STAND. COM. REP. NO. 3051

Honolulu, Hawaii

RE:    H.B. No. 2363

       H.D. 1

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committees on Judiciary and Labor and Commerce, Consumer Protection, and Health, to which was referred H.B. No. 2363, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO LABOR,"

beg leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Exclude sole proprietors, individual partners of a partnership, partners of a limited liability partnership with a transferable interest of at least fifty percent, individual members of a limited liability company with a distributional interest of at least fifty percent, or individuals owning at least fifty percent of a corporation from providing temporary disability insurance coverage for services they provide for themselves;

     (2)  Authorize the Director of Labor and Industrial Relations to receive electronic copies of injury and other reports; and

     (3)  Amend the penalty to an unspecified amount for:

          (A)  Employers who do not provide temporary disability insurance coverage for employees, fail to make correct or timely benefit payments or terminate benefits absent approval or statutory cause, fail to file medical reports or provide copies of requested medical reports, fail to provide workers' compensation coverage, and unlawfully deduct premium payments from employee wages; and

          (B)  Physicians who fail to timely submit workers' compensation injury and treatment forms.

     Your Committees received testimony in support of this measure from the Department of Labor and Industrial Relations, Hawai‘i Construction Alliance, Pacific Resource Partnership, and ILWU Local 142.

     Your Committees find that employers do not always provide workers' compensation or temporary disability insurance coverage due to the misclassification of employees as independent contractors.  The existing penalties for noncompliance with the State's workers' compensation law have not been amended since 1988 and are ineffective in encouraging compliance.  Implementation of this measure will facilitate the resolution of workers' compensation cases, expedite medical and indemnity benefits for injured employees, and provide better assurance that employers and stakeholders in the workers' compensation and temporary disability insurance industries comply with the law.

     Your Committees have amended this measure by:

     (1)  Increasing the maximum penalty for employers or insurance carriers who fail to make correct or timely benefit payments or terminate such benefits without approval or statutory cause from $2,500 to $5,000;

     (2)  Increasing the maximum penalty for physicians who fail to file workers' compensation medical reports from $250 to $500;

     (3)  Increasing the maximum penalty for employers who fail to furnish medical reports or allow inspection and copying of requested medical depositions from $1,000 to $5,000;

     (4)  Increasing the penalty for employers who fail to provide workers' compensation coverage for employees from the greater of at least $250 or $10 per employee per day of failure, to the greater of at least $500 or $100 per employee per day of failure;

     (5)  Increasing the maximum penalty for employers who deduct premium payments from an employee's wages from $2,500 to $5,000;

     (6)  Increasing the penalty for employers who fail to provide temporary disability insurance coverage for employees from the greater of at least $25 or $1 per employee per day of failure, to the greater of at least $500 or $100 per employee per day of failure; and

     (7)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the records of votes of the members of your Committees on Judiciary and Labor and Commerce, Consumer Protection, and Health that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2363, H.D. 1, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 2363, H.D. 1, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Judiciary and Labor and Commerce, Consumer Protection, and Health,

________________________________ ROSALYN H. BAKER, Chair

________________________________ GILBERT S.C. KEITH-AGARAN, Chair