HB2442

SECTION 1. The legislature finds that the State and counties spend millions of dollars in public funds on garments, uniforms, materials, and other equipment and supplies provided by private contractors and manufacturers.

The legislature recognizes a public interest in avoiding vendors and contractors who maintain sweatshop working conditions, including below-subsistence wages, excessively long working hours, and unhealthy and unsafe working environments. These contractors also promote child, indentured, and prison labor, disregard local and international labor laws and workplace regulations, disregard fundamental women's rights, and repress workers' rights to assemble and bargain collectively.

Contractors and subcontractors who use sweatshop labor are able to underbid responsible contractors who pay fair wages and maintain humane work environments and conditions. Sweatshop practices place responsible vendors and contractors at a competitive disadvantage and may dissuade them from participating in the public procurement process.

As market participants, the state and county governments must ensure that the integrity of the public procurement process is not undermined by vendors and contractors who engage in sweatshop practices. Humane working conditions for all workers produce consistently better quality goods by providing fewer disruptions in the workplace due to workers' grievances, fewer absences due to illnesses and fatigue, fewer workplace injuries, less worker turnover, and greater incentives for workers to perform.

The purpose of this Act is to protect the interests of state residents, workers, and businesses by establishing a "sweatfree" public procurement policy and code of conduct that ensures that apparel, garments and related accessories, and other equipment, materials, and supplies procured by the State and counties, including their agencies and employees, through contracts, purchase orders, or uniform allowances and voucher programs are produced in workplaces free of sweatshop conditions.

SECTION 2. Chapter 103D, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . CODE OF CONDUCT AND SWEATFREE PROCUREMENT POLICY

§103D-A Application. This part applies to the procurement and laundering of apparel, garments, and related accessories, and the procurement of services, equipment, materials, and other supplies by the State and counties.

For purposes of this part, "procurement" has the same meaning as defined in section 103D-104 and includes contract, purchase, rental, lease, or allowance and voucher programs.

§103D-B Definitions. As used in this part:

"Administrator" means the administrator of the state procurement office.

"Consortium" means the state and county sweatfree consortium as provided in section 103D-C.

"Contractor" means a person or entity that provides applicable goods or services to the State or any county pursuant to a contract.

"Independent monitor" means an organization that is retained by the consortium to monitor compliance with this part. The independent monitor shall be an organization with expertise in monitoring factory working conditions that is not owned or controlled in whole or in part by, nor obtains any revenue from, any vendor, manufacturer, contractor or subcontractor or any other entity that derives its primary income from the sale of any product or service covered by this part.

"Nonpoverty wage" means the wage earned in the United States that is required for a full-time worker to produce an annual income equal to, or greater than the United States Department of Health and Human Services' most recent poverty guideline for a family of three plus an additional twenty per cent of the wage level paid either as hourly wage, health benefits, or pension benefits.

Outside the United States, a nonpoverty wage is a comparable nationwide wage and benefit level, adjusted to reflect the local cost of living, sufficient to raise a family of average size, out of poverty.

"Production facility" or "facility" means a workplace that provides or manufactures (including cutting and assembly by weaving, sewing, knitting, or felting), finishes, applies marks, warehouses, launders, or engages in any other processes or service that contribute significantly to a finished apparel or other product.

"Subcontractor" means a person, partnership, corporation, or other entity that contracts with a contractor or another subcontractor for the provision of goods or services covered by this part.

"Worker" or "employee" means a person engaged in the production of the goods or services covered by this part.

§103D-C Administration of this part; state and county sweatfree consortium; rules. (a) The administrator shall administer this part consistent with this chapter and other applicable laws of the State.

(b) The administrator shall be the chairperson of the state and county sweatfree consortium that shall consist of the chief procurement officers under section 103D-203. The consortium may appoint an independent monitor or any other state or county agency or personnel to monitor compliance with this part and carry out any other duties required by this chapter.

§103D-D Prohibition of sweatshop conditions; sweatfree code of conduct requirements. (a) Notwithstanding any other law to the contrary, contractors and subcontractors shall ensure that all production facilities adhere to or exceed the requirements of this section in their practices and policies regarding workers engaged in the production of goods and services covered by this part.

(b) Production facilities shall comply with all applicable domestic labor, employment, health and safety, environmental, and building laws, and the fundamental conventions of international labor organizations with respect to forced and child labor and freedom of association.

(1) The legal minimum wage;

(2) The prevailing wage in the industry in the country of production; or

(3) A nonpoverty wage.

(d) Production facilities shall maintain verifiable wage and hour records for each production worker. The records shall include the following for each production worker:

(1) The name and job classification;

(2) A general description of the work the worker performed each day and the rate of pay (including rates of contributions for, or costs assumed to provide fringe benefits);

(3) The daily and weekly number of hours worked;

(4) Wage deductions made; and

(5) The actual wages paid.

