REPORT TITLE:
Unemployment Insurance


DESCRIPTION:
Exempts business owners with a greater than 50% interest in the
company from having to purchase unemplyment insurance.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2320
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO LABOR 


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

 1      SECTION 1.  Section 383-7, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "§383-7 Excluded service."Employment" does not include
 
 4 the following service:
 
 5      (1)  Agricultural labor as defined in section 383-9 if it is
 
 6           performed by an individual who is employed by an
 
 7           employing unit:
 
 8           (A)  Which, during each calendar quarter in both the
 
 9                current and the preceding calendar years, paid
 
10                less than $20,000 in cash remuneration to
 
11                individuals employed in agricultural labor; and
 
12           (B)  Which had, in each of the current and the
 
13                preceding calendar years:
 
14                (i)  No more than nineteen calendar weeks, whether
 
15                     consecutive or not, in which agricultural
 
16                     labor was performed by its employees; or
 
17               (ii)  No more than nine individuals in its employ
 
18                     performing agricultural labor in any one
 
19                     calendar week, whether or not the same
 
20                     individuals performed the labor in each week;
 
21      (2)  Domestic service in a private home, local college club,
 
22           or local chapter of a college fraternity or sorority as
 
Page 2                                                     2320
                                     H.B. NO.           
                                                        
                                                        
 1           set forth in section 3306(c)(2) of the Internal Revenue
 
 2           Code of 1986, as amended;
 
 3      (3)  Service not in the course of the employing unit's trade
 
 4           or business performed in any calendar quarter by an
 
 5           individual, unless the cash remuneration paid for the
 
 6           service is $50 or more and the service is performed by
 
 7           an individual who is regularly employed by the
 
 8           employing unit to perform the service.  For the
 
 9           purposes of this paragraph, an individual shall be
 
10           deemed to be regularly employed to perform service not
 
11           in the course of an employing unit's trade or business
 
12           during a calendar quarter only if:
 
13           (A)  On each of some twenty-four days during the
 
14                quarter the individual performs the service for
 
15                some portion of the day; or
 
16           (B)  The individual was regularly employed as
 
17                determined under subparagraph (A) by the employing
 
18                unit in the performance of the service during the
 
19                preceding calendar quarter;
 
20      (4)  (A)  Service performed on or in connection with a
 
21                vessel not an American vessel, if the individual
 
22                performing the service is employed on and in
 
23                connection with the vessel when outside the United
 
24                States;
 
25           (B)  Service performed by an individual in (or as an
 
26                officer or member of the crew of a vessel while it
 

 
Page 3                                                     2320
                                     H.B. NO.           
                                                        
                                                        
 1                is engaged in) the catching, taking, harvesting,
 
 2                cultivating, or farming of any kind of fish,
 
 3                shellfish, crustacea, sponges, seaweeds, or other
 
 4                aquatic forms of animal and vegetable life,
 
 5                including service performed as an ordinary
 
 6                incident thereto, except:
 
 7                (i)  The service performed in connection with a
 
 8                     vessel of more than ten net tons (determined
 
 9                     in the manner provided for determining the
 
10                     register tonnage of merchant vessels under
 
11                     the laws of the United States);
 
12               (ii)  The service performed in connection with a
 
13                     vessel of ten net tons or less (determined in
 
14                     the manner provided for determining the
 
15                     register tonnage of merchant vessels under
 
16                     the laws of the United States) by an
 
17                     individual who is employed by an employing
 
18                     unit which had in its employ one or more
 
19                     individuals performing the service for some
 
20                     portion of a day in each of twenty calendar
 
21                     weeks all occurring, whether consecutive or
 
22                     not, in either the current or the preceding
 
23                     calendar year; and
 
24              (iii)  Service performed in connection with the
 
25                     catching or taking of salmon or halibut for
 
26                     commercial purposes;
 

 
Page 4                                                     2320
                                     H.B. NO.           
                                                        
                                                        
 1      (5)  Service performed by an individual in the employ of the
 
 2           individual's son, daughter, or spouse, and service
 
 3           performed by a child under the age of twenty-one in the
 
 4           employ of the child's father or mother;
 
