HOUSE BILL NO. 146 "An Act relating to disclosure of information regarding employee compensation by employers, employees, and applicants for employment; establishing the fund for protection of compensation disclosure rights; and providing for an effective date." Co-Chair Merrick invited the bill sponsor to present HB 146. 1:40:11 PM REPRESENTATIVE LIZ SNYDER, CO-CHAIR, HOUSE HEALTH AND SOCIAL SERVICES COMMITTEE, thanked the committee for hearing the bill and hoped it would move quickly out of committee. She reported that the bill helped Alaskans return to work and feel secure in their job as the state recovered from the economic impacts of the COVID-19 pandemic. She indicated that the bill established three new expectations, each of which she would summarize. The first expectation was that workers could see the salary range for a position as part of its posting information, the second was that workers would have the right to salary history privacy, and the third was that workers could not be penalized for discussing compensation amongst themselves. She would provide additional detail on each of the expectations. Representative Snyder expanded upon the first expectation requiring that salary and wage information be available at the time of posting. Only about 12 percent of current job postings in the state offered detailed wage information. She argued that Alaska was competing in a global market and the state was losing residents every year. She thought knowing the salary upfront would help applicants make informed decisions and encourage people to stay in the state. Representative Snyder continued to explain the second expectation regarding salary history privacy, which was proposed in an effort to minimize wage scarring. When a person entered or re-entered the workforce at a low or depressed salary, copious research suggested that the salary tended to stick with the individual and persist over a person's entire professional career. She explained that the phenomenon was referred to as wage scarring. Even though the mechanism was not completely understood, the depressed wages could also be experienced by a person's children. After the 2007 to 2009 recession, only one in four displaced workers were able to return to their original earnings. She hoped the bill could help protect workers in Alaska from experiencing similar situations due to the pandemic. Representative Snyder reviewed the third exceptions which would ensure that workers could discuss compensation amongst themselves. There was already a federal law that ensured that wage discussion was allowable, but the bill would codify it in state statute. She suggested that the law was poorly enforced and the bill would help the state enforce it more effectively. If any employer penalized or restricted discussion of compensation, it was already a violation of federal law. There was significant evidence that similar laws minimized wage scarring. She had been cognizant of the language in the bill and she had made great efforts to utilize language that would help businesses follow the law and take action to minimize or completely avoid penalties. She thanked the committee for hearing the bill. Co-Chair Merrick invited Ms. Tanya Keith to review the fiscal note. 1:47:06 PM TANYA KEITH, CHIEF, WAGE AND HOUR SECTION, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT (via teleconference), reviewed the fiscal note from the Department of Labor and Workforce Development (DLWD) with control code AYpxa. The fiscal impact note reflected three new positions that would be responsible for facilitating the complaints and investigations that would be the result of the proposed regulations in the bill. Representative Snyder commented that she had spent significant time looking at the cost of implementation of similar bills in other states. She had included comparisons to other states in members' bill packets. The fiscal note reflected a cost of implementation that was similar to states with larger populations. She invited the department to comment on how it determined the amount. She added that the fiscal note also reflected some previous language that had since been eliminated from the bill. It was also possible that the bill would generate some revenue and she did not believe the potential revenue was reflected in the fiscal note. Co-Chair Merrick asked Ms. Keith if the department could provide an updated fiscal note. Ms. Keith responded in the affirmative. 1:49:57 PM Representative Thompson was concerned about the implications of the bill and did not understand the requirements being imposed on the private sector. He asked why the bill was being introduced. Representative Snyder responded that the primary motivation behind the legislation was to minimize wage scarring, particularly after emerging from an economically challenging time. Similar legislation had been proven to be helpful in getting people back into the workforce. She argued that the state placed regulations on businesses often, and she thought the regulations associated with the bill would look out for Alaskan workers and placed a minimal burden on businesses. Representative Thompson thought the bill might work for the public sector, but not the private sector. He asked if the bill effected small businesses. Representative Snyder responded in the affirmative, but she was open to amendments that would consider the circumstances of small businesses. Representative Thompson wondered whether small business would be permitted to post a "Help Wanted" sign in windows. Representative Snyder thought it might be helpful to hear from Legislative Legal Services. She thought it was becoming more common to see salary ranges on recruitment signs in Fred Meyers. Representative Thompson reemphasized that he was concerned specifically about small businesses. 