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GOVERNMENT RELATIONS MEETING AGENDA Tuesday, September 1, 2015 | 8:00AM

Chamber Office

I. Call to Order / Establish Quorum – Derek Miller, Chair II. Call for Conflict of Interest Disclosures – Derek Miller, Chair

III. Approval of the Agenda

IV. Approval of Minutes

A. August 25, 2015 Minutes

V. Presentation A. DOL Proposed Overtime Rule Change -- Information included in packet

VI. New Business

A. DOL Proposed Overtime Rule Change (position?)

VII. Unfinished Business A. Federal Issues Survey B. 2016 Fairbanks Chamber Legislative Priorities

1. Workers’ Comp Reform 2. Unmanned Aircraft Industry 3. Support UAF Research 4. Alaska & the Arctic – Derek & Mike Sfraga are working on draft

VIII. Other Communication A. Committee Attendance Report B. Committee Calendar C. Executive Director & Staff Report/Comments D. Committee Chair Report/Comments E. Committee Member Comments F. Guest Comments

IX. Next Committee Meeting – September 8, 2015

GREATER FAIRBANKS CHAMBER OF COMMERCE GOVERNMENT RELATIONS MEETING

Tuesday, August 25, 2015 | 8:00AM Chamber Conference Room

MINUTES

I. Call to Order / Establish Quorum – Derek Miller, Chair, called the meeting to order at 8:05AM

and quorum was established. Board Members Present: Derek Miller, Jennifer Bump, Jeff Cook, Anna Atchison, John Ringstad, Sarah Obed, Tiffany Van Horn, Tammy Randolph

Guests Present: Jennifer Imus Staff Present: Lisa Herbert, Elena Sudduth

II. Conflict of Interest Disclosures – Committee Chair called for members to declare conflicts related to action items on agenda. No conflicts were disclosed.

III. Consider Approval of the Agenda

MOTION: A motion to approve the agenda as presented was made by Jennifer Bump and was seconded. The motion to approve the agenda carried without objection.

IV. Consider Approval of the Minutes from August 18, 2015 MOTION: A motion to approve the agenda as presented was made by John Ringstad and was seconded. The motion to approve the agenda carried without objection.

V. Presentation A. There was no presentation scheduled.

VI. New Business A. Regulatory Accountability Act of 2015

1. The US Chamber is seeking organizations and businesses to sign on to their industry letter supporting the Regulatory Accountability Act of 2015. Since this falls in line with our current advocacy positions, Lisa Herbert has already authorized the US Chamber to add the Fairbanks Chamber as a signatory. This was also one of the questions asked on the Federal Issues Survey. The staff can forward the request to sign on to other businesses and organizations. Committee also discussed requesting a meeting with Senator Sullivan’s office regarding the “Red Tape Act” that he recently introduced – request the staff give an overview of the bill’s intentions. Staff will follow up to schedule a conference call with Sullivan’s office after Senate reconvenes.

VII. Unfinished Business A. Fiscal Advocacy Position update

1. Derek Miller provided the committee with an update from the action taken at the Board of Directors meeting the day prior. Board was not comfortable including

tax language in position. A few other edits were made but did not significantly change the tone of the position. Position was unanimously passed by the Board.

Staff provided an update as to the next steps for the Chamber regarding the position: 1) position was forwarded to Pat Pitney from OMB prior to her scheduled presentation to the membership on August 25; 2) send out a press release with the position attached; 3) create an email blast to the members following the business luncheon with resources for the fiscal conversation.

2. Committee discussed creating fiscal work groups in the following areas: Education/K-12 formula funding, health & social services, collective bargaining/employee negotiations, permanent fund earnings. Jim Lynch was identified as someone for the health workgroup; Gary Wilken & Sabrina Binkley for BSA formula/education. The following board members expressed interest in serving on a fiscal work group: Karl Hanneman, Genevieve Schok, Jim Dodson.

3. ACTION for follow-up: It is the expectation that ALL GRC members pick a fiscal

work group to within and that each fiscal group will draft a 1-2 page “whitepaper” on the impacts/recommendations/etc. Jenn Bump – health and social services AND permanent fund earnings/capping PFD Derek Miller – collective bargaining/employee negotiations Tiffany Van Horn - collective bargaining/employee negotiations Jeff Cook – permanent fund earnings/capping PFD Tammy Randolph - permanent fund earnings/capping PFD Remaining committee members will be asked to pick a group by staff via email. Staff will work with Derek to develop a framework and possible leaders of work groups.

B. Federal Issues Survey 1. ACTION for follow-up: Sarah Obed provided committee with a one-page

summary on process; will work on page 2 that summarizes some of the survey results. Staff will electronically send out the compiled survey results to the committee.

C. 2016 Legislative Priorities 1. Committee discussed the process that should be considered for priorities this

year and how to blend the priorities into the Board’s strategic planning session in November. Staff recommended committee review with other Chamber’s do for their advocacy agenda, not just legislative priorities. Might be helpful to have something in rough draft format to begin discussions with board. Staff is researching options and will share with committee at upcoming meetings.

Derek reported that he is working on an arctic policy position for the committee to consider given Alaska’s position in the arctic discussions.

VIII. Other Communication A. Committee attendance report – included in packet for review. Derek reviewed doodle

pole results and majority of committee members responded to keeping meeting schedule to Tuesday at 8AM.

B. Committee calendar – included in packet; staff needs to amend calendar to remove the Alaska Chamber reference in September.

C. Executive Director/staff comments – no additional comments. D. Committee chair comments – no additional comments

E. Committee member comments – Jeff Cook announced that he is resigning from the

Alaska Chamber Board; encouraged the GRC to consider recommending a pro-business representative from Fairbanks to fill that seat. John Ringstad commented about a potential special session on gas pipeline – if that happens then NRC will work to form a joint gas pipeline work group to be able to respond to whatever is presented by the administration.

F. Guest comments – none.

IX. Next committee meeting – September 2, 2015 Derek Miller adjourned the meeting 9:07AM.

Respectfully submitted,

Lisa Herbert Executive Director

Today the Department of Labor hasannounced a proposed rule thatwould extend overtime protections tonearly 5 million white collar workerswithin the first year of itsimplementation. Failure to update theovertime regulations has left anexception to overtime eligibilityoriginally meant for highly-compensated executive,administrative, and professionalemployees now applying to workersearning as little as $23,660 a year.For example, a convenience storemanager, fast food assistant

manager, or some office workers may be expected to work 50 or 60 hours a week or more, makingless than the poverty level for a family of four, and not receive a dime of overtime pay. Today’sproposed regulation is a critical first step toward ensuring that hard-working Americans arecompensated fairly and have a chance to get ahead.

The Notice of Proposed Rulemaking (NPRM) published on July 6, 2015 in the Federal Register(80 FR 38515) and invited interested parties to submit written comments on the proposed ruleat www.regulations.gov on or before September 4, 2015. Only comments received during thecomment period identified in the Federal Register published version of the NPRM will beconsidered part of the rulemaking record.

Additional InformationNotice of Proposed Rulemaking

Overtime Resources

Fact Sheet: Middle Class Economics Rewarding Hard Work by Restoring Overtime Pay

A Hard Day's Work Deserves a Fair Day's Pay (Huffington Post)

Frequently Asked Questions (PDF)

Fact Sheet on Proposed Rule (PDF)

Blog Post: 5 Million Reasons Why We’re Updating Overtime Protections

Notice of Proposed Rulemaking: Overtime - Wage and Hour Division ... http://www.dol.gov/whd/overtime/NPRM2015/

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FACT SHEET: PROPOSED RULEMAKING TO UPDATE THE REGULATIONS DEFININGAND DELIMITING THE EXEMPTIONS FOR “WHITE COLLAR” EMPLOYEESThe Department is proposing to update the regulations governing which executive, administrative, and professionalemployees (white collar workers) are entitled to the Fair Labor Standards Act’s minimum wage and overtime payprotections. The Department last updated these regulations in 2004, and the current salary threshold for exemption is$455 per week ($23,660 per year). With this proposed rule, the Department seeks to update the salary level required forexemption to ensure that the FLSA’s intended overtime protections are fully implemented, and to simplify theidentification of nonexempt employees, thus making the executive, administrative and professional employee exemptioneasier for employers and workers to understand and apply.

