in
the arbitration process for a year.
Number 1360
REPRESENTATIVE GUTTENBERG offered his understanding that an
arbitrator would be an independent contractor. He asked whether
a hearing officer would be a state employee.
MR. O'BRIEN said no.
Number 1391
MICHAEL SWALLING, President, Swalling Construction Company, told
members his company has been in business about 56 years and that
he has been with the company 30 years; much or most of the
company's work is with DOT&PF. Specifying that he was
testifying in favor of HB 250, he said:
For nearly 25 years, I had no formal claims on
[DOT&PF] work. All the disputes I had were resolved
pretty much at the project level within what I would
consider a reasonable amount of time. About 5 years
ago I had my first claim; it went all the way to the
hearing-officer ... level for resolution, and I came
away from that experience very dissatisfied with the
time, the cost, and the process [for] resolving that
construction dispute.
And since then, I've had two more ... formal claims
with [DOT&PF]. At the beginning, they were both
denied in their entirety, ... and were both delayed
significantly during the administrative portion of the
process, up through the contracting-officer-appeal
level. Both disputes eventually were settled last
year for a total of $591,000. But it took two years
and $250,000 in legal and expert expenses to get to
the settlement table. Frankly, that's a crime.
Unlike any other legal dispute, where the prevailing
party receives some compensation for the expenses
incurred, I got nothing. All of that 250 [thousand
dollars] basically came out of the settlement, and so
I got a very poor return on the dollars ... that I
spent getting that settlement. It's not a fair system
the way it is set up right now. Frankly, it was all
the justice that I could afford. I had to settle, and
I had to move on.
Number 1488
MR. SWALLING continued:
My perception right now of the current process is that
it's basically a war of attrition. The state has
nothing to lose by delaying, denying, or obfuscating a
construction claim for as long as it can, and
everything to gain by forcing the contractor to spend
as much money, time, and effort to pursue the
settlement of the dispute. And at this point, they've
got almost unlimited resources and the ability to
extend response dates almost at their will, while the
contractors are forced basically to do the opposite
and respond to fixed timelines or basically lose their
right to pursue the claim. They also have to finance
the work and pay the cost incurred, and then pay,
additionally, the cost of legal and professional help
to help pursue the claim.
House Bill 250 provides an incentive to the state to
settle these disputes in a more timely fashion, and
allows the contractor to recover some of the cost of
pursuing what is ultimately rightfully his. I think
it solves some of the inequities in this process; it
doesn't solve them all, but moves the state in the
right direction. And I think it should be passed.
Number 1535
REPRESENTATIVE GATTO asked Mr. Swalling whether he'd figured out
what the difference would have been with regard to his $250,000
loss if this legislation had been in place.
MR. SWALLING answered that he doesn't know what Rule 82 would
provide, but suggested there would have been some recovery. He
said the bill does provide an incentive to get [claims]
resolved. He emphasized the importance of time and the need to
settle these and move on.
Number 1583
CHAIR ANDERSON, upon determining there were no questions for any
of the testifiers, closed the public hearing.
Number 1592
REPRESENTATIVE ROKEBERG moved to report CSHB 250, Version 23-
LS0501\H, Bannister, 4/14/03, out of committee with individual
recommendations and the accompanying indeterminate fiscal note.
There being no objection, CSHB 250(L&C) was reported from the
House Labor and Commerce Standing Committee.
HB 251-MARINE PILOT FOR FOREIGN PLEASURE CRAFT
[Contains discussion of SB 20.]
Number 1610
CHAIR ANDERSON announced that the next order of business would
be HOUSE BILL NO. 251, "An Act exempting certain foreign
pleasure craft from the mandatory pilotage requirement."
Number 1650
REPRESENTATIVE DAHLSTROM, sponsor of HB 251, explained that this
bill exempts certain foreign pleasure crafts from the mandatory
pilotage requirements while visiting Alaska. Pleasure craft are
vessels that are not for hire. Currently, American-registered
pleasure craft of any size are not required to employ a marine
pilot, however, all foreign-registered vessels are, she said.
The only exception [to the marine pilotage requirement] is while
the vessel is moored at a dock or at anchor. The intent of HB
251 is to standardize the operation of pleasure craft by
granting a waiver or exemption to foreign-registered vessels of
less than 200 feet. A recent Legislative Budget and Audit
Committee report [recommended] these changes. Recommendation 4
of the Legislative Audit, 08-20015-02, dated Nov. 1, 2002,
reads:
The Board of Marine Pilots should seek statutory
authority to allow the board the discretion to grant
waivers of pilotage requirement to large pleasure
craft.
REPRESENTATIVE DAHLSTROM noted the time and effort [contributed
by] the marine pilots in helping develop this bill. [This bill]
will bring greater economic [activity] into Southeast Alaska
[through increased yacht traffic]. She said that all parties
are in agreement on this bill, and she will present a committee
substitute (CS) [at the April 23rd meeting of the committee].
REPRESENTATIVE DAHLSTROM, in response to a question from
Representative Rokeberg, said she would prefer to wait until the
[April 23] meeting to have the committee adopt a working version
of the bill.
Number 1762
REX SHATTUCK, Staff to Representative Nancy Dahlstrom, Alaska
State Legislature, explained that this bill grew out of the
March 12, 2003, [House Labor and Commerce Standing Committee]
hearing for SB 20, which extends the Board of Marine Pilots; SB
20 passed out of this committee with six "Do Passes" and passed
the House floor with 38 "Yeas" and two excused. He noted that
the audit included a letter from DCED [Department of Community &
Economic Development] that encouraged the legislature to enact a
law that would allow the Board of Marine Pilots [the discretion
to grant waivers of pilotage requirements to larger pleasure
crafts]. Mr. Shattuck stated that the forthcoming CS will
address the concerns of the stakeholders, some of who will
testify today. He said that the parties agreed to an amendment
[to HB 251] that would exempt [smaller foreign-flagged pleasure
craft from the pilotage requirement] and allow the board to
waive the pilotage requirement for larger vessels under certain
conditions. He explained that foreign-flagged vessels under 53
meters in length would be required to take a pilot [on board] no
matter which zone they were going into. They would also be
required to use an Alaskan agent, whose purpose would be to make
arrangements between the marine pilots and the customer. The
Division of Occupational Licensing in DECD would write the
regulations [implementing the law].
Number 1872
REPRESENTATIVE ROKEBERG asked what length vessels are covered in
the bill.
MR. SHATTUCK explained that [a vessel of] 53 meters is just
under 175 feet. He said that the [measurement of] 53 meters
will be used because it's an international standard for those
vessels.