1:52:41 PM NOAH KLEIN, COUNSEL, LEGISLATIVE LEGAL SERVICES, read lines 9 through 12 on page 2 of the bill that referred to the publishing of employment notices by business. He did not think it would be prohibited for Fred Meyer or a mom-and- pop business to publish solicitations as long as the signs did not specifically detail a position without offering a salary range. If the sign simply said, "Help Wanted" there would be no problems. 1:53:40 PM Representative Carpenter asked for details about the process the commissioner of DLWD would utilize to investigate and convict a business that violated the proposed law. Ms. Keith replied that one of the investigators in the Wage and Hour Division (WHD) would determine whether a violation occurred. If it was determined that there was a violation, an enforcement action by the commissioner would be recommended. Representative Carpenter asked whether there would be an appeal process for businesses. Ms. Keith responded that there would be an appeal process where a business could request a hearing to provide a defense against the allegations. Representative Carpenter asked who would receive the appeal. Ms. Keith indicated there would be regulations written to enforce the law, but that had not happened yet. In similar situations, there was an informal hearing process. Representative Carpenter asked if it was customary for the legislature to create laws that would give regulatory authority to a department to penalize individuals. He thought the specific penalization was left up to regulation and not up to the legislature. Representative Snyder needed to refer to her notes. 1:56:21 PM AT EASE 1:56:41 PM RECONVENED Representative Snyder echoed Representative Carpenter's request for clarification from Legislative Legal Services. Mr. Klein would have to review statutes to provide a broad response on whether it was customary for the legislature to give regulatory authority to a department. He emphasized that the department would have to provide adequate constitutional due process. Representative Carpenter asked if the state was enforcing similar provisions already through the National Labor Relations Act. Ms. Keith reported that WHD was not currently investigating similar issues. Representative Carpenter asked if the division was already asking for authority to investigate similar issues. Ms. Keith responded in the negative. Representative Rasmussen referred to AS 23.10.720 and asked whether a three-year timeframe was a broad statute of limitation for a variety of regulations or was it simply applicable to wage information disclosure. Mr. Klein asked Representative Rasmussen to restate her question. Representative Rasmussen restated her question. Mr. Klein indicated that three years was the statute of limitations used in other areas of Alaska law. Representative Rasmussen thought businesses with 50 employees or less should be exempt. She thought that small businesses were operating with small margins and three years was a significant period of time in a small businesses' life. She asked how the penalty for violating the law was determined. 2:01:13 PM Representative Snyder responded that she had looked at a range of penalties used by other states to determine a fair penalty range. She noted that the penalty she chose was lower than the majority of other states. In addition to reducing the range of penalties, she used language to allow the commissioner to determine whether a business should be penalized for each day of violation. There was also the option for a company to conduct an audit to fix the violation. Representative Rasmussen asked if there was a cap on the penalty amount. Representative Snyder responded that there was no cap. Representative Wool asked if other states with similar laws had exemptions based on business size. Representative Snyder would have to get back to the committee with a response. Representative Wool noted that he was the owner of a small business and hired hundreds of people. He relayed that he generally followed the practices regulated by laws in other states already. He wondered if an employee voluntarily disclosed past wage information whether a business would be permitted to verify the information. Representative Snyder responded that the language was not specifically in the bill, but she did not think the bill would prohibit verification if an employee voluntarily disclosed wage information. Representative Wool relayed that he would sometimes list the wage as a number followed by "depending on experience" or "DOE" in solicitations for his small business. He wondered if that would be permittable by the bill. Representative Snyder responded that her intention was to encourage employers to post a specific range. Mr. Klein indicated listing an amount followed by DOE would be acceptable. 