REPORT TITLE:
Rental Car Commissions


DESCRIPTION:
Allows for the payment or receipt of indirect commissions from
the sale of collision damage waivers.  Requires lessors to report
information related to employee compensation plans that include
indirect commissions.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1911
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO THE MOTOR VEHICLE INDUSTRY.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  In 1990, the legislature barred the payment of
 
 2 commissions on the sale of rental vehicle collision damage
 
 3 waivers because of lessee confusion about the nature of collision
 
 4 damage waivers and the potential for abuse relating to their
 
 5 sale.  At the time there were over thirty-five rental companies
 
 6 operating in Hawaii, and related disclosure legislation in
 
 7 section 437D-5, Hawaii Revised Statutes, that required a boldface
 
 8 plain language description of the scope, optional nature, and
 
 9 cost of the collision damage waiver, as well as of the
 
10 possibility that the lessee might already be covered by the
 
11 lessee's personal automobile policy, had only been in existence
 
12 since 1988.
 
13      At present, there are significantly fewer complaints
 
14 associated with collision damage waivers because there are fewer
 
15 rental companies in Hawaii (about fifteen) and also in part due
 
16 to the aforementioned disclosure law. Consequently, there exists
 
17 much less of a basis to regulate the rental car industry through
 
18 the prohibition of commissions on the sale of collision damage
 
19 waivers.  In addition, the legislature finds that there are many
 

 
Page 2                                                     1911
                                     H.B. NO.           
                                                        
                                                        

 
 1 segments of the tourism industry that pay commissions and
 
 2 evaluate or reward their employees based on their performance in
 
 3 selling the various packages and programs offered by the
 
 4 employer, and these commission payment systems are not prohibited
 
 5 by Hawaii law.  Given this, the legislature believes that the
 
 6 motor vehicle rental industry should no longer be singled out by
 
 7 a law barring the payment of commissions calculated in part from
 
 8 the sale of collision damage waivers.
 
 9      The purpose of this Act is to allow the motor vehicle rental
 
10 industry to receive commissions calculated in part from the sale
 
11 of collision damage waivers.
 
12      SECTION 2.  Section 437D-8.5, Hawaii Revised Statutes, is
 
13 amended to read as follows:
 
14      "§437D-8.5  Commissions.  (a)  No lessor or officer,
 
15 employee, agent, or other representative of the lessor shall pay
 
16 or receive a direct commission for selling collision damage
 
17 waivers.  Any violation of this section shall be an unfair or
 
18 deceptive act or practice as provided in section 480-2.
 
19      (b)  As used in this section, ["commission for selling
 
20 collision damage waivers"] "direct commission for selling
 
21 collision damage waivers" includes any compensation, bonus,
 
22 award, or remuneration, [whether direct, indirect, or otherwise,
 
23 which] that is calculated by means of a formula, process,
 

 
Page 3                                                     1911
                                     H.B. NO.           
                                                        
                                                        

 
 1 evaluation, or other [mechanisms which considers sales of
 
 2 collision damage waivers as a factor in any manner.  "Commission
 
 3 for selling collision damage waivers" also includes any
 
 4 performance evaluation which could be used in determining
 
 5 promotions, raises, or other personnel decisions, or any other
 
 6 device which serves to encourage the sale of collision damage
 
 7 waivers.] mechanism by which a person is able to calculate the
 
 8 amount of any compensation, bonus, award, or remuneration based
 
 9 directly on the sales of collision damage waivers."
 
10      SECTION 3.  Section 437D-8.6, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "§437D-8.6  Collision damage waiver statistics.  [Lessors]
 
13 (a)  Each lessor shall submit [data or information] a report to
 
14 the director regarding [their] its sale of collision damage
 
15 waivers in a given year and amounts expended to repair damage to
 
16 rental vehicles caused while the vehicles are subject to the
 
17 collision damage waiver.  
 
18      (b)  Lessors shall maintain all records reflecting these
 
19 statistics.  
 
20      (c)  Neither the director, nor any other employee of the
 
21 department of commerce and consumer affairs, nor any other person
 
22 appointed by the director as provided by law, shall release or
 
23 divulge any of the information or data required by this section,
 

 
Page 4                                                     1911
                                     H.B. NO.           
                                                        
                                                        

 
 1 except as may be requested by the legislature, or as required or
 
 2 allowed by rules adopted pursuant to section 437D-18.
 
 3      (d)  By January 1, 2001, each lessor shall submit a report
 
 4 to the director on its compensation plans for employees who
 
 5 assist or direct the sale of collision damage waivers as of
 
 6 January 1, 2000, which shall include details on all factors used
 
 7 to calculate employee compensation.
 
 8      (e)  By January 1, 2002, and each year thereafter, each
 
 9 lessor shall submit a report to the director that includes
 
10 details on the following:
 
11      (1)  Compensation plans of the lessor that reflect all
 
12           factors, including indirect commissions for selling
 
13           collision damage waivers, used to calculate employee
 
14           compensation;
 
15      (2)  Performance standards or benchmarks that are used in
 
16           determining promotions, raises, or other personnel
 
17           decisions; and
 
18      (3)  Any other device used by the lessor to encourage the
 
19           sale of collision damage waivers."
 
20      SECTION 4.  Statutory material to be repealed is bracketed.
 
21 New statutory material is underscored.
 
22      SECTION 5.  This Act shall take effect upon its approval.
 
23 
 
24                       INTRODUCED BY:  ___________________________