Legislature(1999 - 2000)

02/22/2000 09:02 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE                                                                                                        
February 22, 2000                                                                                                               
9:02 AM                                                                                                                         
SFC-00 # 34, Side A & B                                                                                                         
CALL TO ORDER                                                                                                                   
Co-Chair John Torgerson convened the meeting at                                                                                 
approximately 9:02 AM                                                                                                           
PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell,                                                                         
Senator Al Adams, Senator Lyda Green, Senator Randy                                                                             
Phillips, Senator Gary Wilken, Senator P. Kelly, Senator                                                                        
Donley, Senator Leman                                                                                                           
Also Attending:  DENNIS POSHARD, Legislative                                                                                    
Liaison/Special Assistant, Department of Transportation & &                                                                     
Public Facilities; ROXANNE BASH, Federal Programs,                                                                              
Department of Transportation & Public Facilities;                                                                               
KRISTOPHER KNAUSS, Legislative Assistant, Senator Pearce;                                                                       
AL DWYER, Director, Division of Labor Standards & Safety,                                                                       
Department of Labor & Workforce Development.                                                                                    
Attending via Teleconference: CHRISTINE MCGARVIN, Human                                                                         
Resources Manager; JAY SEYMOUR, Attorney, Perkins Coie;                                                                         
RANDY CARR, Chief of Labor Standards & Safety, Department                                                                       
of Labor & Workforce Development.                                                                                               
SUMMARY INFORMATION                                                                                                             
EO 101-TRANSFER ALASKA HIGHWAY SAFETY PLANNING AGENCY                                                                           
The Committee heard testimony from the Department of                                                                            
Transportation & Public Facilities.  The Committee took no                                                                      
action on the bill.                                                                                                             
SB 123-ATTY FEES:APPORTIONMT/PUBLIC INT.LITIGANT                                                                                
The Committee amended this bill and reported it from                                                                            
SB 193-COLLECTION OF UNPAID WAGES                                                                                               
The Committee heard testimony from the sponsor, the                                                                             
Department of Labor & Workforce Development and members of                                                                      
the public.  The bill was held in Committee.                                                                                    
EO 101                                                                                                                          
 Transfer Alaska Highway Safety Planning Agency.                                                                                
Co-Chair Torgerson informed the Committee members that for                                                                      
this Executive Order 101, the Committee had sixty days in                                                                       
order to object to it, rather than being required to take                                                                       
any standard action on it.                                                                                                      
DENNIS POSHARD, Legislative Liaison/Special Assistant,                                                                          
Department of Transportation & Public Facilities spoke on                                                                       
behalf of Executive Order 101.  He stated that this order                                                                       
was a mutual idea of both Commissioner Otte, Department of                                                                      
Public Safety and Commissioner Perkins, Department of                                                                           
Transportation & Public Facilities.  He noted that the                                                                          
benefits for making this transfer was for greater synergy                                                                       
since this agency would be more centrally located, making                                                                       
it more efficient.  He continued that this Agency                                                                               
administers Highway Safety Grant Programs, which are very                                                                       
similar to what the Department of Transportation & Public                                                                       
Facilities administers.  Mr. Poshard added that both the                                                                        
Highway Safety Planning Agency and the Department of                                                                            
Transportation & Public Facilities rely on highway safety                                                                       
data collection and with their combined efforts, this                                                                           
collection could be more inclusive and improved.  He noted                                                                      
that the merger of these two entities could improve                                                                             
communication and ensure that sanctions are not lodged                                                                          
against the state for not adopting specific safety related                                                                      
laws and programs.  He summed up that this merger would be                                                                      
more cost effective in promoting the various safety                                                                             
measures implemented around the state.                                                                                          
Senator Phillips asked if there were any concerns voiced by                                                                     
individuals outside either department.                                                                                          
Mr. Poshard responded that he was not aware of any concerns                                                                     
outside of the department.  He stated that initially, the                                                                       
department was contacted by the Regional Administrator for                                                                      
the Federal Highway Safety Planning Agency and his concern                                                                      
was that the federal government did not want the program                                                                        
buried within an agency.  Mr. Poshard said that this                                                                            
federal agency was reassured.                                                                                                   
Co-Chair Torgerson asked for examples of sanctions, which                                                                       
were referred to previously.                                                                                                    
Mr. Poshard responded that to date there were no sanctions                                                                      
levied against the state, but this year the state faces the                                                                     
real threat of a sanction regarding "open container" laws.                                                                      
He continued that the federal government has stated that                                                                        
the State of Alaska's "open container" law does not meet                                                                        
the criteria established for their sanction program.  He                                                                        
noted that the State of Alaska believes the federal                                                                             
government has misinterpreted the way in which the state                                                                        
statutes are written.  He cautioned that if the federal                                                                         
government made the determination of non-compliance anyhow,                                                                     
the state would lose up to three percent of their federal                                                                       
highway formula funding.                                                                                                        
Co-Chair Torgerson asked if there was any general fund                                                                          
money involved in this possible sanction scenario.                                                                              
ROXANNE BASH, Federal Programs, Department of                                                                                   
Transportation & Public Facilities responded that a general                                                                     
fund match, as requested in the Governor's Budget under                                                                         
public safety, would be transferred at the same level to                                                                        
the Department of Transportation budget.  She continued                                                                         
that these funds would be moved to the capitol side because                                                                     
of the match to the federal grants and a small portion of                                                                       
this would be retained in the operating budget for the non-                                                                     
federal, eligible support for those individuals transferred                                                                     
to Public Safety.                                                                                                               
Co-Chair Torgerson asked of what money amounts Ms. Bash                                                                         
Ms. Bash responded that this amount was $7,300 in general                                                                       
Co-Chair Torgerson asked if the department anticipated                                                                          
reimbursable service agreement money to Public Safety in                                                                        
order to enforce their rules and programs, such as the                                                                          
"open container" law as noted.                                                                                                  
Mr. Poshard believed that a small amount of these funds                                                                         
would go back to the Department of Public Safety in order                                                                       
to fund programs as noted by the Senator.  He continued                                                                         
that this money would be used for data collection and                                                                           
enforcement related to these activities.                                                                                        
Co-Chair Parnell responded that this issue raised his                                                                           
initial concerns regarding this Executive Order.  He has                                                                        
found no statutory basis for this change and added that he                                                                      
did not see a statutory mission for Public Safety to become                                                                     
involved with programs such as the one noted.  He felt as                                                                       
though this change would bring the Department of                                                                                
Transportation & Public Facilities' mission out of                                                                              
Mr. Poshard responded that the Department of Transportation                                                                     
& Public Facilities has a significant role in highway                                                                           
safety and noted the department's Traffic Safety Engineers,                                                                     
Highway Safety Data Collection Personnel and that the                                                                           
department is required by the Federal Highway                                                                                   
Administration to report on highway safety in order to                                                                          
receive federal allocations.  He continued that these                                                                           
programs have somewhat of a different focus: the Department                                                                     
of Transportation & Public Facilities deals with issues                                                                         
such as guardrails and the structural parts of highway                                                                          
safety and the Highway Safety Planning Agency focuses on                                                                        
the driver behavioral side of highway safety, such as drunk                                                                     
driving or seatbelt laws.  He noted that by combining these                                                                     
two agencies it would provide an opportunity for efficiency                                                                     
in administration, as well as some synergy to aid in                                                                            
program improvements.                                                                                                           
Co-Chair Parnell responded that currently the statutory                                                                         
mission of the Department of Transportation & Public                                                                            
Facilities, as passed last year, is to "plan, design,                                                                           
construct and maintain all state modes of transportation                                                                        
and transportation facilities."  He asked if this mission                                                                       
should include a safety component if these agencies would                                                                       
in fact be combined.  He then read the department's mission                                                                     
statement as posted on the web.                                                                                                 
Co-Chair Torgerson asked how the department anticipates                                                                         
enforcing subparagraph (c), on page two, line 24, which                                                                         
reads: "A peace officer who stops a driver for an alleged                                                                       
violation of AS 28.05.095 shall inform the driver about the                                                                     
loan program," regarding unrestrained infants and children                                                                      
in motor vehicles.  He noted that this subparagraph was a                                                                       
directive to police officers who stop drivers that they                                                                         
need to inform individuals about loan programs.  Co-Chair                                                                       
