Legislature(1999 - 2000)
02/10/2000 01:40 PM Senate L&C
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE February 10, 2000 1:40 P.M. MEMBERS PRESENT Senator Jerry Mackie, Chairman Senator Tim Kelly, Vice Chairman Senator Dave Donley Senator Loren Leman MEMBERS ABSENT Senator Lyman Hoffman COMMITTEE CALENDAR SENATE BILL NO. 193 "An Act relating to the payment of wages and claims for the payment of wages." -MOVED CSSB 193 (L&C) OUT OF COMMITTEE SENATE BILL NO. 220 "An Act clarifying the requirements for limited liability companies and partnerships to qualify for the Alaska bidder's and disability preferences under the State Procurement Code; and providing for an effective date." -MOVED SB 220 OUT OF COMMITTEE SENATE BILL NO. 222 "An Act relating to standard industrial classification for, eligibility for benefits under, and the definition of 'benefit year' for, the Alaska Employment Security Act; and providing for an effective date." -MOVED SB 222 OUT OF COMMITTEE PREVIOUS SENATE COMMITTEE ACTION SB 198 - No previous action to consider. SB 220 - No previous action to consider. SB 222 - No previous action to consider. WITNESS REGISTER Mr. Kris Knauss, Aide Senator Pearce State Capitol Bldg. Juneau, AK 99811-1182 POSITION STATEMENT: Sponsor of SB 193. Mr. Dwight Perkins, Deputy Commissioner Department of Labor and Work Force Development P.O. Box 21149 Juneau, AK 99802-1149 POSITION STATEMENT: Supported on SB 193. Mr. Randy Carr, Chief Division of Labor Standards and Safety Department of Labor and Work Force Development P.O. Box 107021 Anchorage, AK 99510-7021 POSITION STATEMENT: Supported SB 193. Mr. Jay Seymour, private attorney 1029 W 3rd Ave. #200 Anchorage, AK 99501 POSITION STATEMENT: Supported SB 193. Mr. Vern Jones, Chief Procurement Officer Department of Administration P.O. Box 110204 Juneau, AK 99811-0210 POSITION STATEMENT: Supported SB 220. Mr. Ron Hall, Deputy Director Employment Security Division Department of Labor P.O. Box 25509 POSITION STATEMENT: Supported SB 222. Mr. Chuck Blankenship, Assistant Director Employment Security Division Department of Labor P.O. Box 25509 POSITION STATEMENT: Supported SB 222. ACTION NARRATIVE TAPE 00-04, SIDE A Number 001 SB 193-COLLECTION OF UNPAID WAGES AID WAGES CHAIRMAN MACKIE called the Senate Labor and Commerce Committee meeting to order at 1:40 p.m. and announced SB 193 to be up for consideration. SENATOR PEARCE, sponsor of SB 193, said a constituent from Anchorage called for help because her employer was illegally withholding final wages from her. Working with the Department of Labor, she found that the situation was not unique and because of the way our statutes are written there is a problem in being able to go to small claims court for the amounts in question. The Department of Labor suggested changes to the statutes that would help provide more accommodation for employees who are caught in this situation. MR. KRIS KNAUSS, Staff to Senator Pearce, explained SB 193 increased the amounts an individual can retain from the small claims cases from $7,500 to $20,000. As of now is also keeps it in small claims with the Department of Labor and Work Force Development rather than take it into the District Court. He further explained that attorneys are reluctant to take on cases where they can't make a profit on a contingency fee basis, such as $7,500. Number 2300 MR. DWIGHT PERKINS, Deputy Commissioner, Department of Labor and Work Force Development, said that this has been a problem in the past. The Wage and Hour Administration handles about 1,100 - 1,200 valid wage claims per year. About 95 percent of those are settled administratively without need of court action. The remaining five percent are filed in small claims courts. About one half of those are settled before trial. AS 23.05.220(c) limits the size of the wage claim that can be filed in small claims court to the maximum of $7,500. They are compelled to turn away any wage claimants with legitimate claims in excess of $7,500. They are told they must seek private attorneys to pursue their case or file their own in court. $7,500 is a lot of money to an individual. Some legal people are on line and concur with this. Number 2471 CHAIRMAN MACKIE asked how the claims process works. MR. RANDY CARR, Chief, Labor Standards and Safety, explained that presently, if someone presents a wage claim that is within their statutory limits, the claim is assigned to an investigator and is handled administratively. Contact is made with an employer and attempts are made through a series of processes to gather the facts, investigate the claim, and seek administrative resolution within the department. If a claim is found to be valid and they are unable to affect a resolution with the employer, their final steps of enforcement are to either file them in small claims court, if they are under $7,500 or refer them to the Department of Law which has been loath to take any of these cases. This restricts them to prosecuting cases in small claims court. As the assignee they are authorized to take those cases into court without benefit of Department of Law's support. CHAIRMAN MACKIE asked if they had a lot of inquiries from people who were not aware of the $7,500 cap in the statute. MR. CARR replied yes; they have found that they turn away around 10 percent or 100 cases per year. Some of those are in excess of $20,000. They need to be handled by private counsel, anyhow. CHAIRMAN MACKIE asked Mr. Perkins if he had any problems with the proposed amendment. MR. PERKINS replied that they have no problems with it. CHAIRMAN MACKIE asked Mr. Knauss to explain the amendment. MR. KNAUSS explained that it keeps the current language, but deletes the "shall" and leaves it as "may," giving the penalty more time. It's not mandatory. SENATOR LEMAN noted that the amendment adds another paragraph. Number 3255 MR. CARR said the amendment addresses concerns raised by private counsel regarding