Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Labor and Public Employment, to which was referred H.C.R. No. 77 entitled:

begs leave to report as follows:

The purpose of this concurrent resolution is to urge the Department of Labor and Industrial Relations (DLIR) to enforce Act 44, Session Laws of Hawaii 2003, in accord with the Legislature's intent, and to report to the Legislature on the number of employers and employees with self-insured Temporary Disability Insurance (TDI) benefits who were denied the use of sick leave for family leave purposes.

Supportive testimony was received from ILWU Local 142, HSTA, the Hawaii State IBEW, the Hawaii State AFL-CIO, and a concerned citizen. Testimony in opposition was submitted by DLIR and Verizon Hawaii.

The testimony received by your Committee echoed the unease delineated in the measure -- that DLIR's application of Act 44 has resulted in employees being denied the use of their sick leave for family leave purposes. This result is not what the Legislature intended when it enacted Act 44.

Act 44 was enacted specifically to allow employees to use up to ten days of accrued and available sick leave for family leave purposes in a single calendar year. However, DLIR testified that sick leave is included in self-insured TDI plans, rendering Act 44 nugatory.

DLIR's application of the TDI law leaves no sick leave subject to Act 44, even where an employer incorporates sick leave into their self-insured TDI plan, and even if this plan exceeds the minimum requirements under the TDI law.

Specifically, the Director of Labor wrote:

In that opinion, the Attorney General's office responded to the following question posed by DLIR:

The question posed by DLIR does not address DLIR's application of the TDI law, where it is including all sick leave under the umbrella of TDI; thus leaving no sick leave subject to Act 44, even if there is excess sick leave in the approved TDI plan. Nor are there other questions posed by DLIR to the Attorney General that address this issue.

This measure is aimed at addressing this very issue. However, your Committee also recognizes that employers are not required to offer sick leave. If only the minimal amount of sick leave is included in an approved TDI plan, any excess sick leave would probably not be offered to employees.

Thus, your Committee points out that an underlying problem is the conflict between the family leave and TDI statutes. Where family leave allows for the use of paid or unpaid leave to attend to family matters, TDI only allows for the use of leave for matters related to the individual. If the law is to allow for the use of sick leave included in an approved TDI plan for family leave purposes, the Legislature must reassess the underlying reasons for both family leave and TDI.

Your Committee also acknowledges the concern that changes to Act 44 may impact or be preempted by the Federal Employee Retirement Income Security Act (ERISA). However, your Committee notes that in Aurora Medical Group v. Department of Workforce Development, 236 Wis.2d 1, 612 N.W.2d 646 (2000), the Wisconsin Supreme Court upheld a lower appellate court's ruling that ERISA does not preempt Wisconsin's Family and Medical Leave Act (FMLA), which allows a plan participant on FMLA leave to substitute accrued sick pay for part of the FMLA leave.

While this holding applies to Wisconsin law, the reasoning used can be followed by other courts. Aurora further suggests that ERISA may not be a bar to the ends of Act 44. In this light, your Committee notes that the Legislature should reassess the exclusion from Act 44 of sick leave that is provided under a plan subject to ERISA.

Finally, your Committee strongly disagrees with the Director of Labor and Industrial Relations' testimony that this measure is aimed at serving the interests of a single party. Your Committee notes the testimony of other labor organizations in support of this measure.

This Committee was also deeply affected by the testimony of a concerned citizen who flew in from Maui to testify in person. This individual testified to the medical hardships suffered in his family, for which he had to use up all of his vacation leave because his employer denied him the use of accrued and available sick leave for family leave purposes. Now that he has no vacation leave available, he must take unpaid leave to see his daughter graduate. Clearly, this is an actual situation to which Act 44 could have helped one of our constituents had it been implemented by DLIR in the manner intended by the Legislature.

Accordingly, your Committee is in accord with this measure and hopes that a meaningful solution can be found to help the workers of this State.

After careful consideration, your Committee has amended this concurrent resolution by:

As a postscript, during the public hearing, the Director of Labor offered to prepare proposed amendments that would require DLIR to enforce the use of accrued and available sick leave for family leave purposes as the Legislature intended through the enactment of Act 44.

He stated that while this Administration would not support legislation that would make Act 44 operative, in his capacity as the Director of Labor, he would do his best to provide whatever technical assistance this Committee desired. Your Committee has accepted this offer and a letter formally requesting his assistance in drafting proposed amendments was transmitted to him on March 30, 2004.

As affirmed by the record of votes of the members of your Committee on Labor and Public Employment that is attached to this report, your Committee concurs with the intent and purpose of H.C.R. No. 77, as amended herein, and recommends that it be referred to the Committee on Judiciary in the form attached hereto as H.C.R. No. 77, H.D. 1.