HB 204-OVERTIME PAY EXEMPTION  4:21:09 PM CHAIR SUMNER announced that the final order of business would be HOUSE BILL NO. 204, "An Act exempting certain employees from overtime pay requirements; and providing for an effective date." 4:21:37 PM JEREMY APPLEGATE, Program Manager, Wage and Hour, Division of Labor Standards and Safety, Department of Labor and Workforce Development (DLWD), summarized the sponsor statement for HB 204 [included in committee packet], which read as follows [original punctuation provided]: House Bill 204 would increase the hours that flexible work plan employees of certain facilities may work before triggering overtime pay from 10 to 12 hours. These facilities include ambulatory surgical centers, freestanding birth centers, home health agencies, hospices, intermediate care facilities for individuals with intellectual disabilities, residential psychiatric treatment centers, rural health clinics, and subacute mental health facilities. To improve and extend healthcare access, the availability of medical services that do not require hospital admissions has increased nationally and within Alaska; however, non-hospital medical facilities are at a disparity for managing the work- life balance of healthcare employees when compared with hospitals, where employees are exempted from the daily overtime requirement. The result has been a noticeable migration of nurses and other critical healthcare staff to hospitals where a more flexible schedule allows the employee greater control over their time. Alaska law requires overtime pay for eligible employees to begin either after eight working hours in a day or after 40 cumulative hours in a workweek. Employees may, however, work up to 10 hours a day without triggering the overtime requirement if they have a written voluntary flexible work plan agreement with their employer that has been filed with the Department of Labor and Workforce Development and the department has issued a certificate approving the plan. An employee working longer than 10 hours a day, or 40 hours in a week, is paid at the overtime rate. This bill would not affect existing flexible work plan agreements, but it would permit employees working at these facilities to negotiate plans up to 12 hours per day going forward. Employees of these facilities would still be subject to a total of 40 hours per week for overtime pay. This bill will impart flexibility for healthcare workers and provide stability for Alaska's healthcare system. 4:25:17 PM REPRESENTATIVE SADDLER sought clarification about employee/employer signed flexible work plans and whether the employee could work 10-hour shifts four times a week and not be subject to overtime, but if they worked five, 10-hour shifts a week, then they would be subject to overtime hours. MR. APPLEGATE confirmed that anything worked outside the plan would be paid as overtime. 4:25:46 PM REPRESENTATIVE FIELDS offered his understanding that under current law, if a surgery center wanted to pay someone for three, 12-hour days, the center could do that but would have to pay overtime. MR. APPLEGATE confirmed that's correct. REPRESENTATIVE FIELDS asked whether surgery centers have provided evidence that they are financially constrained and cannot pay overtime. MR. APPLEGATE responded that he is unaware of such concerns but was told that the change would benefit centers in hiring and firing employees by offering suitable working hours. REPRESENTATIVE FIELDS questioned whether the department has modeled what the reduction in a nurse's pay would be as a result of not being paid overtime. MR. APPLEGATE answered that he does not have such numbers but said that any overtime that would have been worked as part of the plan would be offset as straight time rather than overtime. He explained that if the individual worked further and outside the plan, then overtime would still exist. 