Key Provisions of the Proposed RuleThe Notice of Proposed Rulemaking (NPRM) focuses primarily on updating the salary and compensation levels needed forwhite collar workers to be exempt. Specifically, the Department proposes to:

set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers ($921 perweek, or $47,892 annually);

1.

increase the total annual compensation requirement needed to exempt highly compensated employees (HCEs) tothe annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually);and

2.

establish a mechanism for automatically updating the salary and compensation levels going forward to ensurethat they will continue to provide a useful and effective test for exemption.

3.

The Department’s proposal to set the standard salary level at the 40th percentile of weekly earnings for full-time salariedworkers represents the most appropriate line of demarcation between exempt and nonexempt employees. This salarylevel minimizes the risk that employees legally entitled to overtime will be subject to misclassification based solely on thesalaries they receive, without excluding from exemption an unacceptably high number of employees who meet the dutiestest. As proposed, this would raise the salary threshold from $455 a week (the equivalent of $23,660 a year) to about$970 a week ($50,440 a year) in 2016.1

The Department is also proposing to automatically update the standard salary and HCE total annual compensationrequirements to ensure that they remain meaningful tests for distinguishing between bona fide executive, administrative,and professional workers who are not entitled to overtime and overtime-protected white collar workers. Experience hasshown that the salary level test is an effective measure of exempt status only if it is up to date.

In addition, the Department discusses the current duties test and solicits suggestions for additional occupation examplesand requests comments on the current requirements. Similarly, the Department seeks comment on the possibility ofincluding nondiscretionary bonuses to satisfy a portion of the standard salary requirement. The Department is notproposing specific regulatory changes on either of these issues.

BackgroundSince 1940, the Department’s regulations have generally required each of three tests to be met for one of the FLSA’swhite collar exemptions to apply: (1) the employee must be paid a predetermined and fixed salary that is not subject toreduction because of variations in the quality or quantity of work performed; (2) the amount of salary paid must meet aminimum specified amount; and (3) the employee’s job duties must primarily involve executive, administrative, orprofessional duties as defined by the regulations.

Certain highly compensated employees are exempt from the overtime pay requirement if they are paid total annual

Overtime NPRM - WHD Fact Sheet - U.S. Department of Labor - Wag... http://www.dol.gov/whd/overtime/NPRM2015/factsheet.htm

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compensation of at least $100,000 (which must include at least $455 per week paid on a salary or fee basis) and if theycustomarily and regularly perform at least one of the exempt duties or responsibilities of an executive, administrative, orprofessional employee identified in the standard tests for exemption.

How to CommentThe Department encourages interested parties to submit comments on the NPRM. The full text of the NPRM, as well asinformation on the deadline for submitting comments and the procedures for submitting comments, can be found at theWage and Hour Division's Proposed Rule website.

Department will consider all comments received on this proposal in determining the salary level for the Final Rule.

1 The Department of Labor relied upon 2013 data in the development of the NPRM, under which the 40th percentile ofweekly earnings for full-time salaried workers was $921 per week. These figures project what the salary level would likelybe in 2016 based on the proposed rule.

Overtime NPRM - WHD Fact Sheet - U.S. Department of Labor - Wag... http://www.dol.gov/whd/overtime/NPRM2015/factsheet.htm

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GENERALWho is entitled to overtime pay under federal law?1.

Who is covered by the Fair Labor Standards Act (FLSA)?2.

Does the FLSA and the Department's proposed overtime rule for white collar workers apply to state or localgovernment workers?

3.

Is there a small business exemption from the FLSA or the Department's proposed overtime rule for white collarworkers?

4.

Is there an exemption for non-profit organizations from the FLSA or the Department's proposed overtime rule forwhite collar workers?

5.

How is overtime pay determined?6.

What are the white collar exemptions to the FLSA?7.

What determines if an employee falls within one of the white collar exemptions?8.

I'm paid a salary and my job title is manager. Am I exempt from overtime pay?9.

What if a state has its own overtime laws?10.

What is the current salary level required to qualify for a white collar exemption?11.

When did the Department last revise its overtime regulations for white collar workers?12.

Why is the Department revising its overtime regulations for white collar workers?13.

What are the significant proposed changes to the overtime regulations for white collar workers?14.

Is the Department proposing adjustments to the standard duties tests?15.

How does the proposed rule provide greater clarity for millions more workers so they - and their employers -know more clearly if they should be covered by overtime protection?

16.

Where can I review, and how can I comment on, the Department's proposed changes to the overtime regulationsfor white collar workers?

17.

Will the proposed rule impact employees who use electronic devices, such as smartphones or laptops, forwork-related purposes outside of regular work hours?

18.

SALARY LEVELWhat is the proposed standard salary level?1.

Why is the Department proposing to set the standard salary level at the 40th percentile of weekly earnings forfull-time salaried workers?

2.

Overtime NPRM - Frequently Asked Questions (FAQs) - U.S. Departme... http://www.dol.gov/whd/overtime/NPRM2015/faq.htm

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Is the Department proposing to increase the salary level for highly compensated employees?3.

Will the Department consider bonuses as part of the new salary level test?4.

Why is the Department proposing to automatically update the salary level and HCE total annual compensationlevel?

5.

How is the Department proposing to automatically update the salary level and HCE total compensation levels?6.

DUTIES TESTHow will the Department update the "duties tests" in the proposal?1.

What is the basis for the standard duties test?2.

ECONOMICSWhat are the costs and benefits of the proposed rule?1.

How many employees does the Department think will be impacted by the proposed salary level increase?2.

Where can I find the earnings information the Department used in setting the salary and total annualcompensation levels?

3.

GENERAL1. Q. Who is entitled to overtime pay under federal law?

A. Most employees covered by the Fair Labor Standards Act ("FLSA") must be paid at least one and one-half times theirregular rate of pay for any hours they work beyond 40 in a workweek. An employer who requires or permits an employeeto work overtime is generally required to pay the employee premium pay for such overtime work.

2. Q. Who is covered by the Fair Labor Standards Act (FLSA)?

A. The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affectingemployees in the private sector and in Federal, State, and local governments. Covered nonexempt workers are entitled toa minimum wage of not less than $7.25 per hour. Overtime pay at a rate not less than one and one-half times the regularrate of pay is required after 40 hours of work in a workweek.

Generally, employees of enterprises that have an annual gross volume of sales made or business done of $500,000 ormore are covered by the FLSA. In addition, employees of certain businesses are covered by the FLSA regardless of theamount of gross volume of sales or business done. These businesses include: hospitals, businesses providing medical ornursing care for residents; schools (whether operated for profit or not for profit); and public agencies.

3. Q. Does the FLSA and the Department's proposed overtime rule for white collar workers apply to state orlocal government workers?

A. Yes, state and local government employers are subject to the FLSA and the Department's proposed regulationsconcerning white collar employees.


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4. Q. Is there a small business exemption from the FLSA or the Department's proposed overtime rule forwhite collar workers?

A. The FLSA does not provide an exemption for small businesses. Generally, the FLSA and the proposed rule apply toemployees of enterprises that have an annual gross volume of sales made or business done of $500,000 or more, andcertain other businesses. The FLSA creates a level playing field for businesses by setting a floor below which employersmay not pay their employees.

5. Q. Is there an exemption for non-profit organizations from the FLSA or the Department's proposedovertime rule for white collar workers?

A. There is no exemption for non-profit organizations under the FLSA or in the proposed rule. Thus, the proposed rulemay impact non-profit organizations having an annual dollar volume of sales or business done of at least $500,000. Indetermining coverage, only activities performed for a business purpose are considered and not charitable, religious,educational, or similar activities of organizations operated on a non-profit basis where such activities are not in substantialcompetition with other businesses.

6. Q. How is overtime pay determined?

A. Unless exempt, employees covered by the FLSA must receive overtime pay for all hours worked over 40 in a workweekat a rate not less than one and one-half times their regular rates of pay.

