SB 169 VOLUNTARY FLEX TIME FOR MINES  CHAIRMAN LEMAN announced SB 169 to be up for consideration. He announced an at ease from 2:33 p.m. - 2:35 p.m. He said although it is not his intention to move the bill today, those who are interested can provide written testimony to the committee and he said that the five hours of testimony from the House would become part of the committee's record, also. MS. KREITZER, Staff to Senate Labor and Commerce Committee, said SB 169 changes the current employee, voluntary, flexible work hour provisions in AS28.10. Under current law an employer must pay an employee one and one half times the regular rate of pay for any hours worked in excess of 40 hours a week or 8 hours a day. However, the law also provides that the Department of Labor may approve a written agreement between an employer and employee, increasing the regular pay hours to 10 hours per day, a long as no more than 40 hours per week are worked when the employee has entered into a voluntary flexible work hour plan. SB 169 permits the Department of Labor to approve a written plan between the employer and employee increasing the regular pay hours to 12 per day, but not more than 40 per week. MR. TOM IRWIN, Operations Manager, Fort Knox, supported SB 169. He said he was here really at the request of the employees who are working eight hour shifts and want to change it to 12 hour shifts. He said they sent out petitions and received a 98% approval rating. This bill would give their employees significant benefits allowing them to work 168 hours every four weeks, but they would have 14 days off in that time period instead of seven giving them a total of 91 more days off per year. He stressed that they still intend to pay overtime over 40 hours. Their overtime pay with this bill will increase by 2.3% which is $250,000 per year. With current law, they would pay $1.5 million per year or $18 million over the life of the mine. He said the mine makes between $200 - $230 per ounce, but they have $180 million in acquisition and predevelopment costs. They have $375 million in capital costs and estimate $30 million more of sustaining capital. The bills need to be paid and Fort Knox is a low grade project, but with correct operations and management it is now, and will continue, to be a viable mine Alaska can be proud of. MR. IRWIN said that they had looked into using the 10 hour flex plan except to work the two hours overtime which was originally suggested by Commissioner Cashen. Later the Deputy Commissioner testified that was illegal. Proposals have been made to drop the pay for employees by Mr. Frye, AFL-CIO, and there were 13 areas where their employees would get hurt by doing that. They would lose in their short and long term disability, they would have reductions in life insurance and accidental death and dismemberment insurance, reductions in military pay leaves, and reductions in workers compensation benefits (all which are set by State law). It has been suggested that they form their own union and a legal opinion they got on the matter said it would be a clear violation of National Labor Relations and employees could lose their rights. The legal opinion said it also bordered on fraud. MR. IRWIN said that Alaska is the only state where miners of this wage cannot work with this 12 hour exemption. It is being fought for in Nevada and California. He said they want fairness and for their employees to be able to make their own choices especially since this schedule is a factor that affects their families and children. He said this would allow the employees to have one of the best work schedules he's seen allowing them time to go home and have quality time with their families. MS. MICHELLE STEEL, Human Resource Technician, Fort Knox Mine, supported SB 169. She said she has worked a 10 hour day four days a week under a flexible work hour plan under the current law. It's very nice and it's good to be able to choose her schedule. It reduces the number of times she has to commute to the mine, about 25 miles each way (45 minutes). She said most importantly it allows her to have an additional day with her family. She said her position at the mine allows her to know every employee and all of their dependents and the request for the 12 hour flexible work hour plan is supported by the employees and their families. She is aware that local hire is a major concern and assured them that this is not designed to help employees to commute from out-of-state. In fact, all 248 employees are Alaska residents and she said that nearly all of them were hired within the State of Alaska. MS. STEEL said they are proud to work for a company whose management addresses concerns and issues that are pertinent to her family. She said this would allow her 91 more days per year to spend together with her family. SENATOR KELLY asked if she currently works four 10s. MS. STEEL replied that she started out working that schedule, but now she is working eight hour days, five days per week, but she will return to the other schedule as soon as she can. SENATOR KELLY asked how many of the 248 employees at Fort Knox want to move to a 12 hour shift. MS. STEEL said that 98% of the employees are in favor of that. Number 364 MS. CAROL DESNOYERS, Alaskan Workers, opposed SB 169. She said they should