(e) Production facilities shall not require hourly and quota-based employees to work more than forty-eight hours per week or the limits on regular hours allowed by the law of the country of the manufactured product, whichever is lower. Contractors shall provide workers with at least one day off for every seven-day period, as well as holidays and vacations.

(f) Production facilities shall ensure that all hours worked beyond the limits established under this part are voluntary, except when each of the following conditions exists:

(1) National law permits mandatory overtime;

(2) The facility is party to a collectively negotiated contract with a representative labor union and the contract permits mandatory overtime; and

(3) Mandatory overtime does not exceed the amount allowed by the contract.

In addition to compensation for regular hours of work, hourly and quota-based employees shall be compensated for overtime hours at a premium rate that is legally required in the country of the manufactured product or, in those locations where similar laws do not exist, at a rate at least one-and-one-half times their regular hourly compensation rate.

(g) Production facilities shall not discriminate in employment, including issues related to hiring, salary, benefits, advancement, discipline, termination, retirement, gender (including pregnancy), race, religion, age, disability, sexual orientation, nationality, political opinion, or social or ethnic origin, or any other term or condition of employment or employer practice.

(h) Production facilities shall not harass or abuse workers sexually, psychologically, or verbally, or use corporal punishment.

(i) Production facilities shall not require pregnancy tests as a condition of employment nor demand pregnancy tests of employees. Female workers shall receive equal remuneration, including equal pay, benefits, treatment, and an opportunity to fill positions open to male workers.

(j) Production facilities shall not terminate employees without just cause. Contractors shall provide for a mediation or grievance process to resolve workplace disputes. For production in the United States, the disputes are limited to those not regulated by the National Labor Relations Board.

(k) Production facilities shall respect employees' rights to freedom of association, collective bargaining, striking or other concerted protest, and the filing of grievances. Production facilities or any of its agents shall not retaliate against, intimidate, coerce, harass, or take any other adverse action against employees for exercising these rights.

Production facilities or any of its agents shall not initiate, dominate, or support organizations in which employees participate or are represented. Production facilities shall allow union organizers free access to employees and shall recognize the union of the employees' choice. Production facilities shall demonstrate their commitment to freedom of association by taking steps to:

(1) Communicate to the workforce the facility's openness to workers' exercise of their associational rights;

(2) Negotiate in good faith with any union or other representative worker body duly constituted by employees;

(3) Implement effective procedures and training programs to safeguard workers against retaliation, intimidation, coercion, harassment, or other adverse action by managers, supervisors, or co-workers; and

(4) Remain strictly neutral on the matter of workers' choice to unionize or not. Employers shall not campaign in any way against, or in favor of workers' efforts to unionize. However, employers are not barred from stating that workers have a right to unionize in the exercise of their freedom of association.

(l) Production facilities shall not engage in any reprisal, coercion, intimidation, or take any other adverse action against employees for filing complaints, giving evidence, or otherwise cooperating with monitoring, enforcement, remediation, or any other activity by the consortium or its members, the independent monitor, any government agency, or other entity authorized to enforce the employers' obligations under this part.

(m) Contractors, subcontractors, or production facilities shall not shut down or reduce orders for a production facility in order to deny workers any right or standard protected by this part, including their right to freely associate.

§103D-E Phase-in period. During the first full fiscal year after the effective date of this part, the State and counties shall target for enforcement, only purchases and contracts for apparel, garments and corresponding accessories, materials, supplies or equipment, and laundry services. Agreements for other goods and services shall be targeted for enforcement in accordance with the procedure set forth in this part.

§103D-F Contractor affidavits, public records, and reporting. (a) The State and counties shall not enter into contracts with a contractor if:

(1) Based on information submitted by the consortium, its independent monitor organization, or other employees or agents authorized to assist in the implementation, administration, or enforcement of this part, the administrator finds that the contractor or one of its subcontractors violated this part and that the contractor or subcontractor refuses or fails to remedy the violation in a timely manner; or

(2) The contractor failed to submit the information required in the affidavit described in subsection (b). However, during the first three years during which this part is in effect, the State or counties may contract with a noncompliant bidder if the State or counties receive no bids or proposals that are fully compliant with this part.