7. Q. What are the white collar exemptions to the FLSA?

A. The FLSA's white collar exemptions exclude certain executive, administrative, and professional employees from federalminimum wage and overtime requirements. Certain computer professionals and outside sales employees are alsoexcluded from these requirements.

8. Q. What determines if an employee falls within one of the white collar exemptions?

A. Currently, to qualify for exemption, a white collar employee generally must:

be salaried, meaning that they are paid a predetermined and fixed salary that is not subject to reduction becauseof variations in the quality or quantity of work performed (the "salary basis test");

1.

be paid at least a specific salary threshold, which is $455 per week (the equivalent of $23,660 annually for afull-year employee) in existing regulations (the "salary level test"); and

2.

primarily perform executive, administrative, or professional duties, as provided in the Department's regulations(the "duties test").

3.

Certain employees are not subject to either the salary basis or salary level tests (for example, doctors, teachers, andlawyers).

9. Q. I'm paid a salary and my job title is manager. Am I exempt from overtime pay?

A. Job titles do not determine exempt status, and the fact that a white collar employee is paid on a salary basis does notalone provide sufficient ground to exempt that employee from the FLSA's minimum wage and overtime requirements. Foran exemption to apply, an employee's specific job duties and salary must meet all of the applicable requirements


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provided in the Department's regulations.

10. Q. What if a state has its own overtime laws?

A. The FLSA provides minimum standards, and does not preempt a state from establishing more protective standards. If aState establishes a more protective standard than the provisions of the FLSA, the higher standard applies in that State.

11. Q. What is the current salary level required to qualify for a white collar exemption?

A. Under the current regulations, a white collar employee must be paid at least $455 per week (equivalent to $23,660annually for a full-year employee) to qualify as an exempt executive, administrative, or professional employee. Anemployee may qualify as an exempt computer professional if he or she is paid at least $455 per week or at least $27.63an hour, if paid on an hourly basis. There is no salary level test required to qualify as an exempt outside sales employee.Certain professionals including doctors, lawyers, and teachers are also not subject to the salary level test. Finally, thecurrent regulations also contain a relaxed duties test for certain employees who receive total annual compensation of$100,000 or more and are paid at least $455 per week.

12. Q. When did the Department last revise its overtime regulations for white collar workers?

A. The Department last updated the white collar overtime regulations in 2004. That update, which included setting thestandard salary level test amount of $455 per week, has been in effect since August 23, 2004.

13. Q. Why is the Department revising its overtime regulations for white collar workers?

A. To help build real, lasting economic security for more hardworking Americans, President Obama directed the Secretaryof Labor to update the FLSA's overtime pay protections and to simplify the overtime rules for employers and workersalike. By way of this rulemaking, the Department seeks to update the salary level test to ensure that the FLSA's intendedovertime protections are fully implemented, and to simplify the identification of overtime-eligible employees, thus makingthe white collar exemptions easier for employers and workers to understand.

14. Q. What are the significant proposed changes to the overtime regulations for white collar workers?

A. To restore the effectiveness of the salary level test, the Department proposes to set the standard salary level at the40th percentile of weekly earnings for full-time salaried workers. Using 2013 data, the proposed salary amount wouldequal $921 per week (which is $47,892 annually for a full-year worker). Should the Department decide after considerationof comments received on the NPRM to set the standard salary level in the final rule at the 40th percentile of weeklyearnings of full-time salaried workers, the Department estimates that a 2016 level may be about $970 a week, or $50,440a year.

The Department is also proposing to set the highly compensated employee ("HCE") annual compensation level equal tothe 90th percentile of earnings for full-time salaried workers ($122,148 annually). Further, in order to prevent the salarylevel requirements from again becoming outdated and ineffective between rulemakings, the Department is proposing toautomatically update the salary and compensation levels on an annual basis.

15. Q. Is the Department proposing adjustments to the standard duties tests?

A. While the Department is not proposing any specific changes to the standard duties tests, the Department is seekingcomments on whether the current duties tests are working as intended to screen out employees who are not bona fide"white collar" exempt employees.


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16. Q. How does the proposed rule provide greater clarity for millions more workers so they - and theiremployers - know more clearly if they should be covered by overtime protection?

A. The proposed rule will clarify the overtime requirements for approximately 11 million workers who earn below theproposed salary threshold and their employers because their entitlement to overtime pay can be determined solely on thebasis of the bright line salary threshold. This group includes almost 5 million white collar workers who will become newlyentitled to overtime protection because of the increase in the salary threshold, and approximately 6 million white collaremployees who are currently entitled to overtime who will have their eligibility clarified because it will be determinedsolely by application of the salary threshold.

17. Q. Where can I review, and how can I comment on, the Department's proposed changes to the overtimeregulations for white collar workers?

A. The Department's Notice for Proposed Rulemaking ("NPRM") is available at www.regulations.gov under RuleIdentification Number (RIN) 1235-AA11. The Department encourages all interested parties to participate in the rulemakingprocess by submitting written comments regarding the NPRM through the online portal provided at www.regulations.gov.

18. Q. Will the proposed rule impact employees who use electronic devices, such as smartphones orlaptops, for work-related purposes outside of regular work hours?

A. During its outreach to stakeholders, the Department heard questions and concerns related to the use of electronicdevices by white collar workers who may be newly entitled to overtime pay as a result of this rulemaking. Because thisconcern involves compensation for hours worked by overtime-protected employees, it is beyond the scope of thisrulemaking. The Department, however, understands the importance of this concern and will publish a Request forInformation (RFI) in the near future seeking information from stakeholders on the use of electronic devices by overtime-protected employees outside of scheduled work hours. The Department anticipates issuing the RFI in August 2015.

SALARY LEVEL1. Q. What is the proposed standard salary level?

A. In order to re-establish the effectiveness of the salary level test as a ready method of drawing a line separating exemptfrom nonexempt employees, the Department proposes to set the standard salary level at the 40th percentile of weeklyearnings for full-time salaried workers. Using 2013 data, the proposed salary amount would equal $921 per week (whichis $47,892 annually for a full-year worker). Should the Department decide after consideration of comments received onthe NPRM to set the standard salary level in the final rule at the 40th percentile of weekly earnings of full-time salariedworkers, the Department estimates that a 2016 level may be about $970 a week, or $50,440 a year.

2. Q. Why is the Department proposing to set the standard salary level at the 40th percentile of weeklyearnings for full-time salaried workers?

A. The Department believes that the 40th percentile of weekly earnings for full-time salaried workers represents the mostappropriate line of demarcation between exempt and nonexempt employees. This amount effectively distinguishesbetween employees who may meet the duties requirements of the white collar exemptions and those who likely do not,without necessitating a return to the more detailed "long" duties test that existed before 2004. This salary level minimizesthe risk that employees legally entitled to overtime will be subject to misclassification based solely on the salaries theyreceive, without excluding from exemption an unacceptably high number of employees who meet the duties test.

Currently, approximately 85 percent of white collar salaried workers who fail the duties test- and therefore are entitled toovertime protection- earn at least $455 per week. Because the current salary level is only screening from exemptionapproximately 15 percent of overtime-eligible white collar salaried employees, it is not an effective test for exemption and


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does not serve the intended purpose of simplifying application of the exemption by reducing the number of employees forwhom employers must perform a duties analysis. Increasing the standard salary level to the 40th percentile of weeklyearnings for full-time salaried workers would reduce the number of white collar employees who do not meet the dutiestest but earn at least the proposed salary level to approximately 41 percent.

3. Q. Is the Department proposing to increase the salary level for highly compensated employees?

A. The Department is proposing to set the HCE annual compensation level equal to the 90th percentile of earnings forfull-time salaried workers ($122,148 annually).

4. Q. Will the Department consider bonuses as part of the new salary level test?

A. In a further effort to respond to changing conditions in the workplace, the Department is seeking comment on whetherto allow nondiscretionary bonuses, such as certain production or performance bonuses, to satisfy a portion of thestandard salary test requirement. Such bonuses include for example, nondiscretionary incentive bonuses tied toproductivity and profitability.