Torgerson felt that this responsibility did not belong                                                                          
under the Department of Transportation & Public Facilities.                                                                     
Mr. Poshard responded that the Highway Safety Planning                                                                          
Agency would continue to have a role in working with the                                                                        
Department of Public Safety.  He felt as though this was                                                                        
not unusual.  He added that the department is solely                                                                            
dependent on state troopers and local law enforcement to                                                                        
collect necessary data for the department's purposes.                                                                           
Co-Chair Torgerson called for an at ease at 9:20 AM.  The                                                                       
Committee reconvened at 9:23 AM.  The Committee took no                                                                         
action on EO 101 and the bill was HELD.                                                                                         
SENATE BILL NO. 123                                                                                                             
"An Act relating to public interest litigants and to                                                                            
attorney fees; and amending Rule 82, Alaska Rules of                                                                            
Civil Procedure."                                                                                                               
Co-Chair Torgerson noted that Version 1-LS0636\I had been                                                                       
previously adopted and was held over in order to                                                                                
incorporate Amendment number two.                                                                                               
Amendment # 2: This amendment would add a new paragraph to                                                                      
the Alaska Rules of Civil Procedure to read:                                                                                    
(5) If the court chooses to vary an award of                                                                                    
attorney's fees under (b)(3) of this rule by                                                                                    
increasing the award beyond the amounts provided in                                                                             
(b)(1) or (2) of this rule, then the court shall                                                                                
apportion the attorney's fees by issue and may only                                                                             
award the increased fees for an issue the party                                                                                 
prevailed upon unless the court finds exceptional                                                                               
circumstances to be present that require an increased                                                                           
award of fees without apportionment by issue.                                                                                   
Senator Donley made a motion to MOVE Amendment # 2.  Co-                                                                        
Chair Torgerson noted an objection by Co-Chair Parnell.                                                                         
Senator Donley said that this amendment was an effort to                                                                        
compromise and to capture the best of the proposals before                                                                      
the Committee, which were discussed previously.  He noted                                                                       
that this amendment would preserve Co-Chair Parnell's                                                                           
proposal regarding public interest litigants being treated                                                                      
the same as civil litigants under Rule 82, but it would go                                                                      
one step further.  He added that if the court made a                                                                            
decision to award an amount of attorney's fees in excess of                                                                     
what is allowed under Rule 82, then this amendment would                                                                        
instruct the court to apportion attorney's fees by issue.                                                                       
He continued that this amendment would still allow the                                                                          
court not to apportion by issue if exceptional                                                                                  
circumstances are found, not requiring a mandate for such a                                                                     
Senator Adams noted that he was trying to understand the                                                                        
intent of this amendment.  He used the Veneti case in the                                                                       
context of this amendment and he asked whether the type of                                                                      
payment would also need to be agreed upon before arguing                                                                        
the merits of a particular case.                                                                                                
Senator Donley responded that the Veneti case was a federal                                                                     
one, without the jurisdiction of Rule 82.  He continued                                                                         
that if this case had come under state jurisdiction, the                                                                        
amendment would be consistent with what the court decided                                                                       
in this instance.  He added that the court tried to                                                                             
apportion as best it could for the proportional costs of                                                                        
the case.                                                                                                                       
Co-Chair Parnell stated that Senator Donley met his                                                                             
objection by providing for public interest litigants                                                                            
enhanced attorney's fees.  He also noted how this amendment                                                                     
made the playing field level for both public interest                                                                           
litigants and civil litigants.                                                                                                  
Senator Adams asked if reference to both public interest                                                                        
litigants and civil litigants should be provided for in the                                                                     
bill title.                                                                                                                     
Co-Chair Parnell responded that he did not think so, since                                                                      
the title of the act was broad enough to include both types                                                                     
of litigants.                                                                                                                   
Senator Adams noted that he had no objection to this                                                                            
Co-Chair Torgerson hearing no objection to Amendment # 2,                                                                       
ADOPTED the same.                                                                                                               
Senator Donley made a motion to move SB 123; Version 1-                                                                         
LS0636\I as amended from Committee with individual                                                                              
recommendations and attached zero fiscal note from the                                                                          
Alaska Court System.  Hearing no objection SB 123 was MOVED                                                                     
FROM COMMITTEE.                                                                                                                 
CS FOR SENATE BILL NO. 193(L&C)                                                                                                 
"An Act relating to the payment of wages and claims                                                                             
for the payment of wages."                                                                                                      
KRISTOPHER KNAUSS, Legislative Assistant, Senator Pearce,                                                                       
testified that SB 193 was brought to the attention of                                                                           
Senator Pearce by a constituent named Margaret Bowman.  He                                                                      
noted that Ms. Bowman obtained employment with the Alaska                                                                       
Business and Industry Newspaper, a publishing company out                                                                       
of Anchorage.  He continued that she was hired in the fall                                                                      
of 1998 under a contractual agreement.  He added that                                                                           
during a year and one half time period, arrears of her                                                                          
wages reached in excess of $10,000.  He added, that at this                                                                     
time, the employment relationship ceased.  He then noted                                                                        
that the bill before the Committee increases the amount                                                                         
allowed in small claims court from $7500 to $20,000.  He                                                                        
offered that by increasing this cap, legal representation                                                                       
would be available to the aggrieved and added that this                                                                         
bill had a zero fiscal note.                                                                                                    
Co-Chair Parnell asked about the original bill and the                                                                          
elimination of Section 3, dealing with the elimination of                                                                       
the court's discretion regarding penalties for late payment                                                                     
of wages.  He asked Mr. Knauss to address this concern and                                                                      
asked for an explanation of what this current version                                                                           
Mr. Knauss responded that the original version of this bill                                                                     
stated that an employer could be liable to pay back wages                                                                       
for a 90-day period.  He continued that this was changed to                                                                     
a straight time, eight hour work day so that the employer                                                                       
would not be penalized for this entire 90-day period, if in                                                                     
fact the payment was three days late.                                                                                           
Co-Chair Parnell asked if this clause changed existing law.                                                                     
Mr. Knauss [inaudible.]                                                                                                         
CHRISTINE MCGARVIN testified via teleconference from                                                                            
Fairbanks.  She stated that she was a Human Resource                                                                            
Manager for a mid-size, non-profit organization.  She noted                                                                     
that her biggest concern regarding this legislation was the                                                                     
language dealing with penalties and felt as though allowing                                                                     
for penalties would be an unfair burden to employers.  She                                                                      
felt as though most employers, especially non-profit                                                                            
organizations are anxious to comply with state and federal                                                                      
regulations, but noted that these laws are very confusing.                                                                      
She added that when the Department of Labor interprets                                                                          
certain aspects of these, the interpretations could be                                                                          
opposite to what the law generally states.  She added that                                                                      
there are many complex elements to consider, especially the                                                                     
salary basis test, which is problematic when trying to                                                                          
determine the criteria for whether an employee should be                                                                        
exempt, salaried or an hourly employee.  She then pointed                                                                       
out how this bill's language relates to this concern.                                                                           
JAY SEYMOUR testified via teleconference from Anchorage.                                                                        
He stated that he was an employment law attorney with                                                                           
Perkins Coie.  He noted that the Alaskan wage and hour laws                                                                     
are the most frustrating and aggravating for most employers                                                                     
since they are so confusing.  He added that if an employer                                                                      
makes the wrong guess regarding an employee, the penalties                                                                      
could be harsh.  He stated his support for the increase in                                                                      
the Department of Labor's jurisdiction as outlined in this                                                                      
present legislation, but he took exception with "waiting                                                                        
time penalties" on top of liquidated damages in any minimum                                                                     
wage or overtime claim. He added that there should be a                                                                         
deterrent to when an employer refuses to pay wages though.                                                                      
He explained why he takes offense to waiting time                                                                               
penalties, with a scenario of an employer required to make                                                                      
a $100,000 payment in penalties as a result of a good faith                                                                     
Co-Chair Parnell asked Mr. Seymour that if the Committee                                                                        
took out Section 3 of this bill, leaving the present                                                                            
jurisdictional increases, whether or not this change would                                                                      
be acceptable.                                                                                                                  
Mr. Seymour responded that Section 3 changes the "waiting                                                                       
time" penalties from discretionary to mandatory, by either                                                                      
a judge or the Department of Labor.  He continued that this                                                                     
penalty could be accomplished by awarding "waiting time" on                                                                     
top of liquidated damages.   He felt as though a prevailing                                                                     
party ought to get one or the other, but not both, deleting                                                                     
Section 3 does not accomplish this.                                                                                             
Co-Chair Torgerson asked how many cases per year did the                                                                        
present draft legislation affect.                                                                                               
RANDY CARR, Chief of Labor Standards & Safety, Department                                                                       
of Labor & Workforce Development testified via                                                                                  
teleconference from Anchorage.  He estimated this amount at                                                                     
100 to 120 new cases yearly on top of a 1100 case load                                                                          
generally, with a settlement rate in excess of 90 percent,                                                                      
along with 10 to 15 percent of these that go to trial.                                                                          
Senator Phillips asked how this caseload compared to other                                                                      
Mr. Carr responded that he did not think this statistic was                                                                     
available.  He felt as though Alaska was at an average                                                                          
compared to other states.                                                                                                       
Co-Chair Torgerson asked that the department address the                                                                        
penalty schedule of this legislation.  He wondered why                                                                          
penalties should be included when they do not currently                                                                         
Mr. Carr responded that the current statute does provide a                                                                      
"waiting time" penalty and noted that the present bill                                                                          
seeks to make these penalties mandatory rather than                                                                             
Tape: SFC - 00 #34, Side B, 9:52 AM                                                                                             
Mr. Carr continued to outline these penalties historically                                                                      
and outlined how the department is able to assess penalties                                                                     
within settlement discussions.  He stated that penalties                                                                        
are necessary in order to discourage employers from                                                                             
violating the law at will.                                                                                                      
Co-Chair Torgerson responded that he agreed with this                                                                           
assessment, but wondered when a trigger is instituted to                                                                        
take a case to court.  He noted a $7500 amount not                                                                              
inclusive of penalties with a proposed increase of $20,000                                                                      
exclusive of penalties.  He interpreted this to mean that a                                                                     
different trigger exists if the penalty is much higher and                                                                      
included in the $7500 claim.                                                                                                    
Mr. Carr responded that the intent of the bill was to raise                                                                     
the statute of limitations addressing the size of the case                                                                      
(in monetary terms) the department can hear, but it was not                                                                     
to tie the assessment of penalties to this dollar value in                                                                      
a particular case.  He noted that presently, any case that                                                                      
the state takes to court, it may seek an award of "waiting                                                                      
time" penalties regardless of the size of the case, as long                                                                     
as it is within the jurisdictional limit of $7500.  He                                                                          
continued that this would not change with the increase of                                                                       
this cap                                                                                                                        
Co-Chair Torgerson stated that he understood this, but that                                                                     
the court can award whatever it feels like.  He went on to                                                                      
explain his interpretation of what triggers the amount of                                                                       
money included in the $7500 or the $20,000 cap.  He                                                                             
clarified that the $7500 amount is exclusive of costs,                                                                          
interest and attorney's fees only and this legislation                                                                          
would amend this present situation to a $20,000 cap                                                                             
exclusive of cost, interest, penalties and attorney's fees.                                                                     
He referred to line 10, the language, which states, "in an                                                                      
amount not to exceed $20,000, exclusive of costs, interest,                                                                     
penalties, and attorney fees."  He stressed that this                                                                           
allows for an exclusion, which did not presently exist in                                                                       
law and that this could force the outside amount for                                                                            
penalties to become inflated.                                                                                                   
Mr. Knauss responded to a subsequent discussion between Co-                                                                     
Chair Torgerson and Senator Donley regarding the scope of                                                                       
small claims court generally and the amount of penalties                                                                        
assessed for these types of claims.  He noted that on line                                                                      
26, page two, the word "shall" was changed to "maybe," in                                                                       
the following: "In an action brought by the department                                                                          
under this section, an employer found liable for failing to                                                                     
pay wages within three working days of termination shall be                                                                     
required to pay the penalty set out in (d) of this                                                                              
Senator Donley stated that this change seemed reasonable                                                                        
but suggested that mandatory penalties be assessed when the                                                                     
department is the litigant.  He was concerned with the                                                                          
sentence following the above referenced Section as follows:                                                                     
"The amount of the penalty shall be calculated based on the                                                                     
employee's straight time rate of pay for an eight-hour                                                                          
day."  He felt as though this placed a greater limit on                                                                         
what could be awarded by setting a specific dollar amount.                                                                      
He thought that the amount of the penalty should be at                                                                          
least equal to a calculated amount based on an employee's                                                                       
work hours.  He offered that this would give the court                                                                          
discretion to award a larger amount if they thought it was                                                                      
AL DWYER, Director, Division of Labor Standards & Safety,                                                                       
Department of Labor & Workforce Development responded that                                                                      
he would like to see a provision such as this one included,                                                                     
but asked that the word "maybe" be put back in this Section                                                                     
based on prior discussions.                                                                                                     
Mr. Carr stated that the bill does not reflect the current                                                                      
language that exists in AS 23.05.140(d) which establishes a                                                                     
"waiting time" penalty as discretionary.  He noted that a                                                                       
modification to this language exists in Section 3.  He                                                                          
continued with noting a related subsection (e) that says,                                                                       
in cases brought by the department a "waiting time" penalty                                                                     
shall be mandatory, including a corresponding formula for                                                                       
how this penalty should be calculated.                                                                                          
Senator Wilken stated that he remained concerned about the                                                                      
word "shall."  He hoped that either Section 3 was deleted                                                                       
or amended.                                                                                                                     
Co-Chair Torgerson asked Mr. Carr to explain penalties as                                                                       
outlined in subsection (d).                                                                                                     
Mr. Carr responded that subsection (d) of the current law                                                                       
provides for up to 90 working days of penalty, but it does                                                                      
not address or define in any manner, what a working day is                                                                      
or how that value is to be calculated.  He stated that, the                                                                     
suggested language of Section 3 in the bill before the                                                                          
Committee, allowing for a 90 working day penalty is                                                                             
mirrored as a maximum potential penalty.  He added that it                                                                      
sets forth a suggested method of calculating the "working                                                                       
day" value to be used as the multiplier for however many                                                                        
days of penalty is assessed.                                                                                                    
Co-Chair Torgerson referred to subsection (b), which                                                                            
states: "employment is terminated regardless of cause of                                                                        
termination, all wage and salary compensation are due in                                                                        
three days."  He noted how this language went to the heart                                                                      
of Section 3 and then referred to subsection (d), which                                                                         
states that if compensation is not paid in three days, a                                                                        
90-day time frame is allowed for a maximum penalty.  He                                                                         
added that Section 3 then states that an employer shall pay                                                                     
the penalty, using an eight-hour day as a benchmark                                                                             
calculation.  He wondered if most of these exceptions were                                                                      
from an employer terminating due to an employee theft or                                                                        
the like.                                                                                                                       
Mr. Carr responded that this was not the genesis for most                                                                       
of the cases, which deal with "waiting time" penalties.  He                                                                     
continued that the largest number of cases, which the                                                                           
department deals with, are situations where an employee is                                                                      
simply not paid.  He noted that it seemed odd that anyone                                                                       
would continue to work for an employer and accrue a debt of                                                                     
wages totaling $10,000 or more, but the department sees                                                                         
this type of thing on a weekly basis.  He added that there                                                                      
are exceptions to the present law dealing with these                                                                            
situations and pointed out that these employers who have a                                                                      
legitimate dispute with an employee, as to the amount of                                                                        
wages due, can make a case as to why the wages should not                                                                       
be paid.                                                                                                                        
Co-Chair Torgerson asked if conflicting statutes existed                                                                        
now, with the existence of Section 3 in the Committee                                                                           
Substitute, which notes an employer "shall" pay and AS                                                                          
23.05.180 where an employer will pay under certain                                                                              
Mr. Carr responded that there was potential for conflict.                                                                       
Senator Wilken referred to employee terminations and asked                                                                      
if the same rules applied for voluntary quit situations.                                                                        
Mr. Carr responded affirmatively and gave the existing                                                                          
section of law covering this situation.  He generally noted                                                                     
that an employee must be paid back wages within three                                                                           
working days regardless of termination cause.                                                                                   
Co-Chair Torgerson stated that SB 193 would be HELD in                                                                          
Co-Chair Torgerson adjourned the meeting at 10:20 AM.                                                                           
SFC-00 (12) 02/22/00                                                                                                            

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