Legislature(1993 - 1994)
03/10/1994 08:00 AM House STA
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
March 10, 1994
8:00 a.m.
MEMBERS PRESENT
Representative Al Vezey, Chairman
Representative Pete Kott, Vice Chairman
Representative Bettye Davis
Representative Gary Davis
Representative Harley Olberg
Representative Jerry Sanders
MEMBERS ABSENT
Representative Fran Ulmer
COMMITTEE CALENDAR
HB 407: "An Act relating to issuance of commemorative
gold rush motor vehicle license plates."
CSHB 407 PASSED OUT OF COMMITTEE
*HB 307: "An Act relating to the Uniform Probate Code,
including nonprobate transfers,
guardianships, trusts, and multiple-party
accounts; relating to the Uniform
Simultaneous Death Act; amending Alaska Rule
of Probate Procedure 5; and providing for an
effective date."
HELD IN COMMITTEE
*HB 489: "An Act repealing the state requirement to
provide overtime compensation and relating to
liquidated damages for unpaid minimum wages."
PASSED OUT OF COMMITTEE
HB 459: "An Act relating to liquidated damages and
attorney fees for minimum wage and overtime
compensation claims."
CSHB 59 PASSED OUT OF COMMITTEE
*HB 389: "An Act relating to criminal mischief."
NOT HEARD
HB 347: "An Act relating to long-term plans of
certain state agencies."
NOT HEARD
WITNESS REGISTER
TIM BENINTENDI, Staff
Representative Carl Moses
Alaska State Capitol, Room 204
Juneau, AK 99811-0460
Phone: 465-4451
POSITION STATEMENT: Gave the sponsor statement for SSHB 307
ART PETERSON, Attorney
Dillon & Findley
Alaska Uniform Law Commissioner
350 N. Franklin
Juneau, AK 99801
Phone: 586-4000
POSITION STATEMENT: Supported SSHB 307
JOHN GEORGE
American Council of Life Insurance
9515 Moraine Way
Juneau, AK 99801
Phone: 789-0172
POSITION STATEMENT: Stated concerns on SSHB 307
J.R. `RANDY' CARR, Chief
Wage & Hour Division
Department of Labor
P.O. Box 107021
Anchorage, AK 99510-7021
Phone: 269-4913
POSITION STATEMENT: Answered questions on HB 489 and HB 459
KEN LEGACKI
425 G Street, Ste. 760
Anchorage, AK 99501
Phone: 258-2422
POSITION STATEMENT: Commented on HB 459 and HB 489
REPRESENTATIVE ELDON MULDER
Alaska State Legislature
Alaska State Capitol, Room 116
Juneau, AK 99811-0460
Phone: 465-2647
POSITION STATEMENT: Addressed HB 459
PREVIOUS ACTION
BILL: HB 407
SHORT TITLE: COMMEMORATIVE GOLD RUSH LICENSE PLATES
SPONSOR(S): REPRESENTATIVE(S) FOSTER,Toohey
JRN-DATE JRN-PG ACTION
01/27/94 2166 (H) READ THE FIRST TIME/REFERRAL(S)
01/27/94 2166 (H) STATE AFFAIRS, FINANCE
01/31/94 2207 (H) COSPONSOR(S): TOOHEY
03/01/94 (H) STA AT 08:00 AM CAPITOL 102
03/01/94 (H) MINUTE(STA)
03/05/94 (H) MINUTE(STA)
03/08/94 (H) STA AT 08:00 AM CAPITOL 102
BILL: HB 307
SHORT TITLE: UNIFORM PROBATE CODE
SPONSOR(S): REPRESENTATIVE(S) MOSES,Ulmer
JRN-DATE JRN-PG ACTION
01/03/94 2007 (H) PREFILE RELEASED
01/10/94 2007 (H) READ THE FIRST TIME/REFERRAL(S)
01/10/94 2007 (H) STATE AFFAIRS,JUDICIARY,FINANCE
01/31/94 2204 (H) SPONSOR SUBSTITUTE
INTRODUCED-REFERRALS
01/31/94 2204 (H) STATE AFFAIRS,JUDICIARY,FINANCE
03/10/94 (H) STA AT 08:00 AM CAPITOL 102
BILL: HB 489
SHORT TITLE: OVERTIME COMPENSATION
SPONSOR(S): REPRESENTATIVE(S) VEZEY
JRN-DATE JRN-PG ACTION
02/14/94 2379 (H) READ THE FIRST TIME/REFERRAL(S)
02/14/94 2379 (H) STATE AFFAIRS
02/18/94 2461 (H) L&C REFERRAL ADDED
03/10/94 (H) STA AT 08:00 AM CAPITOL 102
BILL: HB 459
SHORT TITLE: DAMAGES & ATTY FEES FOR UNPAID WAGES
SPONSOR(S): LABOR & COMMERCE
JRN-DATE JRN-PG ACTION
02/09/94 2321 (H) READ THE FIRST TIME/REFERRAL(S)
02/09/94 2321 (H) L&C,STATE AFFAIRS,JUDICIARY
02/22/94 (H) L&C AT 03:00 PM CAPITOL 17
02/22/94 (H) MINUTE(L&C)
02/23/94 2495 (H) L&C RPT 2DP 4NR
02/23/94 2495 (H) DP: PORTER, MULDER
02/23/94 2496 (H) NR: SITTON, WILLIAMS, GREEN,
HUDSON
02/23/94 2496 (H) -ZERO FISCAL NOTE (LABOR)
2/23/94
03/10/94 (H) STA AT 08:00 AM CAPITOL 102
BILL: HB 389
SHORT TITLE: INCREASED PENALTIES FOR JOYRIDING
SPONSOR(S): REPRESENTATIVE(S) NORDLUND,Finkelstein
JRN-DATE JRN-PG ACTION
01/21/94 2124 (H) READ THE FIRST TIME/REFERRAL(S)
01/21/94 2124 (H) STATE AFFAIRS,JUDICIARY,FINANCE
03/10/94 (H) STA AT 08:00 AM CAPITOL 102
BILL: HB 347
SHORT TITLE: STATE LONG-TERM PLANNING
SPONSOR(S): REPRESENTATIVE(S)PARNELL,Hanley,Therriault,
B.Davis,James
JRN-DATE JRN-PG ACTION
01/07/94 2018 (H) PREFILE RELEASED
01/10/94 2018 (H) READ THE FIRST TIME/REFERRAL(S)
01/10/94 2019 (H) STATE AFFAIRS, FINANCE
01/12/94 2043 (H) COSPONSOR(S): THERRIAULT
01/13/94 2056 (H) COSPONSOR(S): B. DAVIS
01/14/94 2084 (H) COSPONSOR(S): JAMES
03/08/94 (H) STA AT 08:00 AM CAPITOL 102
03/08/94 (H) MINUTE(STA)
03/10/94 (H) STA AT 08:00 AM CAPITOL 102
ACTION NARRATIVE
TAPE 94-26, SIDE A
Number 000
CHAIRMAN AL VEZEY called the meeting to order at 8:00 a.m.
