Legislature(1999 - 2000)

02/10/2000 01:40 PM Senate L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
         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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