(b) After final award of a contract for production of goods or provision of services covered by this part, the contractor or vendor shall submit affidavits that include the information set forth in this subsection. To ensure public access and confidence, the administrator shall post this information on its internet website as soon as possible but not later than fourteen days after final award of a contract. The information shall include:

(1) The names, addresses, phone numbers, and contact persons of each production facility involved in the production of goods or the provision of services;

(2) Where applicable, the names, addresses, contact persons, and telephone numbers of any agent or parent company of each facility involved in the production of goods or the provision of services;

(3) The amount, or increments thereof, to be paid each subcontractor. This information shall be updated in writing to show changes in the amount to be paid any subcontractor or amounts to be paid subcontractors after submittal of the most recent statement to the administrator;

(4) The names of any association or organization in which workers participate or are represented for purposes of collective bargaining in the facilities. The administrator may request copies of any current collective bargaining agreement covering workers in the facilities;

(5) A statement by a contractor or subcontractor indicating the following:

(A) The contractor or subcontractor understands their obligation to ensure that all applicable production facilities adhere to this part and the sweatfree code of conduct under section 103D-D;

(B) The contractor or subcontractor understands their obligation to conduct their business operations in a manner that facilitates the achievement and maintenance of compliance by production facilities;

(C) The contractor or subcontractor understands that if the consortium's independent monitor finds any of its production facilities to be contrary to this part, and the facility fails to remedy the noncompliance within a time period specified by the consortium or its independent monitor, the contractor or subcontractors shall be in violation of this part; and

(D) The contractor or subcontractor has furnished a copy of the sweatfree code of conduct to each covered production facility;

(6) A statement by the contractor or subcontractor indicating the following:

(A) As to each production facility, the facility's current compliance or noncompliance with this part;

(B) For each instance of noncompliance under subparagraph (A), a plan of corrective steps to remedy the noncompliance and the time period within which each step will be taken. The plan shall not replace or limit the consortium's or independent monitor's authority or responsibility to formulate remediation plans under section 103D-I or to take any other action under this part; and

(C) Following the awarding of a contract, as to each remedial step indicated in subparagraph (B), a statement indicating whether the step has been taken and the noncompliance remedied, at the time the step is taken. If no statement is filed by the time indicated in the corrective action plan, it shall be presumed that the facility has failed to implement the step by that time. Fulfillment of this requirement shall not exempt a contractor or subcontractor from their responsibility to cooperate with the consortium's or independent monitor's investigation of worksites or to take remedial action otherwise required under section 103D-I; and

(7) Any other information deemed necessary by the administrator for the administration and enforcement of this part.

(c) If any information provided by a contractor or subcontractor pursuant to this section changes during the specified time period of the contract, the contractor or subcontractor shall submit or cause to be submitted to the administrator, affidavits with the updated information.

(d) Each contractor or subcontractor shall maintain weekly certified payroll records from each of their applicable production facilities for submission to the administrator upon demand. The contractor shall be responsible for submitting the payroll records of its subcontractors and their facilities, although subcontractors shall submit their records directly to the administrator upon request. All certified payroll records shall be accompanied by a statement signed by the contractor or subcontractor if requested by the administrator, stating that the records are complete and correct.

§103D-G Verification and compliance. (a) It shall be the responsibility of contractors to ensure compliance with this part and the requirements of section 103D-D in all production facilities. Contractors and subcontractors shall establish and implement managerial systems, rules, procedures, and audits sufficient to effectively ensure compliance with this part. Contractors and subcontractors shall also ensure that:

(1) Prices paid to production facilities for goods or services are sufficient to enable the facility to meet the costs of compliance with this part;

(2) Dates for delivery of products or the provision of services and other logistical requirements imposed on subcontractors do not induce violations of hours, overtime, or other provisions of this part; and

(3) The contractor's relationship with subcontractors is sufficiently stable to enable the subcontractors to fully comply with this part.

(b) The refusal by a contractor, subcontractor, or production facility to permit monitoring by, or to cooperate fully in the monitoring process with the consortium or its independent monitor organization shall result in disqualification for state or county bidding, in termination of a contract, or in other sanctions under section 103D-I.

(c) Contractors and subcontractors shall cooperate fully with any investigation by the administrator, including without limitation, any independent monitor or state or county employee or agent authorized to assist in the implementation, administration, or enforcement of this part.

These persons or entities, in the performance of their duties, shall have the right to engage in unannounced inspections of any worksite where the contract or subcontract is performed, interview any manager, supervisor, or worker, and view and copy any document that is relevant to the inspection or other activity related to this part.

§103D-H Sweatfree advisory group. (a) The administrator shall establish a sweatfree procurement advisory group to address implementation and enforcement issues. The advisory group shall consist of advocates for garment workers and other workers experiencing sweatshop working conditions, unions of uniformed personnel, representatives of agencies that employ uniformed state or county personnel, administrators responsible for implementing this part, and other interested parties.