Members present were REPRESENTATIVES SANDERS, OLBERG, G.
DAVIS, and B. DAVIS.
HB 407 - COMMEMORATIVE GOLD RUSH LICENSE PLATES
CHAIRMAN VEZEY opened CSHB 407, Version J, for discussion
under bills previously heard. He stated a fiscal note had
been received from the Department of Public Safety which
stated CSHB 407 would average a positive revenue of $22,500
a year.
CSHB 407: "An Act relating to issuance of commemorative
gold rush motor vehicle license plates; and
providing for an effective date."
(REPRESENTATIVE KOTT joined the meeting at 8:01 a.m.)
Number 045
REPRESENTATIVE GARY DAVIS moved to pass CSHB 407 from
committee with attached fiscal notes and individual
recommendations.
Number 048
CHAIRMAN VEZEY asked the committee secretary to call roll on
the motion. The House State Affairs Committee passed CSHB
407.
IN FAVOR: VEZEY, KOTT, SANDERS, G. DAVIS, OLBERG, B.
DAVIS.
OPPOSED: NONE
ABSENT: ULMER
HB 307 - UNIFORM PROBATE CODE
CHAIRMAN VEZEY opened discussion on SSHB 307.
Number 067
TIM BENINTENDI, AIDE FOR REPRESENTATIVE CARL MOSES, gave the
sponsor statement for SSHB 307. The sponsor summary reads
as follows:
"SSHB 307 would provide a comprehensive upgrade of Alaska's
probate code by adopting revisions to AS 13.11 and AS 13.31,
as recommended by the National Conference of Commissioners
on Uniform State Law (NCCUSL). Revisions to AS 13.11
involve Intestacy, Wills, and Donative Transfers. There
would also be changes to AS 13.06, General Provisions, and
to AS 13.16, Probate of Wills and Administration.
"Changes to AS 13.11 are primarily aimed at enhanced spousal
and family protection, reduced risk of technical
invalidation of wills, and greater harmony of the rules of
presumed intention for property transfers at death.
"Changes to AS 13.31 center on the clarification of the law
of joint tenancy and tenancy in common for deposit accounts
held by multiple parties. It also includes Transfer-On-
Death provisions for investment security accounts.
"The Sponsor Substitute added the changes to AS 13.31, the
Nonprobate Transfers. It also deletes some definitions as
found in the NCCUSL language, which are duplicative or
unnecessary. Other modifications convert NCCUSL language
into Alaska's drafting style. This version also places the
registry for international wills in the Department of
Commerce and Economic Development..."
MR. BENINTENDI stated the registry for international wills
may eventually be placed in the court system, but without
the court system completing its review of SSHB 307, they
were not prepared to recommend this change.
The sponsor summary continued:
"HB 307 is supported by the Attorney General, the Alaska
Uniform Law Commission, and the American Association of
Retired Persons. The Alaska Court System is currently
reviewing its provisions. It carries zero fiscal notes from
DCED, LAW, and the Court System."
Number 126
CHAIRMAN VEZEY commented SSHB 307 dealt with a very
complicated subject. ART PETERSON was asked to be the next
individual to testify. CHAIRMAN VEZEY stated he had
received a letter from MR. PETERSON earlier in the week.
Number 166
ART PETERSON, DILLON & FINDLEY ATTORNEY, ALASKA UNIFORM LAW
COMMISSIONER, testified in favor of SSHB 307. He stated
SSHB 307 is an attempt by the NCCUSL, in conjunction with
the Joint Editorial Board for the Uniform Probate Code, to
update discrepancies they have found in Uniform Law. He
noted families are not the same as they were when the
original version of Uniform Law was being drafted. Families
now have multiple parents due to divorces and remarriages,
and mixed children within them. He stated questions arise
when a decedent, in his will says, "I give to my children
all of my property," because it is hard to define which
children, out of which marriage, are to be included in the
distribution.
MR. PETERSON stated if a person dies without a will,
currently the Intestacy provisions divide the assets of the
deceased. SSHB 307 will rearrange some of the traditional
provisions on Intestacy. The surviving spouse will get a
larger share under the amendments in SSHB 307. In second
marriage situations, the second marriage may occur much
later in life; therefore, SSHB 307 recognizes the number of
years of marriage will go to the percentage that the
survivor will receive. Descendants and parents of the
decedent will have distribution changes.
MR. PETERSON mentioned the Alaska delegation to the National
Conference supports SSHB 307. He commented SSHB 307 really
only has one provision which has a state impact which is the
registry for international wills. This would be a state
repository for performing international wills registration.
He stated SSHB 307 regulates the distribution of property
among private individuals.
MR. PETERSON said the letter the committee received from the
Association of Retired Persons to REPRESENTATIVE MOSES,
December 1, 1993, highlights SSHB 307 well.
MR. PETERSON explained there were two basic parts to SSHB
307, Article II, Intestacy and Wills, and Article IV,
Nonprobate Transfers. Alaska already has some provisions
which regard the concept of "pay on death," whereby a
decedent's bank account can automatically be transferred
into a survivor's name. Current law, however, relates to
multiple party accounts, and the amendment in SSHB 307 would
allow the law to address single party accounts. The
transfer provisions for securities will be expanded to cover
an individual's certain range of assets, whereby upon death,
a person's stocks would avoid probate and be transferred
directly to the property of a designated person.
(REPRESENTATIVE SANDERS left the meeting at 8:15 a.m.)
