Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 2787 entitled:

begs leave to report as follows:

The purpose of this measure is to raise the guaranteed monthly compensation ceiling for those exempted from the State's Wage and Hour Law from the existing $1,250 to $2,000.

Testimony in support of the measure was received from the Department of Labor and Industrial Relations and the ILWU Local 142.

Your Committee finds that the State of Hawaii's Wage and Hour Law was originally established to safeguard existing minimum wage and maximum hour standards to maintain the health, efficiency and general well-being of workers. Under the existing definition of "employee" in section 387-1, Hawaii Revised Statutes, an individual who receives a guaranteed compensation of $1,250 or more per month is excluded from the requirements of the law. By paying a guaranteed compensation, employers who are subject to the State law may schedule such individuals to work unlimited hours without being required to pay overtime compensation.

However, your Committee finds that an employee earning the current minimum wage and who averages twenty hours per week of overtime would earn approximately $1,744 a month. With the minimum wage increase to $6.25 per hour, effective January 1, 2003, the same employee averaging twenty hours of overtime would earn approximately $1,896 per month. For an individual who is paid $1,250 a month, however, the employer could schedule unlimited hours without paying additional overtime compensation. To correct this inequity, the measure increases the amount of guaranteed compensation to $2,000 per month.

Your Committee believes that the measure will protect salaried employees who are compensated at less than $2,000 per month.

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. 2787 and recommends that it pass Second Reading and be placed on the calendar for Third Reading.