HB760 SD2

SECTION 1. The legislature finds that service employees working for contractors of the State and counties deserve wage protections. Similarly, even stronger protections were established in 1965 for employees of federal contractors under the McNamara-O'Hara Service Contracts Act (41 U.S.C. §351 et seq.). The legislature further finds that the existing language of section 103-55, Hawaii Revised Statutes, while laudatory in purpose, exempts nearly all employees who might possibly benefit from the section. Section 103-55, Hawaii Revised Statutes, contains insufficient provisions for enforcement, rendering it ineffective in accomplishing the express purpose of the law: to ensure that contracted "services to be rendered shall be performed by employees paid at wages or salaries not less than the wages paid to public officers and employees for similar work."

Paraphrasing the report of the senate labor committee in recommending passage of the State's prevailing wage law for construction laborers in 1955, the legislature declared that it is the public policy of the State that bids for the performance of public work shall be based on the relative skill and efficiency of the contractors concerned and not on a difference in wages paid. To state the principle another way, government money, coming from the taxes of all, should not be used to subsidize contractors who are depressing the wages of some.

According to the 2006 Poverty Guidelines for Hawaii, as published by the United States Department of Health and Human Services, a family of four needs to earn at least $23,000 per year. This Act proposes that the wages of employees of a contractor providing services to the State of Hawaii and any of the counties be no less than the prorated hourly equivalent of the poverty threshold ($11.06 per hour = $23,000/2,080 hours).

SECTION 2. Section 103-55, Hawaii Revised Statutes, is amended to read as follows:

"§103-55 Wages, hours, and working conditions of employees of contractors performing services. (a) Before any offeror, other than a nonprofit organization, enters into a contract to perform services in excess of [~~$25,000~~] $5,000 for any governmental agency, or an offeror who is a nonprofit organization enters into a contract to perform services in excess of $25,000 for any governmental agency, the offeror shall certify that the services to be performed will be performed under the following conditions:

Wages. The services to be rendered shall be performed by employees paid at wages or salaries not less than the wage that provides an annual income equivalent to the current annual poverty guideline for Hawaii for a family of four as determined and periodically adjusted by the United States Department of Health and Human Services; provided that employees of nonprofit organizations to which this section applies shall be paid at wages or salaries not less than the wages paid to public officers and employees for similar work.

Compliance with labor laws. [~~All~~] The offeror shall comply with applicable laws of the federal and state governments relating to workers' compensation, unemployment compensation, payment of wages, and safety [~~will be fully complied with~~].

(b) No contract to perform services for any governmental contracting agency in excess of [~~$25,000~~] $5,000 shall be granted unless all the conditions of this section are met[.]; provided that where the contractor is a nonprofit organization, this section shall apply only to contracts in excess of $25,000. Failure to comply with the conditions of this section during the period of contract to perform services shall result in cancellation of the contract, unless [~~such~~] the noncompliance is corrected within a reasonable period as determined by the procurement officer. Final payment of a contract [or], release of bonds, or both, shall not be made unless the procurement officer has determined that the noncompliance has been corrected.

It shall be the duty of the governmental contracting agency awarding the contract to perform services [~~in excess of $25,000~~] and the department of labor and industrial relations to enforce this section.

(c) [~~This~~] Except as provided in subsections (a) and (b), this section shall apply to all contracts to perform services in excess of [~~$25,000,~~] $5,000, including contracts to supply ambulance service and janitorial service.

This section shall not apply to:

(1) Managerial[~~, supervisory, or clerical~~] or supervisory personnel[.];

(2) Contracts for supplies[,] or materials[~~, or printing.~~];

(3) Contracts for utility services[.];

(4) Contracts [~~to perform personal services under paragraphs (2), (3), (12), and (15) of section 76-16, paragraphs (7), (8), and (9) of section 46-33, and paragraphs (7), (8), and (12) of section 76-77.~~

~~(5)~~ ~~Contracts for professional services.~~] with other governmental bodies; and

[~~(6)~~] (5) Contracts to operate refreshment concessions in public parks[~~, or to provide food services to educational institutions.~~

~~(7)~~ ~~Contracts with nonprofit institutions~~].

(d) Any bid specification offered or contract entered into by a governmental body under this section shall contain the following:

(1) A provision requiring the contractor to ensure the right of all employees under relevant state or federal law to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to exercise these legal rights without interference;

(2) A provision that, if at any time during the period of the contract, a labor organization or any employee of the contractor seeks to organize employees of the contractor, the contractor shall commit no act nor make any statement that will directly or indirectly state or imply the contractor's preference or non-preference for unionization of its employees in general or for recognition of any bona fide labor organization as the exclusive representative of the employees working on contracts covered by this section;

(3) A provision that, if at any time during the contract period, a labor organization or any employee of the contractor seeks to organize employees of the contractor, the contractor shall grant access to its employees by any bona fide labor organization in the employee lunchrooms, lounges, or other non-public areas on the contractor's premises during employees' off-work periods, for organizational purposes; provided that there is no interference with normal work operations; and

(4) A provision that, if at any time during the contract period, a bona fide labor organization requests recognition within an appropriate bargaining unit, a disinterested neutral party selected by the director of labor and industrial relations shall conduct a review of employee authorization cards submitted by any labor organization in support of its claim to represent a majority of employees in an appropriate bargaining unit. If a majority of employees within a unit has designated the signatory labor organization to represent them, the contractor shall recognize that labor organization as the exclusive representative of the designated bargaining unit, and negotiations will commence for a collective bargaining agreement.

(e) Any contractor found in violation of this section shall pay a fine of $5,000 per violation to the governmental body, in addition to attorney's fees and costs, to the governmental body or the affected employees.

(f) Any employer who violates any provision of this section shall be liable to the employee or employees affected for the amount of their unpaid wages or compensation, and in case of wilful violation, for an additional amount equal to the liquidated damages.

(g) For the purposes of this section, "nonprofit organization" means a private, nonprofit, tax-exempt entity that is recognized as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.

(h) Excluded from this section are non-profits that qualify under sections 103D-1009 through and including 103D-1011 and chapter 103F."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2050.

HOUSE OF REPRESENTATIVES	H.B. NO.	760
TWENTY-FOURTH LEGISLATURE, 2007		H.D. 2
STATE OF HAWAII		S.D. 2