Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 165 entitled:

begs leave to report as follows:

The purpose of this measure is to provide a tax credit for taxable years beginning after December 31, 2001, to businesses who provide paid family leave benefits to their employees.

Testimony in support of the measure was received from the ILWU, Local 142. Testimony in opposition to the measure was received from the Department of Taxation. The Tax Foundation submitted comments on the measure.

Your Committee finds that Hawaii's family leave law, Chapter 398, Hawaii Revised Statutes, requires an employer who employs one hundred or more employees for twenty or more calendar weeks per year, to provide an employee with a total of four weeks of family leave during any calendar year upon the birth or adoption of a child, or to care for a child, spouse, reciprocal beneficiary, or parent with a serious health condition.

Your Committee further finds that while this law provides a much-needed benefit for Hawaii families whose members are employed by large businesses, it does not apply to companies with fewer than one hundred employees. Over sixty per cent of employees in the private sector in Hawaii work for companies with fewer than one hundred employees.

Your Committee believes that family-friendly policies should be extended to all employees, regardless of the size of the employer. However, your Committee also recognizes that for many small businesses, providing paid family leave would be a severe financial burden and could adversely affect the success of the business.

Consequently, your Committee believes that providing a tax credit would serve as an incentive for smaller businesses to implement a paid family leave program, hence lessening the financial burden on the employer, and providing financial resources to employees in times of family need.

As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 165 and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.