remember that Fort Knox is trying to change a State labor law that was enacted to protect the workers from an abuse of excess work hours each day by penalizing the employer while compensating the worker when they do. Despite the narrowed down version of this bill, it will still have repercussions in other industries and other mining areas. For instance, Usibelli Coal Mine just asked its workers to give up their overtime. Carlisle Trucking also is asking for exemptions as well. She said Alaska is beginning to see a new era in the mining industries. She named three mines that were opening up and said hundreds of thousand of acres were just recently opened to mining exploration bringing jobs that would be directly affected by this law. AMAX has a legacy of backing legislation in other states that erode workers wages as well as their rights - all under the guise of making their employees' schedules more liveable and family friendly. Anyone who has lived in Alaska for any length of time has had to endure hardships to make a living. The bottom line on hardships is the cost of living, much of which is offset by the overtime pay. SB 169 and HB 68 threaten to erode the wages and rights of workers and the majority of Alaskan workers are really appalled that such a bill would be considered. MS. DESNOYERS said that AMAX says the only feasible way they can give their workers the schedule they are requesting is through an overtime exemption caused by the fluctuating gold prices and cost overruns in construction. She added that also due to the hard work of the employees AMAX expects to make their production curve six months ahead of schedule this year and is expected to save $20 million on projected cost overruns and that recent exploration tests indicated an additional 2.7 million ounces of gold. She also noted that AMAX hedges their gold prices to keep from having to deal with fluctuating gold prices on the market. The employees at Fort Knox are an asset to the mine and AMAX would be wise to recognize that and give them the schedule they have asked for and pay them the overtime they would have earned in that schedule rather than using them as pawns to change the State labor laws that are there to protect the rights of all the Alaskan workers. CHAIRMAN LEMAN asked who she thought Fort Knox should be accommodating, the 97% of employees who want the change or the other 3%. MS. DESNOYERS replied she thought they should recognize their workers as an asset that has already proven to make more money for them. CHAIRMAN LEMAN said that testimony stated the workers would make $70 more per cycle and yet she is suggesting taking money away. MS. DESNOYERS replied that AMAX should recognize their workers as an asset and pay them what they are worth. SENATOR MACKIE asked where she works. She replied that she is a nonunion worker and works in a gift shop. Her husband has worked in the mining industry in both union and nonunion jobs. SENATOR MACKIE said he thought Chairman Leman was trying to say that this would give people more time with their families and pay them more money and asked if she didn't think that was accurate. MS. DESNOYERS said she is saying that a State labor law that has been enacted to protect the rights of all the Alaskan workers shouldn't be changed when accommodations could be made at the mine by giving the workers schedules they want and paying them what they are worth. Number 267 MR. DAN SEATON , Teamsters Local 959, opposed SB 169 because once it is granted to one group of people, it's not going to be able to be denied to other industries whether it be construction or whatever. He lives in a very small town, Kodiak, where people are very dependent upon seasonal work. Without the overtime rates through the summer months, the cannery industry, the freight industry, and the construction industry a lot of people will not be able to make it through the winter months, especially considering the high cost of living in the small villages. MR. SEATON said he thought everyone needed to step back and think about what everyone and their fathers went through and fought to get a fair wage. One of the biggest battles they had was obtaining an overtime rate. He said that 12 hours is a pretty hard day and he didn't think they were counting the evening times they would be home with their families helping with home work and doing whatever goes on in their family life. He said he didn't see this profiting anyone but big business. He thought Fort Knox could take care of their workers if they chose to do so. He said he has heard from other businesses if this does go, they are going to try to get exemptions also. Number 192 MR. JERRY MARSHALL, Fort Knox Gold, said he represented the people who signed the petitions and supported SB 169. He said the company did not coerce them into this at all. When they first started up the mill, they worked 12 hour days, five days a week. So they know what it's like and they asked the company to do this for them. He said in order for this to work every employee has to want it and also Fort Knox has to go to the Department of Labor every year and reapply for the certification. SENATOR KELLY asked why they didn't organize under a collective bargaining agreement under the Wage and Hour Act, number 13, work performed by an employee