03/17/2005 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB102 | |
| SB124 | |
| SB131 | |
| SB138 | |
| SB130 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 131 | TELECONFERENCED | |
| *+ | SB 138 | TELECONFERENCED | |
| += | SB 124 | TELECONFERENCED | |
| += | HB 102 | TELECONFERENCED | |
| += | SB 130 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 17, 2005
1:35 p.m.
MEMBERS PRESENT
Senator Con Bunde, Chair
Senator Ralph Seekins, Vice Chair
Senator Johnny Ellis
Senator Bettye Davis
MEMBERS ABSENT
Senator Ben Stevens
COMMITTEE CALENDAR
HOUSE BILL NO. 102 am
"An Act relating to the licensure of foreign medical graduates
and to applications for a license to practice medicine; and
providing for an effective date."
MOVED HB 102 am OUT OF COMMITTEE
SENATE BILL NO. 124
"An Act relating to requirements to obtain and maintain a
fisheries business license; relating to security required of
fish processors and primary fish buyers; and providing for an
effective date."
MOVED CSSB 124(L&C) OUT OF COMMITTEE
SENATE BILL NO. 131
"An Act amending the Alaska Wage and Hour Act as it relates to
the employment of a person acting in a supervisory capacity;
providing definitions for persons employed in administrative,
executive, and professional capacities, for persons working in
the capacity of an outside salesman, and for persons working in
the capacity of a salesman employed on a straight commission
basis."
HEARD AND HELD
SENATE BILL NO. 138
"An Act relating to a motor vehicle dealer's selling certain
motor vehicles as new model motor vehicles or as new model motor
vehicles having a manufacturer's warranty."
HEARD AND HELD
SENATE BILL NO. 130
"An Act relating to a special deposit for workers' compensation
and employers' liability insurers; relating to assigned risk
pools; relating to workers' compensation insurers; stating the
intent of the legislature, and setting out limitations,
concerning the interpretation, construction, and implementation
of workers' compensation laws; relating to the Alaska Workers'
Compensation Board; assigning certain Alaska Workers'
Compensation Board functions to the division of workers'
compensation in the Department of Labor and Workforce
Development and to that department, and authorizing the board to
delegate administrative and enforcement duties to the division;
establishing a Workers' Compensation Appeals Commission;
providing for workers' compensation hearing officers in workers'
compensation proceedings; relating to workers' compensation
medical benefits and to charges for and payment of fees for the
medical benefits; relating to agreements that discharge workers'
compensation liability; relating to workers' compensation
awards; relating to reemployment benefits and job dislocation
benefits; relating to coordination of workers' compensation and
certain disability benefits; relating to division of workers'
compensation records; relating to release of treatment records;
relating to an employer's failure to insure and keep insured or
provide security; providing for appeals from compensation
orders; relating to workers' compensation proceedings; providing
for supreme court jurisdiction of appeals from the Workers'
Compensation Appeals Commission; providing for a maximum amount
for the cost-of-living adjustment for workers' compensation
benefits; relating to attorney fees; providing for the
department to enter into contracts with nonprofit organizations
to provide information services and legal representation to
injured employees; providing for administrative penalties for
employers uninsured or without adequate security for workers'
compensation; relating to fraudulent acts or false or misleading
statements in workers' compensation and penalties for the acts
or statements; providing for members of a limited liability
company to be included as an employee for purposes of workers'
compensation; establishing a workers' compensation benefits
guaranty fund; relating to the second injury fund; making
conforming amendments; providing for a study and report by the
medical services review committee; and providing for an
effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 102
SHORT TITLE: MEDICAL LICENSE: APPLICATION/FOREIGN GRAD
SPONSOR(s): REPRESENTATIVE(s) STOLTZE
01/21/05 (H) READ THE FIRST TIME - REFERRALS
01/21/05 (H) L&C, FIN
02/04/05 (H) L&C AT 3:15 PM CAPITOL 17
02/04/05 (H) Moved Out of Committee
02/04/05 (H) MINUTE(L&C)
02/09/05 (H) L&C RPT 3DP 2NR
02/09/05 (H) DP: KOTT, LEDOUX, ANDERSON;
02/09/05 (H) NR: LYNN, GUTTENBERG
02/14/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/14/05 (H) Moved Out of Committee
02/14/05 (H) MINUTE(FIN)
02/16/05 (H) FIN RPT 10DP
02/16/05 (H) DP: WEYHRAUCH, HAWKER, JOULE, CROFT,
HOLM, KELLY, FOSTER, STOLTZE, MEYER,
02/16/05 (H) CHENAULT
02/24/05 (H) TRANSMITTED TO (S)
02/24/05 (H) VERSION: HB 102 AM
02/28/05 (S) READ THE FIRST TIME - REFERRALS
02/28/05 (S) L&C, FIN
03/08/05 (S) L&C AT 1:30 PM BELTZ 211
03/08/05 (S) Heard & Held
03/08/05 (S) MINUTE(L&C)
03/17/05 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 124
SHORT TITLE: FISHERIES BUSINESS LICENSE; BOND
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/02/05 (S) READ THE FIRST TIME - REFERRALS
03/02/05 (S) L&C, FIN
03/08/05 (S) L&C AT 1:30 PM BELTZ 211
03/08/05 (S) Heard & Held
03/08/05 (S) MINUTE(L&C)
03/17/05 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 131
SHORT TITLE: WAGE & HOUR ACT: EXEC/PROF/ADMIN/SALES
SPONSOR(s): LABOR & COMMERCE
03/04/05 (S) READ THE FIRST TIME - REFERRALS
03/04/05 (S) L&C, FIN
03/17/05 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 138
SHORT TITLE: MOTOR VEHICLE DEALER SALES
SPONSOR(s): LABOR & COMMERCE
03/08/05 (S) READ THE FIRST TIME - REFERRALS
03/08/05 (S) L&C, FIN
03/17/05 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 130
SHORT TITLE: WORKERS' COMPENSATION
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/03/05 (S) READ THE FIRST TIME - REFERRALS
03/03/05 (S) L&C, FIN
03/08/05 (S) L&C AT 1:30 PM BELTZ 211
03/08/05 (S) Heard & Held
03/08/05 (S) MINUTE(L&C)
03/10/05 (S) L&C AT 1:30 PM BELTZ 211
03/10/05 (S) Heard & Held
03/10/05 (S) MINUTE(L&C)
03/15/05 (S) L&C AT 1:30 PM BELTZ 211
03/15/05 (S) Heard & Held
03/15/05 (S) MINUTE(L&C)
03/17/05 (S) L&C AT 1:30 PM BELTZ 211
WITNESS REGISTER
BEN MULLIGAN
Staff to Representative Stoltze
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on HB 102.
CHUCK HARLAMERT, Juneau Section Chief
Department of Revenue
PO Box 110400
Juneau, AK 99811-0400
POSITION STATEMENT: Commented on SB 124.
JOHN SEDOR
Anchorage Society for Human Resource Management
Anchorage AK
POSITION STATEMENT: Supports SB 131.
KAREN ROGINA
Alaska Hospitality Alliance
Alaska Hotel and Lodging Association
Alaska Restaurant and Beverage Association
No address provided
POSITION STATEMENT: Supports SB 131.
GREY MITCHELL, Director
Division of Labor Standards and Safety
Department of Labor & Workforce
Development
PO Box 21149
Juneau, AK 99802-1149
POSITION STATEMENT: Supports SB 131.
BOSCO BALDWIN, Vice President
Human Resources and Logistics
Alaska Commercial Company
No address provided
POSITION STATEMENT: Supports SB 131.
JACK AMON
Alaska Restaurant and Beverage Association (ARBA)
Marks Brothers Café and Catering
Anchorage AK
POSITION STATEMENT: Supports SB 131.
BARBARA HUFF-TUCKNESS, Director
Governmental and Legislative Affairs
Teamsters Local 959
th
520 E 34 Ave.
Anchorage AK 99503
POSITION STATEMENT: Opposes SB 131.
ED SNIFFEN
Department of Law
PO Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Commented on SB 138.
STEVE ALLWINE
Alaska Automobile Dealers Association
Juneau AK
POSITION STATEMENT: Supports CSSB 138(L&C).
MR. ARPINO, Affordable Used Cars
Fairbanks AK
POSITION STATEMENT: Supported CSSB 138(L&C).
ART HOUSER
Alaska Park And Sell
Fairbanks AK
POSITION STATEMENT: Commented on CSSB 138(L&C).
RICK MORRISON
Auto Dealers Association
Anchorage AK
POSITION STATEMENT: Supports CSSB 138(L&C).
WAYNE BANNOCK
Division of Motor Vehicles
Department of Public Safety
PO Box 111200
Juneau, AK 99811-1200
POSITION STATEMENT: Had concerns with CSSB 138(L&C).
MIKE JENSEN, Attorney
Anchorage AK
POSITION STATEMENT: Commented on SB 130.
MARK KLINE
Fairbanks AK
POSITION STATEMENT: Opposes SB 130.
LANCE BUSH
Anchorage AK
POSITION STATEMENT: Opposes SB 130.
ACTION NARRATIVE
CHAIR CON BUNDE called the Senate Labor and Commerce Standing
Committee meeting to order at 1:35:38 PM. Present were Senators
Seekins, Ellis and Chair Con Bunde.
HB 102 AM-MEDICAL LICENSE: APPLICATION/FOREIGN GRAD
CHAIR CON BUNDE announced HB 102 AM to be up for consideration.
BEN MULLIGAN, staff to Representative Stoltze, briefly recapped
the main points of the bill saying that allowing licensure for
foreign medical school graduates to practice in Alaska will
allow the state to fill some needed positions.
Also, we're not looking to lower standards in any way,
shape or form. We're going to maintain the same
standards we have for doctors right now.
1:37:16 PM
SENATOR SEEKINS moved to pass HB 102 AM from committee with
individual recommendations and attached fiscal note. Senators
Seekins, Ellis and Chair Bunde voted yea; and HB 102 AM moved
from committee.
SB 124-FISHERIES BUSINESS LICENSE; BOND
CHAIR CON BUNDE announced SB 124 to be up for consideration.
SENATOR SEEKINS moved to adopt CSSB 124(L&C), version Y. There
were no objections and it was so ordered.
CHUCK HARLAMERT, Juneau Section Chief, Department of Revenue,
explained that the CS adds to the list of obligations that a
processor must be current on in order to obtain a license. A new
section 2 on page 3, line 24, covers the security that needs to
be provided for estimated tax. He explained that fish processors
don't have to pay their tax until March 31 of the year following
the year they incurred it. In exchange for that privilege, they
have to provide security of some sort to guarantee that it will
be paid.
The processors that operate between January 1 and March 31 end
up in a position of having to supply security to cover two
years-worth of tax and this can present difficulties. This
amendment allows them to use the same security simultaneously
for the taxes in both periods.
1:40:41 PM
SENATOR DAVIS arrived.
1:41:00 PM
A third change on page 6, line 13, says, "The commissioner shall
waive the filing of a performance bond under this section...."
The original bill used the term "may", which left discretion
with the commissioner on whether or not to accept real property.
That is thought to be a restriction above and beyond current
rules.
CHAIR BUNDE thanked him for his comments and established that
there was no further discussion.
1:42:55 PM
SENATOR SEEKINS moved CSSB 124(L&C), version Y, from committee
with individual recommendations and attached fiscal note.
Senators Davis, Ellis, Seekins and Chair Bunde voted yea; and
CSSB 124(L&C) moved from committee.
SB 131-WAGE & HOUR ACT: EXEC/PROF/ADMIN/SALES
CHAIR CON BUNDE announced SB 131 to be up for consideration.
SENATOR SEEKINS moved to adopt CSSB 131(L&C), version G. Senator
Ellis objected for an explanation.
JOHN SEDOR, Anchorage Society for Human Resource Management,
said the changes were proposed by the Department of Labor and
Workforce Development.
GREY MITCHELL, Director, Division of Labor Standards and Safety,
Department of Labor and Workforce Development (DOLWD), explained
the differences in the CS. Two sections were left off the
particular exemption that exists currently in the definitions of
what a professional employee is. Those are on page 3, lines 17 -
22, and essentially include teachers and people who are working
as teachers in schools and other educational establishments and
computer-related occupations that have been exempt from overtime
under the professional exemption for a while.
CHAIR BUNDE asked if that language was left out inadvertently.
1:48:25 PM
MR. MITCHELL replied yes. He further elucidated that language on
page 3, line 26, related to the question of whether someone who
spent most of their time sweeping the floor, but spent a little
time making sales, would qualify as an outside salesperson. That
would be confusing without the primary duty language. It was not
the intent of the sponsor to include them if it isn't their
primary duty. On page 4, line 6, the primary duty element was
also added for straight-commission sales workers.
1:50:51 PM
SENATOR ELLIS asked about section 1 that deletes the exemption
for supervisory work from AS 23.100.60(a).
CHAIR BUNDE clarified that the CS doesn't change section 1. The
only changes are in section 3.
MR. SEDOR explained how it applies to all salaried employees
over time, but does not impact anyone earning an hourly wage.
1:54:14 PM
He said the federal Fair Labor Standards Act (FLSA) looks at
whether an employee is exempt because of his primary duties or
not. The State Department of Labor and Workforce Development
used that regulation, which had two tests - the primary duties
component and the 80/20 component.
1:54:59 PM
The 80/20 component is a time-based analysis of a person's daily
duties and was originally put in to address lower-end employees.
So, it applied to people who were making $159 - $249 per week.
That original 80/20 test has not been applicable in Alaska for a
long time, because even minimum wage is above that.
And yet under the state system, it still does apply.
So, in essence, what you have if you're a business
owner in the State of Alaska or an employee, what you
have is ambiguity and you have confusion, because you
have the same words - administrative, professional,
executive - and yet you have two different tests. One
a duties test and one a time-based test. The problem
with a time-based test, among others, is that the way
a business is organized. It does not provide for the
oversight necessary to ensure that the 80/20 is being
met and what the 80/20 is is that you cannot spend
more than 20 percent of your time doing non-exempt
duties.
If you have an employee who you have hired in your
organizational system to be a manager, an
administrator, an executive - you are not overseeing
him by definitions. So, for instance, there's a
national non-profit that has an Alaska chapter, also,
that had a director of marketing. That director of
marketing oversaw seven stores.... By definition, that
individual didn't have somebody sitting in the car
next to him or following him around to each store
detailing and overseeing to determine what they were
doing each and every day. So, when a dispute arose on
other aspects of their employment, that individual,
that director says, 'I've been working more than
20percent of my time on non-exempt duties' - whether
it's making a pot of coffee, whether it's unlocking a
door, whatever it is they may say. That is a difficult
thing for an employer to address in a situation where
the person is not in a position where they get the
oversight.
