SB2626 HD1.DOC

SECTION 1. The legislature finds that the critical purpose of this Act is to exercise austerity with respect to all state executive budget expenditures by imposing an absolute hiring freeze on permanent civil service position holders for the relatively short duration of nine months or less. Hiring freezes are commonly used by federal government agencies to immediately reduce expenditures, and thereby conserve limited federal funds. Given the Hawaii state government's current revenue shortfalls, the legislature finds that immediate conservation of state funds can be implemented through the hiring freeze required under this Act.

In determining the exact breadth of the civil service positions that will be subject to this temporary hiring freeze, in Konno v. County of Hawaii, 85 Hawaii 61 (1997), the Hawaii supreme court stated that it is the legislature's duty to make such a determination. In holding that the legislature has great leeway in determining which job positions were civil service job positions, the Hawaii supreme court held in Konno that the civil service system cannot be read as "only including those employees who are paid regular salaries by the government [because] such an interpretation would allow the state [administration] . . . to avoid civil service coverage simply by reducing the size of . . . [the state's] official payroll." The Hawaii supreme court in Konno further construed the then existing statutory term "civil service" to mean "those services that have been customarily and historically provided by civil servants."

While Konno dealt with the portion of chapter 76, Hawaii Revised Statutes, that addressed employment in the civil service system of the State's political subdivisions, and this Act concerns the civil service system of the State, the legislature finds that such a difference is immaterial. Through this Act, the legislature is exercising its authority, "as defined by law" as set forth in article XVI, section 1, of the Hawaii Constitution, to determine the scope of the state civil service. In doing so, the legislature adopts the approach set forth in Konno.

Against this backdrop of fiscal uncertainty, it is the legislature's intent to halt further deterioration of the core of the state government treasury by implementing this temporary hiring freeze system.

The legislature also finds that in the employer-public service employee relationship, it is imperative for the employee to undergo an initial probation period that allows the employer and employee to develop a complete and clear understanding of what the employee's daily job requirements will consist of over the course of one year and to give the employer sufficient time to assess the employee's ability to meet the fundamental expectations of the job position. In some cases, certain civil service positions that have only a six-month initial probation period can create an inherent risk for inefficiencies, ineffectiveness, or ineptness.

In the wake of the current revenue shortfalls of this state, there have been numerous layoffs of civil service position employees. The governor has also announced a second wave of layoffs is likely for civil service employees and for those working in civil service-like positions later this year. To prevent the potential for overloading the hiring of permanent civil service employees and thus further depleting the State's fiscal and human resources that are dedicated to providing core government functions, the legislature finds that the initial probation period for civil service positions needs to be extended.

The legislature further finds that providing periodic reports to the legislature about the hiring practices of civil service employees will enhance the transparency and accountability of state government operations. In addition, periodic reporting will assist the legislature in identifying potential pitfalls to providing for the efficient and timely delivery of critical services and functions of state government.

SECTION 2. Chapter 76, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§76- Positions insulated from partiality; appointment prohibited practices; Hawaii enforcement board established. (a) It shall be prohibited for any person, directly or indirectly, to:

(1) Fill, attempt to fill, accept, or attempt to accept any position insulated from partiality, from the effective date of Act , Session Laws of Hawaii 2010, until 10 a.m. on the third Wednesday in January 2011, including issuing or causing to be issued requests for proposals that call for individuals who are not government employees to be employed to perform work that is traditionally performed by civil service employees, or contracts that fulfill such requests for proposals;

(2) Retaliate against any person or entity participating in any manner in the investigation of or bringing of an appointment prohibited practice, including providing information regarding a possible appointment prohibited practice either to a person or entity who is authorized to bring an appointment prohibited practice complaint, or in testimony in a Hawaii enforcement board proceeding; or

(3) Compensate or cause to be compensated an attorney or representative of a respondent to represent the respondent in any matter that arose under this section, including an appeal of the Hawaii enforcement board's finding of fact, conclusions of law, and decision and order, where that person is not the respondent or the spouse of the respondent.