2:06:26 PM Representative LeBon wondered if Representative Snyder had been contacted by a private sector industry or any industry asking for help with wage disclosure. Representative Snyder responded that was not how the bill came to be. However, Bank of America, Wells Fargo, Cisco, Google, and others had proactively adopted the provisions proposed by the bill. She thought companies were trying to stay ahead of the trend. Representative LeBon asked if it would be considered misleading if he posted a job in the banking sector with the wage listed as, "salary depending on experience, training, and education level." Representative Snyder asked Representative LeBon to repeat his question. Representative LeBon repeated his question. Representative Snyder would argue that language would not reflect the full picture of the description of the position. Representative LeBon noted that there were other benefits to consider in addition to salary, such as bonuses, sick leave, and vacation. He suggested the story was much larger than the salary range. He wondered if it would be misleading if one company had a higher salary range but a competitor had a lower salary range but more generous benefits. Representative Snyder thought the bill would provide further incentive for businesses to provide greater detail about benefits. She thought it would help educate applicants on positions which would avoid wasting the time of the applicant and the business. Representative LeBon had hired many people over the past 40 years. His motivation was to hire the best person every time and would write job postings with the goal to attract the best talent. He continued to emphasize that the story was much bigger than simply a salary range. 2:11:47 PM Representative Josephson asked Mr. Klein about the delegation of authority on regulations. He referred to line 18 on page 3 of the bill. Mr. Klein indicated he was looking at the line to which Representative Josephson was referring. Representative Josephson asked about AS 23.10.085 which discussed the scope of administrative regulations. He thought that Alaska law allowed DLWD to write the regulations regarding minimum wage and payment of overtime. Mr. Klein responded in the affirmative. Representative Josephson added that there was a case where the authority was disputed and the United States Supreme Court was asked to look at the issue, however the court declined to address it. He asked if he was correct. Mr. Klein responded that Representative Josephson was correct. 2:13:29 PM Vice-Chair Ortiz asked what prompted the bill and what made it timely. Representative Snyder indicated the bill was based on her background in public and community health and economic wellbeing. An important part of community health was the ability to support oneself financially. She was highly informed on wage scarring and she became very concerned about workers not returning to the workforce after leaving due to the pandemic. Vice-Chair Ortiz asked for a more detailed definition of the meaning of wage scarring. Representative Snyder explained that if a person returned to the workforce and accepted a lower salary job and then aspired to move to a different job, it was more likely that the low wage would be used as justification for continuing to pay the individual poorly if employers were permitted to ask about past wages. 2:16:32 PM Representative Carpenter referred to page 2, line 16 of the bill. He did not understand the language and wanted more information. Representative Snyder indicated that the intent of the language was to permit applicants and employees to be free to talk about compensation with each other. Representative Wool agreed with Representative LeBon's earlier point about benefits being an important part of compensation. For example, hospitals were having trouble competing with traveling nurses because traveling nurses were sometimes paid three times more than in-house nurses but did not receive the same benefits. He understood wanting to get people back to work but thought there were many jobs currently available for prospective employees. He thought the trades needed experienced workers. He wondered if businesses could tell prospective employees that they could disclose their past wages if they so desired, but that disclosure was not required. Representative Snyder responded that the intent of the bill was to prevent any sneaky inquiries into past pay. However, there was nothing preventing an employer from asking for the desired salary range of a prospective employee. Representative Rasmussen thought that a savvy employee might look at the larger picture of a compensation package, which would include benefits. She was concerned that some employees might be deceived by a salary-only disclosure. Representative Snyder suggested that going into a job interview with a seed of information was better than having no information at all. 2:22:43 PM Co-Chair Merrick invited Representative Snyder to submit any additional comments she may have in writing to the committee. HB 146 was HEARD and HELD in committee for further consideration. 2:22:57 PM AT EASE 2:24:22 PM RECONVENED