HB 61 - OVERTIME WAGE EXEMPTION AIRLINE EMPLOYEES Number 1183 CHAIRMAN ROKEBERG announced the committee's next order of business is HB 61, "An Act relating to an exemption from the requirement for payment for overtime under a voluntary written agreement for certain employees in the airline industry; and providing for an effective date." He invited the sponsor's representative forward. Number 1195 JONATHON LACK, Legislative Assistant to Representative Andrew Halcro, Alaska State Legislature, came forward to present HB 61. He noted Representative Halcro is offering HB 61, which was introduced the previous legislative session as HB 389. House Bill 389 moved out of the House Labor and Commerce Standing Committee but did not make it to the House floor because it was introduced late in the session. Mr. Lack explained HB 61 is intended to allow airline employees to trade workdays with each other without invoking overtime pay requirements for their employers. Under current Alaska Statute, a substitute employee who works a shift for another employee must be paid overtime if that substitute employee has already worked 8 hours in the same workday or 40 hours in the same workweek. Employees currently enjoy shift-trading so they can attend special events for their children, take longer weekend trips, and travel. This legislation is necessary because Alaska is the only western state with a daily overtime requirement. Shift-trading is very common nationwide throughout the airline industry. Usually it is done informally, with the employer's tacit approval, and HB 61 would legitimize the custom in the industry. Mr. Lack, noting the committee was running short on time, made himself available for questions and said Michelle Buckmaster is also available in Anchorage to testify in favor of the legislation. CHAIRMAN ROKEBERG asked Mr. Lack to quickly list for the record the letters of support for the legislation in the bill packet. Number 1288 MR. LACK commented there are letters of support from Alaska Airlines, ERA Aviation and the Alaska Air Carriers Association, as well as a resolution of support from the Alaska Air Carriers Association. There is a letter of support for the previous session's HB 389 from Peninsula Airways, Incorporated [d.b.a. PenAir]. There are letters of support from a number of airline employees. Mr. Lack said the bill packet also contains petition format support forms from various airline employees including ERA Aviation, United Airlines counter and airfreight staff, United Airlines ramp agents, and Delta Airlines. REPRESENTATIVE HARRIS asked Mr. Lack if they had received any comments from the Department of Labor. Number 1379 MR. LACK noted Mr. Perkins [Deputy Commissioner, Department of Labor] had been present earlier but had to leave to attend a "Finance Subcommittee" meeting. Mr. Lack said Mr. Perkins has indicated the department and the Administration do not oppose the intent of this legislation as written. REPRESENTATIVE MURKOWSKI commented a couple of the letters in the packet are in support but they express the desire that the flexible work hour be included. She questioned, "I notice that it specifically does not include, and that's why you're asking for this additional exemption. What's going on there?" MR. LACK indicated he thinks there possibly may have just been a misunderstanding and that is why the letters include flexible work hour. He noted the state of Alaska already has provision for people to work four 10-hour shifts for their employers. They simply have to sign up for that and it has to be approved by the Department of Labor. The legislation before the committee would allow shift trading within the same work period, either an 8-hour period or a 40-hour workweek. Mr. Lack stated he believes this is what the letter's authors are speaking of when they talk about flexible shifts. Number 1449 REPRESENTATIVE MURKOWSKI said, then, the exemptions set out in subsections (13) and (14) in statute [AS 23.10.060(d)] do not currently cover the miscellaneous airline employees. MR. LACK answered no, they do not. REPRESENTATIVE MURKOWSKI asked why. MR. LACK indicated he does not know, he has been told by legislative counsel that those exemptions do not cover these employees. CHAIRMAN ROKEBERG questioned if it has anything to do with whether they are under a labor agreement. REPRESENTATIVE MURKOWSKI reviewed subsections (13) and (14). [AS 23.10.060(d)(13) and (14) read: (13) work performed by an employee under a flexible work hour plan if the plan is included as part of a collective bargaining agreement; (14) work performed by an employee under a voluntary flexible work hour plan if (A) the employee and the employer have signed a written agreement and the written agreement has been filed with the department; and (B) the department has issued a certificate approving the plan that states the work is for 40 hours a week and not more than 10 hours a day; for work over 40 hours a week or 10 hours a day under a flexible work hour plan not included as part of a collective bargaining agreement, compensation at the rate of one and one-half times the regular rate of pay shall be paid for the overtime;] Number 1515 MR. LACK indicated he understands it is currently possible for the employee and the union to negotiate whether or not to have flexible time rules. He noted that is allowed, but non-union airlines do not have this luxury because they're not part of a collective bargaining agreement. CHAIRMAN ROKEBERG said he remembers this provision very well, stating, "That is, if you have a collective bargaining (indisc.) if you have a flex-work plan that's already bargained for -- but if not, you have to have an approved plan." The chairman indicated this is for a flexible work plan hour, normally providing for a four 10-hour day work week. He noted it is a formalized process which has to be approved. REPRESENTATIVE HALCRO indicated the shift-trading practice has been going on for a very long time. The problem lies with Alaska's daily