STAND. COM. REP. NO. 3427

Honolulu, Hawaii

RE: H.B. No. 2602

H.D. 1

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committee on Labor, to which was referred H.B. No. 2602, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO INDEPENDENT CONTRACTORS,"

begs leave to report as follows:

The purpose and intent of this measure is to provide three categories and twelve factors for the Department of Labor and Industrial Relations to apply to determine independent contractor status

Your Committee received testimony in support of this measure from the Chamber of Commerce Hawaii; Maui Chamber of Commerce; Tropical Maui Weddings; Construction Industry of Maui; Esign and Design; Envisions Entertainments & Productions, Inc.; Maui Pops Orchestra; and six individuals. Your Committee received testimony in opposition to this measure from the Department of Labor and Industrial Relations; Hawaii State AFL-CIO; Labor Caucus of the Democratic Party of Hawaii; SAG-AFTRA Hawaii Local; I.A.T.S.E. Local 665; American Federation of Musicians' Local 677; Hawaii Teamsters and Allied Workers Local 996; Hawaii Regional Council of Carpenters; and one individual.

Your Committee finds that independent contractors are an important part of Hawaii's business community and economy. Your Committee also finds that the existing Hawaii employment security law has been broadly interpreted when determining who qualifies as an independent contractor versus who is an employee of an employer. This measure seeks to provide greater clarity to those individuals choosing to become entrepreneurs and operate as independent contractors by setting forth in greater detail the criteria used to determine independent contractor status.

Your Committee acknowledges that proper determination of independent contractor status has been an ongoing issue and, as this measure moves forward, urges the Department of Labor and Industrial Relations to identify other state laws that may serve as models in amending this measure in a manner that will preserve compliance with federal law and the status of the state unemployment insurance program while protecting tax statuses and credits of employers.

Your Committee has amended this measure by inserting an effective date of January 1, 3000, to encourage further discussion.

As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2602, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2602, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Labor,

________________________________

JILL N. TOKUDA, Chair