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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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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