HB 276-MOTOR VEHICLE DEALER EMPLOYEES                                                                          
                                                                                                                                
3:45:03 PM                                                                                                                    
CHAIR  DUNLEAVY   reconvened  the   meeting  and   announced  the                                                               
consideration of HB 276. "An Act  making the Alaska Wage and Hour                                                               
Act inapplicable  to certain employees of  motor vehicle dealers;                                                               
and  providing  for  an  effective  date."  This  was  the  first                                                               
hearing.                                                                                                                        
                                                                                                                                
3:45:11 PM                                                                                                                    
REPRESENTATIVE STEVE THOMPSON, Alaska State Legislature, Juneau,                                                                
Alaska, sponsor of HB 276 introduced the bill paraphrasing the                                                                  
following sponsor statement: [Original punctuation provided.]                                                                   
                                                                                                                                
                                                                                                                                
     House  Bill 276  clarifies that  auto salespersons  and                                                                    
     service writers  are exempt from Alaska's  Minimum Wage                                                                    
     and  Hour   Act.  These  individuals  are   paid  on  a                                                                    
     commission  basis  and  are not  and  have  never  been                                                                    
     hourly employees.                                                                                                          
                                                                                                                                
     HB  276 is  a result  of confusion  caused by  previous                                                                    
     regulations from the Department  of Labor and Workforce                                                                    
     Development  that  defined  straight commission  as  "a                                                                    
     fixed percentage  of each dollar  of sales  an employee                                                                    
     makes."   This  became   interpreted  as   meaning  the                                                                    
     commission must  be applied  to the  gross amount  of a                                                                    
     sale.                                                                                                                      
                                                                                                                                
     While  that  interpretation  might be  appropriate  for                                                                    
     some commission  sales, it  is neither  appropriate nor                                                                    
     customary for auto sales. The  prime reason is that the                                                                    
     auto dealer must  pay for the vehicle first  out of the                                                                    
     sale  price.  Advertising   laws  prevent  an  "add-on"                                                                    
     charge  to an  advertised sale  price to  accommodate a                                                                    
     commission. Thus,  is the net  of a  sale is 3%  of the                                                                    
     gross, the dealer  cannot pay a commission  of 5%. This                                                                    
     legislation  allows for  auto dealers'  common practice                                                                    
     of using a  net amount against which  the commission is                                                                    
     applied.                                                                                                                   
                                                                                                                                
     The Department  of Labor and Workforce  Development did                                                                    
     amend its  regulations and  has been  extremely helpful                                                                    
     working  with the  Alaska Auto  Dealers Association  on                                                                    
     this  issue. However,  as a  result  of litigation  and                                                                    
      with the advice of legal counsel, we believe that it                                                                      
     is necessary to seek final clarification in statute.                                                                       
                                                                                                                                
3:47:16 PM                                                                                                                    
JANE  PIERSON,  Staff,   Representative  Thompson,  Alaska  State                                                               
Legislature, Juneau,  Alaska, provided  a sectional review  of HB                                                               
276.                                                                                                                            
                                                                                                                                
Section 1  amends AS  23.10.055(a). It  exempts from  the minimum                                                               
wage act auto service writers,  individuals who arrange financing                                                               
for  motor  vehicle  sales and  individuals  who  solicit,  sell,                                                               
lease, or exchange motor vehicles.                                                                                              
                                                                                                                                
Section 2  adds a new  subsection (d)  to AS 23.10.055  to define                                                               
"lease," "motor vehicle," and "motor vehicle dealer."                                                                           
                                                                                                                                
CHAIR DUNLEAVY asked if there is a fiscal impact.                                                                               
                                                                                                                                
MS. PIERSON said no.                                                                                                            
                                                                                                                                
SENATOR  OLSON  asked if  the  Ford  dealer  in Fairbanks  has  a                                                               
position on the bill.                                                                                                           
                                                                                                                                
REPRESENTATIVE  THOMPSON  replied  that  he  didn't  have  direct                                                               
communication with  that dealership,  but the former  Senator has                                                               
not opposed the legislation.                                                                                                    
                                                                                                                                
3:49:24 PM                                                                                                                    
STEVE  ALLWYNE, Board  Member, Alaska  Auto Dealers  Association,                                                               
stated  that  he knows  the  former  Senator personally  and  can                                                               
assure the committee that he does not object to the bill.                                                                       
                                                                                                                                
SENATOR OLSON asked if anybody has problems with the bill.                                                                      
                                                                                                                                
MR. ALLWYNE said he wasn't aware of any problems.                                                                               
                                                                                                                                
CHAIR DUNLEAVY announced  that he would hold HB  276 in committee                                                               
for further consideration. Public testimony was open.