REPRESENTATIVE ROKEBERG asked Mr. Shattuck to clarify how the
bill affects vessels under 53 meters.
MR. SHATTUCK replied that any vessel under 53 meters would have
to meet the requirements in regulation that will be drafted by
the Board of Marine Pilots. He said those standards will cover
the vessel size and the requirement to take on a pilot coming
into Alaskan waters.
REPRESENTATIVE ROKEBERG asked if a vessel under 53 meters would
have to have a pilot.
MR. SHATTUCK said that such a vessel would have to have a pilot
from the entry point [into Alaskan waters] to the vessel's first
port.
CHAIR ANDERSON said that a vessel would have to have a pilot
from the entry point into Alaskan waters to the first port. It
would not have a pilot [after that], whereas in current law a
vessel must have a pilot [on board the entire time it is
moving].
Number 1933
REPRESENTATIVE ROKEBERG observed that the pilots have "one bite
at the apple." He asked about the agent [referenced by Mr.
Shattuck].
MR. SHATTUCK said at present there is an agent's license under
the Board of Marine Pilots. That agent would arrange for the
marine pilots to be available at the pilot stations.
REPRESENTATIVE ROKEBERG asked whether the CS will give specific
details for the regulations.
MR. SHATTUCK replied the bill will contain the tenants outlined
today, while the regulations, formulated in part by the Board of
Marine Pilots, will be more detailed.
Number 1982
REPRESENTATIVE CRAWFORD surmised that a marine pilot is on board
during the first voyage into Alaskan waters to the first port in
order to see if the master is capable of piloting in Alaskan
waters. What happens if the master is incompetent, he queried.
MR. SHATTUCK replied that the marine pilots will be involved in
writing the regulations to cover what should happen in that
circumstance. Because the marine pilots are the eyes and the
ears of the state, statute gives them some authority to say
whether the vessel would be safe in Alaskan waters.
CHAIR ANDERSON confirmed that the board will have more of a
regulatory purview.
Number 2032
REPRESENTATIVE GATTO commented that the marine pilot would
notify the Coast Guard of whatever was found.
REPRESENTATIVE ROKEBERG asked what size vessel needs to have a
marine pilot aboard.
MR. SHATTUCK said that currently, there is an [exemption for
foreign-flagged pleasure craft of less than] 300 [gross] tons;
that exemption would be removed [under the forthcoming CS]. The
CS will deal with vessels up to a maximum of 53 meters, which is
just under 175 feet. As far as [waivers for vessels of] a
minimum size, [no minimum size] has yet been established. He
said he anticipated that [a minimum size will be included] in
the CS.
Number 2086
REPRESENTATIVE ROKEBERG said that it's not the committee's
intent to negatively affect the small craft tourism in the
state.
MR. SHATTUCK replied that the intent is not to impact those
craft that would not normally carry a marine pilot.
REPRESENTATIVE ROKEBERG asked why the [exemption for vessels
less than] 300 gross tons [will be] removed.
MR. SHATTUCK replied that there are vessels of less than 300
[gross tons] that qualify [for an exemption] under existing law
but those vessels could be larger than the [200] feet or [53]
meters [limit in the proposed CS]. Sail craft might have to be
addressed separately, he said.
REPRESENTATIVE ROKEBERG commented that if the CS is going to
remove the 300-ton threshold, there must be an argument [in
favor] of that [action].
MR. SHATTACK said the bill is targeting vessels over that [300
ton size], many of which are substantially larger than 53
meters.
Number 2164
REPRESENTATIVE CRAWFORD said that now any [vessel] under 300
tons is exempt from pilotage; it doesn't have anything to do
with the length of the boat. If the 300 tons is removed, there
will need to be some sort of a minimum size [in statute].
MR. SHATTUCK said in some cases the minimum tonnage is actually
larger.
REPRESENTATIVE CRAWFORD said, no, in feet.
REPRESENTATIVE ROKEBERG surmised that [these vessels] are
shorter but weigh more.
MR. SHATTUCK agreed.
REPRESENTATIVE CRAWFORD said the state wouldn't want to be
requiring pilots for a 40-foot ketch.
MR. SHATTUCK said that this bill addresses motorized pleasure
craft. However, it does not address sail craft. The tonnage
issue is something all together different.
REPRESENTATIVE DAHLSTROM suggested addressing these questions to
the marine pilots [present at the hearing].
CHAIR ANDERSON said that the bill will be held and will be
brought up first [at the meeting] next week.
Number 2227
KATE TESAR, Lobbyist for Alaska Yacht Services and Provisioning,
stated that her client works with yacht owners and yacht
management companies throughout the country, assisting these
yachts in coming to Alaska. She supervises port services for
the guests and crews of these large yachts. She is working
aboard a yacht now.
MS. TESAR said her client supports [HB] 251. She said that the
stakeholders reached agreement on how to address these
exemptions a very short time ago. They agreed to work on the
language together and so do not yet have specific language for
the committee. She said that the group has worked out the 53-
meter size limit, which mandates that a pilot be on board at the
initial entry point into each region, and the use of Alaskan
agents, which will also be a revenue-producer for some of these
small communities. The stakeholders support the [legislative
audit] recommendation 4 that says the state should address the
situation with these large yachts. She said that the yachts
bring a large amount of commerce into the small communities.
She thanked Representative Dahlstrom and the marine pilots for
working to find a solution that will allow this commerce to
continue in the state.
Number 2302
ROBERT WINTER, Captain, Marine Pilot, Southeast Alaska Pilots'
Association, testified that he supports legislation to
accommodate the needs of these small yachts, but that his group
cannot support HB 251 as written. [The various interested
parties] have reached some agreements, but [additional work] is
necessary. Mr. Winter said he appreciated Representative
Dahlstrom's leadership in bringing together the pilots
[associations] and the agents for the small yachts to discuss
the issue. He said he thinks there is agreement with the
language, so the process can move forward.
MR. WINTERS identified several issues key to his group. One is
the definition of pleasure craft. He said the group has reached
agreement on a legal definition: "a not for hire foreign
vessel." [Another issue is that] all foreign yachts would have
to [carry] a pilot from the vessel's initial entry into Alaska
waters to its first port of call in each region. The purpose of
this requirement, he said, is not to decide whether the master
was competent, but rather to give the master information on
Southeast, for example, gill net openings, cruise ship schedules
so that the master would know what traffic to expect, radio
frequencies to monitor as well as information on passages.
