STAND. COM. REP. NO. 2660

Honolulu, Hawaii

RE:    S.B. No. 2694

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committee on Commerce, Consumer Protection, and Health, to which was referred S.B. No. 2694, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO EMPLOYMENT SECURITY,"

begs leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Clarify Hawaii's employment security law for independent contractors by:

          (A)  Including twenty factors to be used as guidelines for the Department of Labor and Industrial Relations when determining whether an individual could be an independent contractor;

          (B)  Retaining the Department of Labor and Industrial Relations' ability to determine if an individual is an independent contractor; and

          (C)  Defining "client" and "independent contractor";

     (2)  Require the Director of Labor and Industrial Relations to submit a report to the Legislature prior to the convening of the Regular Session of 2017 on the guidelines developed by the Unemployment Insurance Coverage Committee to assist auditors during investigations; and

     (3)  Require the Director of Labor and Industrial Relations to submit an annual report to the Legislature regarding independent contractor and covered employment determinations.

     Your Committee received testimony in support of this measure from Envisions Entertainment & Productions, Inc.; Maui Chamber of Commerce; Whalers Realty, Inc.; and three individuals.  Your Committee received testimony in opposition to this measure from the International Longshore and Warehouse Union, Local 142.  Your Committee received comments on this measure from the Department of Labor and Industrial Relations and Department of the Attorney General.

     Your Committee finds that independent contractors are an important part of Hawaii's business community and economy.  Furthermore, increasing numbers of entrepreneurs are choosing to go into business for themselves as independent contractors.  However, many of these individuals may not be aware of the criteria used by the Department of Labor and Industrial Relations when making determinations as to whether an individual is in an employment relationship or is a bona fide independent contractor.  This measure clarifies the law that determines who qualifies as an independent contractor, thereby protecting legitimate independent contractors and the businesses with which they contract.

     As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Health that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2694, S.D. 1, and recommends that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Health,

________________________________

ROSALYN H. BAKER, Chair