1:59:05 PM
The FLSA applies to everyone in the country and the committee
should consider why Alaska has two separate systems for overtime
and require employers to apply two different systems to each of
their exempt employees. One thing that might be Alaskan is the
rate of pay, which historically has been higher. That is
addressed in the bill by requiring two times the minimum wage.
This has never been the case before. Currently, a bill last year
made some changes, but historically there has been no
requirement other than when making a 60/40 test, a separate
issue.
Alaska has not had any wage requirements. So, you
could previously had paid somebody - or even currently
- paid somebody minimum wage and still qualify them
for the exemption. But, what this bill does is say no,
'If you're going to meet one of these exemptions, you
are going to pay a level of pay that would be higher
than what the federal minimums are.' - which the
federal minimums right now are $455 per week. Two
times minimum wage in Alaska would be more than that.
SB 131 doesn't push into the new frontiers in the state in
general. Thirty-two of the 51 jurisdictions in the country
follow lock-step with the FLSA. Eight other jurisdictions follow
a short test with the primary duties component that tracks
closely. "Alaska is only one of seven jurisdictions that still
uses the old test - the long test - the 80/20 test."
2:02:21 PM
This bill puts Alaska on the same track as the federal system
for clarity.
2:03:42 PM
CHAIR BUNDE asked if this only applies to a wage segment that
doesn't exist.
MR. SEDOR replied that in Alaska, the 80/20 test is used for
anybody. "You could be paying somebody $100,000 a year and they
have to pass the 80/20 test...."
2:05:19 PM
CHAIR BUNDE asked if there are existing lawsuits that would be
addressed by this legislation.
MR. SEDOR replied that wage and hour litigation is on-going
throughout the state, including issues pertaining to exemption
status.
2:05:47 PM
SENATOR SEEKINS asked under current law, if he were an employee
in supervisory status, would there be a requirement for him to
time clock by task so his employer could prove that he didn't
have to pay him overtime.
MR. SEDOR replied, "Correct."
2:08:36 PM
KAREN ROGINA, Alaska Hospitality Alliance, said she represents
the Alaska Hotel and Lodging Association and the Alaska
Restaurant and Beverage Association, said:
This bill transcends all industries and addresses the
need of employers to be able to employ salaried
workers in the correct manner, because it eliminates
the time-based 80/20 rule and allows for primary
duties.
It will impact employers of all exempt workers. The good news is
that it benefits both employers and employees. On the employer
side, it takes away the exposure that an employer has today when
employing any salaried worker since they aren't keeping track of
how that person is spending their time every hour. Today, they
can't say for sure if that person is eligible to be exempt.
The reason this benefits employees is because today a lot of
employers chose not to have any salaried employees at all. They
will employ managers as hourly workers because they are afraid
of the exposure from that employee coming back later.
This bill takes the employee out of a class that would
have otherwise provided them with the opportunity to
have benefits; denies employees benefits, because an
employer can segregate employees as exempt employees
or salaried profession, executive staff and gives them
other benefits that they wouldn't have to give to
their entire staff. By allowing this bill to have a
segregated group, like an executive staff,
professional exempt salaried workers, since this group
is now all hourly, they're not getting the benefits
they would otherwise be afforded by their employer.
2:12:32 PM
SENATOR ELLIS asked if the bill provides an opportunity for an
employer to provide benefits for professional employees as
opposed to a salaried worker and is it still up to the employer
in the hiring negotiating process to determine that.
MS. ROGINA answered by giving an example of a hotel that has 100
employees and five executive staff. The owners would like to
reward the executive staff with health insurance, but if they
are all hourly, which many of them are, that group can't be
segregated for benefits.
Since they are hourly, they would have to give it to
their other 100 employees and they can't afford to do
that. As a result, all of their employees are hourly
and none of them get health insurance....
2:14:50 PM
SENATOR ELLIS asked if a manager pitches in when a housekeeper
doesn't show and that amounted to 20percent of their time, would
an employer be obligated to pay overtime for those duties.
"Isn't that the situation that gave rise to the bill?"
MS. ROGINA replied that type of situation occurred and when the
employee left, he presented a log of extra things he did while
managing. The owner didn't clock those things and had no control
over the things the manager did.
SENATOR ELLIS asked how that situation would be handled if this
becomes law. Would "pitching in" just be part of professional
supervisory duties?
MS. ROGINA replied that a manager would have management skills
enough to hire the right staff so they don't have to do extras.
They could still fill in, but not on a regular basis.
2:17:58 PM
SENATOR ELLIS asked if there is any interplay between the union
versus non-union situation using the hotel example again.
MS. ROGINA replied that this bill addresses the private sector,
because unions have their own contracts that deal with hourly
workers.
SENATOR ELLIS asked if she means union versus non-union in the
private sector.
MS. ROGINA responded, "Right."
2:19:16 PM
BOSCO BALDWIN, Vice President, Human Resources and Logistics,
Alaska Commercial Company, agreed with previous testimony in
support of SB 131. He disagreed, however, with the statement
that companies don't get sued for someone working four or five
hours doing non-exempt work in a workweek.
That's simply not true. I think you can find lots of
case law up here that will absolutely show that that's
the case. If you think about that. If you have someone
who upon termination - and this happens all the time -
someone who writes, documents in their own book -
whether they create it after the fact or not, that
becomes fact. Unless the employer, on a daily basis,
is sitting there watching what this employee is doing
on his tasks. If you take four hours a day times
whatever their rate of pay is times 52 weeks and then
you put in punitive damages over the course of time,
you're talking about a pretty hefty bill that an
employer would be faced to pay. What actually ends up
happening is employers are forced to settle these
cases, because it's cheaper to settle and give
somebody money than to take it to court. It would cost
you $50,000 just to get to the point where you're
walking into a courtroom.
The way the law is set up today, in our case, with
Alaska Commercial Company, we span the whole state....
Our home offices are based out of Anchorage.... We
have 25 stores. We can't be everywhere at one time.
That puts us at a pretty unfair advantage when you
think about it - when we are forced...to be able to
identify what each of our management employees are
doing on a day to day basis - making sure that
80percent of the time they are actually performing
what their job description says.
He related how a former employee sued his company as an example
of what can happen.
2:25:16 PM
JACK AMON, representing the Alaska Restaurant and Beverage
Association (ARBA) and the Marks Brothers Café and Catering,
supported SB 131 and previous testimony in its favor. He said:
The changes made in the duties test for exempt
employees is a great stride forward in modernizing
Alaska's labor laws to more accurately reflect the
current work place.
Only two of his 12 employees at the restaurant would qualify as
exempt employees in the new statute - his chef de' cuisine and
floor manager. He disagreed that one would give an hourly
employee a supervisory position.
These are people who are your supervisors and who are
your top-level employees. In my mind, if one has the
authority to hire and fire and is responsible for the
work, they are managers whether they manage from
behind the stove or behind a desk. I, myself, often
manage with my hands in a dish sink.
I'm afraid that opponents of this bill will state that
it's an attempt by business owners to cheat-hard
working employees out of the overtime they deserve.
Nothing could be farther from the truth. In order to
run a successful business, it's essential to retain
your top-quality employees. These top workers know
their work and there's demand for their skills. One
could not keep them long by taking advantage of them.
There was constant talk that this is going to be -
there was some talk yesterday that owners are going to
look for ways to work people 60 or 70 hours a week.
You know, we know that the productivity of employees
drop off by working those long hours. There's really
no benefit to doing that. This change in the statute
will allow more flexibility for employers and
employees to make compensation arrangements that are
beneficial to both.
2:28:22 PM
BARBARA HUFF-TUCKNESS, Director, Governmental and Legislative
Affairs, Teamsters Local 959, opposed SB 131 in its current
form. She referenced Senator Ellis' question about whether this
affected unions or not saying:
We looked at this potential impact on every Alaskan
worker in the state, whether they're union or non-
union. Our biggest concern traditionally has been the
impact on the lower-paid, not the professionals.
Technically, I don't think that that's where
traditionally over the years that there have been
abuses.
She related how the 80/20 rule came about because at that time
there were many lawsuits on the books and a lot of abuse by
employers. The 80/20 legislation helped level the playing field
with equitable treatment for workers in general.
Her initial concern with the original bill was the impact on the
low-paid worker. She commended Representative Rokeberg for
maintaining the double-minimum wage. She stated:
I will say on the record that having still the double-
minimum wage we do believe will help protect the
majority of those entry level workers. I will use, for
example, the McDonald's manager who does flip burgers
and they put a manager sign on him. I'm sorry, but it
does happen. At least the double minimum wage will
help discourage that.
What I am here to talk about and it is a concern....
While one of the earlier speakers addressed federal
regulations, we do have a concern with the fact that
the primary duty definition is not addressed in the
bill.... We do believe that definition should be
defined in state statute - while we believe regulation
is fine whether it's on a state level or a federal
level, for that matter. We believe that having that in
our state law will actually help clarify for the
employee as well as the employers when they are
reviewing our state laws so that they don't have to go
from a state law and then funnel through the FLSA,
which is literally a fact.
I also want to go on record with respect to a comment
made...that there is a lot of federal case decisions
that have been made. So, adopting the FLSA is the
right thing for the State of Alaska to do. I would
just caution everyone there's been a drastic change in
the Federal Labor Standards Act and I don't believe
that there has been near the litigation. I mean, it's
been in place less than a year. You are going to be
challenged, we're concerned, even with the primary
duty definition. While it's not clear, it gives some
guidance out there for the employers and/or employees
when it's being applied. But, we do believe that it is
somewhat ambiguous and you will probably see lawsuits
come out of the application of that as well....
She suggested amending the bill to include a primary duty
definition. Other terms used in the bill should also be defined
in statute including customarily and regularly, discretion and
independent judgment, and matters of significance - so they are
applied consistently regarding primary duties.
2:33:56 PM
Lastly, she noted another exemption for employees who make at
least $100,000 or more per year in last year's implementation of
the FLSA that was strongly supported by labor and management and
said she would like to see it in this bill.
CHAIR BUNDE asked how replacing "supervisory" with three other
definitions - executive, administrative and professional - would
be more workable and exact.
MR. MITCHELL explained that currently there is an exemption for
an employee employed in a supervisory capacity. This bill
proposes to remove that exemption. There are also currently
exemptions for the five categories: administrative, executive,
professional and two sales jobs - straight commission and
outside sales. They are defined in regulation and this bill
takes those definitions and makes them meaningless, basically,
and establishes statutory definitions for them.
CHAIR BUNDE asked if the definitions are just being taken out of
regulation and being put into statute.
MR. MITCHELL replied:
No, the terms are currently in statute and then they
are defined in regulation. What this bill does is it
takes the definitions that are in regulation and uses
bits and pieces of them and some of the federal
regulations and takes those definitions basically out
of the regulations and put them into statute.
CHAIR BUNDE thanked him for his explanation and set SB 131 aside
for further consideration at a later date.
SB 138-MOTOR VEHICLE DEALER SALES
CHAIR CON BUNDE announced SB 138 to be up for consideration.
SENATOR SEEKINS moved to adopt CSSB 138(L&C), version G, for
discussion. There were no objections and it was so ordered.
CHAIR BUNDE asked Mr. Sniffen to explain the differences.
ED SNIFFEN, Department of Law (DOL), said he is the attorney who
handles all of the consumer protection issues that come with
automobiles in the State of Alaska. The reason the language in
AS 08.66.015 is the way it is currently is because of a concern
with auto brokers some years ago who were selling used cars as
new vehicles. A lot of those problems are no longer prevalent in
auto transactions today, but there is some question about when a
used car dealer should be allowed to obtain a low-mileage
vehicle and sell if off their used-car lot as a used car even
though it might have the appearance of a new car. There were
concerns about warranty and odometer issues with cars imported
from Canada and the lemon. Those were addressed through
amendments to another statute that require auto dealers to
disclose those issues to consumers.
2:40:02 PM
He wanted a balanced fix to the problem of allowing new and used
car dealers to sell products and not interfere with the free
flow of commerce. He proposed in his report:
The first one was to simply remove the language
"current model vehicle" from the statute, which would
essentially allow anyone to sell a vehicle as a used
vehicle as long as it had been sold once and the
vehicle lost its manufacturer's statement of origin
(MSO), which is a document that comes from the factory
with a new car that is surrendered to the Department
of Motor Vehicles (DMV) as soon as a car has been
titled to a first purchaser.... Then we would leave
these other issues related to low mileage, current
model vehicles showing up on car lots - we would leave
that to the auto dealers and their manufacturers to
resolve, because that really doesn't involve too many
enforcement issues with our office.
The second proposal I made and, I think, the committee
substitute that you have before you is premised on the
second proposal is essentially adopted from Washington
State's DMV's approach to this problem. They deal with
some related issues being a border state with Canada
and they have decided in their code to define new
motor vehicles to mean motor vehicles that have 3,000
miles or less or have been titled for 90 days or less
- and you can't sell a vehicle unless it meets that
requirement unless you are a new car dealer. And there
is an exception to that rule that allows for the
resale of a vehicle if it was actually a vehicle
purchased by a bona fide purchaser and that is defined
to mean someone who actually bought the car to use it
as opposed to a broker who is actually buying a car
just for the purpose of reselling it.
The CS has language that allows for that arrangement. The
department's concern is to fix language in AS 08.66.015, because
now no car dealer, new or used, can sell a used current model
vehicle. He thought it was an oversight.
CHAIR BUNDE asked if the new definition of "new vehicle" takes
care of that problem.
MR. SNIFFEN replied yes.
2:45:45 PM
STEVE ALLWINE, Alaska Automobile Dealers Association, supported
CSSB 138(L&C) and agreed with Mr. Sniffen's synopsis of the
issue. Currently, new car dealers who sell used cars are in
violation of this statute, which was an unintended consequence
to the legislation.
2:49:26 PM
CHAIR BUNDE said that 3,000 miles is a lot of miles.
STEVE ALLWINE said that "demonstrators" are still under the MSO
and it must be disclosed that it is demonstration vehicle, but
they are still new vehicles.
CHAIR BUNDE asked him to comment on the 90 days difference
between 120 days and 30.
MR. ALLWINE replied that 90 days is a compromise.
This precludes people from manufacturing used cars....
In other regions of the country, manufacturers may
pile on some significant incentives because they have
huge inventories. If they put those incentives on and
somebody walks in there to buy one of those cars...
those incentives may be significant enough that it
allows them to manufacture a used car, bring it to
this side of the world and dump here in Alaska.
Now, that vehicle, depending on the manufacturer, also
may or may not include any manufacturers warranty. If
you put a 90-day or a 120, or 150 or a 180-day time on
it, if they want to manufacture a used car, they are
going to pay the interest on that money for that
period of time. What that does is it slows them down
from doing that. That's the reason we feel the 90 or
120 or 150 is more than appropriate. If you went with
a 30-day number, I think that would be a cursory
number; it would have zero impact.