TAPE 03-36, SIDE B
Number 2364
MR. WINTER explained that the pilot would make sure that the
master had all the pertinent charts. [The pilot's role covers]
strictly safety issues. He said the pilots associations would
also want to have a pilot on board when the yacht leaves the
region.
MR. WINTER said the group agreed to a length of 53 meters and
agreed to get rid of the gross tonnage because it is an
ambiguous number. For example, a 170-foot ship could be 1,000
gross tons, while a vessel [varying in length from] 170 to 300
feet could be 99 gross tons. [Tonnage] is a volume measurement
built around a bunch of specialized rules. He used the example
of the Yorktown Clipper, which is almost 300 feet but is only 99
gross tons. Therefore, this legislation uses a fixed figure of
length and anyone can look at a vessel and determine its length.
MR. WINTER said the pilots wanted to put in some conditions on
[yachts'] transit. There are some areas, regardless of the size
of the yacht, that [should] require a state pilot on board, he
said. These include Valdez Narrows, Wrangell Narrows, Peril
Straits, and Sergius Narrows in Southeast Alaska. He said the
yachts have an option of using a pilot for that transit or
choosing a different route so there's no need for a pilot. He
said the concern is for commerce. If a ship of 170 feet goes
aground in Wrangell Narrows, it would interrupt commerce as well
as ferry traffic. He said that the pilots consider this a
safety issue. They also want an Alaska-registered agent to
represent the yachts. In the past, the pilots have had a
difficult time getting paid by some foreign yachts. An agent
takes care of bonds, [can be held responsible for payment to the
pilots], can arrange contracts and give pilots advance notice,
and handles the customs and immigration details for the yachts.
Number 2261
REPRESENTATIVE ROKEBERG noted that there's a distinction [in
state law] now in the exemptions between a U.S.-registered and
foreign-registered vessels of less than 300 tons. He asked if
the compromise leaves the U.S. registry alone or will it apply
to both types of registry.
MR. WINTER replied that the requirements for U.S.-flagged ships
are federal. He explained that the federal government regulates
U.S.-flagged vessels, and the state regulates foreign vessels.
The legislature can't do anything about U.S.-flagged vessels.
REPRESENTATIVE ROKEBERG asked about the federal requirement for
pilotage on U.S.-registered vessels.
MR. WINTER responded that if the vessel is under 99 gross tons
and [engaged] in coast-wise trade, even if it's a U.S. hull, the
master and the mates must have made three round trips in every
area before they can act as a first class pilot. The Yorktown
Clipper, the Sea Lion, and many other 99 gross "tonners" seen in
Southeast Alaska all have crew on board that have made a minimum
of three round trips in every area. For a pleasure yacht, there
is no such requirement.
REPRESENTATIVE ROKEBERG confirmed that for any U.S.- registered
[pleasure craft], there is no restriction or requirement for
pilotage. He also confirmed that this [bill applies] only to
foreign-registered vessels.
MR. WINTER said only if those vessels are under 300 gross tons.
He said HB 251 covers vessels up to 53 meters -- they would have
no pilotage requirements other than initial entry and exit and
for the couple of narrow passages in Southeast.
REPRESENTATIVE ROKEBERG asked whether smaller pleasure craft
from British Columbia are considered foreign registry.
MR. WINTER said if it's between 20 and 53 meters, it [wouldn't]
need a pilot. A vessel under 20 meters does not need a pilot.
REPRESENTATIVE ROKEBERG asked about the minimum [vessel size of
under 20 meters].
MR. WINTER said the 20 meters comes from the COLREGS, which is
The International Regulations for Avoiding Collisions at Sea or
Rules of the Road. He said that 20 meters [65 feet or less] is
the break between small vessels and big vessels.
REPRESENTATIVE ROKEBERG said anything above the 53 meters would
have to have a pilot. He recalled that Mr. Shattuck mentioned
inbound pilotage and inquired about outbound [pilotage].
Number 2140
MR. WINTER said that [pilots would be required to be onboard] on
initial entry and on exit from the region; that's the only two
times pilotage would be required. He described different entry
points in Southeast Alaska.
REPRESENTATIVE ROKEBERG asked if there is a problem with
availability of pilots.
MR. WINTER testified that since pilotage started in Alaska in
1972, there has never been a ship that went without a
[requested] pilot.
REPRESENTATIVE ROKEBERG asked how long in advance do vessels
need to make a reservation [for a pilot].
MR. WINTER said that a reservation must be made 96 hours in
advance, according to statute.
REPRESENTATIVE ROKEBERG inquired as to the typical cost of an
in-bound voyage.
Number 2119
MR. WINTER said it would be $600-900, depending on the weather.
CHAIR ANDERSON said he will hold [HB 251] over until next week
and keep public testimony open.
HB 255-WAGES:TRAINING/FLEX-TIME/DEFINITIONS
Number 2063
CHAIR ANDERSON announced that the final order of business would
be HOUSE BILL NO. 255, "An Act amending the Alaska Wage and Hour
Act as it relates to flexible work hour plans, the provision of
training wages, and the definitions of certain terms; and
repealing the exemption in the Act from the payment of minimum
wages for learners."
The committee took a brief at-ease from 4:18 to 4:20 p.m.
Number 1992
REPRESENTATIVE ROKEBERG moved to adopt Amendment 1 which read:
Page 2, Line 4:
Delete: "solely"
Page 3, Line 16 and 17:
Keep in statute:
"and the written agreement has been filed with
the department"
REPRESENTATIVE LYNN objected for purposes of discussion.
Number 1963
REPRESENTATIVE ROKEBERG explained that removing the word
"solely" on page 2, line 4, helped clarify the definition of
supervisory capacity. He addressed the other change, on page 3,
lines 16-17. The amendment restores the current statutory
language, "and the written agreement has been filed with the
department", which was mistakenly removed, he said. He reviewed
the affect of the amendment: after an employer and employee
agree to a voluntary flexible work hour plan, a copy must be
filed with the department [of Labor & Workforce Development] so
[department staff] can audit it.
CHAIR ANDERSON reminded committee members that this is a
technical amendment.
REPRESENTATIVE ROKEBERG explained that the flex-time plan needs
to be filed with the department; [removing it from the bill] was
an oversight on his part.
REPRESENTATIVE GUTTENBERG asked about the impact of deleting
"solely" from the language [about supervisory capacity] on page
2.
Number 1904
HEATHER NOBREGA, Staff to Representative Norman Rokeberg, Alaska
State Legislature, explained that there was a request to delete
"solely" so that the work of supervisory employees would not be
limited to assigning and directing the activities of
subordinates. She said that removing the word "solely" gives
the [employer] more flexibility in the duties the supervisor can
perform.
CHAIR ANDERSON explained that the assigning and directing duties
would no longer be all-inclusive, whereas solely makes them all-
inclusive.
REPRESENTATIVE ROKEBERG said that the amendment speaks to the
allocation of a supervisor's time between supervisory and other
duties. The word solely implies only supervisory duties. He
said as written, the current statutory wording is too tight.
REPRESENTATIVE GATTO suggested [substituting] the word
"primarily" for "solely."
Number 1835
REPRESENTATIVE LYNN removed his objection to Amendment 1.
CHAIR ANDERSON confirmed that Representative Guttenberg did not
object to the amendment. There being no other objections,
Amendment 1 was adopted.
Number 1777
DON ETHERIDGE, Lobbyist for Alaska State AFL-CIO, testified that
his group opposes the entire bill, even with Amendment 1. He
spoke against removing the department's [approval] of the
voluntary flexible-hour work plan. He said [simply] filing a
piece of paper with the department doesn't give an employee the
backbone to stand up against an employer who might say, "Here,
sign this if you want the job," or, "If you don't want this to
be your last day, here, sign this piece of paper." He stated
that there are unscrupulous employers who would do such a thing.
MR. ETHERIDGE also opposed the training wage portion of the
bill. He said this provision fleeces working kids who are
trying to make money for school or to buy their own cars. The
30 hours a week allowed by the current statute is already too
much. "To push [those 30 hours] to a full-time job -- we don't
believe in it," he said. Union apprentices start at $13 or $14
an hour; he said that they need to make a decent living. He
predicted that a young person with a 90-day summer job at
training wages would wind up working the next year for another
employer at $5.15 for another 90 days. If young workers don't
go back to the same employer, they could end up working forever
at $5.15 an hour, he cautioned. He concluded that his
organization is totally opposed to HB 255.
Number 1648
CHAIR ANDERSON asked what happens when a young person works for
a new employer after receiving training wages at a previous job.
REPRESENTATIVE ROKEBERG said that once a young person has some
experience, the person doesn't need to be trained [again]. He
said there is so much demand for experienced, hard-working young
people, that the [teenager] would [easily] find work at a higher
wage. He said he doesn't think kids are going to be fleeced in
the current labor market. This bill provides an opportunity for
more jobs for young people. He said that the 30-hour rule
doesn't change [under HB 255]. There has been testimony that
it's difficult for employers to use [the 30-hour per week
maximum for training wages] because of paperwork and accounting
problems. This [bill] provides for a longer [work] period of
[40 hours per week].
Number 1540
MR. ETHERIDGE stated that grocery stores hire lots of kids at
training wages for 30-hour weeks. They box [groceries] and
stock [the shelves]. He disagreed that it's that difficult to
track a young person's time for the 30-hour [limit].
REPRESENTATIVE ROKEBERG said he's not repealing the 30-hour
provision in [regulations]; it's still there.
MR. ETHERIDGE countered that the 30-hour [work week] is being
expanded to 40 hours, which he opposes.
Number 1502
REPRESENTATIVE GUTTENBERG asked how the 90 consecutive calendar
days, on page 5, [line 5,] is calculated.
MR. ETHERIDGE agreed that calculation of the 90 consecutive days
is another concern. He asked if a young worker misses some time
or gets laid off, does the 90 consecutive day [clock] start
over.
REPRESENTATIVE GATTO said he interprets the language to mean
that 90 days after the young person starts work, the worker no
longer qualifies for the [training wage]. He asked what other
interpretation of this provision is possible.
MR. ETHERIDGE gave the example of problems currently experienced
by some of the state [workers]. They have to work 195
consecutive days to get bumped up. He said that if they miss a
day at work, their supervisors [reset the 195-day clock]. That
practice is going on right now, he said, and that's why he's
concerned.
REPRESENTATIVE ROKEBERG asked if people covered by collective
bargaining are exempt from the Alaska Wage and Hour Act and
these provisions.
MR. ETHERIDGE said that collective bargaining can exempt some of
the [provisions of state law]. But collective bargaining
agreements can't exempt the payment of minimum wage and can't
exempt working over 10-hour days, he said.
Number 1364
REPRESENTATIVE ROKEBERG stated that collective bargaining
workers are exempt under the current Alaska Wage and Hour Act.
He said they are governed by their collective bargaining
agreement, not the statute.
Number 1354
REPRESENTATIVE CRAWFORD pointed to subparagraph (14)(B), page 3,
lines 18-25, and said that this language limits ironworkers to
the "four-tens" workweek under their collective bargaining
agreements. He said the "four-tens" [represents the maximum]
flexibility before overtime [provisions take effect].
REPRESENTATIVE ROKEBERG explained that it's part of the
bargaining agreement.
REPRESENTATIVE CRAWFORD replied that no, [this requirement] is
not part of the bargaining agreement; it is in statute. The
"four-ten" workweek is the only flexible schedule ironworkers
can use, other than the five-day, 8-hour week. [Union
employees] are not exempt from the statute. He said, for
example, that ironworkers can't work [a week consisting of]
three 12-hour days and a 4-hour day.
REPRESENTATIVE ROKEBERG said, "You make my case."
Number 1295
REPRESENTATIVE CRAWFORD asked Representative Rokeberg if he
intends to delete this part of the law so that jobs outside of
collective bargaining can have any work schedule agreed to by
the employer and the employee. He said he can support "four-
tens" but not just any schedule that an employer wants.
Number 1274
REPRESENTATIVE GUTTENBERG asked Mr. Etheridge if subparagraph
(14)(B) [were removed from state law], could [an employer] work
someone two twenty-hour ("two-twenties") days.
MR. ETHERIDGE agreed. [An employer] could work the employee
back-to-back weeks and get 40 hours in four days, if it was
timed just right.
REPRESENTATIVE GUTTENBERG described a theoretical situation at a
cannery, in which the employer worked the staff "two-twenties,"
charged them room and board, resulting in pay lower than the
minimum wage. He said the employee could owe the employer at
the end of the week.
Number 1229
REPRESENTATIVE ROKEBERG asked about organized labor's position
on working parents and their need for flexible work time.
MR. ETHERIDGE stated that his group supports every working
person and does what they think is best for all of those folks.
If several people need a specific [schedule] change, it doesn't
mean that the whole contract is changed to accommodate them.
One of the main rules in negotiations is looking at the good of
the [whole group], not just the good of the few.