overtime requirement. A lot of airlines have told their employees that they can't allow the employees to trade shifts until this is resolved in statute and the airlines are protected. Representative Halcro noted a large part of working in the airline industry is the ability to trade shifts. He indicated this practice is done in every state and the legislation is just a means of legitimizing the practice in Alaska. CHAIRMAN ROKEBERG announced the committee would take Ms. Buckmaster's testimony. Number 1636 MICHELLE BUCKMASTER testified via teleconference from Anchorage in support of HB 61. She spoke mainly from a prepared statement: "Mr. Chairman, members of the committee, ... I am a customer service representative for United Airlines in Anchorage, Alaska. I am here on behalf of numerous airline employees who are from various airlines here in the state of Alaska. I would like to thank you for giving me the opportunity to give my testimony. Unfortunately there may not be too many people here today because of the short notice of this hearing, so I am speaking on behalf of quite a few people. I am here in regard to HB 61, which I hope will be passed through ... this legislation [legislature] this year. As you are aware, the states of Washington and Hawaii passed a similar bill last year. "In May of 1997 United Airlines informed us employees in Alaska that because of the labor laws in our state, the trade policy in company regulations would no longer pertain to us. The trade policy is a significant benefit to us as employees as well as all airline employees in the state of Alaska. "The airline industry ... is an industry that spends 24 hours a day, 7 days a week, 52 weeks a year in promoting and supporting the economic growth of our state through tourism, conventions, sporting events and numerous other activities. The trade policy is a valuable benefit and tool to its employees who would otherwise miss out on precious time with their family, observance of religious holidays, educational opportunities, summer vacations and extra income for those who require it. "In an industry where competition is always a priority, as we know, we have come together to make a change that will benefit and create a win-win situation for all airline employees." Number 1737 "Over the past two years employees from several airlines have worked together to encourage implementation of this bill. As you are aware, last year [you] received numerous phone calls and letters from concerned airline employees; this still holds true today and the support is here. I faxed you Friday a (indisc.) petition I had sent to airlines to have signed in support of this bill, just to show you a little support this and that we still stand behind our word. Unfortunately today Doug Orcutt who works for Alaska Airlines, the largest airline in Alaska, has a previous engagement in Washington, D.C. I talked with him and he reassured me of the full support from Alaska Airlines employees. He is a ramp serviceman here in Anchorage. There has been a great deal of grassroots support for this legislation. I would like to remind you that this is on a volunteer basis by employees, making their own choice. This will not invoke overtime pay requirements. This will ... ["not" stated on tape and in written statement] give individual workers the freedom to schedule specific time off or to make extra earnings without invoking overtime. Therefore you will have happier, more productive, more dedicated employees in a highly traveled state." "To give you an example: Employee A works 40 hours a week, Friday/Saturday off. Employee A would like to have an extra day off, Thursday, so he can have a long weekend fishing. Employee B works 20 hours a week, Wednesday/Thursday off. He would like to work for Employee A on Thursday to get the extra hours and money, however he only receives straight-time pay on (indisc.) volunteer basis. If the company needs him to work extra hours on (indisc.) day or his day off and he is eligible for the overtime, then he would receive (indisc.) the applicable overtime rate. Let's not get confused that the overtime that the company needs you to work is (indisc.) totally separate issue (indisc.) assumption. Another example is Employee B needs an extra day off. He needs Saturday, he is running the Mayors Marathon here in Anchorage. Employee A will work for him that Saturday on a volunteer basis and only receives straight-time pay even though he exceeds his forty hours in a work week and/or 8 hours in a day, he only receives his straight-time pay. However, if his company needs him to work the overtime or calls him in needs of his service, he is eligible then for the applicable overtime rate. As you see this does not hurt anyone, the company or the employee. They both meet their needs. "In closing, Mr. Chairman, members of the committee, we understand and respect that the labor laws are here to protect us. However, this particular law which may be a protection in your eyes has eliminated a benefit in ours here in Alaska. Therefore, here I am on behalf of these employees to request the amendment we have brought before you not only be passed, but in a timely manner be passed. This is a very valuable benefit to us, and throughout the country with United Airlines as well as many other airlines. I am here again to support HB 61 along with several other airline employees. Thank you again for your time." Number 1946 CHAIRMAN ROKEBERG stated the committee appreciated Ms. Buckmaster's efforts. He invited Mr. Perkins forward. Number 1978 DWIGHT PERKINS, Deputy Commissioner, Department of Labor, came forward to testify on HB 61. He noted the department has historically opposed these types of legislation because the department feels they weaken overtime requirements for employers. However, Mr. Perkins indicated the department feels HB 61's voluntary written agreement between the employer and employee provides a safeguard for the employee against being coerced by the employer to voluntarily work when