2:51:15 PM
SENATOR SEEKINS disclosed that he has been an automobile dealer
in Alaska since 1977.
2:52:07 PM
There are ways to obtain a vehicle from the black market or from
another country where the exchange rate is different and not
increase the price. However, the manufacturer takes a lesser
profit than if they sold it to a dealer in the United States. He
explained:
As a result of that, in the exchange rates, there may
be automobiles that come into the market that a broker
can buy and turn around and sell at a reasonable
profit for less money than a franchise automobile
dealer can buy from their own manufacturer. In some
cases, for some manufacturers, those vehicles that do
cross the international border no longer carry a
warranty on them from the fact that - Chrysler
Corporation was one of them that I'm aware of - that
dropped the warranty. I believe Daimler Benz may have,
Honda may have, Chevrolet, General Motors may have -
I've seen lists and I think that those four, maybe
Toyota, as well have it, but I'm not sure of all the
manufacturers. I just know that some of them don't do
that.
So, when it comes time, then, for someone who has a
used car license in a temporary facility that's on the
corner of a lot somewhere - will attempt to sell that
vehicle and misrepresent it as a vehicle with a
warranty. Because all automobiles in the United State
that are bought in the United States, the warranty
follows that vehicle, not the owner. And all of a
sudden, the person finds out they don't have a
warranty. But they may have been sold a service
contract that was represented as a warranty. So
there's a lot of misrepresentation that can take place
in that process and I think probably the best police
that are out there of other dealers are automobile
dealers, themselves. When they see someone who is not
living up to the standards of the law, it's not
unusual for them to make a phone call to Mr. Sniffen
or someone else in the DMV or Department of Law and
say this dealer is not complying with the law....
2:57:18 PM
Franchise dealers who feel they must meet the needs of their
community by providing expensive servicing are at a disadvantage
because of the loophole. There are also problems with people are
buying cars without knowing for sure.
2:58:04 PM
MR. ARPINO, Affordable Used Cars, said he is located in both
Fairbanks and Anchorage. He supported the CS with the timeframe
and mileage. He said it would help clarify current law which is
not working.
ART HOUSER, Alaska Park and Sell, agreed that the loopholes have
to be closed. The only issue he has is that using 3,000 miles
and 90-days for a new vehicle is that there are still loopholes.
For long-term benefits, the bill has to be kept
simple. If it's got an MSO, it's a new vehicle; if
it's got a title, it's a used vehicle.
2:59:44 PM
RICK MORRISON, Auto Dealers Association, agreed that the law
needs to be clarified or there could be a class action suit. He
supported CSSB 138(L&C).
3:03:24 PM
CHAIR BUNDE asked if he thought industry would be self-policing.
MR. MORRISON said he thought that would help. The current law is
very vague.
If you are in the new car business and are a franchise
dealer, you have paid thousands of dollars for tools;
you've paid thousands of dollars for training; you've
paid millions of dollars for a facility and all in
order to take care of the consumer....
He concluded saying that this bill gives the consumer an
opportunity to defend himself and gives other dealers in the
area something to stand on.
WAYNE BANNOCK, Division of Motor Vehicles, said he works very
closely with dealers and has some concerns with version G. His
comments were on section (d)(2), but didn't concern the mileage
or the timeframe.
DMV believes that the definition of a new motor
vehicle is limited to that of a vehicle that retains
its MSO or MCO. Once a vehicle has been converted to a
titled vehicle, it is a used vehicle. What is
described in (d)(2)(b)(1) and (2) is indeed a used
vehicle. It is a very slightly used vehicle, but it is
without exception a used vehicle. Now recognizing the
industry, recognizing some of the excellent points
that have been made by the speakers before me, with
your permission, sir, I would like to propose an
alternative that I think may solve both the DMV's
problem and adequately addresses the other speakers as
well.
3:05:48 PM
If the language of (d)(2)(b)(1) and (2) is written in
the affirmative and is placed in section (c)(4),
(c)(4) would then read, 'The vehicle has been operated
in excess of 3,000 miles or titled and registered in
more than 90 days.'
Section (c) speaks to what cars can be sold. So, what
it says in section (c), if that were to be adopted, is
that it is definitely a used car. We're recognizing
that it's a used car and it can be sold if it meets
that threshold of 3,000 miles or more than 90 days....
So, I believe from the speakers we've heard from
before, it would accomplish the exact same effect, yet
it would not put the State of Alaska in the awkward
position of attempting to define a slightly used car
as a new car.
CHAIR BUNDE thanked him for the suggestion. He said he would
hold the bill for a further hearing.
SB 130-WORKERS' COMPENSATION
CHAIR CON BUNDE announced SB 130 to be up for consideration.
MIKE JENSON, attorney, said he exclusively represents injured
workers with workers' compensation cases. He said his colleagues
had faxed the committee with their concerns today.
MR. JENSON said he has heard a lot of testimony about premium
increases, but he hasn't ever heard an explanation that accounts
for the increases.