5. Q. Why is the Department proposing to automatically update the salary level and HCE total annualcompensation level?

A. The Department is proposing to automatically update the standard salary and HCE total annual compensationrequirements to ensure that they remain meaningful tests for distinguishing between bona fide executive, administrative,and professional workers who are not entitled to overtime and overtime-protected white collar workers. Experience hasshown that the salary level test is a strong measure of exempt status only if it is up to date. Left unchanged, the testerodes due to inflation, becoming substantially less effective as wages for overtime-protected workers increase over time.Automatically updating the salary level and HCE total annual compensation requirement using the most recent data willensure that these tests continue to accurately reflect current economic conditions.

6. Q. How is the Department proposing to automatically update the salary level and HCE totalcompensation levels?

A. The Department has proposed two different methodologies for updating the standard salary and HCE total annualcompensation levels. One method would keep those levels pegged to the 40th and 90th percentiles of earnings forfull-time salaried workers, respectively. The other method would adjust the standard salary and HCE compensationamounts based on changes in inflation, as measured by the Consumer Price Index for all Urban Consumers (CPI-U). TheDepartment is seeking comment on both methods of updating.

DUTIES TEST1. Q. How will the Department update the "duties tests" in the proposal?

A. The Department is not making specific proposals to modify the standard duties tests; however, the Department isseeking comment on whether the standard duties tests are working as intended to screen out employees who are notbona fide white collar exempt employees.

2. Q. What is the basis for the standard duties test?

A. From 1949 until 2004 the regulations contained two different tests for exemption - a long test for employees paid alower salary, and a short test for employees paid at a higher salary level. Under the old short test/long test structure, thelong duties test included a limit on the amount of nonexempt work that could be performed (20 percent for most workers


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and 40 percent for retail and service workers) and thus provided an adequate safeguard against the exemption of whitecollar workers who should be overtime-protected but who were paid between the long test salary level and the short testsalary level. The short duties test did not include a cap on nonexempt work for employees paid at or above the highershort test salary level. The Department in the 2004 Final Rule replaced the short test/long test structure with a single"standard" test. The standard test based the new "standard" duties tests on the short duties tests (which did not strictlylimit the amount of nonexempt work that could be performed), and tied them to a salary test level that was updated fromthe long test salary (which historically had been paired with a cap on nonexempt work).

ECONOMICS1. Q. What are the costs and benefits of the proposed rule?

A. The Department estimates that average annualized direct employer costs will total between $239.6 and $255.3 millionper year, depending on the updating methodology. In addition to the direct costs, this proposed rulemaking will alsotransfer income from employers to employees in the form of higher earnings. Average annualized transfers are estimatedto be between $1.18 and $1.27 billion, depending on which of the two updating methodologies is used.

2. Q. How many employees does the Department think will be impacted by the proposed salary levelincrease?

A. In the first year, the Department estimates that 4.6 million workers exempt under the current regulations who earn atleast the current weekly salary level of $455 but less than the proposed salary level of $921 would, without someintervening action by their employers, become newly entitled to overtime protection under the FLSA. Similarly, anestimated 36,000 currently exempt workers who earn at least $100,000 but less than $122,148 and who meet theminimal HCE duties test but not the standard duties test may also become eligible for minimum wage and overtime.Additionally, the Department estimates that 6.0 million salaried white collar workers who are currently entitled to overtimedue to their job duties, and who earn at least $455 per week but less than the proposed salary level, would have theirovertime protection strengthened because their exemption status would be clear based on the salary test alone withoutthe need to examine their duties. This would reduce the number of overtime eligible workers potentially subject tomisclassification as exempt by their employers.

3. Q. Where can I find the earnings information the Department used in setting the salary and total annualcompensation levels?

A. The Department set these levels using Bureau of Labor Statistics (BLS) data available at http://www.bls.gov/cps/research_nonhourly_earnings_2013.htm. On a quarterly basis, BLS publishes a table of deciles of the weekly wagesof full-time salaried workers, calculated using Current Population Survey data. See http://www.bls.gov/cps/research_series_earnings_nonhourly_workers.htm


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Action Center

Action Alert

Department of Labor's Proposed Regulations Regarding Overtime Exemptions

Do you have employees who check their e-mails from home?Do you have employees who are currently exempt earning less than $50,000?Do you provide employees with a flexible work schedule?

If you answered yes to any of the above, please read on to learn more aboutproposed changes to update the regulations governing which executive,administrative and professional employees are entitled to the Fair Labor StandardsAct's minimum wage and overtime pay protections. According to the Department ofLabor's Wage and Hour Division, the primary focus of these proposed changes is on updatingthe compensation and salary levels needed for these workers to be exempt - and that willaffect employees across all industries and sectors.

Read on to learn more on the proposed regulation, the impact to employers and employeesand how you can share your comments on the proposed regulation.

What's the Issue?

Currently under the Fair Labor Standards Act (FLSA), an individual must satisfy three criteriato qualify as a white collar employee exempt from federal overtime pay requirements: first,they must be paid on a salary basis (the salary basis test); second, that salary must be morethan $455/week ($23,660 annually) (the minimum salary requirement or salary threshold);and third, their "primary duties" must be consistent with executive, professional oradministrative positions as defined by the US Department of Labor (DOL) (the primary dutiestest).

Employees who do not meet these three requirements or fail to qualify for another exemptionmust be treated as "hourly" or "nonexempt" employees and be paid for each hour workedand at a rate of one and a half times their normal hourly rate for all hours worked over 40 ina given work week. The latter is known as overtime pay. To ensure employees are paid for allhours worked and at the proper rate for overtime, employers must carefully track the hoursnonexempt employees work.

President Barack Obama issued a memorandum on March 13, 2014, directing DOL to"modernize" the FLSA overtime regulations governing eligibility for the white collarexemption. On July 6, 2015, DOL published proposed changes to the regulations. In theproposal, which is known as a Notice of Proposed Rulemaking (NPRM) or proposed rule, DOLasked the public for input on several suggested changes.

Key Provisions of the Proposed Rule

The Notice of Proposed Rulemaking (NPRM) focuses primarily on updating the salary andcompensation levels needed for white collar workers to be exempt. Specifically, theDepartment proposes to:

set the standard salary level at the 40th percentile of weekly earnings forfull-time salaried workers ($921 per week, or $47,892 annually);

1.

increase the total annual compensation requirement needed to exempt highly2.

Action Center https://www.votervoice.net/LCCI/Campaigns/42299/Respond

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compensated employees (HCEs) to the annualized value of the 90th percentile ofweekly earnings of full-time salaried workers ($122,148 annually); andestablish a mechanism for automatically updating the salary and compensationlevels going forward to ensure that they will continue to provide a useful andeffective test for exemption.

3.

The Department's proposal to set the standard salary level at the 40th percentile of weeklyearnings for full-time salaried workers would raise the salary threshold from $455 a week(the equivalent of $23,660 a year) to about $970 a week ($50,440 a year) in 2016.

The Department is also proposing to automatically update the standard salary and HCE totalannual compensation requirements based on the Consumer Price Index for All UrbanConsumers.

In addition, the Department discusses the current duties test and solicits suggestions foradditional occupation examples and requests comments on the current requirements.Similarly, the Department seeks comment on the possibility of including nondiscretionarybonuses to satisfy a portion of the standard salary requirement. The Department is notproposing specific regulatory changes on either of these issues.

What's the Impact?

- The increase in the salary threshold from $455 per week to $970 per week is amassive and unprecedented 113% increase.This proposed salary threshold is higherthan minimums set under any state laws and does not take into account differentindustries and economic differences in various regions across the nation.

- The salary threshold has historically been intended to screen out obviously nonexemptemployees and has relied on the duties test to evaluate whether employees makingmore than the minimum salary fit within the exemption. DOL's proposal is inconsistentwith this model and, if implemented, millions of executive, professional andadministrative employees that would have fit within the exemptions could bereclassified as hourly employees.

- DOL has asked for public input on the current primary duties test, it said it isconsidering changes to the duties test, including bringing back aspects of the "longtest". The agency asked several questions about limiting the amount of time exemptemployees could perform nonexempt work and/or eliminating the provision in thecurrent regulations on concurrent duties (i.e. the provision in the regulations that allowsexempt employees to concurrently perform exempt and non-exempt work such as amanager who supervises employees and serves customers at the same time). Any suchsubstantial changes that would be included in the final rule would be dropped in withoutany opportunity to review or comment on them.