the original proposed change in Section 3 which would make all waiting time penalties mandatory by adding "shall." The concern was that penalty could be abusive in certain kinds of cases. They suggested removing the proposed amendment in Section 3 so the current language in (d) that leaves penalties in a discretionary state with the court would be unchanged. A new Section (e) would be added that states if the Department of Labor and Work Force Development brings a case forward successfully, that waiting time penalties "shall" be mandatory with those cases. There was a brief explanation of how the penalties would be calculated. MR. JAY SEYMOUR, labor and employment attorney, he has represented employers primarily. He is speaking for himself here, however. He doesn't have any problem with raising the jurisdiction of the Department of Labor to $20,000. It's been his experience that they have been very professional and easy to deal with. The portion of the bill that causes him concern is Section 3 which changes "may" to "shall." There is no law on the books that cause employers more aggravation and more consternation than the wage and hour clause. They are very technical and sometimes applied very vague and can sometimes result in very harsh penalties for technical violations. Often they will see in a wage and hour case, that claimants will win getting their overtime that they are due. They are awarded damages and on top of that they will get full and reasonable attorney's fees; and then plaintiffs lawyers always ask for waiting time penalties under AS 23.05.140. If he had input into the bill, he would request limiting that liquidated damages, if they are awarded, take the place of the penalties under AS 23.05.140. In other words, you wouldn't get them both, except if the Department of Labor was hearing the case. He wouldn't have any difficulty keeping the new Section 2 as it is proposed. CHAIRMAN MACKIE asked if they adopted the proposed amendment, would that alleviate his concerns. MR. SEYMOUR answered that it would alleviate his major concern about making the penalties "shall." He has concerns with current law because they always see claims of overtime cases where the penalties are added on top of damages for the claimant who prevailed. Sometimes that is a harsh penalty which is unjust in some cases. SENATOR KELLY pointed out that "shall" is not being taken out; they are just adding a modifier. CHAIRMAN MACKIE explained that they are taking out the "shall" and leaving the current section as it is in statute now. They are adding a new subsection, subsection (e), dealing with how it's calculated. Number 3250 SENATOR LEMAN moved to adopt amendment Cramer a 1. SENATOR DONLEY objected asking what affect this had on a private cause of action. It refers to an action brought on by the Department. MR. CARR explained that new section (e) will have no affect on private causes of action. They would remain as they are now under existing law where penalties are awarded at the discretion of the court. SENATOR DONLEY said it doesn't read that way. Existing law reads "when an employer violates" which would seem to cover both actions by the department and private causes of action. MR. CARR said he didn't have a copy of the actual amendment so he was at a disadvantage. SENATOR DONLEY said it looked like a step backwards the way this amendment was drafted. SENATOR LEMAN attempted to explain that subparagraph (d) would remain in the law, but it will remain as it is currently written and it will be there for private causes of action and for department actions. They only thing they will be doing is adding subparagraph (e) which modifies it for actions brought by the department. MR. CARR said that was correct. The language is (e) is taken from the liquidated damages penalties found in AS 23.10.110 where cases brought by the Department of Labor would result in a mandatory liquidated damage penalty while cases brought in the private sector would result in a penalty that was awarded at the discretion of the courts. This fairly well mirrors the intent and outcome of that penalty statute, as well. CHAIRMAN MACKIE asked Senator Donley if he maintained his objection. SENATOR DONLEY replied yes. CHAIRMAN MACKIE called for the roll. SENATORS LEMAN, KELLY, and MACKIE voted yea; and SENATOR DONLEY voted nay. The amendment was adopted. CHAIRMAN MACKIE asked if there was any further testimony and there wasn't. SENATOR LEMAN moved to pass CS SB193 (L&C)from committee with individual recommendations. There were no objections and it was so ordered. SB 220-PROCUREMENT PREFS:PARTNERSHP/LTD LIAB CO CHAIRMAN MACKIE announced SB 220 to be up for consideration. MR. VERN JONES, Chief Procurement Officer, Department of Administration, said that SB 220 clarifies the Alaska Bidder and Disability Preferences Sections of the State Procurement Code regarding limited liability partnerships and limited liability corporations. It was written in 1987 and well before the inception of LLPs and LLCs. So the preferences section in their Procurement Code does not recognize these business entities. This bill inserts language that specifically mentions these types of businesses in the preference section of the Code as well as stipulating the qualifying factors required to receive those preferences. They believe the clarification is necessary and furthers the legislative objectives of the Procurement Code by insuring that bona fide Alaskan businesses receive the preference. SENATOR DONLEY asked what Representative Grusendorf thought about the bill as he was the author of the existing Procurement Preference. SENATOR KELLY said he thought it looked like they were going along with the intent of the disability bill sponsored by Representative Grussendorf, and just adding an LLP with disability partners. MR. JONES said that was correct. This bill does two things. It allows LLCs and LLPs to qualify for the