(b) The purpose of the sweatfree procurement advisory group shall be to:

(1) Receive and assess evidence of bidders' and contractors' noncompliance with this part, including the requirements of section 103D-D, from the consortium or an independent monitor, workers, labor unions, the State and counties, businesses, nongovernment organizations, and human rights advocates;

(2) Provide advice on bidding guidelines, dissemination of information to workers, and collaboration with other public entities;

(3) Evaluate the implementation of this part; and

(4) Evaluate industries engaged in the manufacture and sale of goods other than apparel and garments to determine whether the procurement of goods, in addition to apparel and garments, should be subject to this part. To recommend whether a particular good shall be targeted for enforcement, the factors that the sweatfree advisory group shall consider include, but not be limited to:

(A) The amount the State or counties have spent and anticipate spending for goods;

(B) Evidence of sweatshop labor or other conditions prohibited by this part in the manufacturing, assemblage or distribution of goods; and

§103D-I Violations and enforcement. (a) Any person may file a complaint for a violation of this part. The administrator or any independent monitor agency acting on behalf of the State or any county shall investigate the merits of all complaints. At the request of the party submitting the complaint, or when deemed necessary by the independent monitor in cases where the complainant has not explicitly requested, the administrator shall keep the name and contact information of the complainant confidential.

(b) The consortium or the independent monitor may conduct proactive monitoring for compliance with this part. The monitoring may include but is not limited to:

(1) Confidential interviews with workers conducted outside of the workplace;

(2) Interviews with local nongovernmental organizations and labor unions;

(3) Monitoring of local media and government reports regarding labor conditions at the facilities;

(4) Physical inspection of facilities; and

(5) Interviews with management or supervisors.

When information gathered in the course of the monitoring indicates a likelihood of noncompliance by a production facility, the consortium or the independent monitor shall initiate an investigation.

(c) Any contractor or subcontractor shall provide the administrator and agents authorized to assist in the administration and enforcement of this part, immediate access to the production facility or operation where the violation or alleged violation occurred to:

(1) Inspect the production facility;

(2) Inspect and copy all relevant documents; and

(3) Interview managers, supervisors, workers, and other personnel.

(d) Upon the determination of a violation of this part at a production facility by a contractor or its supplier, including all subcontractors, the administrator and the contractor shall meet for the purpose of drafting a remediation plan. However, in the event of disagreement, the consortium or the independent monitoring organization shall retain ultimate authority in the matter. Corrective action includes all steps necessary to correct the violations, including, but not limited to:

(1) Paying back wages to workers who made manufactured products or provided services supplied to the State or any county;

(2) Reinstating any worker unlawfully dismissed; or

(3) Providing training on worker rights and best practices education for managers and workers at the production facility or operation where the violation occurred to ensure future compliance. Any training and education shall be at the expense of the contractor or subcontractor. Upon request by the administrator or the independent monitor, the contractor or subcontractor shall submit the materials for training and education for the administrator or monitor's review and approval prior to distribution to managers and employees.

(e) After formulating a remediation plan, the consortium or the independent monitoring, as it sees fit, may engage in any follow-up inspections, interviews, and viewing and copying of documents, to ensure that the contractor or subcontractor implements the remediation plan in a timely manner. The consortium or its independent monitoring organization may collaborate with the contractor or subcontractor to solve problems encountered in remediation and to ensure that remediation is complete and sustainable.

(f) Sanctions shall be used as a last resort if the consortium or its independent monitoring organization finds:

(1) That the contractor or one of its subcontractors violates this part; and

(2) The contractor or subcontractor refuses or fails to remedy the violation in a timely manner.

Sanctions may include termination of a contract without notice and without liability for unpaid amounts that otherwise would have been payable, a financial penalty, or removal of the contractor from the bidder's list for a period determined by the administrator.

§103D-J Award of contract absent a sweatfree-compliant bid or proposal. (a) In the absence of bids or proposals that are fully compliant with this part, the administrator may award contracts to bidders or proposers that are or will be the most compliant with this part. This exemption from full compliance shall expire after the first full year after the effective date of this part.

(b) The exemption under subsection (a) shall comply with the following:

(1) No contract awarded under this section may exceed one year unless the administrator, no later than six months prior to the expiration of the original term of the contract, finds that the contractor has achieved an additional level of compliance with the terms of this part that warrants an extension of the contract for an additional year;

(2) Standards for determining compliance and additional levels of compliance shall be adopted by the administrator following consultation with the sweatfree procurement advisory group; and

(3) A noncompliant contractor shall provide a plan for corrective action pursuant to this part, implement the corrective action plan in a timely manner, and provide timely updated statements accounting for each remedial step taken; and

Nothing in this part shall compromise the administrator's authority to reject all bids or take any other authorized action under this part.

§103D-K Preemption. Nothing in this part shall be interpreted or applied to create any power or duty in conflict with federal law.

§103D-L Severability. If any provision of this part, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the part, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2008-2009 for the purposes of this Act.

The sum appropriated shall be expended by the state procurement office for the purposes of this Act.

SECTION 4. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 5. This Act shall take effect on January 1, 2009; provided that section 3 shall take effect on July 1, 2008.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2442
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII