SB2220.DOC

SECTION 1. The legislature finds that Hawaii's economy is driven by thousands of businesses that provide essential goods, services, and jobs. However, an underground economy exists that threatens the ability of legitimate businesses to effectively compete in the marketplace. Underground business operations typically:

(1) Avoid licensing requirements;

(2) Pay wages in cash, allowing the avoidance of payroll taxes, unemployment insurance, disability insurance, personal income tax, and paid family leave;

(3) Employ vulnerable workers, new immigrants, and economically disadvantaged individuals;

(4) Fail to pay minimum wages required by state and federal law;

(5) Fail to carry workers' compensation insurance; and

(6) Avoid worker and workplace safety requirements.

The legislature further finds that underground business operations drive down wages, create harsh working conditions, and undercut a legitimate business' profit margins. Underground business operations are a threat to the State's economy, workforce, and consumers.

The purpose of this Act is to create a construction site inspection task force to investigate and inspect construction sites for unlicensed contractors, illegal workers, and workplace safety violations.

SECTION 2. Chapter 444, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§444- Construction site inspection task force. (a) The director shall establish a construction site inspection task force attached to the department of commerce and consumer affairs for administrative purposes. The director, or the director's designee, shall serve as chairperson of the construction site inspection task force. The task force shall include at least two representatives from the department of commerce and consumer affairs, the department of labor and industrial relations, and the department of taxation. The task force also shall include a representative from each county permitting department.

(b) The construction site inspection task force shall:

(1) Facilitate and encourage the development and sharing of information by the participating agencies necessary to combat the underground economy including shared automated information database systems, the use of a common business identification number, and a centralized debt collection system;

(2) Improve the coordination of activities among the participating agencies;

(3) Develop methods to pool, focus, and target the enforcement resources of the participating agencies in order to deter tax evasion, unlicensed contractor activity, and workplace safety violations and maximize recoveries from violators of applicable laws and rules; and

(4) Reduce enforcement costs wherever possible by eliminating duplicative audits and investigations.

(1) Form joint enforcement teams to utilize the existing collective investigative and enforcement capabilities of the participating members, including inspectors appointed by the director or by participating members. The joint enforcement teams shall conduct site inspections on sites suspected of engaging in tax evasion, unlicensed contractor activity, and workplace safety violations. The teams also shall conduct random site inspections to ensure compliance with existing laws;

(2) Solicit the cooperation and participation of other state and local agencies in carrying out the objectives of the task force;

(3) Establish procedures for soliciting referrals from the public, including but not limited to an advertised telephone hotline;

(4) Develop procedures to permit the use of civil sanctions in lieu of criminal actions wherever possible; and

(5) Evaluate the need for statutory changes to achieve the purposes of this section, including:

(A) Eliminating barriers to interagency information sharing;

(B) Improving the ability of the participating agencies to audit, investigate, and prosecute violations;

(D) Establishing centralized, automated debt collection services for the participating agencies; and

(E) Emphasizing civil penalties instead of criminal ones whenever possible.

(d) For purposes of this section, members of any joint enforcement team formed by the task force pursuant to subsection (c)(1) may enter at reasonable times, without prior notice, any property, public or private, for the purpose of investigating and inspecting the condition or operation of any construction site thereon.

(e) The task force shall submit an annual report to the legislature no later than twenty days before the convening of each regular session. The report shall include but not be limited to all of the following:

(1) The number of cases of violations and noncompliance with tax laws identified, audited, investigated, or prosecuted through civil action or referred for criminal prosecution;

(2) Actions taken by the task force to publicize its activities; and

(3) Recommendations for any legislation needed to accomplish the goals described in subsection (c)(5)."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2010.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2220
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII