HOUSE BILL NO. 201 "An Act relating to the computation of overtime; and providing for an effective date." REPRESENTATIVE NORMAN ROKEBERG, SPONSOR testified in support of HB 201. He explained that the legislation is the result of a court decision by Superior Court Judge Larry R. Weeks, for Stuart Hallam vs. Holland America Line, Inc (a copy of the opinion is on file.) Judge Weeks found that the interpretation of AS 23.10.060(b), a statute relating to overtime, was unclear. He maintained that under the court's interpretation employees would be paid twice for the same overtime hours (see excerpt from sponsor statement below). The legislation is supported by the Administration. Members were provided with a proposed committee substitute, Representative Austerman MOVED to ADOPT proposed committee substitute, #1-LS0872\H, 4/22/99. There being NO OBJECTION, it was so ordered. Representative Rokeberg compared the committee substitute to CSHB 201 (L&C). He observed that the following language was deleted: "overtime compensation under this paragraph shall be paid only for those hours for which overtime compensation has not been paid under (1) of this subsection" and replaced with "the number of hours worked in a week under this paragraph shall be determined without including hours that are worked in excess of eight hours in a day." Representative Austerman spoke in support of the legislation. He asked for information regarding the retroactive effective date. Representative Williams asked how the legislation would affect negotiated contracts. Representative Rokeberg stated that the overtime law would take precedence. TERRY CRAMER, LEGAL COUNSEL, LEGISLATIVE AFFAIRS AGENCY did not think that the legislation would affect the negotiated contracts. She observed that there is exclusion in the overtime law for flextime arrangements. The legislation would not change the terms of existing contracts. Ms. Cramer clarified that the retroactive effective date in section 3 was based on the date that the Wage and Hour Act came into effect. She observed that if the finding is upheld and it is determined that this is the way the law should have been interpreted then the retrospective clause would survive. The retroactive clause will not have an effect if the finding is not upheld. Representative J. Davies asked why a retroactive clause was included. Co-Chair Therriault explained that the retroactive clause would attempt to prevent retroactive suits for compensation and uphold the status quo before the judge's ruling. In response to a question by Representative J. Davies, Ms. Cramer pointed out that there is a two-year statute of limitation. DWIGHT PERKINS, DEPUTY COMMISSIONER, DEPARTMENT OF LABOR provided additional information on HB 201. He noted that the legislation represents the minimum overtime requirements contained in any of the negotiated contracts. He reiterated that there is a two-year statute of limitation on back wages. The department feels that the retroactive clause would provide clarification. The Department of Labor supports the legislation. The legislation supports the Department of Labor's interpretation of the overtime law. He stressed that would the legislation take away the possibility of pyramiding. Pyramiding was explained in the sponsor statement. Assume Employee worked the following schedule for a total of 43 hours: Monday 11 hours Thursday 8 hours Tuesday 8 hours Friday 8 hours Wednesday 8 hours As to Monday, everyone agrees that Employee is entitled to 3 hours of overtime. The issue is as to Friday. Under the Department's interpretation and the interpretation of employers, no overtime would be due as to Friday since Employee worked 43 hours during the week and has already been paid for 3 hours overtime. Under the Court's ruling, Employee would receive overtime for 3 hours on Friday because, in computing the 40 hours under the statute, one must include the 3 overtime hours worked on Monday. Consequently, Employee received 6 hours of overtime pay for the week even though he/she only worked 43 hours. Vice-Chair Bunde asked what the overtime would be if someone worked 10 hours over four days. Co-Chair Therriault clarified that under the court's interpretation they would have been paid overtime on each individual day and overtime on the time above 40 hours in a week. He noted that if a person worked 10 hours a day for five days that they would be paid 2 hours of overtime for each day and 10 hours for the time over 40 hours. They would be paid for a total of 20 hours of overtime. Representative Foster asked what would prevent any retroactive suits. Mr. Perkins noted that, without passage of the legislation, there is nothing to prevent individuals from filing for overtime occurred in the past two years. Representative J. Davies noted that" An employee is entitled to overtime for hours worked in excess of (1) eight hours a day; or (2) 40 hours a week; the number of hours worked in a week under this paragraph shall be determined without including hours that are worked in excess of eight hours in a day. He questioned how the determination is made. Mr. Perkins acknowledged that it would not be fair to expect an employee to work 10 hours on Monday and 6 hours on Tuesday not to be paid for the overtime they worked on Monday because they worked under 40 hours in the week. Under the Department of Labor 's interpretation the employee who worked 10 hours on Monday and 6 hours on Tuesday would have to be paid overtime for the 2 hours over 8 that he worked on Monday. Representative J. Davies gave the example of an employee who worked over 8 hours a day and over 40 hours in a week. They worked 10 hours a day for 4 days and two hours on the fifth. They worked a total of 42 hours in the week. Mr. Perkins stated that the employee would be entitled to 8 hours of overtime. Representative Foster noted that state employees are paid for 37.5 hours a week. Mr. Perkins observed that employees work 37.5 under their negotiated contract. Co-Chair Therriault reiterated that the negotiated contract would rule. In response to a question by Representative J. Davies, Ms. Cramer clarified that the "or" indicates that they would not need both conditions to receive overtime. Co-Chair Therriault concluded that the concerns of Representative J. Davies would be resolved by the inclusion of "or whichever is greater", but felt that the language would be unnecessary. He noted that "and" would cause confusion. Mr. Perkins stated that if there is a concern it could be addressed during the remaining legislative process. Co-Chair Therriault asked if the retroactive clause should be two years. He stressed that it is unnecessary to go back to 1959. Representative Rokeberg questioned if the two-year statute of limitation would be sufficient to prevent legislation. Mr. Cramer stated that if there were a change in law the retroactive date would not stand. If the Supreme Court rules that the legislative interpretation is correct there would not be a need for a retroactive effective date. PAM LABOLLE, PRESIDENT, STATE CHAMBER OF COMMERCE spoke in support of the legislation. She noted that Chamber members are concerned that they not have to pay for overtime hours twice. They are especially concerned about the retroactive interpretation by the Court. Representative Rokeberg stated that he would support a retroactive date of two years and one day from April 7, 1999, which was the date of the court ruling. Vice-Chair Bunde stated that he supports the pyramid interpretation. Co-Chair Mulder MOVED to ADOPT Amendment 1, a conceptual amendment to change the effective date to April 1, 1997. There being NO OBJECTION, it was so ordered. Co-Chair Therriault noted that there is a zero fiscal note by the Department of Commerce and Economic Development. Representative Foster MOVED to report CSHB 201 (FIN) out of Committee with the accompanying fiscal note. Vice-Chair Bunde OBJECTED. He spoke in support of the overtime compensation represented by the court's interpretation. Representative Moses observed that an employee cannot be forced to work overtime. A roll call vote was taken on the motion. IN FAVOR: Moses, Williams, Austerman, Davis, Foster, Kohring, OPPOSED: Bunde, Davies, Grussendorf The MOTION PASSED (8-3). CSHB 201 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Law, dated 4/22/99.