When you look at the annual reports that the
commissioner and the Governor are relying upon, they
show, in fact, that time-loss claims have decreased.
Injuries have decreased over 5 percent in the last
annual report. Employee legal expenses have decreased
over 10 percent. Incidentally, we've enjoyed the
greatest decrease in expense for the workers' comp
system.
Our colleagues on the insurance side, on the other
hand, have seen an increase in legal expenses and, in
fact, received approximately three times as much in
legal expense reimbursements as employees do. In
addition, the annual report shows reemployment
benefits have decreased medical costs. They have shown
an increase, but that's only 8 percent and total
benefits are only up 7 percent. So, it's difficult for
me as a lay person to understand why employers are
facing up to 400 percent premium increases when the
total benefits have only gone up 7 percent. I have not
heard any discussion or explanation from the
Governor's office, the commissioner or the director,
which addresses that concern.
In addition to representing injured workers, I'm also
an employer and I also have to face increased
premiums, but as an employer, I would like to know
that if we are to reform the compensation system, that
my premiums are, in fact, reduced. If total benefits
are only up 7 percent, it's difficult for me to
comprehend how reforming a workers' compensation
system will address the problems that other employers
are facing with as much as 400 percent increases.
He wanted to address the creation of a commission in section 10
that creates a court without calling it a court and creates
judges without calling them judges.
Judges will be mere political appointees, not subject
to the standards of judicial conduct. Preemption would
not be allowed; the commission would not be subject to
the present standards of judicial review. It will
decide cases de novo and the judges will never be
evaluated for their ability or fairness.
Section 29, which is part of this creation of the
commission, takes away current power of the board to
determine the credibility of medical reports. A board
finding concerning the weight to be accorded witness
testimony including medical testimony will no longer
be conclusive. The board's determination of
credibility will be exclusively limited to testimony
presented by a witness at a hearing. This will
increase, not decrease, the cost of litigation to
employers and employees alike, since medical reports
will no longer have the weight currently accorded by
the present act. The board will lose, in fact, its
power to determine credibility of medical reports or
other evidence not presented by a witness at hearing.
In addition, it makes clear the commission, since it
will review de novo all prior board decisions, it
makes clear that instead of resolving a case with one
hearing, now all cases will require two hearings. How
this will decrease litigation costs that employers are
facing is difficult for me to comprehend. It permits
parties to present new or additional evidence at this
second hearing. It permits an easier granting of stays
without requiring any bonds - increasing the
likelihood of having two hearings.
It makes certain that all adverse board decisions will
be appealed by the party who lost at the board level.
All of this will greatly increase litigation costs.
Every party who loses at the board will be compelled
to appeal for a chance at two bites of the apple. Me,
as an employer, would be certainly troubled by hearing
a case that went to a hearing in which I prevailed. I
would only have to face another hearing where I would
have to defend, face additional and new evidence. This
does not benefit employers and it certainly doesn't
benefit injured workers. It creates another hurdle
that both employers and employees have to jump
through. It certainly doesn't address, in light of the
annual report statistics, the increased premiums that
employers here in Alaska face.
3:17:06 PM
MARK KLINE, representing himself, said reduced fees in section
25 might reduce the quality of health care already available
through existing law. Studies done during the Clinton
administration found that regulation of health care to control
costs decreased the quality of it. He also thought the majority
of cost problems employers are having is because of the lack of
appropriate pursuit of safety that in turn causes a significant
quantity of injuries and illnesses. The national estimate rate
is five injuries per hundred employees, but Alaska's is seven
injuries per hundred employees. That makes it 40 percent higher
than the national average according to the Bureau of Labor
statistics.
This higher incidence could likely cause increased prices in
insurance premiums. He favored increased involvement by OSHA,
employers and employees who should have meetings pertaining to
safety issues. This would keep injuries and insurance premiums
down.
3:21:10 PM
Section 16 reduces the amount of permanent impairment capital an
employee is entitled to, which might encourage employers who
have little or no interest in safety to reduce their efforts
even further in preservation of the working environment. They
could afford to take more chances because of a lesser amount of
penalty they would be subjected to.
CHAIR BUNDE thanked him for his testimony.
3:21:53 PM
LANCE BUSH said he works at Fred Meyer in Anchorage and agreed
with Mr. Kline. A garage door came down and hit him on the
shoulder and broke his foot in six places. His wife, six
children and he are going through a living hell. Loopholes in
the law are being used against him. He thinks the Legislature is
increasing corporate protection in Alaska. He sees Alaskans with
injuries that require minimal medical attention and said:
But seriously injured Alaskans are swept under
corporate America's rug, left to be ignored in
litigation because the liability is too costly and
they don't want to take accountability.... Now I feel
me and my family's American dream is altered and we've
begun to live the workman's comp nightmare. I would
like to know when we are going to hold corporate
Alaska, corporate America, accountable for illegal
practices, bullying, intimidation and outright lies -
to us as truly proven cases of injured Alaskans....
CHAIR BUNDE thanked everyone for their testimony and said the
committee ran out of time and adjourned the meeting at 3:27:24
PM.
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