Number 1167
CHIP WAGONER, Lobbyist for Alaska Catholic Conference, explained
that the conference is the voice of the three Roman Catholic
Bishops of Alaska, who represent 55,000 Alaskans, and 100
parishes and missions. He noted that the Catholic Church
nationally has been an advocate for the minimum wage since 1919,
fully two decades before the federal law was passed. Mr.
Wagoner explained that Catholic social teaching flows from the
Bible and the Gospels, and he quoted Jesus as saying, "The
Spirit ... has sent me to bring glad tidings to the poor." He
emphasized that work has dignity and is a way for people to meet
their community obligations and their material needs. He said
in order for a person to have a dignity of life, they must have
a living wage sufficient to provide adequate housing, shelter,
healthcare, and food. That's why, in 2001, the Alaska Catholic
Conference endorsed the increase to the minimum wage and the
indexing provision.
MR. WAGONER spoke to Section 4, of HB 255, Training Wages. In
considering any legislation, he reported that the church
evaluates the affect of the bill on the poor and what it does to
help the poor to help themselves. According to the Department
of Labor & Workforce Development, about 14,000 to 15,000
Alaskans earn minimum wage. At the national level, 72 percent
of those on the minimum wage are 22 years or older.
[Therefore], he concluded that HB 255 would affect approximately
3,300 people in Alaska.
Number 0960
MR. WAGONER stated that HB 255 takes $2 out of the pockets of
these 3,300 people, who are at the bottom of the economic
ladder, and puts it into the pockets of people who are not at
the bottom of the economic ladder. There's a difference between
a job with training sessions and on-the-job training. He said
he has been a cook, a janitor, a highway worker, and a seafood
processor, and in all of those jobs, he worked hard. He said
that even though he was a new employee, he deserved to be paid
the same amount as the person standing next to him because it
was on-the-job training. He observed that generally, the new
worker is being trained by fellow workers. He said there hasn't
been any testimony that describes the so-called training that
requires the employer to pay the new worker $2 less an hour,
which is a substantial amount.
MR. WAGONER also raised issues of equity. He used the example
of two new employees hired at McDonalds -- one is 19 years old
and the other is 20. One earns $7.15 a hour and the other gets
paid $5.15. There's no equity there, he said. He also
described the situation of a 32-year-old woman, a single mom who
doesn't have a lot of job skills but needs the work. He asked
whom the employer would hire in the summertime, someone for
$7.15 an hour, or someone for $5.15 a hour. It creates an
imbalance, he claimed. Young people will benefit but the people
over age 20 won't be able to get the jobs. These unintended
consequences are not good, he said.
MR. WAGONER recommended that Section 4 [Training wages] be
dropped from the bill. He said the conference has no problem
with the rest of the bill and is not taking a position on it.
He said his wife uses the flexible schedule. He applied to the
department for those wages.
Number 0807
REPRESENTATIVE LYNN identified himself as a member of the same
church, but disagreed with Mr. Wagoner, saying that the bishops
are expressing a political position rather than a moral
position. He said he didn't remember seeing anything in
scripture about minimum wage. He agrees with Mr. Wagoner's
point about the dignity of work and the right to work for a
living, decent wage.
MR. WAGONER noted that preference for the poor and vulnerable is
a tenet of Catholic social teaching. The most often cited
subject in the New Testament is service to the poor, he said.
He recounted the story of the field manager who hired workers
throughout the day and paid each one a full day's wage. He
explained that each worker was paid the amount necessary to
survive to the next day.
CHAIR ANDERSON commented that the turnover rate is very high at
fast food restaurants. There needs to be a balance for the
business owner, too, he said.
Number 0562
MR. WAGONER described a local business in town that pays its
workers more than minimum wage; this business doesn't have high
turnover. If an employer treats the workers with respect, there
is less turnover. There are some jobs that don't require a lot
of training and people move [through the business rapidly].
People who have good key employees don't want to lose them.
Some of these small-thinking businesses would rather have a
revolving mill because they don't care. He reiterated that this
bill is an attempt to take $2 out of the pockets of those people
who need it the most. There's not a lot of training in these
jobs, he said.
Number 0470
REPRESENTATIVE ROKEBERG agreed with Mr. Wagoner's tenets about
the dignity of work but took exception to his analysis. He said
he believes that he is accomplishing Mr. Wagoner's [goals]. He
said he intends to open opportunities for young people and give
them an opportunity to become employed, to learn, and to
progress. He said he believes in the marketplace; when
employees prove their worth, they will be rewarded. He stated
that he agrees with the enlightened self-interest style of
management that treats employees well. He contended that people
who had the training will be hired at a higher wage in a better
position.
REPRESENTATIVE ROKEBERG asked if the Catholic Church is against
the current training wage for 16 and 17 year olds for 30 hours a
week. This bill expands the current law to 18- and 19- year
olds and allows them to work 10 hours more a week. He also said
he was distressed that the Catholic Church was not supporting
flexible schedules for working parents. He asked Mr. Wagoner to
consider this provision and give it his support. He said of all
the major employment issues in the country right now, single
parents need to have flexibility in their workday.
MR. WAGONER said he would take the flex-time issue back to the
Alaska Catholic Conference.
REPRESENTATIVE LYNN agreed with Representative Rokeberg's
comments.
Number 0204
REPRESENTATIVE GUTTENBERG thanked Mr. Wagoner for representing
the church's position on HB 255. He said they agree that the
best thing to give a person is a good job with good benefits.
He said that undercutting the minimum wage by $2 an hour for 90
days because it's called training is bizarre. An employer
learns a worker's worth in an afternoon, he opined. He asked
Mr. Wagoner whether filing the flex-time request for his wife
was difficult.
Number 0128
MR. WAGONER replied that it was "a pain," a regulations hoop.
This occurred seven years ago, for "four-tens", which the staff
[at his wife's office] loves. If there was more flexibility [in
the program], it would have been good to have a different set of
hours, he said.
REPRESENTATIVE GUTTENBERG commented that removing language on
page 3, lines 18-25, [that requires department approval of any
flex plan] opens the program to complete abuse [by the
employer]. There are no restrictions regarding [what schedule
an employer could demand], he said. An employer could work
somebody two twenty-hour shifts in a row.
Number 0027
MR. WAGONER said the goal of flex time is important, regardless
of a person's side of the bargaining table. One reason he is a
real estate agent is the flexibility of his schedule, [allowing
him to drive his children to various events].
TAPE 03-37, SIDE A
Number 0009
MR. WAGONER reiterated his opposition to training wages.
