HOUSE BILL NO. 182 "An Act amending the Alaska Wage and Hour Act as it relates to the employment of a person acting in a supervisory capacity; providing definitions for persons employed in administrative, executive, and professional capacities, for persons working in the capacity of an outside salesman, and for persons working in the capacity of a salesman employed on a straight commission basis." Representative Foster moved to adopt the new CS for HB 182 labeled 24-LS0507\P, Carver, 4/6/05. There being NO OBJECTION, it was so ordered. 1:53:58 PM REPRESENTATIVE NORM ROKEBERG, sponsor, explained that the bill adopts federal rules for the Federal Fair Labor Standards Act by amending the Alaska Wage and Hour Act. This bill will significantly help small businesses because it clarifies provisions of the Alaska Wage and Hour Act. Representative Rokeberg explained that the new amendment would provide a "bright line" to the effective date of this law, July 1, 2005. 1:56:38 PM JOHN SEDOR, ANCHORAGE SOCIETY FOR RESOURCE MANAGEMENT, (via teleconference) spoke in support of HB 182. He explained that the bill would eliminate confusion about how to determine overtime exemptions. 1:59:47 PM Representative Weyhrauch pointed out that in order to understand the various occupations in this bill, Federal Fair Labor Standards Act regulations have to be understood. He questioned the relevance of certain classifications. Mr. Sedor responded that one of the benefits of moving toward the federal system is that some people in the computer industry qualify due to the complexity of their jobs. The state has not moved forward to clarify which jobs are exempt. Representative Rokeberg asked Mr. Sedor to comment on the proposed amendment. Mr. Sedor related that the bill would delete the 80/20 test and sets forth definitions which are much more understandable. He gave an example. The primary duties test is the only test now in the federal system. The amendment states that claims brought after July 1, 2005, would be subject to statutory provisions of HB 182, and claims brought before that date would be subject to conditions prior to HB 182. 2:07:46 PM Representative Croft asked if primary duty is defined in the P version. Mr. Sedor replied it is not defined in any version, only in federal regulation. He gave an example of a position that is exempt due to the importance of the job. Representative Croft rephrased his question to ask if an employer has to conform to both state and federal laws. Mr. Sedor replied that those in the private sector do. He pointed out that the P version only has one system. Representative Croft inquired why the definitions differ and why it is not stated that they shall be the same as in federal law. Mr. Sedor replied that "primary duties" is only one of several tests. He indicated that the statutes would be extremely large if all duties were spelled out. 2:13:41 PM Representative Croft asked if primary duty is one of the tests below executive, administrative, professional capacity, and all other definitions are incorporated. Mr. Sedor replied correct. Representative Croft referred to page 4, (C) (1), which allows for state private employers having to follow only one system. Mr. Sedor replied that is exactly right, and 41 other jurisdictions have adopted that as well. 2:14:52 PM Representative Rokeberg drew attention to Section 5 where definitions in federal law are mentioned. Representative Croft pointed out that in other areas outside of that capacity definition, the bill allows for different definitions by the wording, "if not defined in this title". Representative Croft asked Mr. Sedor if the amendment states that claims filed previous to the effective date of the bill are cut off. Mr. Sedor responded that claims brought after the date are subject to one statutory requirement, HB 182. A two-year look-back applies to both time situations. 2:18:29 PM KARIN ROGINA, ALASKA HOSPITALITY ALLIANCE, ANCHORAGE, (via teleconference) conveyed full support for HB 182 because it provides for clear exempt status language. It defines exempt status, makes it workable, and will prevent litigation. She gave an example of a hotel worker with an exempt salary status issue. 