 5      (6)  Service performed in the employ of the United States
 
 6           government or an instrumentality of the United States
 
 7           exempt under the Constitution of the United States from
 
 8           the contributions imposed by this chapter, except that
 
 9           to the extent that the Congress of the United States
 
10           permits states to require any instrumentalities of the
 
11           United States to make payments into an unemployment
 
12           fund under a state unemployment compensation law, all
 
13           of the provisions of this chapter shall apply to those
 
14           instrumentalities, and to services performed for those
 
15           instrumentalities, in the same manner, to the same
 
16           extent, and on the same terms as to all other
 
17           employers, employing units, individuals, and services;
 
18           provided that if this State is not certified for any
 
19           year by the Secretary of Labor under section 3304(c) of
 
20           the federal Internal Revenue Code, the payments
 
21           required of those instrumentalities with respect to
 
22           that year shall be refunded by the department of labor
 
23           and industrial relations from the fund in the same
 
24           manner and within the same period as is provided in
 
25           section 383-76 with respect to contributions
 
26           erroneously collected;
 

 
Page 5                                                     2320
                                     H.B. NO.           
                                                        
                                                        
 1      (7)  Service performed in the employ of any other state, or
 
 2           any political subdivision thereof, or any
 
 3           instrumentality of any one or more of the foregoing
 
 4           which is wholly owned by one or more states or
 
 5           political subdivisions; and any service performed in
 
 6           the employ of any instrumentality of one or more other
 
 7           states or their political subdivisions to the extent
 
 8           that the instrumentality is, with respect to the
 
 9           service, exempt from the tax imposed by section 3301 of
 
10           the Internal Revenue Code of 1986, as amended;
 
11      (8)  Service with respect to which unemployment compensation
 
12           is payable under an unemployment system established by
 
13           an act of Congress; 
 
14      (9)  (A)  Service performed in any calendar quarter in the
 
15                employ of any organization exempt from income tax
 
16                under section 501(a) of the federal Internal
 
17                Revenue Code (other than an organization described
 
18                in section 401(a) or under section 521 of the
 
19                Code), if:
 
20                (i)  The remuneration for the service is less than
 
21                     $50; or
 
22               (ii)  The service is performed by a fully ordained,
 
23                     commissioned, or licensed minister of a
 
24                     church in the exercise of the minister's
 
25                     ministry or by a member of a religious order
 

 
Page 6                                                     2320
                                     H.B. NO.           
                                                        
                                                        
 1                     in the exercise of duties required by the
 
 2                     order; 
 
 3           (B)  Service performed in the employ of a school,
 
 4                college, or university, if the service is
 
 5                performed by a student who is enrolled and is
 
 6                regularly attending classes at the school,
 
 7                college, or university; or
 
 8           (C)  Service performed by an individual who is enrolled
 
 9                at a nonprofit or public educational institution
 
10                which normally maintains a regular faculty and
 
11                curriculum and normally has a regularly organized
 
12                body of students in attendance at the place where
 
13                its educational activities are carried on as a
 
14                student in a full-time program, taken for credit
 
15                at such institution, which combines academic
 
16                instruction with work experience, if such service
 
17                is an integral part of such program, and such
 
18                institution has so certified to the employer,
 
19                except that this subparagraph shall not apply to
 
20                service performed in a program established for or
 
21                on behalf of an employer or group of employers;
 
22     (10)  Service performed in the employ of a foreign government
 
23           (including service as a consular or other officer or
 
24           employee of a nondiplomatic representative);
 
25     (11)  Service performed in the employ of an instrumentality
 
26           wholly owned by a foreign government:
 

 
Page 7                                                     2320
                                     H.B. NO.           
                                                        
                                                        
 1           (A)  If the service is of a character similar to that
 
 2                performed in foreign countries by employees of the
 
 3                United States government or of an instrumentality
 
 4                thereof; and
 
 5           (B)  If the United States Secretary of State has
 
 6                certified or certifies to the United States
 
 7                Secretary of the Treasury that the foreign
 
 8                government, with respect to whose instrumentality
 
 9                exemption is claimed, grants an equivalent
 
10                exemption with respect to similar service
 
11                performed in the foreign country by employees of
 
12                the United States government and of
 
13                instrumentalities thereof;
 