Number 0033
REPRESENTATIVE GATTO used the example of his daughter who is a
college sophomore and scans groceries at a large store in
Wasilla. He said that she learned how to push groceries through
a scanner in the first 45 seconds of her job. If she had been
hired at a training wage, it would have been a way to pay her a
lot less. He said he would favor paying $1 an hour less than
the prevailing minimum wage for a maximum of 10 consecutive work
hours. He asked Mr. Wagoner if he favored this approach.
Number 0170
MR. WAGONER said he would go back to the Alaska Catholic
Conference to ask the members' opinion.
REPRESENTATIVE GATTO said he is considering offering an
amendment that would modify the training wages.
MR. WAGONER said $1 less for 10 hours is a total of $10 [saved].
The working college student is a good example, he recalled using
the money he earned in the summer to pay for his next year of
college.
Number 0254
BARBARA HUFF TUCKNESS, Director of Legislative and Governmental
Affairs, General Teamsters, Local 959, Alaska, testified against
HB 255. She asked about the public outcry [for this change in
the law]. With respect to the proposed definition changes [in
Section 1], she noted that the federal government is considering
changing its definitions and cautioned against Alaska
incorporate [a changing federal definition]. She advocated
state control -- rather than federal [dictates] -- over those
decisions that affect working people.
MS. HUFF TUCKNESS testified that she was very concerned about
[changes in HB 255 in] flexible schedules. The Teamsters do not
oppose flexible schedules, she said, but the bill in its current
form allows an employer to direct an employee to work according
to the particular needs of that employer. She said the
Teamsters support [flexible schedules] with sideboards that
protect the employees. She described dealing with employers,
under collective bargaining agreements, who attempted to misuse
the flexible schedule for the employers' convenience, not at the
employee's request. She suggested the need for language that
addressed that particular issue. The language [in HB 255] gives
full power and control to any employer to implement a flexible
schedule, [which could] negatively impact an employee's overtime
hours.
Number 0505
MS. HUFF TUCKNESS addressed the training wage issue. She
discussed the bill with her 19-year-old son who told her, "Mom,
at $5.15 an hour, I can't afford to put gas in my truck or pay
for my insurance." She explained that at age 18, he was
training the new, older workers at a parts store where he was
employed. She said this is called a training wage, but it's not
about training. These are workers coming in at minimum wage.
The people get trained, and they move through the system; that's
the purpose of the minimum wage. She said she doesn't know of
any business that pays less than minimum wage that is able to
keep children let alone adults in these positions.
Number 0638
CHAIR ANDERSON said that a big group [of fast food restaurants]
support this bill. He said that there's the issue of fairness
for the business owner who must make cuts in order to pay that
minimum wage. The intent [of HB 255] is not to be punitive; he
said that Representative Rokeberg is trying to work with
businesses and assist in the spirit of employment. He asked how
she would respond to a restaurant owner who wants to expand the
[training wage work week by] 10 hours because [most] kids leave
before three months.
Number 0727
MS. HUFF TUCKNESS replied that if this bill is a jobs creation
bill, [accomplished by] reducing an employee's wage by $2 an
hour, she doesn't agree with it. She said she doesn't believe
that there will be kids who will work for $5.15 an hour.
CHAIR ANDERSON restated Ms. Huff Tuckness's point that [HB 255]
would hurt the business because kids would not work at that
wage.
Number 0809
REPRESENTATIVE GATTO mentioned the proposed $100 head tax as
another [impediment] that would [discourage young people] from
taking a job [at training wages].
REPRESENTATIVE ROKEBERG asked Ms. Huff Tuckness what wage her
son was earning.
MS. HUFF TUCKNESS said he was earning $9.25 an hour at the parts
store.
REPRESENTATIVE ROKEBERG read an [exemption] from the current
overtime statute on page 3, line 11: "(13) work performed by an
employee under a flexible work hour plan if the plan is included
as part of a collective bargaining agreement;". He concluded
that employees [covered by] collective bargaining are exempt
from the provisions of the flexible work hour plan for overtime
payment under Alaska statutes. He asked Ms. Huff Tuckness if
that is correct.
MS. HUFF TUCKNESS replied yes. She added that unions negotiate
overtime that is applicable to any of these schedules.
REPRESENTATIVE ROKEBERG asked Representative Crawford to comment
on this provision.
REPRESENTATIVE CRAWFORD replied that under his union's contract,
employees can work "four-tens" under state law but they can't
work [a week consisting of three twelve hour days and one four
hour day] "three twelves and a four".
Number 0951
REPRESENTATIVE ROKEBERG disagreed. He said union employees can
work whatever [flexible schedule] they bargain; they are exempt
under collective bargaining agreements. That's the whole point
here, he said; all organized labor is exempt from these
provisions.
MS. HUFF TUCKNESS responded that whether the union represents 30
people or thousands, those workers are protected under the
collective bargaining agreement with overtime rules and
regulations as restrictive or as flexible as they need to be to
accommodate the particular employer. That is those workers
protection. She stated that there are still grievances, even
with a contract in writing, over wages and schedules. She
advised against [removing] the sideboards from the statutes.
She [mischievously] suggested that organized labor should
support the bill, creating the best possible organizing
opportunity. She reiterated that the Teamsters are not here
testifying against flexible schedules. She said that this exact
issue was debated several years ago in Washington, D.C., and
went down for the same reasons. When an employer looks at a
flexible schedule, it's for totally different reasons than those
of an employee. An employer's perspective is managing the
workforce and getting the work product out in the most timely,
efficient manner. Unfortunately, it is the workers who
ultimately end up [paying the price].
Number 1100
JOHN ZULEGER, explained that he represented himself and other
hard working, voting Alaskans who oppose HB 255. He put himself
through college at age 18 and 19 by working these same jobs that
the committee is discussing. He said at $5.15 an hour, he could
not have done it without [taking out] loans and drawing on
everybody else. He said it doesn't take 90 days to learn how
flip a hamburger, make a bed, or mop a floor. It took him five
minutes. Ninety days is the working season for the majority of
people; it's the time they make their money. If they had to
work for $2 an hour less, they couldn't survive. He said he now
works in the road construction industry, which has a very short
season. If he had to work for less than time and a half after
eight hours, he said he couldn't survive either. He said the
workers get the job done, and that's what it takes. He said
that employers can't throw in other people and do the flex
schedule; it's not productive. He said that the only support
for this bill is from the business people who are going to
benefit. He quoted average blue collar working persons who told
him, "This is nothing but a bad deal for me," especially younger
people working in the fast food restaurants and grocery stores.
Number 1269
KAREN PLESS, Apprentice, International Union of Operating
Engineers, Local 302, testified against HB 255. Taking money
from the pockets of Alaskans hurts all Alaskans, including the
businesspeople [whose interests] are represented in this bill,
she said. She said that legislators, of all people, should be
aware of the short working season; this is when a large segment
of Alaskans make their yearly wages. She decried as
unconscionable the idea that people under age 20 do not deserve
a decent wage. Many of these individuals support families and
pay child support, [difficult to do on] $5.15 an hour. She
predicted that most of the committee will receive Social
Security, but a lot of these people won't have Social Security
by the time they retire. This bill will effectively take jobs
away from Alaskans who cannot insist on [the minimum] wage. In
her industry, she's protected. But employers can "pink slip" a
worker [to avoid paying] overtime; they wouldn't have to give
any reason to let the employee go. She encouraged committee
members to think of all the people out there who don't have the
protection that [Operating Engineers] Local 302 offers its
members.
Number 1348
JOHN BROWN, President, Fairbanks Central Labor Council;
International Union of Operating Engineers, Local 302, explained
that he represents almost 10,000 members. He testified against
HB 255. The working families of Alaska do not need a pay cut.
Alaska has gone from having the highest per capita income in the
nation to the middle of the pack in the last 15 years; this bill
will continue the erosion of wages for workers in Alaska, he
cautioned. He said the testimony from the [hospitality]
industry at the earlier hearing [indicated that] they want their
employees to work more hours for less money. Currently all
employers pay overtime and minimum wages on a level basis. This
bill will allow some employers to pay less in overtime and less
than the minimum wage. Many industries in Alaska are seasonal
in nature and the employees in those industries depend on the
overtime to make up for the lack of work. The reduced wage for
90 days in many cases would [pay] young workers at a substandard
rate for their entire employment period. He quoted an earlier
witness who testified that this legislation is needed for people
who work two jobs. Mr. Brown commented that it's a very sad
commentary on our state and our society that a person must work
two jobs just to survive. This bill will push more workers in
that direction. He said that collective bargaining agreements
are not exempted [from state law]. He invited Representative
Rokeberg to talk to specific attorneys and union officials. He
said [employers with union contracts] must pay overtime on the
same basis as everyone else. That right cannot be bargained
away under state law.
Number 1492
JOHN DAVID RAGAN, Laborers International Union of North America,
Local 942; Ester Community Association; Volunteer fire fighter,
Ester Volunteer Fire Department, opposed HB 255. He quoted
Henry Ford who said that he wanted every worker in his factory
to earn enough money to buy his or her own automobile. American
workers making a decent wage, buying automobiles, houses,
consumer goods, patronizing local businesses, sending their
children to college, and raising families, has been the motor
creating America's prosperity in the 20th century. That decent
wage, as Franklin D. Roosevelt called it, was guaranteed by the
great labor victories in the nineteenth and twentieth centuries.
That decent wage is what makes the economy so different from
third world countries like Mexico, where money is concentrated
in the hands of a few people and the mass of people barely make
enough to buy the basic necessities of life. Because the
majority of people in many third world countries have no buying
power, their economies have stagnated and are unable to develop.
Because American workers were paid a decent wage, the U.S.
became the economic powerhouse of the world. This legislation,
HB 255, is a direct attack on the minimum wage and the 8-hour
day, which the American labor movement fought for and died to
make the law of the land in 20th century America.
MR. RAGAN complained that he and many others came to the
legislative [information] office on Monday to testify. Instead,
the committee heard the testimony of paid industry lobbyists who
spoke at length without any time limits, while [ignoring] normal
working people in Fairbanks who could not travel to Juneau.
Number 1585
CHAIR ANDERSON explained the time constraints on committee
hearings and invited Mr. Ragan to submit written testimony which
would be included in all legislators' bill packets when the bill
goes to the House floor.
MR. RAGAN replied that there were 15-20 people waiting to
testify on Monday.
CHAIR ANDERSON apologized for the delays.
Number 1638
MATTHEW SAMPSON disagreed that HB 255 makes improvements to the
Alaska Wage and Hour Act and argued that it is user-friendly for
employers but not employees. He said this bill enables
employers to make money off of the little guy. He said Section
3 undermines current overtime laws. The people voted to raise
the Alaska minimum wage, which is different from the federal
minimum wage for a reason. Mr. Sampson said that the written
agreement between a newly hired employee and employer is all
that's needed to reduce the [worker's] current overtime pay
requirements. Nothing in this bill allows for oversight or that
holds employers to a standard that prevents abuse.
Number 1766
MR. SAMPSON said that the 8-hour day, 40-hour workweek came
about in the 1930's for the benefit of the working man and the
employer. He said it has worked for the last 70 years and is
going to work for the next 70 years. [The 90-day training
period in] Section 4 covers seasonal workers, and it's about the
length of the summertime season in Fairbanks. It [appears that
the bill is written] for the food processing and service
industry employers who make most of their money in the summer
off of cheap labor. He said he heard testimony from employers
who stand to make money off this bill. He has yet to hear
testimony from any employee who will make better wages as the
result of this bill. He has yet to hear from any single parents
who support the bill. He said it doesn't take too long to learn
how to cut the head off a fish or how to make a bed. He
understands training and learning, and that's why he's part of a
union; he gets paid to get that training. The bill
discriminates against people under the age of 20.
Number 1915
CARL WEED opposed HB 255, which he described as regressive in
helping workers, who are consumers, and also for the businessman
who is selling products. He anticipated that the [results would
ultimately harm the families of] the person working two jobs and
the parent who owes child support. He said he could train any
young person to put a pickle on a hamburger.
CHAIR ANDERSON, upon hearing no one else wished to testify,
closed the public hearing.
Number 2030
REPRESENTATIVE ROKEBERG moved to adopt Conceptual Amendment 2.
In Section 3 [page 3, line 17, after "department" from Amendment
1] add:
and the plan provides that the work is for 80 hours in
a two-week period and not more than 12 hours a day;
REPRESENTATIVE ROKEBERG explained that now, the current rule is
40 hours in a week, but any employee can't make up any time
missed. He said he used 12 hours because the current maximum is
10 hours, and it would be the maximum [allowed] in a flex-time
provision. He said this provides additional sideboards so that
when the [flex-time] contract is filed with the department, it
would have a way to enforce the contract if there was a
complaint. This [provision] avoids the "two twenties" [example
cited earlier] which is absurd but makes a point.
Number 2115
CHAIR ANDERSON, hearing no objections, said that Conceptual
Amendment 2 was adopted.