- Employers must closely track nonexempt employees hours to ensure compliance withovertime pay and other requirements. As a result, nonexempt employees often haveless workplace autonomy and fewer opportunities for flexible work arrangements,career training and advancement than their exempt counterparts.

- If approved, these changes could have a significant impact on your company's wageand benefits policies. Imagine having to track every minute that an employee spendschecking e-mail at home or not responding to a potential customer because it may takethem into overtime. Or imagine having to take away a flexible schedule from anemployee because you need to track their hours more diligently - taking away anemployee benefit and potentially hindering your business' ability to connect withcustomers at different times of the day.


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- When employees have been reclassified from exempt to nonexempt, there is veryoften a decline in employee morale, as this change is generally seen as a loss of"workplace status." Employees often believe they are being punished or demoted, andsome even lose trust that their employer sees them as a professional.

- If DOL chooses to implement substantial changes to the duties test in its final rulewithout first undergoing a notice-and-comment period on the specific details of theproposal and providing related cost and economic analysis, employers and the public ingeneral will not have the opportunity to comment on the specific changes made. Thiswill leave the public with no opportunity to voice their concerns about the potentialimpact the proposal could have on employers, workers, or the economy as a whole.

- DOL has issued a proposal that could dramatically alter the white collar exemptionsfor overtime under the Fair Labor Standards Act and has only permitted a 60-daycomment period for organizations to analyze potential consequences. This is not enoughtime to review such a drastic change.

What Can I Do?

Learn more about the issue by watching a one-hour recording of our Wake Up to the Issuesforum on 8/20/15 that featured Jill Welch, attorney with Barley Snyder; Maggie Sheely,manager with the US Chamber; and Michele Stauffer, board president for Lancaster SHRM.That recording can be viewed by clicking here.

You can also read a recap of the event and impacts from LancasterOnline by clicking here.

Click the "Take Action" button below to share with the Department of Labor andyour members of Congress concerns you have with the proposal.

Back Take Action


3 of 3 8/28/2015 3:57 PM

Take action to protect workplace flexibility from potential

changes in overtime pay.

President Obama

and the Department

of Labor announced

a proposal to revise

the Fair Labor Stan-

dards Act for over-

time pay. Currently,

salaried workers are automatically eligible for overtime compensa-

tion if they work over 40 hours per week and make $455 per week

or less ($23,660 annually). The proposal would increase this rate

to $970 per week ($50,440 annually).

President Obama announced the proposal saying it will “give as

many as five million Americans the overtime protections they de-

Action Alert! Proposed Overtime Rules Open for Public Comment | Gra... http://www.grandrapids.org/action-alert-overtime-pay/

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serve.” However, economic research is showing far different out-

comes.

The Labor Department projects only one-fifth of affected employ-

ees would actually see a pay increase, while the rest will either

see their hours or salary reduced in anticipation of potential over-

time.

Studies also show that millions will have less workplace flexibility

as employers will more closely monitor work hours to avoid law-

suits. This will hurt salaried employees personally and profession-

ally – especially as telecommuting and flexible work arrangements

are becoming increasing popular.

The Department of Labor is taking public comments on the

proposed rule changes through Friday, September 4, 2015.

We encourage you to submit your comments by clicking here.

We prepared a sample letter you may use when submitting com-

ments, but we encourage you to build upon it and share how it will

impact your business.

If you would like more information on the proposal, please visit the

links below:

The Chamber team will continue to monitor the situation and keep

you abreast of the latest news.

Action Alert! Proposed Overtime Rules Open for Public Comment | Gra... http://www.grandrapids.org/action-alert-overtime-pay/

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To Whom it may Concern:

I write in opposition to the proposed rules changes governing overtime pay impacting exempt or “white-collar” workers.

Currently, workers may earn overtime compensation if they work over 40 hours per week and make $455 per week or less ($23, 660 annually). The proposed increase more than doubles the current rate to $970 per week ($50,400 annually). This rate of increase is unprecedented. It far exceeds the rate of inflation and salary increases over the last decade.

Additionally, the proposed minimum salary increase will have a significant negative impact on workers. Studies have shown that while a few workers will experience pay raises, millions will either see their hours reduced, or will see their salary reduced in anticipation of potential over-time.

The proposed changes will also reduce a business’ ability to offer a flexible work schedule that is adaptable to the needs of employees, as employers will be forced to closely monitor and detail work hours to avoid lawsuits. This adds to administrative costs, leaving less revenue to invest in business growth and employee wages.

In order to attract and retain talent, businesses are increasingly focusing on creating organizational cultures that offer greater flexibility to employees, where employees have more ownership in their work production schedules. The proposed changes threaten this by creating a legal and administrative nightmare that will result in operational standards preventing employees from being able to manage their own schedules.

If the minimum salary threshold is to be amended, I encourage the Department of Labor to make a more reasonable adjustment. For example, research has shown that if the Department of Labor used the same methodology used in 2004 to set the current rate, it would result in a minimum salary level of $577 per week ($30,004 annually).

Again, we urge your opposition to the proposed overtime pay rate changes.

Thank you for your consideration,

1

August 18, 2015 Tulsa Regional Chamber 1 West 3rd Avenue

Tulsa, OK 74014 Mary Ziegler, Director of the Division of Regulations, Legislation And Interpretation Wage and Hour Division U.S. Department of Labor Room S-3502 200 Constitution Avenue, NW Washington, D.C. 20210

Dear Ms. Ziegler:

The Tulsa Regional Chamber (“the Chamber”) is the principal business-driven leadership organization in the Tulsa, Oklahoma, metropolitan area, which has a population of 970,034 residents (2014 est.). The Chamber represents more than 2,500 member organizations and approximately 160,000 area employees. This correspondence is provided as the Chamber’s formal comment on the proposed change to the administration of the Fair Labor Standards Act as it relates to moving the weekly salary rate below which overtime must be paid from $445 to $970.

We would like the Department of Labor to consider the following:

A. A nationwide rate fails to take into account significant variances in cost of labor, value of money and other factors. Thus, it disproportionally impacts certain regions and industries. For example, the cost of labor in the Tulsa region reflects the region’s relatively low cost of living, which is calculated at 88.4 percent of the U.S. average on the U.S. Census Bureau’s Cost of Living Index. Tulsa’s median household annual income of $48,181 is correspondingly below the national median of $51,939 and far below the New York City household income of $58,003 (U.S. Census Bureau). Using weighted data to determine the minimum salary below which overtime is paid being different for across the country is logical, fair, easily implemented and would follow precedence set by federal policies that take into relative regional demographics in cost of labor.

B. The current proposal to increase the rate suddenly by 118% does not reflect actual salary changes in our region, especially given the labor rate depression that occurred during the fairly recent recession years. The BLS data shows that the average weekly salary in Tulsa was $685 in 2004 when the current rate of $445 was established. Since that time our average weekly salary has gone up 37.4%, based on 2014 data. When we project the anticipated increase for 2015 and 2016, using the average increase over the last five years, we believe our average weekly salary for 2016 will be $1,003, a 42.9% increase from the rate in 2004.

C. For a very large percent of the affected employees working in our member companies, employees receive monthly, quarterly, or annual non-discretionary incentives based on very specific performance factors such as Payroll as a Percent of Sales, Productivity of Delivery Trucks, Inventory Turns of Assigned Materials Purchased, etc. These incentives can be a

2

significant percent of a person’s total compensation and are a most important part of our member companies’ strategies to align the goals of first line supervisors and professionals with the goals of the company. Should they be compelled to begin paying overtime, it will be very difficult for them to continue to afford such incentives. We believe it makes a great deal of sense to include the amount of these incentives and bonuses in the definition of an annual salary rate below which overtime must be paid.