(b) Notwithstanding any law or memoranda, documents, or writings of the State, including any conflicts in any of the foregoing, this section shall be in full force and effect.

(c) It shall be an appointment prohibited practice for any person to cause or commit in any manner, directly or indirectly, individually or in concert with other persons, a violation of subsection (a).

A civil penalty shall be imposed on any person who commits an appointment prohibited practice, with the doctrine of respondeat superior being inapplicable thereto, thereby making no superior person or entity, including a government entity, liable for payment of that penalty. The civil penalty shall not exceed $500,000 per individual filling, or attempting to fill a position in a manner that constitutes an appointment prohibited practice. The civil penalty shall be deposited into the general fund.

No form of immunity shall make any person, including without limitation the governor, exempt from payment of the penalty, with this subsection constituting a waiver of sovereign immunity. In executing any order or judgment that imposes the penalty upon a person, any and all property of that person shall be subject to execution, including any property upon which a limitation on execution of an order or judgment would normally apply, including limitations as spendthrift provisions in a trust, and the limitation on the execution on property held as tenants by the entirety. Any property or money that was transferred from the respondent in an appointment prohibited practice proceeding to any person or entity six months prior to, or one day after, the effective date of Act , Session Laws of Hawaii 2010, but prior to the filing of an appointment prohibited practice complaint, whichever is shorter in duration, shall be void and subject to execution even though the property is in the possession of the transferee; provided that this voiding of transfers shall not apply to transfers that satisfied the following debts of the respondent that are bona fide:

(1) Payments of loans to financial institutions that are registered with the state or federal government;

(2) Utility payments; and

(3) Bona fide payments for food, clothing, and shelter for the respondent.

(d) There is established the Hawaii enforcement board within the department of labor and industrial relations for administrative purposes only. The board shall adjudicate allegations that any person or entity has committed an appointment prohibited practice, pursuant to the contested case provisions in chapter 91.

The Hawaii enforcement board shall consist of five members as follows:

(1) One member shall be appointed by the governor;

(2) One member shall be appointed by the president of the senate;

(3) One member shall be appointed by the speaker of the house of representatives;

(4) One member shall be appointed by agreement of the three chapter 89 exclusive representative organizations that have the largest number of bargaining unit members; and

(5) One member shall be appointed by agreement of all chapter 89 exclusive representative organizations;

provided that if no agreement is reached, then by a per capita of chapter 89 bargaining unit members vote with their respective exclusive representative organizations voting on their behalf in the respective bargaining units that they represent.

The Hawaii enforcement board shall use the Hawaii labor relations board facilities, statutory and administrative rules for the adjudication of prohibited practices within the meaning of chapter 89, in the adjudication of claims of commissions of appointment prohibited practices, and in doing so shall substitute in these chapter 89 statutory and administrative rules, appropriate statutory and administrative terms from this section for the adjudication of appointment prohibited practices; provided that notwithstanding any law to the contrary, there shall be a two-year statute of limitations in which to file a complaint with the Hawaii enforcement board that a person has committed an appointment prohibited practice.

The president of the senate and the speaker of the house of representatives shall appoint an attorney who is employed by the legislature to represent the Hawaii enforcement board when it conducts proceedings under this section. At the pleasure of the Hawaii enforcement board, the following shall represent the Hawaii enforcement board in any court proceeding to which the Hawaii enforcement board is a party:

(1) The department of the attorney general;

(2) Any attorney who is an employee of the legislature, except for attorneys of the legislative reference bureau; or

(3) A private attorney of the Hawaii enforcement board's choice; provided that if a private attorney is appointed, the attorney shall be paid from the funds appropriated to the department of the attorney general for the payment of special attorneys general.

The Hawaii enforcement board is empowered to, and shall award reasonable attorney's fees to be paid to the complainant by the respondent in any case that is filed with the Hawaii enforcement board and in which the complainant prevails.

(e) The following entities and persons may bring a complaint against any person alleged to have committed an appointment prohibited practice:

(1) Any exclusive representative within the meaning of chapter 89 who represents the members of a bargaining unit that contains at least one position insulated from partiality and that has suffered the adverse effects of an appointment prohibited practice; or

(2) Any entity or person who has been directly or indirectly displaced or otherwise adversely affected by an appointment prohibited practice;

provided that the complainant shall have the burden of proving by a preponderance of the evidence that an appointment prohibited practice has been committed by the respondent named in the appointment prohibited practice complaint.

(f) The department of the attorney general and any attorney directly or indirectly affiliated with it, including the attorney general, any deputy attorney general, and any special deputy attorney general, shall not represent or cause another to represent, in any manner, any person who is alleged to have directly or indirectly committed an appointment prohibited practice, at any stage of an appointment prohibited practice proceeding, including the appellate stage.

(g) The complainant and the respondent to an allegation that the respondent violated an attempt to accept under paragraph (a)(1) may resolve that allegation if the respondent agrees:

(1) To resign immediately from the position insulated from partiality that the respondent filled;

(2) To execute a release of claims in favor of the State and the complainant;

(3) Not to seek any position with the State for a period of five years after the resignation becomes effective; and

(4) To testify truthfully regarding transactions and occurrences that led to that respondent obtaining a position insulated from partiality in violation of subsection (a).

All other respondents may resolve with the complainant the allegations that they committed appointment prohibited practices in an agreed upon manner; provided that one of the terms of the resolution shall be that the respondents testify truthfully regarding transactions and occurrences that led to the commission of appointment prohibited practices.

All resolutions of allegations of appointment prohibited practices shall be approved by the Hawaii enforcement board. The foregoing resolution of a complaint that subsection (a) has been violated shall not affect any other claim that any other person violated any provision of subsection (a).

(h) After a party to a contested case conducted under this section receives notice of prevailing therein, the party may make a motion to the circuit court that has jurisdiction over the non-prevailing party for an order confirming the findings of fact, conclusions of law, and decisions and order of the Hawaii enforcement board. There shall be no time limitation for making such a motion. Thereupon, the circuit court shall grant the motion and issue an order confirming the findings of fact, conclusions of law, and decision and order, unless an appeal of those findings of fact, conclusions of law, and decision and order is granted pursuant to section 91-14. Upon the granting of the motion and order of confirmation, the same shall be filed in the office of the clerk of the circuit court and this shall constitute the entry of judgment. The judgment entered in accordance with this subsection shall have the same force and effect, in all respects as, and is subject to all the provisions of law relating to, a judgment in an action, and it may be enforced, as if it had been rendered in an action in the circuit court in which it is entered.

(i) For any and all appeals of the Hawaii enforcement board's decisions, the costs of the preparation of the record on appeal, including the cost of transcribing the hearing proceedings, shall be borne solely by the appellant.

(j) For the purposes of this section;
"Any and all positions in the civil service" means:

(i) Any and all positions in the State under section 76-16 that are compensated on the E.M. pay scale, as the sections existed on December 31, 2009;

(ii) Any and all positions that would be held by civil service employees or members of the civil service but for the fact that the positions are vacant; and

(iii) Any and all positions that perform personal services for the benefit of the State that have customarily and historically been held by the civil servants, but are within the employment system of a person or entity that is not a government;

provided that, notwithstanding the foregoing, the provisions that require the director of human resources development to determine the applicability of the statute to specific positions shall not apply.

"Fill" means a person performing work in a position insulated from partiality or of a position insulated from partiality, be it as an employee, an independent agent, an employee of a person, or entity who has entered into a contract, agreement, or understanding with the State, or an independent agent of an entity that has entered into a contract, agreement, or understanding with the State, or otherwise, for any length of time; provided that it shall not mean an employee who, having been continuously employed in a position insulated from partiality prior to January 1, 2009, performing work in a position insulated from partiality on a temporary assignment, as that term is customarily used in the state civil service system; provided further that it shall not mean a person who performs work as an emergency hire for a duration of ninety consecutive calendar days or less.

"Position" means a specific office or job, whether occupied or vacant, requiring full- or part-time employment of one person; provided that "position" also means a specific office or job, whether occupied or vacant, which normally requires full- or part-time employment of one person, but that is capable of being shared by two or more people, or that is being shared by two or more people.

"Positions insulated from partiality" means any and all positions in the state civil service; any and all positions that were held by state civil service employees who were compensated on the E.M. pay scale or members of the state civil service who were compensated on the E.M. pay scale, just prior to becoming vacant; classified and non-classified positions of the department of education; and faculty and non-faculty positions of the University of Hawaii and the community college system.

"State" means any and all parts of the State of Hawaii government, including but not limited to the state entities set forth in the Hawaii state constitution; the state entities under chapter 26; any and all state bodies corporate and state corporations, including the Hawaii health systems corporation, the University of Hawaii and the research corporation of the University of Hawaii and all subdivisions, employees, agents, servants, intermediaries, or offshoots of any of the foregoing entities.

"To directly or indirectly" means any entity, including the State, or persons to take direct action or inaction, such as, without limitation, hiring employees; or the State to take indirect action or inaction, such as, without limitation, making a written or verbal contract, agreement, or understanding with a third party for the third party to cause an action, transaction, or occurrence to transpire or not transpire at any time."

SECTION 3. Chapter 78, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§78- Non-civil service, temporary employees; report by state agencies. Every state agency shall report to the legislature all non-civil service, temporary employees employed by the agency for each quarterly period of the fiscal year, not later than the fifteenth day following the end of each quarterly period, as follows:

(1) Each position filled by a non-civil service, temporary employee, the purpose of the position, and the date that the position was established;

(2) How long the position has been filled by a non-civil service, temporary employee, and the reason the position has not been filled by a permanent civil service or exempt employee; and

(3) In the case of any position that has been filled by the rehiring of a non-civil service, temporary employee for at least three contract periods in one fiscal year, the reasons for the rehiring and why the position should or should not be made a permanent civil service or exempt position.

For the purpose of this section, "non-civil service, temporary employee" means any person employed for a contract period of less than ninety days."

SECTION 4. Section 76-11, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Initial probation period" means a period of not less than six months nor more than one year from the beginning of an employee's service in a civil service position."

SECTION 5. Section 76-27, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) All employees appointed to civil service positions shall constitute the membership of the civil service, but no employee shall be entitled to membership in civil service until the employee has:

(1) Successfully completed the initial probation period required as part of the examination process to determine the employee's fitness and ability for the position; provided that, notwithstanding the minimum time period of probation established under this section, the definition of initial probation period in section 76-11, or any rule adopted pursuant to this chapter, a person occupying a position exempt from civil service pursuant to section 76-16, and who either:

(A) Transfers into a civil service position between the effective date of Act , Session Laws of Hawaii 2010, and 11:59 a.m. on the third Wednesday in January 2011; or

(B) Voluntarily or involuntarily terminates employment from a position that is exempt from civil service pursuant to section 76-16 and, within ninety days of that termination, is subsequently hired in a civil service position between the effective date of Act , Session Laws of Hawaii 2010, and 11:59 a.m. on the third Wednesday in January 2011,

shall have an initial probation period of not less than twelve months commencing from the person's initial appointment to the civil service position that the person is transferring or being hired into; and

(2) Satisfied all requirements for employment prescribed by this chapter and the qualifications prescribed by section 78-1."

SECTION 6. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2020; provided that section 5 of this Act shall be repealed on December 31, 2012, and section 76-27(a)(1), Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act.

THE SENATE	S.B. NO.	2626
TWENTY-FIFTH LEGISLATURE, 2010		S.D. 1
STATE OF HAWAII		H.D. 1