4:27:28 PM REPRESENTATIVE SADDLER referred to the list of employers who are exempt from overtime. He asked if any finding of an employer's financial condition was a determining factor as to whether or not their employees could be exempt from overtime. MR. APPLEGATE answered no. 4:28:05 PM REPRESENTATIVE CARRICK inquired as to how much money overtime is costing facilities currently. She further asked for the average wage of people working in the professions listed under HB 204. MR. APPLEGATE responded that he does not have such information but could direct Representative Carrick to the appropriate agency with the data. 4:29:07 PM REPRESENTATIVE PRAX asked if the department has tracked the cost of going back and forth to work. MR. APPLEGATE answered that he is unaware of anyone tracking that data. 4:30:00 PM CHAIR SUMNER suggested that a 40-hour in four-day plan is already possible. He asked if companies in the industry already offer a 10-hour flex plan and pay the additional two hours. MR. APPLEGATE answered yes, 10-hour plans are used across various industries. He explained that the bill would add to the availability and therefore provide for longer workdays. He stressed that the statutes around flex plans direct the employer to maintain the schedule that is agreed to in the flex plan; if employees work beyond the plan, then it has to be due to circumstances beyond control of the employer. If plan violations occur 20 percent of the time that the plan is in place, then it could be invalidated. 4:32:05 PM REPRESENTATIVE FIELDS inquired as to how many businesses are using such plans now, and how many employees are affected. MR. APPLEGATE said he has no data to provide. He said that once an employer has an approved plan, the plan can apply to any employees that voluntarily enter it. 4:33:08 PM REPRESENTATIVE CARRICK asked if Mr. Applegate has a comment from DLWD about the reason why HB 204 is limited to just the health industry, when it is known that there is a lot of overtime used in other professions. MR. APPLEGATE answered that the health industry has expressed interest in 12-hour plans; in hospitals, 12 hours is the standard shift for a nurse. 4:34:42 PM REPRESENTATIVE SADDLER asked whether the bill would obligate a surgery center employee to work overtime. MR. APPLEGATE answered that it is the department's position that an employee serves at the employers request; if the employee would like to opt out of working overtime, they are open to do so, but there may be consequences. He said entry into a flex plan is voluntary for an employee, as they cannot be compelled to do so or have it be made as a condition of employment. REPRESENTATIVE SADDLER asked for confirmation that the proposed bill would not obligate overtime. MR. APPLEGATE answered correct. REPRESENTATIVE SADDLER inquired whether under HB 204, an employee who voluntarily entered into a flex plan could agree to work 12 hours. MR. APPLEGATE answered that's correct. REPRESENTATIVE SADDLER asked if the bill just would expand the flexible work plan from 10 to 12 hours. MR. APPLEGATE answered that's correct. 4:36:05 PM REPRESENTATIVE PRAX questioned if the flex plan option is available universally. MR. APPLEGATE answered yes, but currently just for 10 hours. REPRESENTATIVE PRAX offered that there are many people who are working two jobs. 4:37:02 PM REPRESENTATIVE RUFFRIDGE commented that the committee discussion is focusing around forcing an employee to work or taking away overtime. He explained that in the medical industry, the ability to hire someone is based on a facility's ability to pay a 12-hour work day; oftentimes for the employer, they may not hire an individual if the flex plan is only available at 10 hours. He observed that HB 204 may help the ability of employers to fill vacant positions, and he asked if that is the purpose of the bill. MR. APPLEGATE answered that the title "flexible work hour plan" is accurate, and that such plans would provide flexibility for employees. REPRESENTATIVE RUFFRIDGE, regarding why the bill applies only to certain entities, asked if the reason for the request was due to the inability to hire people who wished to have a 12-hour work plan. MR. APPLEGATE said he does not have an answer. 4:38:58 PM REPRESENTATIVE FIELDS requested, at a later meeting, the most recent data on orthopedic reimbursement rates in Alaska. 4:40:23 PM REPRESENTATIVE PRAX asked whether the bill would take away or provide something. MR. APPLEGATE answered that it is providing the ability for employees to opt in for a more flexible schedule. 4:40:55 PM REPRESENTATIVE SADDLER asked if the department provides the legislature information regarding the profitability of businesses in Alaska MR. APPLEGATE replied that he doesn't know. 4:41:25 PM REPRESENTATIVE FIELDS suggested that Mr. Applegate collaborate with other departments to get more information. MR. APPLEGATE answered that he can get members in contact with people who could answer questions. 4:41:50 PM CHAIR SUMNER said he doesn't know if profitability data is available. He shared that he would like to see DLWD provide overtime data for the industries listed within the bill. 4:42:12 PM CHAIR SUMNER announced that HB 204 was held over.