D. A mandatory sudden increase of this magnitude would require a significant change in pay programs to the detriment of the smooth operations and profitability of companies, and creates difficulty in the planning and structuring of compensation programs. It would be most difficult as it relates to the profitability of our member companies, especially as they continue recovering from the recession years. Some of the key ways they will be impacted are listed below.

a. An increase in overtime of this magnitude or an alternative increase in salaries to the $50,440 level would be financially difficult for many of our member companies. As an example, one company with a total revenue of $175 million would be faced with increased labor costs ranging from $406,000 to $762,000, depending on how its compensation plan is adapted. Operating with a modest profit margin, this could cost the company nearly 10% of its profit, which is currently being used to purchase new equipment, expand, and employ more people.

b. This change would cause pay compression problems, which would force pay increases at the supervisory and managerial levels above the employees directly affected by the change.

c. Some of our companies may also be forced to purchase additional licenses for their timekeeping system, or to upgrade their timekeeping software, presenting additional financial burdens.

d. The owners and investors of a company must achieve a certain level of profit in order for them to take on the many risks of ownership. The reduction in profit will have to be recouped, perhaps through additional sales, but also probably through reduction in employer contributions to benefits and elimination of some employees.

e. The time to implement the changes in compensation plans is extremely short, especially considering ongoing efforts to be compliant with changes in the Affordable Care Act set to take effect in 2016 for medium-sized companies.

f. Gradual and systematic changes to meet the Department of Labor’s goal would drastically reduce the burden on businesses. Establishing a regular process to adjust the rate more frequently, and on a regular schedule, will greatly benefit the companies within the Tulsa area. However, an annual review should be avoided in favor of a longer review cycle of at least three to five years.

E. Affected employees strongly prefer being salaried and exempt because of the status and flexibility it provides, and changes in how time is logged would be unpopular.

With this, we make four key recommendations:

1. That the proposal be revised to take into account regional and industry variances in the cost of labor and the value of money.

2. That the proposal be revised to specify total annual cash compensation which would include nondiscretionary incentive and performance bonuses when calculating annual salaries.

3

3. That the proposal provide a specified structure for increasing the amount at regular intervals (e.g. every three to five years) based on regional median weekly salaries.

4. That the status quo of the duties requirement is maintained for the immediate future to allow companies a period of stability in adjusting to this and other recent changes in federal regulations, such as those associated with the Affordable Care Act. We support reexamining the duties requirement at a later date if the reexamination takes into account the diverse needs and limitations of different industries, but any change should be implemented only after a full review process and comment period devoted specifically to the duties requirement.

In summary, the Chamber fully acknowledges the need for the establishment of a salary threshold below which overtime must be paid, and that the threshold be revised from time to time. However, the proposed change is too drastic to be implemented at one time. Increases in the threshold should be implemented gradually on an established schedule, and the changes should reflect the cost of labor of the region. Thank you for taking the time to read these comments and for your consideration of them as you move forward with this issue.

VIA ELECTRONIC SUBMISSION August 24, 2015 Mary Ziegler Director of the Division of Regulations, Legislation, and Interpretations, Wage and House Division US Department of Labor Room S-3502 200 Constitution Avenue, N.W. Washington, D.C. 20210 Re: RIN: 1235-AA11; Proposed Rulemaking Regarding Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees (80 Fed. Reg. 38515, July 6, 2015) Dear Mrs. Ziegler, The Lancaster Chamber of Commerce & Industry believes the Department of Labor’s proposed regulation amending the existing exemptions for executive, administrative, professional, outside sales and computer employees would negatively impact the business community and their employees. Our membership consists of 2,200 businesses, majority small, representing nearly 120,000 employees in Lancaster County, PA. The Chamber’s members believe that employees and employers alike are best served by a system that promotes maximum flexibility in structuring schedules, provides career advancement opportunities for employees and offers clarity for employers when classifying employees. The Department’s proposed increase of the salary levels required for the white collar exemptions, from $23,660/year to $50,440/year, is unnecessary and damaging and would have negative impacts for employees, employers and the economy. While The Lancaster Chamber and our members recognize the need to adjust the salary basis level under the regulations, more than doubling the threshold will significantly impact employers and employees and will disproportionately affect the non-profit and service sector industries, as well as certain geographic areas of the country. Employees would need to be reclassified (to being non-exempt) as a result of the proposed minimum salary increase which would result in less workplace autonomy while forcing employees to closely track their hours to ensure compliance giving them less control over when and where they work. In addition, the vague inquiry seeking additional information on the duties test for consideration in the final rule presents another potential burden and liability for employers. The potential reclassification to non-exempt would mean many employees would lose the ability to structure their time to address their needs. In addition, this contributes to a more restrictive work environment for both employees and employers. Some employees will lose the opportunity to work from home or remotely, as it can be difficult for employers to track employees’ hours in those situations. Employers will also be more reluctant to provide nonexempt employees with mobile devices or place restrictions on their use, as employers need to account for any time employees spend on such devices.

In addition, nonexempt status can lead to fewer opportunities for career advancement. Employees who reach or are near 40 hours of work in a week may need to skip additional training or other career-enhancing opportunities, because the employer is not able to pay overtime rates for that time. The proposal also disproportionately impacts regions of the country where the cost of living is significantly lower, such as Lancaster County, PA, compared to large metropolitan areas, the West Coast and the Northeast. The proposal simply fails in any meaningful way to account for regional economic differences. With that in mind, we request the Department to seriously consider the impact of these regulations and, further, request that the Department extend the comment period by 60 days, to November 3, 2015, in order to hear from effected parties. This will allow for an adequate amount of time to examine and provide meaningful and constructive feedback on the proposal. Thank you for your consideration. Sincerely, Thomas T. Baldrige President & CEO (add any businesses that would like to sign onto the letter) CC: Congressman Pitts, Congressman Meehan, Senator Toomey, Senator Casey

Proposed Federal Regulations Change for Overtime Pay

Your Fairbanks Chamber is surveying our members regarding a pending federal regulation change to raise the

salary threshold at which eligible workers qualify for overtime pay.

Currently, employees with primary duties that fall under the executive, administrative and professional (EAP) ex-

emption, with salaries of more than $23,660, are exempt from overtime eligibility. This regulation change would in-

crease the minimum annual salary level for exempt employees to $50,440; more than twice the current salary level

for overtime eligibility.

The Fairbanks Chamber would like to know if this regulation change will affect your organization and what assis-

tance we may be able to provide you surrounding this issue.

For more information on this topic please visit the U.S. Department of Labor's website at http://www.dol.gov

/whd/overtime/NPRM2015/factsheet.htm.

1. Are you concerned with this proposed change to raise the eligible minimum salary at

which EAP (Executive, Administrative, Professional) workers qualify for overtime pay?

Comment

*

Yes

No

2. Will this change affect your organization?

Comment

*

Yes

No

[SURVEY PREVIEW MODE] Proposed Federal Regulations Change fo... https://www.surveymonkey.com/r/?sm=MrZvapRmVbCWzcPB2k2u6W...

1 of 3 8/28/2015 4:07 PM

3. Do you oppose this change?

Comment

*

Yes

No

4. Would you need Fairbanks Chamber's assistance in addressing this issue? If so, what

would be your preferred action?

Comment

*

Yes

No

5. If you would like us to send you specific information related to the DOL's proposed

overtime rule change, please feel free to share your contact information with us:

Name:

Company:

City/Town:

Email Address:

Phone Number:


2 of 3 8/28/2015 4:07 PM

Powered by

See how easy it is to create a survey.


3 of 3 8/28/2015 4:07 PM

1

Lisa Herbert

Subject: FW: FW: [MARKETING] ACTION ALERT: US Department of Labor Proposed Change to Overtime Rule

BUSINESS

ADVOCACY

ACTION

ALERT

Designed to engage Chamber members on various issues impacting Interior business.

August 28, 2015

Proposed Overtime Rules Open for Public Comment

Deadline to submit public comment: September 4, 2015

The Department of Labor announced a proposal to revise the Fair Labor Standards Act for overtime pay. Currently, salaried workers are automatically eligible for overtime compensation if they work over 40 hours per week and make $455 per week or less ($23,660 annually). The proposal would increase this rate to $970 per week ($50,440 annually).