under a flexible work hour plan. MR. MARSHALL replied that if they do it for this pretext, they are breaking the law or on the verge. He said the unions play a very important role in our society and there should always be the right to organize and help each other out. The reason to have unions is when management and workers can't come together. In this case workers and the company want to work together. SENATOR KELLY asked how they dealt with holidays like Christmas in terms of overtime. MR. IRWIN replied that they have 10 set holidays. An employee is paid time and a half for his benefits. If it's his time off, he would get paid holiday pay. SENATOR MACKIE asked what would happen if an employee didn't want to go to this schedule and wanted to stay with the existing schedule. MR. IRWIN said they thought about that a lot and feel their word to their employees is important. They have made it clear if someone wants to stay on their schedule, if it's an eight hour schedule, he will stay on his schedule. He said it's clearly voluntary. If the employees decide they don't like it, the Commissioner of Labor has the right to change it. TAPE 97-18, SIDE A Number 001 MR. IRWIN said they would end up paying their employees more overtime. The benefit to the company they see is safety. Statistics show that it's not the schedule they work, but the satisfaction of the worker in the job. They feel they will break even at $250,000. They don't feel under current law they could afford the $1.5 million extra. SENATOR MACKIE asked if they followed current law and went to two 12-hour shifts, it would cost them $1.5 million extra and by going to the proposed shift it would cost $250,000 more. MR. IRWIN said that was right. SENATOR KELLY asked if this legislation doesn't pass, will they go to 12-hour shifts. MR. IRWIN replied that they didn't see how they could do that economically. He said there is a lot of talk about how they are a big company and have ulterior motives and that's a lie. He has personally done over 150 economic analyses on the property and they did not dig in the wrong place, but they have to have very clear plans to make sure they protect the environment and have a good economic mine. If it would have been economic to do 12-hour shifts, they would have done it long ago. He explained that the mobile mechanics will stay on a 10-hour day shift, anyhow. This schedule would not give them more production, he said in answer to Senator Kelly's question, because they operate 24-hours a day anyway. This is why they have 8-hour shifts; it's tough to divide work schedules up into 10-hour shifts. You can do two 10s, but how can you fill the gap in for the other four hours? Number 79 SENATOR MACKIE said it was stated that you commute an hour each way and work a 12-hour shift, that's 14 hours per day and asked what his experience has been with fatigue and safety. MR. IRWIN replied, for example, when they worked 12-hour shifts and drove further there was over one year without a loss of time accident. Another company, Lone Tree, in Santa Fee went to 12-hour shifts and actually dropped to nil losses and their drive was farther than his. One of his sister companies, AMAX Gold, switched to 12-hour shifts and the year they switched they won the National Sentinel's Safety Award. MR. DARRELL MCSPADDEN, Teamsters 959, opposed SB 169 and any other legislation that affects the working conditions of the people of Alaska in the manner this does. He said there is no need for unions when companies treat you properly. Working 12-hours a day at any job is an exhausting thing to do to anybody. The mine was designed and built with full knowledge of existing labor laws. And although the mine's representatives claim the change is for the benefit of their employees, they know who the ultimate beneficiaries are going to be. MR. MCSPADDEN said that he hasn't talked to one individual, outside of the Fort Knox people, who has said anything in support of this bill. Number 219 SENATOR MACKIE said he has heard conflicting stories about exemptions current in State law. He asked why the 98% of employees who are asking for this at Fort Knox not be allowed to do it. MR. MCSPADDEN responded that these laws were written after long, hard contested battles that cost many lives. It would take a great deal of research into labor union history. SENATOR KELLY asked Mr. Irwin if you're switching from three 8's now to two 12's, don't you need one-third less people? MR. IRWIN replied no because they still have the same number of hours in a month to cover. He added that they have four crews right now. Number 320 MR. ED FLANAGAN, Deputy Commissioner, Department of Labor, said he is here to try and hold back the snowball he sees as rolling down the hill. They are opposed to this bill, although they sympathize with the workers there. He said the schedule they are on would certainly drive folks to distraction and to try to change the law for all workers to address their own situations. He said the Department of Labor did not put them on that schedule; Mr. Irwin did. Alaska is the only state they couldn't do this in and he felt that we should be proud that we have exceptional laws protecting the rights of workers. He said they hear that other states do it all the time, but don't find that a persuasive