Number 353
CHAIRMAN VEZEY noticed the section of SSHB 307 regarding
Alaska Native Corporation stock and pointed out it did not
sound like a national issue.
Number 360
MR. PETERSON responded the Alaska Native Corporation stock
section was an "Alaska wrinkle." When he worked with House
Judiciary in the early 1970s, they amended the probate code
to include that provision because the Alaska Native Claims
Settlement Act (ANCSA) had just passed in 1971. He noted
certain provisions of state law had to be enacted to
implement the federal law. Therefore, the special situation
of ANCSA stock had to be recognized in SSHB 307.
MR. PETERSON pointed out the provision was on page 9, lines
18-20, which states, "The intested share of the surviving
spouse in settlement common stock, or other inalienable
stock, in a corporation organized under ANCSA..." He noted
there have been attempts to tailor SSHB 307 to fit both the
Alaska format in drafting style, as well as a "wrinkle" such
as the ANCSA provision.
Number 380
CHAIRMAN VEZEY asked MR. PETERSON to explain what SSHB 307
would do with Native corporation stock.
(REPRESENTATIVE OLBERG left the meeting at 8:20 a.m.)
Number 385
MR. PETERSON replied when there is no will, the surviving
spouse will get all of the decedents assets if there are no
children. If there are children, the surviving spouse would
get half of the assets.
Number 390
CHAIRMAN VEZEY questioned the phrase "surviving issue."
Number 392
MR. PETERSON responded SSHB 307 helps clarify and improve
terminology such as "child, children, issue, descendants,
etc..." "Surviving issue" would normally be the descendant
children.
Number 401
CHAIRMAN VEZEY commented the revision of Uniform Probate
Code has been worked on for 20 or more years and he observed
society has not necessarily changed. He noted the divorce
rate in Alaska today is less than that of 25 years ago. He
asked if MR. PETERSON had been referring to societal changes
which had been occurring from the mid-1970s to the current
date.
Number 416
MR. PETERSON answered he was referring to the complete
continuum. He said he based his testimony on the comments
produced by the drafters when SSHB 307 came out. The
drafters were addressing the changes which occurred during
the 20 year original promulgation and enactment of the
original version of the Uniform Probate Code. The drafters
pointed out along with the substantial divorce rate, there
is a substantial remarriage rate. Remarriages produce
children with multiple sets of parents and SSHB 307 deals
with the questions that arise because of these changes in
the family.
(REPRESENTATIVE OLBERG returned to the meeting at 8:24 a.m.)
Number 442
CHAIRMAN VEZEY stated the biggest change he was aware of in
the last 30 years was the number of illegitimate births.
MR. PETERSON agreed, assuming CHAIRMAN VEZEY meant the
parties are out of wedlock and may or may not be living
together. He stated SSHB 307 tries to simplify both the
intested, and will situation, so there is an emphasis on
executing the intent of the person with the will. Secondly,
for those without a will, SSHB 307 tries to determine what
the decedent would most want to have happen to their
property. He noted SSHB 307 does not specifically point out
illegitimate children, but it does define "children" as
including adopted children, and in a single parent situation
a "child" is still defined as a child.
Number 469
REPRESENTATIVE G. DAVIS inquired if there had been any
attempts to ensure that residents of a state do have a will
in trying to reduce the amount of probate problems that
arise.
MR. PETERSON did not know of a state that has made the
making of wills an official state policy by some state
agency. He knew Bar Associations around the country are
encouraging people to get wills and make their intent clear.
(REPRESENTATIVE SANDERS returned to the meeting at 8:27
a.m.)
Number 483
CHAIRMAN VEZEY asked what changes there are in circumstances
that would trigger a person's estate going to the state.
Number 487
MR. PETERSON did not believe there were significant changes
by SSHB 307 in the circumstances. An estate goes the state
when there is no will and there is no identifiable
descendant or antecedent who could inherit from the
decedent.
Number 495
REPRESENTATIVE JERRY SANDERS referred to AS 13.12.108 on
page 11, which states,"after born heirs, an individual in
gestation at a particular time is treated as living." He
inquired as to the definition of "a particular time."
Number 500
MR. PETERSON assumed "particular time" means the time of
death of the decedent. In the case of the woman who dies
while a child is in gestation, typically the child would
also die. He stated the example of a father who dies and
his will speaks before his child is born. AS 13.12.108
attempts to address this problem if the individual lives 120
hours more after the birth.
Number 511
REPRESENTATIVE SANDERS clarified the newborn child could not
be disinherited.
Number 515
MR. PETERSON said the child would be treated as a living
child if it survived 120 hours after birth. He noted the
120 hours were similar to the provisions in the Simultaneous
Death Act, which Alaska now has and is slightly modified by
SSHB 307.
Number 521
REPRESENTATIVE BETTYE DAVIS asked if there had not been any
changes to the Uniform Probate Code since it was enacted 20
years ago.
Number 525
MR. PETERSON answered there had been no comprehensive
revisions.
Number 526
REPRESENTATIVE B. DAVIS questioned if there was a mandate
for the changes, or were the Uniform Probate Code changes
reviewed and the states were left to decide if they should
implement them.
Number 530
MR. PETERSON answered there was not a federal mandate for
the Uniform Probate Code changes, although there is an
international convention in effect which the United States
has not signed onto yet. He stated if states were to adopt
the international wills provisions in SSHB 307, it would
encourage the federal government sign on.
Number 535
REPRESENTATIVE B. DAVIS clarified the changes started on a
state by state basis.
Number 536
MR. PETERSON affirmed REPRESENTATIVE B. DAVIS.
Number 542
MR. PETERSON pointed out in Article II there are some random
amendments, but basically the Uniform Code in the 1972
version. He stated the Joint Editorial Board for the
Uniform Probate Code is comprised of several component
organizations that bring the topics together. The Uniform
Laws Conference then creates a drafting committee who then
works for a minimum of two, or more years to reach the final
stages. The drafting committee then brings the draft to the
floor of the National Uniform Laws Conference where it is
debated by the entire group for two separate years.
Number 557
CHAIRMAN VEZEY introduced JOHN GEORGE as the next individual
to testify.
Number 561
JOHN GEORGE, AMERICAN COUNCIL OF LIFE INSURANCE, stated his
concerns about SSHB 307. He stated life insurance agencies
are very concerned about SSHB 307 because the beneficiary to
a life insurance policy is designated by the person buying
the policy, or there are contingent beneficiaries, assuming
the named beneficiary is deceased. He noted SSHB 307 might
change the beneficiary of the life insurance policy to
someone other than designated. Insurance would be pulled
into probate, whereas before life insurance policies have
been excluded from probate.
Number 583
CHAIRMAN VEZEY clarified the American Council of Life
Insurance is asking for more time to review SSHB 307.
Number 587
MR. GEORGE felt MR. PETERSON and other researchers should
review SSHB 307 with them. He noted SSHB 307 had a number
of committee referrals and there would probably be time to
go over SSHB 307 and deal with any problems they may find in
another committee.
Number 596
REPRESENTATIVE B. DAVIS asked MR. PETERSON to speak to MR.
GEORGE's concern.
CHAIRMAN VEZEY added he had received communication from five
attorneys in the Fairbanks area who practice probate and
have asked for time to review SSHB 307. They stated the
Probate Committee for the Alaska Bar Association had not
reviewed SSHB 307.
Number 604
MR. PETERSON responded the Alaska Bar Association, Probate
Section, has had the opportunity to study and review SSHB
307. The Bar Association puts out a monthly newsletter
listing the different sections of the bar, and in that
schedule for 1992-1993, they were taking up Article II
revisions in several meetings. He noted the Bar Association
has had SSHB 307 in their formal study system for nearly two
years. He said the chair of the probate section advised him
that some members expressed serious concerns to him (the
chair). He wrote back, October 4, 1993, and asked them for
their concerns so they could get them straightened out. In
the same letter he gave an example of a concern and offered
alternative approaches to solve the problem. MR. PETERSON
said he still has not received a response to his October 4,
1994, letter and he doubted the seriousness of their
concerns.
MR. PETERSON referred to Former Attorney General, Charlie
Cole, who supported SSHB 307. He stated in reference to the
section on spousal share, Mr. Cole supported a more extreme
version which gave the spouse even more.
MR. PETERSON would like to know the specific comments by the
Fairbanks attorneys because he felt they had had time to
study SSHB 307.
MR. PETERSON did not quite understand MR. GEORGE'S
statement, therefore, he felt it would be good to meet with
his organization and discuss their concerns.
Number 647
CHAIRMAN VEZEY commented the letters received by the
attorneys would become public record and MR. PETERSON would
have access to them. Due to the complex nature of SSHB 307,
CHAIRMAN VEZEY decided to hold SSHB 307 in committee and it
would be rescheduled at a later date.
HB 489 - OVERTIME COMPENSATION
CHAIRMAN VEZEY opened HB 489 for discussion. The House
State Affairs Committee filed HB 489, and it has a referral
to the House Labor & Commerce Committee.
CHAIRMAN VEZEY, in order to give the sponsor statement on HB
489, turned the gavel over to VICE CHAIRMAN KOTT.
Number 661
VICE CHAIRMAN KOTT asked CHAIRMAN VEZEY to address HB 489.
Number 665
CHAIRMAN VEZEY addressed HB 489 for the House State Affairs
Committee. He stated HB 489 would adjust Alaska's overtime
laws to allow workers to work longer workdays and shorter
work weeks. The inability to do this has been a frequent
complaint, CHAIRMAN VEZEY had heard. Alaska currently has
an entire section in statute which deals with the number of
hours in a workday. In drafting HB 489, he thought making
more statutes would nullify other current statutes;
therefore, the most flexible approach would be to adopt the
federal standard and repeal Alaska's current overtime
statutes. The federal standard states if a person works
more than 40 hours a week, they will be paid overtime.
Collective bargaining agreements are also clarified by the
federal standard, whereby the employer/employee can agree
upon their own terms as long as they do not require
individuals to work over 40 hours a week without overtime.
CHAIRMAN VEZEY stated the second part of HB 489 addresses
the area in Alaska statute which regulates the failure to
pay overtime.
TAPE 94-26, SIDE B
Number 000
CHAIRMAN VEZEY explained current statute states if overtime
is not paid, for any reason, the employer accrues a 100
percent liquidated damage penalty. He stated a vast
majority of employers act in good faith and there are
misunderstandings, whereby overtime may not have been paid.
He felt a 100 percent penalty may not be in the best
interest of promoting employer/employee relationships. He
suggested this portion of the statute be amended to clarify,
if the matter is settled administratively, that liquidated
damages would not apply. CHAIRMAN VEZEY felt this would be
the simplest approach.
Number 032
REPRESENTATIVE B. DAVIS asked who requested the drafting of
HB 489.
CHAIRMAN VEZEY stated there was not a specific request, but
he has had several employers and employees confront him with
the issue that they would like to work short workweeks,
allowing them longer weekends.
Number 042
REPRESENTATIVE B. DAVIS inquired if employers were not
already working with employees to allow them longer work
hours.
CHAIRMAN VEZEY responded Alaska has two pages of statutes
regarding the "8-hour workday." Rather than add more pages
of exceptions to the "8-hour workday," he advocated the
federal standard of a 40-hour workweek be adopted.
Number 056
REPRESENTATIVE B. DAVIS felt employees already have the
opportunity to work long days, and asked how HB 489 make the
system any different. Would HB 489 make it easier to have
longer workdays?
CHAIRMAN VEZEY said REPRESENTATIVE B. DAVIS was correct.
Number 063
REPRESENTATIVE B. DAVIS asked if HB 489 would eliminate
overtime for any of the individuals who work more than 40
hours.
Number 065
CHAIRMAN VEZEY said no, HB 489 adopts the mandate that
overtime has to be paid after 40 hours a week, by federal
law. He could not see the point of duplicating federal law;
therefore, he opted to adopt federal law and repeal Alaska's
overtime regulations.
Number 074
REPRESENTATIVE B. DAVIS clarified liquidated damages would
be settled on an employer/employee basis and the employees
would not be paid the liquidated damages.
Number 084
CHAIRMAN VEZEY affirmed REPRESENTATIVE B. DAVIS. If the
employee has to adjudicate the matter, however, there would
be a mandated 100 percent liquidated damages.
Number 089
REPRESENTATIVE B. DAVIS asked how HB 489 would allow a
person to work longer hours in order to have a three-day
weekend.