2:23:27 PM JACK AMON, ALASKA HOSPITALITY ALLIANCE, ANCHORAGE, (via teleconference) testified in support of HB 182. He related the difficulties of operation under the older system. Representative Weyhrauch quoted the bill, "an individual employed in an executive, administrative, or professional capacity is compensated on a salary or fee basis at a rate of not less than two times the state minimum wage for the first 40 hours of employment each week, exclusive of board or lodging". He opined that most people work more than 40 hours. He asked about the pay after that period of time. Representative Rokeberg replied that exempt employees would not receive extra compensation; they would be on salary. HEATHER NOBREGA, STAFF, REPRESENTATIVE ROKEBERG, clarified that their salary would be based on a normal 40-hour work week. Representative Weyhrauch asked if the value of board and lodging is not included. Ms. Nobrega replied that is correct. Representative Rokeberg added that because there is a unique test in Alaska, it is two times the minimum wage, which is based on the 40-hour week. 2:27:53 PM BARBARA HUFF TUCKNESS, LOBBYIST, TEAMSTERS UNION 959, concurred with the sponsor's earlier comments regarding concerns and definitions. She responded to the comment that this bill impacts the highest paid workers. In the supervisory and administrative categories, there are managers at McDonald's that flip hamburgers and are in an hourly, paid-with-overtime compensation or are exempt from overtime and have to be paid at least double time. She recalled a bill from last session regarding minimum wage. She provided a history of definition discussions and maintained that they should be introduced into state law. The statute serves to provide information to employers and employees. She suggested that it should all be incorporated into statute. She voiced concern about the adoption of regulations and made suggestions about how to deal with them. She spoke of increasing from double minimum wage to 2.2 percent and reasonable salary compensation. 2:32:43 PM Vice-Chair Stoltze asked if the employee has the option of exempting himself or herself from overtime. Ms. Tuckness said that is determined by law. 2:34:27 PM Co-Chair Chenault closed public testimony. Representative Foster MOVED to ADOPT Amendment 1: Page 1, line 6, following "occupations;": Insert "directing retrospective application of the  provisions of this Act to work performed before the  effective date of this Act for purposes of claims filed  on or after the effective date of this Act, and  disallowing retrospective application for purposes of  claims for that work that are filed before the  effective date of this Act;"  Page 5, following line 30: Insert a new bill section to read: "* Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to read: APPLICATION AS TO WORK PERFORMED BEFORE THE EFFECTIVE DATE OF THIS ACT. (a) This Act applies retrospectively to work performed before the effective date of this Act for purposes of any claim or proceeding based on AS 23.10.050 - 23.10.150 (Alaska Wage and Hour Act) that is filed on or after the effective date of this Act. (b) This Act does not apply to work performed before the effective date of this Act for purposes of any claim or proceeding based on AS 23.10.050 - 23.10.150 that is filed before the effective date of this Act." Renumber the following bill section accordingly. Co-Chair Chenault OBJECTED for discussion purposes. Representative Rokeberg explained that the amendment creates a bright line of flexibility. There would be two sets of rules, before and after the effective date of the bill. 2:36:39 PM Vice-Chair Stoltze asked if this legislation was found in HB 255 last year. Representative Rokeberg replied that it was somewhat similar. Vice-Chair Stoltze wondered what the Department of Labor's position is. 2:38:59 PM GREY MITCHELL, DIRECTOR, DIVISION OF LABOR STANDARDS & SAFETY, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, related that the department has had input on this bill. The department remains neutral on the bill. Representative Kelly commended the sponsor for bringing this bill forward. He asked Mr. Mitchell if this bill would cut down on the cost of administering the hourly vs. salaried worker situation. Mr. Mitchell agreed that it would. Representative Kelly opined that it would cut down on fraud. Co-Chair Chenault REMOVED his OBJECTION to adopt Amendment 1. There being NO OBJECTION, Amendment 1 was adopted. 2:42:46 PM Co-Chair Chenault announced that HB 27 would not be taken up today. Representative Hawker summarized the discussion. He related that there is a valid parallel to state corporate income tax regulations in this bill. Representative Foster MOVED to report CSHB 182 (FIN) out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 182 (FIN) was REPORTED out of Committee with a "no recommendation" recommendation and with a zero fiscal impact note by the Department of Labor and Workforce Development. 2:46:15 PM