If you would like more information on the proposal, please visit the links below:

Federal register entry and public comment link U.S. Department of Labor: Overtime FAQ U.S. Department of Labor: Overtime Pay Society for Human Resources Management Testimony to House Education and the Workforce Committee's

Subcommittee on Workforce Protections

A few quick facts on the issue:

The rules are not final and input from stakeholders is critical. The U.S. Chamber states the amount of increase is

unprecedented in the 77-year history of FLSA.

o The National Retail Federation (NRF) estimates the change could cost employers $9.5 billion in overtime costs.

o NRF also estimates this will cost the restaurant and retail industries alone $745 million.

The Notice of Proposed Rulemaking (NPRM) published on July 6, 2015 in the Federal Register (80 FR 38515) invited interested parties to submit written comments on the proposed rule at www.regulations.gov on or before September 4, 2015. Only comments received during the

2

comment period identified in the Federal Register published version of the NPRM will be considered part of the rulemaking record.

Take our survey

Your Fairbanks Chamber is surveying our members regarding a pending federal regulation change to raise the salary threshold at which eligible workers qualify for overtime pay.

Currently, employees with primary duties that fall under the executive, administrative and professional (EAP) exemption, with salaries of more than $23,660, are exempt from overtime eligibility. This regulation change would increase the minimum annual salary level for exempt employees to $50,440; more than twice the current salary level for overtime eligibility.

The Fairbanks Chamber would like to know if this regulation change will affect your organization and what assistance we may be able to provide you surrounding this issue.

For more information on this topic please visit the U.S. Department of Labor's website. Survey Link

US Chamber & US Department of Labor Resources

3

U.S. Chamber Statement on Obama Administration's Overtime Proposal

Read More

U.S. Department of Labor Fact Sheet on Proposed Overtime Rule

Read More

Chamber Website / Contact Us

Forward this email

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Greater Fairbanks Chamber of Commerce | 100 Cushman St, Ste 102 | Fairbanks | AK | 99701

THIS IS A TEST EMAIL ONLY. This email was sent by the author for the sole purpose of testing a draft message. If you believe you have received the message in error, please contact the author by replying to this message. Constant Contact takes reports of abuse very seriously. If you wish to report abuse, please forward this message to [email protected].

-- Derek Miller '03 & '11 Business Office Manager University of Alaska Fairbanks Institute of Northern Engineering http://ine.uaf.edu/business-office/ 907.474.6644 p

This position was adopted as a legislative priority in 2015.

Greater Fairbanks Chamber of Commerce 100 Cushman Street, Suite 102 – Fairbanks, Alaska 99701 – www.FairbanksChamber.org

Support Workers’ Compensation Reform Position Statement

The Greater Fairbanks Chamber of Commerce encourages the Alaska State Legislature and the Administration to enact reform to the Workers’ Compensation Statutes to improve the balance between providing quick, efficient and fair compensation to injured workers at a reasonable cost to employers. The current system is delivering benefits at exorbitantly high costs to employers, and ineffectively administers the claims of injured workers. Support for the Position

Alaska Workers’ Compensation premium rates are the highest in the nation, having been #1 or #2 five times in the last 9 years.

Medical benefit costs have risen 25% over the last five years, while the same time period showed a 14.2% decline in the frequency of workers’ compensation claims. Significant cost factors include fees for services, over-utilization of services, and changes in prescription drug use and dispensing. Medical costs are disproportionate to overall claim costs, and far exceed nationwide averages.

While claim frequency declined 32.6% in the 10 year period through 2010, indemnity payments only declined 13.9% for the same time frame.

Legal costs related to workers’ compensation claims rose 68.6% from 2000 – 2010, during which time disputed claims dropped 18.1%, scheduled hearings declined 8.3%, and issued Decision & Orders declined 21.7%.

The Reemployment Benefits system completed retraining for only 8% of eligible employees, at a cost of $12.9M in 2012.

Action Required for the Position

Adopt legislation to address the major medical cost drivers –over-utilization of services, opioid use, physician dispensing of pharmaceuticals. Adopt legislation to improve the management of claims, addressing indemnity factors including an emphasis on Return-to-Work/Stay-At-Work, and the legal costs associated with workers’ compensation claims. Adopt legislation to address the Reemployment Benefits process, including a repeal of the 90 day mandatory reemployment evaluation, stricter criteria for reemployment specialist credentialing, implementation of reemployment specialist fee schedules, and an increase to the reemployment benefit limit. Fiscal Impact of the Position

The current trajectory in workers’ compensation costs is unsustainable. The upward trends adversely impact Alaskan commerce, making Alaska businesses less competitive, and negatively affect the quality of life for injured workers. To ensure a viable economic environment, both businesses and employees need reform to occur. If business cannot compete with Outside competition, Alaskans can’t be put to work.

GREATER FAIRBANKS CHAMBER OF COMMERCE Legislative Priorities for Federal, State & Local Issues

Position title Support the Unmanned Aircraft Systems Industry Position statement The Greater Fairbanks Chamber of Commerce recognizes the importance of the Unmanned Aircraft Systems (UAS) industry, supports the university’s program, and development of training and infrastructure to foster this technology which will touch on nearly every other industry in the state providing cost, time, and life savings. With a world class UAS program, the Alaska Center for Unmanned Aircraft Systems Integration (ACUASI) and experience gained through research since 2001, this state is poised at the forefront of an industry that will diversify our economy, strengthen technology programs within the university, and create jobs that can transform Alaska. While the Chamber recognizes the importance of creating jobs and diversifying our economy, it understand this industry is unique because it is not only the jobs but the benefits derived from work performed with UAS that has a far reaching impact. Just one example is change out of a gas flare stack on the North Slope. Traditional methods require shut down of the stack to inspect it for change out of parts. This comes at a cost of $1 million to $3 million per shut down and parts may not need to be replaced. With UAS, it is possible to fly in close enough to a gas flare stack while it is fully operational and determine whether any parts need to be replaced. Another example is use for emergency operations for the Funny River Wildfire that occurred in June of 2014. It was estimated that the time and cost savings was cut in half with the use of UAS and infrared to capture and transmit data displaying where the hot spots were so they could effectively be extinguished. The Chamber supports efforts to foster the growth of this industry through global marketing with Alaska’s presence at the AUVSI Unmanned Systems conferences. In 2014, this was achieved through collaboration between the Fairbanks North Star Borough (FNSB); ACUASI; the State of Alaska Department of Commerce, Community, and Economic Development; and the State of Alaska Department of Military and Veterans Affairs. Likewise, the consortium has secured a booth for 2015. This event has over 8,000 attendees and over 600 vendors with one-third being major to mid-size industry firms while the remaining are small UAS support businesses and manufacturers. FNSB UAS Tech Park. The Chamber recognizes that a tech park will provide a site for collaboration and innovation of the UAS industry in Alaska. Through the FNSB’s research and evolving discussions with ACUASI, the military, and major UAS industry partners (Lockheed Martin, General Atomics, Northrop Grumman, and CAE) in constructing a tech park, a site has been identified that would provide the optimum environment. • Close proximity to UAF’s research and development division • Space to construct a runway to serve UAS and piloted planes • Location on borough property next to restricted airspace (military land) • Access to high speed cable • Sparsely populated area • Ability to construct office and hangar space, dormitory or hotel accommodations, food concessions, etc. The Chamber supports construction of a UAS tech park which is anticipated to provide from 100 up to 350 new jobs as growth occurs.

In preparation of a UAS workforce, a career path has been established from K-12 to the technical college to the university. In addition to programs being developed within our educational systems, a variety of funding has been provided to fit this niche. In 2014, the Alaska legislature approved $3 million in funding for three consecutive years for the Science, Technology, Engineering, and Math (STEM) program. In addition, the National Science Foundation is providing a $750,000 three year award for Alaska Upward Bound, EPSCoR which is administering “The Modern Blanket Toss”, where high school students will be performing experiments using UAS to increase their interest in STEM fields that will be useful to their communities. The Chamber seeks continued support for educational programs to support this career pathway. Support for the position The State of Alaska Department of Commerce, Community, and Economic Development (DCCED) supports this industry. Efforts to date include creation of Alaska’s AUVSI 2014 booth and collateral materials, establishing a statewide unmanned aircraft systems business strategy, and efforts to showcase Alaska to CAE a global aviation training firm interested in establishing a UAS training facility in our state. In addition, DCCED is partnering with the FNSB to conduct a cadastral survey, site assessment, and perform a feasibility study for a UAS tech park. ACUASI, the military and major industry have expressed an interest in occupying the UAS tech park. Likewise, local economic development organizations and the military support the growth of this industry. Opposition for the position While commercial and private pilots are among those in opposition, it is mixed. Some are actually supportive of unmanned aircraft. Other opposition comes from those concerned about privacy issues. The legislature attempted to address those concerns in 2014 through UAS legislation on privacy (HB 255) and through extension of the Unmanned Aircraft Systems Legislative Task Force (HCR 15). This provides a public body knowledgeable in this industry to hear and address concerns and recommend policy or legislative changes. Supporting Documents

UAS Blanket Toss Program

Pan-Pacific UAS Test Range Complex EIA

UAS Legislative Task Force Report Action Required of the Administration or Legislature

Funding programs and infrastructure to foster the UAS industry in Alaska. Fiscal Impact of the Position

$5 million of GF appropriations necessary to continue ACUASI’s vibrant UAS program

Funding for ancillary support programs for UAS within the University’s Research Division and within the Office of Intellectual Property and Commercialization

Support for the State of Alaska Department of Commerce, Community, and Economic Development’s budget.

Economic Impact of the Position

The economic impact of the UAS industry has been estimated in studies by Association of Unmanned Vehicle Systems International (AUVSI) and the McDowell Group. o An AUVSI 2013 nationwide study, estimated that integration of UAS would generate $82 billion

in activity between 2015 and 2025 and create just over 100,000 jobs by 2025. o Specific to Alaska, the McDowell Group estimated the Pan Pacific UAS Test Range Complex

(PPUTC) would generate 283 direct, indirect, and induced jobs in 2015, increasing to over 345 jobs by 2017. Total labor income is expected to climb from $16.4 million in 2015 to about $20 million in 2017.

The UAS industry will provide the added benefit of diversifying Alaska’s economy.

Position Sponsor Information

Government Relations Committee

This position was adopted for the 2015 legislative priorities, but was combined with the Support Funding for the University of Alaska Position.

Position title

Research at UAF supports economic growth in the Interior. Position statement Research at UAF has direct impacts on Fairbanks businesses in the form of purchases of goods and services, support of high paying jobs, and the opportunity for businesses to take advantage of new and innovative technologies. Furthermore, research at UAF attracts companies to the area that broaden and deepen the business ecosystem of Fairbanks. The Chamber can support UAF’s research enterprise through advocacy for the University’s budget as well as through support of legislation that encourages and enriches UAF research. Define how position impacts business In addition to the direct impacts, companies are starting to take advantage of UAF research in the form of commercialization of intellectual property (IP). In the last two years, two new start-up companies have been created in Fairbanks as a direct result of University IP. As more research is commercialized, small and large Fairbanks companies have the opportunity to take advantage of leading edge technology and software. The Alaska Center for Unmanned Aircraft Systems Integration is attracting new companies to Fairbanks as well as supporting locally launched start-up companies. Support for the position Although it is not well publicized, UAF research has very broad impacts on local vendors of commodities, services, financial services and infrastructure. Natural advocates include the beneficiaries of UAF research such as industries (e.g., Alyeska), start-up companies (e.g., V-ADAPT), suppliers of logistics (e.g., InFlight Helicopters), design and construction firms (e.g., PDC, Inc.), suppliers of commodities (e.g., Spenard Builders Supply), and insurance services (e.g., Hale and Associates), and financial services (e.g., Denali State Bank). Opposition for the position The University budget was cut last year and the fiscal environment of the state has not improved. There will be downward pressure on the University’s budget during the legislative session. However, for every state dollar spent in research, 3-6 dollars in leveraging (Federal, private) are attracted and spent in the Fairbanks community. Supporting Documents Details of the three capital research projects for UAF included in the UA budget proposal can be provided. Action Required of the Administration or Legislature

This position was adopted for the 2015 legislative priorities, but was combined with the Support Funding for the University of Alaska Position.

Support for research requests in the University’s state budget request: Unmanned Aircraft Systems in the Arctic (ACUASI) – Capital request (GF* $5,000.0, NGF* $5,000.0, Total $10,000.0), Establish Core Infrastructure for Continued Unmanned Aircraft Systems Operations – Operating Request (GF $570.0, NGF $1,000.0, Total $1,500.0), Energy & Remote Power Partnerships for Alaska’s Future (ACEP) – Capital request (GF $3,000.0, NGF $8,000.0, Total $11,000.0), Oil Spill Research Center of the Arctic (ORCA) – Capital request (GF $5,000.0, NGF $2,000.0, Total $7,000.0). *NOTE: GF is General Fund (state dollars) and NGF is non-general fund (non-state dollars leveraged from Federal, private companies, and foundations). Support legislation that supports research – most states have a research and development tax credit that is intended to encourage companies to conduct research in-state, supporting state universities. In many cases, these tax credits extend to innovation costs – patenting, licensing costs. Legislation in other states requires that the state university be the first choice for research if the corporation is seeking state research tax credits. House Bill 118 was a first try at such legislation in Spring 2012. Support public entity research contracting with UAF. The state funds research contracts outside of Alaska. There will be cases where UAF does not have the capacity to conduct certain types of research. However, state and local contracting procedures could contain language that contained a preference for UAF to be the research contractor before looking for research providers outside Alaska, particularly outside Universities. Fiscal Impact of the Position Adding new businesses or strengthening existing ones broadens the Fairbanks and Fairbanks North Star Borough tax base. Economic Impact of the Position

Direct expenditures on goods and services in the Fairbanks area.

UAF employment of research faculty, staff and students who are contributing members of the Fairbanks community and are part of the Fairbanks economic fabric.

Innovation driven by research leads to new companies that create high-tech jobs locally.

UAF research attracts and supports high value/high wage companies to the Fairbanks area. Position Sponsor Information Government Relations Committee

8/25/15Total # of

Meetings

QUORUM = 7 Meeting Held: Yes / No Yes 24

NAME ORGANIZATION % Attend % Absent

1 Atchison, Anna Kinross Fort Knox Mine x 12 50% 50%

2 Bump, Jennifer Wells Fargo Bank Alaska x 20 83% 17%

3 Cook, Jeff Flint Hills Resources x 14 58% 42%

4 Lefebvre, Sarah Exclusive Paving 12 50% 50%

5 Mahlen, Jenny First National Bank Alaska 19 79% 21%

6 Miller, Derek (CHAIR) UAF x 24 100% 0%

7 Obed, Sarah Doyon, Limited x 14 82% 42%

8 Randolph, Tammy State Farm Insurance x 16 67% 33%

9 Ringstad, John BP x 19 79% 21%

10 Shaw, Lorna Pogo Mine 14 74% 26%

11 Solie, Rick Tower Hill Mines - Livengood Project 15 63% 38%

12 Van Horn, Tiffany Golden Heart Utilities x 10 42% 58%

Quorum Established: Yes / No 23

Committees members are expected to attend at least 75% of regularly scheduled meeings.

Currently, 4 of 12 members are meeting the attendance expectations

Government Relations Committee 2015 Member Attendance

2015 Government Relations Important Dates (events, comment periods, etc.)

August

4 GML: Alaska’s Fiscal Facts & Choices presented by: Gunnar Knapp –12:00PM at

Carlson Center 6 Jesse VanderZanden Farewell 11:30AM at the FAI Air Park

18 GML: TBD

19 Usibelli Tour – Limited space available. Must RSVP with Liz 25 GML: Office of Management & Budget State Budget Director Pat Pitney –

12:00PM at Carlson Center September

8 GML: UA President Jim Johnsen

15 GML: Unmanned Aircraft Systems Update 19 Alaska’s Fiscal Future Conference – 9AM- 4PM at UAA

22 GML: United Way Campaign Kick-Off

28 Deadline - Fairbanks Chamber Priorities to Government Relations

Committee 29 GML: Fairbanks North Star Borough Mayoral Forum

30- Oct. 1 7 Habits of Highly Effective People Seminar October 12-14 Alaska Chamber Policy Forum at Westmark Hotel