Number 093
CHAIRMAN VEZEY answered there would not be two pages of
Alaska statutes to comply with in order to exceed the 8-hour
work day.
Number 098
REPRESENTATIVE B. DAVIS asked for an example of things
needed to be done to comply with the statutes.
CHAIRMAN VEZEY replied currently each employer, for each
project, has to submit a specific plan to the Department of
Labor and have it approved.
REPRESENTATIVE B. DAVIS clarified HB 489 eliminates this
requirement and an employee need only fulfill the 40-hour
workweek in some way, in order to get a three day weekend.
Number 108
CHAIRMAN VEZEY stated collective bargaining agreements would
still have to be honored.
Number 110
REPRESENTATIVE B. DAVIS stated Department of Labor did not
have a statement of disagreement with HB 489. She clarified
the 40 hours could be worked in any way the
employer/employee decide, unless there would be a labor
bargaining agreement setting the standards.
Number 120
CHAIRMAN VEZEY stated the bargaining agreement would be
between the employer and the employee.
Number 122
REPRESENTATIVE G. DAVIS thought it was apparent federal law
did not recognize a 4-day, 10-hour workweek. He questioned
if current state law states a person who works 10 hours a
day would receive overtime for the extra two hours.
Number 129
CHAIRMAN VEZEY responded the requirement to pay that
overtime is in state statute, and the two hours would be
paid as overtime, unless there was a work plan approved by
the Department of Labor.
Number 137
VICE CHAIRMAN KOTT introduced RANDY CARR as the next to
testify.
Number 145
J.R. `RANDY' CARR, CHIEF WAGE & HOUR DIVISION, DEPARTMENT OF
LABOR (DOL), answered questions on HB 489 and the impact it
will have. The DOL opposed HB 489. He stated, in current
law, there is an exemption from the overtime statutes that
provide for an employer to submit a flexible work hour plan
request to the DOL. The statutes define fairly specific
criteria that the request can contain, and it is essentially
a 4-day, 10-hour workweek. He said current law was written
in the early 1980s as a result of a legislature's attempt to
do what HB 489 is now trying to do. The banking and airline
industry was concerned that their employees were not able to
work 4-day, 10-hour workweeks to receive a 3-day weekend.
He pointed out the current laws were the resolution to these
concerns. A plan need only be submitted to the DOL for
approval. After approval, the employer and employee can
enter into voluntary arrangements to work under the approved
schedule.
MR. CARR stated the elimination of a state overtime
requirement will have a negative impact on Alaska employers.
Because Alaska has been enforcing its overtime law, greater
than the federal standard, the U.S. DOL has taken action in
enforcing the Federal Labor Law. The Fair Labor Standards
Act (FLSA) has a provision which states if there is a state
law with a higher standard, the state law prevails. He
noted if Alaska's overtime is completely eliminated, the
federal government will have no alternative but to begin
enforcing the FLSA. The FLSA enforces the payment of
overtime after 40 hours differently than state law with a
civil money penalty. A civil money penalty is like a
ticket, MR. CARR stated, with the potential of up to $1000
for each violation an employer is found guilty of. The
state would have to write tickets on top of collecting the
unpaid overtime and assessing punitive liquidated damages.
MR. CARR did not believe CHAIRMAN VEZEY would be aware of
this, because they had not met on the issue.
MR. CARR addressed liquidated damages regarding having them
not be assessed if the matter was settled administratively.
The DOL did support this concept. In previous years, the
payment of liquidated damages was variable and not
mandatory; however, as the result of a 1993 court decision
the payment of liquidated damages is now mandatory. He did
not know if the language used in HB 489 would properly
accomplish the desired end result.
MR. CARR stated if overtime, under state law, is eliminated
there will be a sector of employees in the state that will
be totally disenfranchised. The FLSA applies to 75-80
percent of businesses in the state, but this will leave 20-
25 percent of businesses in state that are not subject to
federal law; therefore, their employees would be
disenfranchised. He noted these employees are not the type
usually represented by collective bargaining, but the unions
may seek these people to join into collective bargaining.
MR. CARR related to the history of overtime as it began as a
penalty levied against employers to encourage them to hire
more workers, rather than work their existing work force
longer hours. Employees now, however, view overtime as a
reward for working longer hours. MR. CARR emphasized
overtime is meant to be punitive, and with 10 plus percent
of unemployment in Alaska, the law still has valid purpose.
Number 311
REPRESENTATIVE OLBERG asked if the state of Alaska would
cease enforcing any overtime provision with the passage of
HB 489.
Number 315
MR. CARR replied HB 489 would eliminate the word overtime
from Alaska statutes, therefore the state would not have
authority to enforce any overtime requirements because it
would no longer have a state law.
Number 319
REPRESENTATIVE OLBERG asked CHAIRMAN VEZEY if this was his
intent.
CHAIRMAN VEZEY responded he deliberately left the state's
ability to pursue violations of federal overtime laws or
collective bargaining agreements in statute.
MR. CARR stated there is presently a serious doubt the state
would be able to enforce the federal overtime requirement.
The state has statutory power to enforce contracts, whereby
if an employer violated its stated overtime policy, the
state could enforce it. He did not believe it was plausible
to think the state would be able to go to state court to
enforce federal overtime requirements found in the FLSA.
Number 341
CHAIRMAN VEZEY asked MR. CARR to describe groups of
employees that would not be covered under the FLSA.
Number 344
MR. CARR replied it would be easier to state what groups the
FLSA does cover. The FLSA addresses enterprises, any
business doing $500,000 gross business annually. Small
businesses, doing less than $500,000 gross business
annually, would not be subject to the FLSA. Businesses
involved in interstate commerce, selling manufactured items
which are transported across state lines, are also covered
by the FLSA. He noted the service industry, which is
rapidly growing in Alaska, generally falls into the small
business category and those businesses would not be subject
to the current FLSA.
Number 366
REPRESENTATIVE OLBERG asked why the DOL did not supply a
negative fiscal note for HB 489 if the bill meant the state
of Alaska would be taken out of overtime enforcement. If HB
489 were to pass, those individuals involved in the
enforcement of overtime would then be unemployed.
Number 371
MR. CARR responded overtime enforcement is only one element
of nine programs the Division of Wage & Hour administers,
and HB 489 would not have a great impact on the employees.
The Wage & Hour work force would merely be redirected.
Number 379
CHAIRMAN VEZEY interpreted the DOL zero fiscal note as
though the state did not spend a lot of time pursuing
overtime issues.
Number 383
MR. CARR responded that the DOL handles approximately 800
wage claims per year statewide. Of these claims, 30 percent
have some overtime element involved.
Number 390
CHAIRMAN VEZEY pointed out "some element involved," as
stated by MR. CARR, and responded there is also other issues
involved; therefore, the time in handling the case would not
substantially change if overtime was not an issue.
Number 392
MR. CARR said CHAIRMAN VEZEY was correct. He clarified the
DOL would still have enough work without overtime cases.
Number 395
CHAIRMAN VEZEY asked why Alaska allowed for a 56-hour
workweek for the mining industry.
MR. CARR replied there is a specific exemption in state law
for small mining, whereby they can work up to 56 hours a
week before overtime is incurred. This exemption exists
because there is a federal exemption for the mining
industry.
VICE CHAIRMAN KOTT moved to the Anchorage teleconference
site.
Number 413
KEN LEGACKI, an attorney in Anchorage, expressed his
concerns regarding HB 459 and HB 489 combined. The analysis
of HB 459 concerned him because it does not address how HB
459 effectuates its purpose and policies. He noted HB 459
is in conflict with the work fare bill submitted by
REPRESENTATIVE MARK HANLEY and SENATOR LOREN LEMAN, which
would help people get into the work force and off public
assistance. He felt HB 459 did not encourage employment
and it would reward "unscrupulous employers who try to
circumvent and escape the law." He related to employers who
avoid paying overtime and, when they are caught, then try to
wager down the earnings to be paid in restitution. MR.
LEGACKI stated he was involved in a case against one of the
worlds largest insurance companies "who bragged that their
overhead is 5 percent lower than their competition."
However, their overhead is low only because they force their
employees to work long hours. He noted this company is
being sued in four states by the Federal Department of
Labor. This company is using the "good faith defense" and
has been found in violation of the overtime law several
times. He felt Alaska's overtime laws are very important
because it protects the employers, employees, and it
encourages employment. From his analysis, he believed if HB
459 were to pass, several sections of the bill would be in
violation with federal law and would then become nullified.
Number 516
CHAIRMAN VEZEY asked MR. LEGACKI what bill he was testifying
on.
Number 518
MR. LEGACKI replied HB 459 and some of his comments related
to HB 489.
Number 522
REPRESENTATIVE B. DAVIS commented the problems CHAIRMAN
VEZEY intended to take care of with HB 489 would be taken
care of in HB 459. She asked if HB 459 would be listened to
before action was taken on HB 489.
Number 529
VICE CHAIRMAN KOTT replied the committee intended to take
action on HB 489 so it may proceed through the process with
HB 459. He noted if there is a duplication "they will be
rolled by an amendment into one or the other."
Number 533
REPRESENTATIVE B. DAVIS stated, since HB 489 only had one
referral, she was not interested in moving it out of
committee at that time. She felt HB 489 deserved more
consideration by the committee.
Number 538
REPRESENTATIVE SANDERS agreed with REPRESENTATIVE B. DAVIS
and would like to hold HB 489 for further consideration.
Number 543
VICE CHAIRMAN KOTT noted HB 489 also has a referral to Labor
and Commerce.
Number 549
REPRESENTATIVE G. DAVIS commented his copy of HB 489 only
reads one referral to State Affairs. He asked if the HB 489
really did have a referral to Labor & Commerce.
CHAIRMAN VEZEY said the Speaker has given HB 489 an
additional referral to the Labor & Commerce committee.
Number 554
REPRESENTATIVE B. DAVIS commented the bill should state the
referrals it has and the problems may be able to be
addressed in Labor & Commerce.
Number 557
REPRESENTATIVE OLBERG moved to pass HB 489 from committee
with the accompanying fiscal note and individual
recommendations.
Number 560
REPRESENTATIVE SANDERS objected to the motion. He felt HB
489 was not clearly a good bill and it should be reviewed
more.
Number 567
REPRESENTATIVE B. DAVIS added HB 489 should at least be held
until HB 459 is heard.
Number 570
VICE CHAIRMAN KOTT recognized the motion and asked the
committee secretary to call the roll.
IN FAVOR: VEZEY, KOTT, G. DAVIS, OLBERG.
OPPOSED: B. DAVIS, SANDERS.
ABSENT: ULMER
VICE CHAIRMAN KOTT announced HB 489 passed from the House
State Affairs Committee with attached fiscal notes and
individual recommendations.
Number 582
CHAIRMAN VEZEY clarified, for technical purposes, if a
quorum is present bills can be amended by the majority of
those present. Bills cannot move out of committee without a
majority of the total committee, which is four votes.
HB 459 - DAMAGES & ATTORNEY FEES FOR UNPAID WAGES
CHAIRMAN VEZEY resumed control of the gavel and opened HB
459 for discussion. The HOUSE LABOR & COMMERCE COMMITTEE is
the sponsor of HB 459.
Number 602
REPRESENTATIVE ELDON MULDER, MEMBER, HOUSE LABOR & COMMERCE
COMMITTEE, addressed HB 459. He stated HB 459 "addresses
the awarding of punitive damages and claims of underpaid
overtime compensation where, statutory minimum wages under
the Alaska Wage & Hour Act, state statute imposes the
payment of unpaid minimum wages that are overtime
compensation to an employee, by an employer, who has
violated provisions of the Alaska Wage & Hour Act." The
employer may be liable for mandatory liquidated damages of
an equal amount, whereby if an employer is found in
violation of not paying overtime, HB 459 would double that
amount as a penalty.
REPRESENTATIVE MULDER stated the 1991 Alaska Supreme Court
case involving Kinney Shoes ruled that liquidated damages
are mandatory, and that individual settlements out of court,
that did not include liquidated damages were invalid. Prior
to the Kinney Shoes decision, an employee with a claim for
underpaid overtime or minimum wages had two options: 1)
They could file a complaint with the DOL who was able to
negotiate a settlement; or 2) they could attempt to reach a
private settlement with the employer in question. With
either option the settlement could be reached for an amount
below full liquidated damages.
REPRESENTATIVE MULDER explained current law states an
employer in violation of Alaska's Minimum Wage or Overtime
Compensation Laws is automatically liable for liquidated
damages, regardless of the circumstances. Though intended
to be a deterrent to employers, this law creates an
imbalance in certain situations. An employer who makes an
unintentional mistake is treated as severely as the employer
who was trying to cheat their employee. In this case, the
employer faces the possibility of paying full liquidated
damages, plus court costs, or settling out of court for the
claim, plus full liquidated damages. The Federal Labor
Standards Act (FLSA), upon which the Alaska Wage & Hour Act
is based, contains identical language to AS 23.10.110 (a) in
HB 459. REPRESENTATIVE MULDER noted the FLSA also states if
the employer shows to the satisfaction of the court, that
the act or omission giving rise to such action, was in "good
faith" and he had reasonable grounds for believing his act
or omission was not in violation of the FLSA, the court may,
in its sound discretion award no liquidated damages or award
any amount thereof, not to exceed the amount specified in 29
U.S. Code 216. This language, he felt, allowed employers
flexibility in overtime disputes.
REPRESENTATIVE MULDER stated the goal of HB 459 is to change
state standards regarding the awarding of liquidated damages
to be congruent with the federal standards as they currently
exist. There will still be protection for the employee to
seek punitive damages and the employer who makes a mistake
in "good faith" is allowed flexibility, provided they meet
the burden of proof. He emphasized "good faith" is
contingent upon the proof that the employer demonstrated
some sort of action to act in good faith.
CHAIRMAN VEZEY questioned the interpretation of section 2,
subparagraph (c). He interpreted "the prevailing party will
be allowed cost according to court rule, and if the
commissioner's the prevailing party, he will still pay the
costs."
REPRESENTATIVE MULDER responded currently, if an employee
takes their employer to court and prevails for liquidated
damages, the employer is liable for both party's attorney
fees. However, in this instance if the employer had
prevailed, the employer is not allowed any attorneys fees.
He noted the employee has nothing to lose other than paying
for his/her own attorney. Section 2, subparagraph (c),
allows whichever party prevails in the court case to seek
attorneys fees.
Number 688
CHAIRMAN VEZEY clarified under current law "plaintiff" is
the only one to recover costs and HB 459, section 2,
subparagraph (c), would change this to the "prevailing
party."
TAPE 94-27, SIDE A
Number 000
CHAIRMAN VEZEY continued. He felt HB 459 stated when the
commissioner is the prevailing party, the commissioner shall
remit the attorneys fees.
Number 006
REPRESENTATIVE MULDER corrected the second sentence, of
section 2, clarifies what is already in current statute.
Current statute states, "to be paid by the defendant." He
explained when the commissioner is the prevailing party in
an action, brought under section 2, the commissioner shall
remit the attorneys fees to the Department of Revenue, into
the general fund.
CHAIRMAN VEZEY thought HB 459 may be clearer if words were
added to clarify the commissioner shall remit the fees to
the Department of Revenue.
REPRESENTATIVE MULDER responded the operative words are,
"When the commissioner is the prevailing party,..."
Thereby, he shall remit the attorneys fees to the Department
of Revenue, the general fund. He felt HB 459, as written,
is legally correct, however, it may be confusing in laymen
terms.
Number 063
REPRESENTATIVE OLBERG felt section 2, lines 13-14, would be
clearer if it stated, "recovered attorneys fees."
Number 072
REPRESENTATIVE MULDER was amenable to REPRESENTATIVE
OLBERG's revision. He clarified HB 459 shall state, "The
commissioner shall remit the recovered attorneys fees."
CHAIRMAN VEZEY felt this revision would clarify the section.
Number 082
REPRESENTATIVE OLBERG moved for an amendment to HB 459,
whereby on line 14, after the word "the", insert
"recovered."
Hearing no objection, CHAIRMAN VEZEY announced the amendment
to HB 459 was adopted.
Number 095
REPRESENTATIVE B. DAVIS asked the definition of "good
faith."
Number 102
REPRESENTATIVE MULDER replied the definition of "good faith"
is outlined through precedents within previous federal court
cases. He said they had tried to define "good faith," but
they did not because they would have been establishing a
standard which may not be congruent with the federal
standard. The purpose of HB 459 is to minimize litigation,
but by creating a new definition of "good faith," he felt
they would be encouraging more litigation.
Number 130
REPRESENTATIVE OLBERG clarified HB 459 gives the court an
option by saying "the court may decline to award liquidated
damages," if in fact, the employer had acted in "good
faith."
Number 137
REPRESENTATIVE SANDERS stated he had trouble with HB 459 as
both a laborer, and a businessman. He felt overtime
problems with honest employers were usually settled outside
of court, one on one with employer/employee. He believed
overtime cases were not taken to court unless "you are
trying to screw somebody."
Number 148
REPRESENTATIVE MULDER responded, under the current
interpretation of law, settling overtime disputes out of
court was illegal. The dispute with the employee could have
only been settled by doubling the amount owed to them. One
on one settlements cannot be settled for anything less than
double what that individual claims to be owed.
Number 160
CHAIRMAN VEZEY clarified REPRESENTATIVE SANDERS point as the
courts do not have the chance to enforce the law unless the
action is brought before them.
Number 188
J.R. 'RANDY' CARR, CHIEF WAGE & HOUR DIVISION, DEPARTMENT OF
LABOR, answered questions on HB 459. He stated the Kinney
Shoes decision established a rule of law that no one had
ever anticipated would exist.
MR. CARR said, the 1959 Liquidated Damage statute was first
interpreted by the Supreme Court in 1979, in Musara v. AIA
Industries. In this case, the Supreme Court ruled that
liquidated damages were a mandatory penalty; however, the
jury waived the liquidated damages for this employer, found
guilty of overtime violations. On appeal, the Supreme Court
clarified, if a matter goes to court and a judgment is
rendered, the judgment must include a 100 percent penalty.
He termed this law as a "competitive assistance to
employers."
MR. CARR explained in the Kinney Shoe case, the employer was
subject to a class action lawsuit; however, they approached
the employees out of court and settled with them for about
30 cents on the dollar, of the actual documented overtime
they were due. Kinney Shoes eroded the legal class being
represented. The employees' attorneys argued that the
penalties were punitive and not compensatory; therefore, the
penalties are not the employees' to give up. The court
agreed with this argument.
MR. CARR stated prior to Kinney Shoes, most disputes were
settled by the Department of Labor (DOL). He believed every
one of the cases were settled for less than the full amount
of liquidated damages. After Kinney Shoes, the DOL asked
the Employment Law section of the Bar Association if they
would play the DOL's past supervising approval authority
role over settlements.
MR. CARR clarified the DOL does support the concept of
returning the law to the condition it was in pre-Kinney
Shoes. If this were to happen, both the DOL and specific
parties could settle cases for less than liquidated damages,
short of court judgment. The DOL is willing to enter into a
arrangement, whereby they can review and approve settlement
agreements submitted to them by private council. The DOL
does, however, want to maintain the mandatory status of a
liquidated damage as defined by the Musara v. AIA Industries
decision. The leverage gained by this decision has enabled
the state to settle 100 percent of its overtime cases,
because employers know they must deal fairly in settlements
or they will have to go to court and pay an additional 100
percent on top of the actual claim.
MR. CARR felt HB 459 goes beyond necessity. Section 3 is a
concern to the DOL because it deals with elements that
exceed current federal law. The DOL felt, because the
commissioner could settle for less than liquidated damages
and would not have the "good faith" exception, the dual
status created with the private parties council would be
found unconstitutional in the future. If the dual status is
found unconstitutional, the state will lose the ability to
have the mandatory penalty and to settle cases short of 100
percent liquidated damages. The DOL believed section 3,
subparagraph (e), to be the heart of the concept, whereby
the chief labor official would have approval authority to
oversee settlement agreements. Section 3, subparagraph (f),
was a concern because they felt parties, without
representation, were "too unsophisticated to understand
their rights and what they may be giving up..."
MR. CARR expressed there are very few minimum wage
complaints, compared to overtime complaints under the Wage &
Hour Act. The DOL would like all employers to have the same
competitive advantage. Employers acting in "good faith"
should have an advantage, but confusing language such as
"good faith" may be questioned in the future and increase
litigation.
Number 383
REPRESENTATIVE G. DAVIS asked the DOL proposed definition of
"good faith" they may want to see incorporated into HB 459.
Number 389
MR. CARR answered "good faith" need not be defined in HB
459, because it is defined through previous decisions. The
problem is the facts are different for every case, and if a
definition of "good faith" was supplied, the facts would
still be arguable for every case.
Number 400
REPRESENTATIVE B. DAVIS questioned if MR. CARR had testified
before the Labor & Commerce Committee.
Number 402
MR. CARR replied he was unavailable at the previous hearing.
Number 403
REPRESENTATIVE MULDER stated the DOL had testified.
Number 407
REPRESENTATIVE B. DAVIS inquired why REPRESENTATIVE MULDER
did not take the suggestions from the DOL because HB 459
appeared unchanged.
Number 409
REPRESENTATIVE MULDER responded he was still trying to
pursue the definition of "good faith." It was the Labor &
Commerce Committee's opinion to not stop HB 459, with his
assurance that HB 459 would not be put to the floor until
they had come to an adequate solution about the definition
of "good faith."
Number 419
REPRESENTATIVE B. DAVIS asked REPRESENTATIVE MULDER'S view
of the DOL's request to have the laws as they were pre-
Kinney Shoes decision. She thought the DOL's request may be
suitable.
Number 423
REPRESENTATIVE MULDER answered HB 459 does revert to pre-
Kinney Shoes decision; however, it does supercede pre-Kinney
Shoes by relating directly to "good faith," and the
legislature's ability to determine what is "good faith."
The inclusion of attorneys costs in HB 459 was an attempt to
make a level playing field, whereby those who prevail are
entitled to attorneys fees. He emphasized the agreement on
an adequate definition of "good faith" was very close.
Number 440
MR. CARR agreed with REPRESENTATIVE MULDER that negotiations
are still taking place to accomplish a suitable result.
Number 442
REPRESENTATIVE KOTT commented HB 459 did have a Judiciary
Committee referral, and as a member of that committee, he
felt they would take care of the definition problem.
Number 450
MR. CARR clarified the DOL does support amending the law, so
that the mandatory penalties are somewhat reduced; however,
a mandatory penalty is still required to maintain leverage.
Number 456
REPRESENTATIVE MULDER agreed that those found guilty of
purposeful negligent overtime compensation should be
penalized. He felt HB 459 is intended to help those who
never intended to cheat their employees.
REPRESENTATIVE SANDERS responded the amount of those who do
honestly make mistakes are already correcting the disputes
internally. He believed the laws should address those who
intentionally continue to avoid overtime compensation over
the years.
CHAIRMAN VEZEY asked the pleasure of the committee. He
stated he would not be opposed to bringing a committee
substitute before the committee which incorporates the
adopted amendment.
Number 473
REPRESENTATIVE G. DAVIS commented he would like to see HB
459 moved from committee. He felt the DOL had a vested
interest and they would follow HB 459 to the Judiciary
Committee. REPRESENTATIVE KOTT is also a member of
Judiciary Committee and he would be able to convey the
committee's interests.
REPRESENTATIVE G. DAVIS moved to adopt CSHB 459 reflecting
the amendment adopted in committee.
Hearing no objection, the House State Affairs Committee
adopted CSHB 459, as amended.
REPRESENTATIVE G. DAVIS moved to pass CSHB 459 as amended
from committee, with attached fiscal notes and individual
recommendations.
Number 490
CHAIRMAN VEZEY asked the committee secretary to call the
roll on REPRESENTATIVE G. DAVIS' motion.
IN FAVOR: VEZEY, KOTT, B. DAVIS, G. DAVIS, SANDERS,
OLBERG.
OPPOSED; NONE
ABSENT: ULMER
CHAIRMAN VEZEY announced CSHB 459, as amended passed from
the House State Affairs Committee.
ADJOURNMENT
CHAIRMAN VEZEY adjourned the meeting at 10:01 a.m.
BILLS NOT HEARD
HB 389 - INCREASED PENALTIES FOR JOY RIDING
HB 347 - STATE LONG TERM PLANS
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