SB2840 SD2.DOC

SECTION 1. The legislature finds that state and local spending on public works projects and construction procurement drives a significant portion of Hawaii's economy. As a result, Hawaii residents face difficulties acquiring employment in this important sector of the Hawaii economy. Furthermore, non-resident employees working on public works projects and construction procurement contracts contribute very little to the State's economy while they work in Hawaii, and return a disproportionately large amount of their wages to their home state upon the completion of their employment in Hawaii.

The legislature further finds that, in recent years, the number of resident construction workers who have been unemployed or underemployed have been substantial and that the rate of unemployment in Hawaii has reached levels that have not been experienced locally for a number of years. In addition, the unique geographic isolation of Hawaii compounds the rate of unemployment because it restricts the ability of its residents to find work in, or relocate to, other states. The high unemployment problem is further exacerbated for residents employed in the construction industry by contractors bringing in non-resident workers for public works and construction procurement contracts.

The United States Supreme Court ruled in United Building and Construction Trades Council of Camden County and Vicinity v. Mayor and Council of the City of Camden, 465 U.S. 208 (1984), that a specific local preference in hiring decisions to lessen local unemployment rates is constitutional under the Privileges and Immunities Clause if they are substantially related to the important governmental goal of reducing unemployment. The legislature finds that the inability of residents to acquire employment on public works projects and construction procurement contracts contributes to unemployment in the State, deprives the State of fiscal resources and capital, and dampens the State's economic development. Thus, the purpose of this Act is substantially related to the important governmental goal of reducing unemployment.

The intent of this Act is to level the playing field for Hawaii residents and to remedy the negative effects of non‑resident employment on public works projects and construction procurement contracts, while preserving contractors' flexibility to employ non-residents when necessary.

The purpose of this Act is to require that residents of Hawaii make up at least eighty per cent of the labor force working on certain public works projects and construction procurement contracts.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

EMPLOYMENT OF STATE RESIDENTS ON PUBLIC WORKS PROJECTS AND CONSTRUCTION PROCUREMENT CONTRACTS

§ ‑A Definitions. As used in this chapter:

"Contract" means public works contracts under chapter 103 and contracts for construction under chapter 103D. "Contractor" has the same meaning as in section 103D-104 and as the term is applied to public works contracts under chapter 103; provided that "contractor" includes a subcontractor where applicable.

"Construction" has the same meaning as in section 103D-104 and includes public works and contracts under chapter 103.

"Procurement officer" has the same meaning as in section 103D-104, and as used for purposes of chapter 103.

"Resident" means a person who is physically present in the State at the time the person claims to have established the person's domicile in the State and shows the person's intent is to make Hawaii the person's primary residence.

§ -B Application of chapter. (a) This chapter shall apply to all public works contracts under chapter 103 and to all construction procurements under chapter 103D; provided that this chapter shall not apply to procurements for professional services under section 103D-304 and procurements for small purchases under chapter 103D-305.

(b) This chapter shall apply to any subcontract of $50,000 or more in connection with any general contract otherwise covered by this chapter.

§ -C Requirements of contractor. (a) A contractor awarded any contract shall ensure that Hawaii residents make up not less than eighty per cent of the workforce employed to perform the contract on a particular construction, as determined under subsection (b).

(b) The eighty per cent requirement under subsection (a) shall be determined by dividing the total number of hours worked on a contract by residents, by the total number of hours worked by all employees of the contractor in the performance of the contract. Hours worked for any subcontractor of the contractor shall count towards the calculation for purposes of this subsection. The hours worked by employees within shortage trades, as determined by the department of labor and industrial relations, shall not be included in the calculations for purposes of this subsection.

(c) Every contractor shall comply with this chapter for the entire duration of the contract. Certification of compliance with this chapter shall be made under oath by an officer of the contractor to the procurement officer on a monthly basis.

(d) Upon request, a contractor shall provide the procurement officer with documentation sufficient to demonstrate compliance with this chapter.

(e) A contractor who fails to comply with this chapter shall be subject to any of the following sanctions:

(1) Temporary suspension of work on the project until the contractor or subcontractor complies this chapter;

(2) Withholding of payment on the contract or subcontract, as applicable, until the contractor or subcontractor complies with this chapter;

(3) Permanent disqualification of the contractor or subcontractor from any further work on the project;

(4) Recovery by the State or county, as applicable, of any moneys expended on the contract or subcontract, as applicable; or

(5) Proceedings for debarment or suspension of the contractor or subcontractor under section 103D-702.

§ -D Conflict with federal law. This chapter shall not apply if it conflicts with any federal law or its application will disqualify any state or county agency from receiving federal funds or aid."

SECTION 3. 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 4. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 5. This Act shall take effect on July 1, 2050.

SENATE	S.B. NO.	2840
TWENTY-FIFTH LEGISLATURE, 2010		S.D. 2
STATE OF HAWAII