the employee really does not want to. The benefits the employees received from the airlines kind of make up for "the sometimes pay that they may not receive on the paycheck," so this is a benefit the employees would lose if this is not changed. Mr. Perkins also indicated the employers do have a possibly strong liability out there and the department understands the employers' need and desire to add this exemption. He stated the department does not oppose this legislation. CHAIRMAN ROKEBERG commented to Mr. Perkins there is also a possible CS [labeled 1-LS0335\G, Cramer, 3/19/99] which deletes the written contract. He asked for the department's position on this CS. Number 2160 MR. PERKINS answered the department supports HB 61, Version A, as he has testified. However, the department would have some concern, and probably not be able to give its non-opposition to the bill, if the CS was to be adopted. The written agreement provides some sort of safeguard for the employee and does ensure the employee voluntarily agreed to the shift change. Mr. Perkins indicated he thinks the employer would want to have that as well to protect them against possible claims of unpaid overtime from an employee. CHAIRMAN ROKEBERG asked, for the record, if the voluntary written agreement would be between the employer and employee, and asked how that would work as a practical matter regarding Department of Labor enforcement. MR. PERKINS responded that if a wage claim was brought to the department, the department would ask the employer for supporting documentation and the employer would produce the written agreement. Mr. Perkins referred to subsection (d)(18)(D) of HB 61, which reads: * Section 1. AS 23.10.060(d) is amended by adding a new paragraph to read: (18) work performed by an employee under a voluntary written agreement addressing the trading of work shifts among employees if ... (D) the trading agreement states that the employee is not entitled to receive overtime for any hours worked by the employee when the employee voluntarily works those hours under a shift trading practice under which the employee has the opportunity, in the same or other work weeks, to reduce hours worked by voluntarily offering a shift for trade or reassignment. MR. PERKINS stated he believes it is a good safeguard for both employer and employee, and it is a workable solution. NUMBER 2333 CHAIRMAN ROKEBERG, confirming there were no questions for Mr. Perkins and that no one else wished to testify on HB 61, announced the public hearing was closed. The chairman commented he was familiar with the practice of shift trading from his work experience in 1966 and 1967 as a transportation agent for Northwest Airlines and a customer service representative for Alaska Airlines. He noted the practice is longstanding and has almost completely no bearing on labor practices. Chairman Rokeberg indicated HB 61 merely legitimizes this customary practice. He thanked organized labor for not opposing the legislation and the Department of Labor for its non-opposition. The chairman indicated he wished Mr. Lack to explain why the verbiage in subsection(18)(A) is necessary. He understands it, but wishes the explanation to be on the record. [Subsection (A) reads: (A) the employee is employed by an air carrier subject to subchapter II of the Railway Labor Act (45 U.S.C. 181-188), including employment as a customer service representative;] Number 2486 MR. LACK replied, "Mr. Chairman, to answer your question, the reason we -- it's put in the Railway Labor Act and defined as who are ... employees of an air carrier under that Act is because the Act specifically allow..." [SOME TESTIMONY LOST DUE TO BRIEF TAPE MALFUNCTION DURING TAPE CHANGE. A REQUEST WAS MADE TO THE CHAIRMAN TO RESTATE HIS QUESTION SO MR. LACK'S ANSWER COULD BE FULLY RECORDED. A VERY BRIEF AT-EASE WAS TAKEN DURING THE TAPE MALFUNCTION.] TAPE 99-32, SIDE A Number 0001 CHAIRMAN ROKEBERG stated, "For the record, could you answer why including employment as a customer service representative is stipulated in the bill." MR. LACK answered, "Mr. Chairman, it is redundant including customer service representative. However, because ... the federal Railway Labor Act does include all employees of the air carrier unless they're involved in the mining of coal. So it is redundant, however there was some concern by people, apparently last year, that customer service agents might not be included under the federal Act." CHAIRMAN ROKEBERG confirmed Mr. Lack had read the minutes from the last session. The chairman recalled there had been a reason but could not remember exactly why. He asked Mr. Lack to follow up on this with Representative John Cowdery [sponsor of the previous session's HB 389], noting the committee did not like to have surplus wordage and definitely wanted to avoid redundancy. Number 0097 REPRESENTATIVE HALCRO indicated the initial version of HB 389, the bill introduced the previous session, did not contain that provision but the version brought back before the committee after work with organized labor had that language added [Note: Representative Halcro's testimony mentioned the creation of "kind of a work subcommittee" for HB 389; HB 389 was not formally assigned to a subcommittee]. CHAIRMAN ROKEBERG confirmed there was no further discussion. He indicated both he and Representative Halcro represent the area encompassing Anchorage International Airport and he does not think this is a conflict of interest. The chairman commented there are some 10,000 jobs at that airport; the airport is very important to the economy of Anchorage and the state of Alaska. Number 0172 REPRESENTATIVE MURKOWSKI clarified that the sponsor had withdrawn the possible CS. CHAIRMAN ROKEBERG noted the written contract was being retained. Number 0206 REPRESENTATIVE MURKOWSKI made a motion to move HB 61 out of committee with the zero fiscal note and individual recommendations. There being no objection, HB 61 moved out of the House Labor and Commerce Standing Committee.