REPRESENTATIVE ROKEBERG said he would like to consult with
people directly affected by the training wage, including some
workers. State law has an existing 30-hour [per week] rule for
16- and 17- year olds. This bill relates to 18- and 19- year
olds who could work [at training wages] for 40 hours [a week].
He said that because of the testimony and [his desire to avoid
this becoming] a ploy for [employers of] summer or seasonal
workers, he is considering lowering [the 90-day training period]
to 30 days. He disagreed that a person could be trained in 10
hours, unless it [involves] scanning [groceries]. He said the
intention is to hire people, to avoid the revolving door [of
short-term employees], to get kids up to speed [in work skills].
The bill's purpose is not to relieve the employer of paying the
[minimum] wage. He said he is not going to offer the amendment
today, but he'll consider it for the next committee.
CHAIR ANDERSON said he agrees with this [potential amendment];
it helps with one of the issues he has been trying to balance.
Number 2221
REPRESENTATIVE ROKEBERG said that Section 1, with the
definitions of supervisors and executives, defaults to the new
federal regulations that are part of the bill packet. He
pointed out the unintended consequence of a regulation [8 AAC
15.910. Definitions] by the Department of Labor & Workforce
Development is that it requires anyone in an administrative
category to be paid 2.5 times the minimum wage, that is, $17.88
an hour or $37,000 a year. This is a crushing blow to small
businesses, he said, and needs to be corrected. He explained
that the department offered to change the regulation, but this
bill uses the language and the standards of federal law, which
raise the wages [of administrative staff to a minimum of] $425 a
week. He said he wanted to put this issue on the record.
CHAIR ANDERSON said that he particularly agrees with the change
[in Section 1]. No one has spoken in opposition to it, he said.
Number 2280
REPRESENTATIVE ROKEBERG said that regulation forced the wage up
to a very high level. If someone is building a resume, working
into a managerial position, the person would only be making $10,
$12, or $14 an hour, which is all a small business can afford to
pay. He used the example of his own small business, in which he
hired people out of the correctional institutions to give them a
break and give them some managerial responsibility. But he
can't afford to pay $17.88 an hour. It looks good on their
resume, gives them good experience, helps put their lives
together, and [allows them to] make a decent income.
Representative Rokeberg said he shouldn't be forced by the law
to have to pay somebody overtime if they work an extra 15
minutes, if they have a certain amount of responsibility over
the other folks. It's just not fair, he said.
CHAIR ANDERSON invited committee members to make closing
statements.
Number 2346
REPRESENTATIVE LYNN said the bill will help small business and
help employees because [the businesses] will be able to afford
to hire more employees. He advised caution so that it doesn't
have unintended consequences.
TAPE 03-37, SIDE A
Number 2371
REPRESENTATIVE GUTTENBERG said he disagrees regarding the flex-
time portion of the bill. The committee heard the bill; we
heard arguments from the [hospitality] industry that it wanted a
level playing field, which he called a bizarre statement. He
said the bill leaves considerable difference between people who
are covered by collective bargaining agreement and those who
aren't. If an employee is covered by a collective bargaining
agreement, the person has a contract and a representative who
can come in and have a discussion with the employer. However,
the [nonunion] employee may be given a form to sign agreeing to
a flex-time schedule, and therefore in the end the person has no
options.
REPRESENTATIVE GUTTENBERG expressed concern with the training
wage. In a minimum wage job, it doesn't take [a new employee]
more than an hour to figure out how to bus dishes, cut fish
heads, mop floors, or grind coffee. Employees make the
business. If a business doesn't pay its employees what they're
worth, if it hides behind a training excuse to reduce the
minimum wage, he said he can't imagine that the business will be
successful anyway. Tourism and food service are service
industries. He recalled Mr. Wagoner's comments on the basic
human dignity [of work]. Representative Guttenberg said that
the best social service program is a decent job with a decent
salary, with health and welfare benefits to take care of the
worker and the family. He said this bill erodes that basic
[role] of society.
Number 2276
REPRESENTATIVE DAHLSTROM said for the record that this bill does
not affect the basic minimum wage of $7.15 an hour.
Number 2267
REPRESENTATIVE CRAWFORD apologized that he missed some of the
testimony today and earlier that might have answered his
questions. He focused on moving the training wage age from
under 18 years to under 20 years. He said there was some
[justification] for workers under age 18 because they had not
reached the age of majority yet. But 18- and 19-year olds have
reached the age of majority, and he said there might be grounds
for an age discrimination suit, which he would prefer to avoid.
He said he's still not certain whether changing the definition
of managers affects their rights to overtime. If they give up
their rights to overtime, do they still have minimum wage
protection under this bill, he asked. He said he believes that
a flexible work schedule is up to 10 hours a day. He would hate
to see not having those sideboards [protecting workers] in the
law.
Number 2164
CHAIR ANDERSON said that Representative Rokeberg's staff just
provided him with an analysis from Legislative Legal and
Research Services to answer one of the questions. The federal
law on minimum wage, 29 U.S.C. 026, already allows for training
wages for newly hired employees less than 20 years old.
REPRESENTATIVE ROKEBERG confirmed that [these items are
contained] in the federal law. [Provisions in HB 255] clearly
default to federal law. He reviewed for Representative Crawford
the affect of Amendments 1 and 2 on the bill and his interest in
a potential amendment to cut the training period back to 30
days. He commented that to make flex-time work, the employee
needs longer than a one-week work period to make up time; most
small businesses pay over a two-week work period. [This bill]
provides more flexibility to make up time.
Number 2103
REPRESENTATIVE CRAWFORD said he has worked many a 12-hour day
and he knows that after 10 hours people get a lot more fatigued.
[The number of hours in a work day] becomes a safety issue. He
said that a 10-hour workday is flexible enough. A 12-hour
workday is above and beyond a normal person's capacity to work
except in an emergency situation. He said he still favors four
10-hour days in a 7-day period.
Number 2062
REPRESENTATIVE DAHLSTROM moved to report HB 255, as amended, out
of committee with individual recommendations and the
accompanying fiscal note.
Number 2038
REPRESENTATIVE GUTTENBERG objected.
A roll call vote was taken. Representatives Dahlstrom,
Rokeberg, Lynn, and Anderson voted in favor of HB 255, as
amended. Representatives Guttenberg and Crawford voted against
it. Therefore, CSHB 255 was reported out of the House Labor and
Commerce Standing Committee by a vote of 4-2.
CHAIR ANDERSON invited all witnesses who testified to submit
written testimony to the next committee of referral, the House
Finance Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:58 p.m.
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