argument. He explained that Alaska is one of three states that has anything for over 8 hours as far as overtime. Rather than give one exemption a year, maybe they should consider scrapping it. SENATOR KELLY said he grew up in California and whenever he worked over eight hours he got overtime and asked if that was not standard practice now. MR. FLANAGAN said that California has an industrial welfare commission that's appointed by the Governor that has recommended a drop in the over-eight, but the legislature is holding on to it. So California is an over-eight state and so are we. MR. CLARK , Attorney for Fort Knox, interrupted to say that California changed that law two weeks ago. MR. FLANAGAN continued saying that was not an argument for doing away with the law. He said that Mr. Marshall's argument is well taken about an exemption. There are 16; why not 17, etc. Why not just muck out the whole thing, if that's where we want to get, and take a race to the bottom with other jurisdictions by sacrificing worker protections. The workers have a right to organize or not. They exercised their rights by taking jobs with a mine that is the lowest paying large mine in the State. They already pay $3 - $4 less than the going rate for large mines in the State of Alaska. That's a considerable cost savings already. MR. FLANAGAN allowed that they do need to make a profit and they have done a good job of training and hiring locally and are a welcome addition to the State, in that respect. If $18 million would cost them to comply with State law, they have just written down the cost overrun by $25 million. MR. FLANAGAN said he wanted to correct Mr. Irwin's statement that Commissioner Cashen never said they should work four 10s and pay the overtime, too. That is not consistent with current law. Commissioner Cashen said can't you do something using the four 10s exemption under law; and there is a four 10s exemption under law for those employees where it is appropriate. He said the department is ready to support Representative James bill that would put exemption 13, collective bargaining units, on the same footing - just the straight four 10s. There are three power-house agreements that cover a total of 20 employees in the whole State that had straight time for 12 hours. When the Commissioner decided he would support Representative James' bill, he talked to the unions involved about what they would do if this bill passed. They said they would have to renegotiate the wages if it's important for the guys to stay on 12 hours, but the employer won't go with the overtime on that schedule. Fort Knox has made much of the fact that their benefit plans are geared to the base pay. While it is true that a couple of those are statutory, but with the proposed great savings in safety that they are expecting to see, according to Mr. Irwin and Mr. Lange, they could possibly redirect some of the savings towards some kind of supplemental disability. If this bill doesn't pass, he thought they would find a way to achieve what they need to do under current State law. MR. FLANAGAN said one of Commissioner Cashen's biggest concerns with this bill is that it is changing State law for 243 employees. No one doubts that they are behind this and they will take Fort Knox's word that they would accommodate anyone who didn't want this schedule, but he thought other companies would not give that option. He noted that no large industry had tried to get an exemption. However, there are other smaller ones in the wings, like auto mechanics and hairdressers. He predicted they would see more of these bills and the Department of Labor will sound like a broken record, because they will be here opposing them because they don't think it's in the best interests of the workers of the State of Alaska. MR. FLANAGAN also pointed out that it's not true that the exemption would have to be approved every year by the Department of Labor. They do it if they get a complaint or they decide to rescind the plan, but the employees do have a window period every November/December where they could say they don't want to be on the voluntary plan any more. MR. FLANAGAN concluded that if the legislature wants to chip away at the eight-hour law, they would have to agree to disagree and try to convince them that there's nothing to be ashamed of in having a law that's more protective of its workers than other states in the union. SENATOR MACKIE commented that he has mixed feelings about this sole proposal and he has listen closely to testimony on both sides of the issue. He said he didn't think it necessary to criticize people with an opposing view. He said the bill would probably pass out of committee since it is sponsored by the President of the Senate and would come to a vote on the floor. CHAIRMAN LEMAN stated that he appreciated the civility people used in discussing this charged issue. SENATOR KELLY asked under the terms of this law, does the Commissioner have to okay any agreement with Fort Knox. MR. FLANAGAN replied yes. SENATOR KELLY asked if he has to approve it. Could he say no? MR. FLANAGAN responded that he could say no, but if he didn't produce a finding, they could be challenged. SENATOR KELLY commented that he didn't see what good it does to pass a law if the Department of Labor talks like this about it.