14     (12)  Service performed as a student nurse in the employ of a
 
15           hospital or a nurses' training school by an individual
 
16           who is enrolled and is regularly attending classes in a
 
17           nurses' training school chartered or approved pursuant
 
18           to state law; and service performed as an intern in the
 
19           employ of a hospital by an individual who has completed
 
20           a four-year course in a medical school chartered or
 
21           approved pursuant to state law;
 
22     (13)  Service performed by an individual for an employing
 
23           unit as an insurance agent or as an insurance
 
24           solicitor, if all service performed by the individual
 
25           for the employing unit is performed for remuneration
 
26           solely by way of commission;
 

 
Page 8                                                     2320
                                     H.B. NO.           
                                                        
                                                        
 1     (14)  Service performed by an individual under the age of
 
 2           eighteen in the delivery or distribution of newspapers
 
 3           or shopping news, not including delivery or
 
 4           distribution to any point for subsequent delivery or
 
 5           distribution;
 
 6     (15)  Service covered by an arrangement between the
 
 7           department and the agency charged with the
 
 8           administration of any other state or federal
 
 9           unemployment compensation law pursuant to which all
 
10           services performed by an individual for an employing
 
11           unit during the period covered by the employing unit's
 
12           duly approved election, are deemed to be performed
 
13           entirely within the agency's state;
 
14     (16)  Service performed by an individual who, pursuant to the
 
15           Federal Economic Opportunity Act of 1964, is not
 
16           subject to the federal laws relating to unemployment
 
17           compensation;
 
18     (17)  Service performed by an individual for an employing
 
19           unit as a real estate salesperson, if all service
 
20           performed by the individual for the employing unit is
 
21           performed for remuneration solely by way of commission;
 
22     (18)  Service performed by a registered sales representative
 
23           for a registered travel agency, when the service
 
24           performed by the individual for the travel agent is
 
25           performed for remuneration by way of commission;
 

 
Page 9                                                     2320
                                     H.B. NO.           
                                                        
                                                        
 1     (19)  Service performed by a vacuum cleaner salesperson for
 
 2           an employing unit, if all services performed by the
 
 3           individual for the employing unit are performed for
 
 4           remuneration solely by way of commission;
 
 5     (20)  Service performed for a family-owned private
 
 6           corporation organized for profit that employs only
 
 7           members of the family who each own at least fifty per
 
 8           cent of the shares issued by the corporation, provided
 
 9           that:
 
10           (A)  The private corporation elects to be excluded from
 
11                coverage under this chapter;
 
12           (B)  The election for exclusion shall apply to all
 
13                shareholders and under the same circumstances;
 
14           (C)  No more than two members of a family may be
 
15                eligible per entity for exclusion under this
 
16                paragraph;
 
17           (D)  The exclusion shall be irrevocable for five years;
 
18           (E)  The family-owned private corporation presents to
 
19                the department proof that it has paid federal
 
20                unemployment insurance taxes as required by
 
21                federal law; and
 
22           (F)  The election to be excluded from coverage shall be
 
23                effective the first day of the calendar quarter in
 
24                which the application and all substantiating
 
25                documents requested by the department are filed
 
26                with the department;
 

 
Page 10                                                    2320
                                     H.B. NO.           
                                                        
                                                        
 1     (21)  Service performed by a direct seller as defined in
 
 2           section 3508 of the Internal Revenue Code of 1986;
 
 3           [and]
 
 4     (22)  Service performed by an election official or election
 
 5           worker as defined in section 3309(b)(3)(F) of the
 
 6           Internal Revenue Code of 1986, as amended[.]; and
 
 7     (23)  Services performed by an individual who holds an
 
 8           ownership interest of not less than fifty per cent in
 
 9           the employing unit.
 
10      None of the foregoing exclusions (1) to [(22)] (23) shall
 
11 apply to any service with respect to which a tax is required to
 
12 be paid under any federal law imposing a tax against which credit
 
13 may be taken for contributions required to be paid into a state
 
14 unemployment fund or which as a condition for full tax credit
 
15 against the tax imposed by the federal Unemployment Tax Act is
 
16 required to be covered under this chapter."
 
17      SECTION 2.  Statutory material to be repealed is bracketed.
 
18 New statutory material is underscored.
 
19      SECTION 3.  This Act shall take effect upon its approval.
 
20 
 
21                           INTRODUCED BY:  _______________________
 
22 
 
23