Alaska bidder preference by stipulating the same kinds of qualifications other businesses have to posses to qualify. It also allows those types of businesses to qualify for the disability preferences if all the managing directors are also disabled. SENATOR KELLY added that now we allow for every other type of business entity. The LLPs and LLC is a new type of entity. So they are just being inserted into that law. MR. JONES said that is right. SENATOR LEMAN mentioned that yesterday there was a comparable bill on the House floor providing for architects, engineers, and land surveyors. It passed on the floor 38 - 0. So if Representative Grussendorf was on the floor, he voted for it. It's generally considered to be a technical fix. SENATOR DONLEY said he thought any time the Administration proposes to amend a law that was sponsored by an acting member, it's just courtesy to get the opinion of that member. He asked them to do that. SENATOR MACKIE noted if he did that before the bill reached Senate Finance, he could answer Senator Donley's question when he asks it. SENATOR LEMAN moved to report CSSB 220 (L&C) from committee with individual recommendations. There were no objections and it was so ordered. SB 222-EMPLOYMENT SECURITY ACT CHAIRMAN MACKIE announced SB 222 to be up for consideration. MR. RON HALL, Deputy Director, Employment Security Division, said this bill is basically housekeeping. Section 1 replaces the standard industrial clasification system with a North American industry classification system, a conformity issue with USDOL based on a NAFTA code. Section 2 also conforms to the NAFTA code's employer rate of contributions. It won't have any effect on current employer rates, but it has a different rating system. Section 3 is a technical change to clarify that the potential disqualification for misconduct that applies only to the last period of employment held prior to filing for unemployment insurance benefits. They are adding "last." Right now if the issue comes up today, the Department sends out notices to employers that aren't involved in the issue, they have a problem showing up for the appeal hearing. Section 4 amends the reference to training under 29 USC 16.51 - 16.58 JTPA to public law 105.220, the Work Force Investment Act (WIA). JTPA is closing out in July 2000 when the Work Force Investment Act takes over and this allows continued payments of approved training under the WIA. Section 5 is changed to make benefit years mutually exclusive and eliminate confusion in determining which benefit year or week will be filed. SENATOR KELLY asked him to explain the benefit week and how it's different. MR. CHUCK BLANKENSHIP, Assistant Director, Employment Security Division, said the basis to the proposed change to the definition of a benefit week is that the current definition allows for some overlap. Benefits are based on a week by week eligibility Sunday through Saturday. Current definition of a benefit year is a period of time during which a claimant can file for the benefit entitlement begins with whatever day they file their claim and ends one year later. If they file on a Wednesday, it would end the following year on a Tuesday. This raises an issues on the last week of that claim as it could actually fall in either benefit year. It has created a great deal of confusion both for the claimants and many hours and tens of thousands of dollars in programing because of this overlap of benefit years. A simple solution is the change in definition that says when you file a claim, that week in which you file it, the effective date would be Sunday and it would end 52 weeks later on a Saturday. Unfortunately, as they looked at calendars for the last several years, periodically when a calendar quarter begins on a Sunday, they get into a situation that can cause difficulty in the subsequent claim, if the claimant has to file another year. That's the reason they had to come up with a 53 week benefit year. This has only happened 10 times in a 20 year period, but when they started looking at potential scenarios, they knew they would have to have some way of dealing with it. If a claimant filed on October 1, 2000 or any time that week, under the proposed legislation, they would make it effective October 1, the Sunday of that week. That claim would end in 2001 on September 29 which is a Saturday. The claim filed in the following week, should the claimant need a second benefit year, would begin on September 30 which is a Sunday. The qualifying period of wages used to determine eligibility for an unemployment claim is predicated on the calendar quarter in which the claim was filed. This situation would cause them to be double using wage credits because of the overlapping in the qualifying base period for a claim. This is the only reason for the 53 week exception. As a general rule, the claim would start on Sunday and end 52 week later on Saturday. There would be no confusion of where that transitional week would fall. MR. HALL explained that section 6 adds a transitional provision in uncodified law to address benefit years that will begin under the old definition, but will expire under the new definition. Sections 7 and 8 speak to the effective date. SENATOR KELLY asked if he anticipated passage of this bill resulting in more benefits being paid. MR. HALL said it just cleans up technicalities. There is an expense to the state, but the expense is mostly to the claimant. It's benficial to them to not use the same base period. When their claim ends and it's in the same base period they started with, there's a problem, especially if they haven't earned any additional wages. No, it won't add any claims to the pool. Number 3998 SENATOR LEMAN moved to report SB 222 from committee with individual recommendations. There were no objections and it was so ordered. CHAIRMAN MACKIE adjourned the meeting at 2:17 p.m.
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