SB1568

SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

WAGES AND HOURS OF

HUMAN SERVICES PROVIDERS

CONTRACTED BY THE STATE OR COUNTIES

PART I. GENERAL PROVISIONS

§ -1 Definitions. As used in this chapter, unless the context otherwise requires:

"Basic hourly rate" means the hourly wage paid to a human services provider for work performed during nonovertime hours, but shall not include the cost to an employer of furnishing fringe benefits, whether paid directly or indirectly to the human services provider as provided in the definition of "wages".

"Contractor" means any person furnishing human services under a contract with a governmental contracting agency, subcontractor, or any other person under a subcontract arrangement with any person who has a contract subject to this chapter.

"County" means the city and county of Honolulu, county of Hawaii, county of Kauai, and county of Maui.

"Department" means the department of labor and industrial relations.

"Director" means the director of labor and industrial relations of the State.

"Governmental contracting agency" means the State, any county and any officer, bureau, board, commission, or other agency or instrumentality thereof.

"Human services" includes social work, case work, and investigative services intended to improve the lives of individuals and families by, among other duties, evaluating an individual's needs, creating a treatment plan for the individual, implementing the plan, and providing emotional support.

"Human services provider" includes a social worker, case worker, or investigator employed by a private organization providing human services under a contract with a governmental contracting agency.

"Overtime compensation" means compensation based on not less than one and one-half times the human services providers' basic hourly rate of pay plus the cost to an employer of furnishing a human services provider with fringe benefits as described in the definition of "wages"; provided that if the department determines that a prevailing wage is defined by a collective bargaining agreement, the overtime compensation shall be at the rates set by the applicable collective bargaining agreement.

"Wages", "rate of wages", "wage rates", "minimum wages" and "prevailing wages" mean the basic hourly rate and the cost to an employer of furnishing a human services provider with fringe benefits, including but not limited to health and welfare benefits, vacation benefits, and pension benefits, whether paid directly or indirectly to the human services provider.

§ -2 Applicability; wages, hours, and other requirements. (a) This chapter shall apply to every contract in excess of $2,000 for human services to which a governmental contracting agency is a party.

For the purposes of this subsection:

"Contract" includes but is not limited to any agreement, purchase order, or voucher in excess of $2,000 for human services.

"Governmental contracting agency" includes:

(1) Any person or entity that causes either directly or indirectly the provision of human services; and

(2) Any public-private partnership.

"Party" includes eligible bidders for the provision of human services.

(b) Every human services provider performing work pursuant to this chapter shall be paid no less than prevailing wages; provided that:

(1) The prevailing wages shall be established by the director as the sum of the basic hourly rate and the cost to an employer of providing a human services provider with fringe benefits. In making prevailing wage determinations, the following shall apply:

(A) The director shall make separate findings of:

(i) The basic hourly rate; and

(ii) The rate of contribution or cost of fringe benefits paid by the employer when the payment of the fringe benefits by the employer constitutes a prevailing practice. The cost of fringe benefits shall be reflected in the wage rate scheduled as an hourly rate; and

(B) The rates of wages that the director shall regard as prevailing in each corresponding classification of human services providers shall be the rate of wages paid to the greatest number of those employed in the State, the modal rate, in the corresponding classes of human services provider in circumstances that are similar to the contract work;

(2) Except for the prevailing wages established by subsections (h) and (i), the prevailing wages shall be not less than the wages payable under federal law to corresponding classes of human services providers employed in the State that are prosecuted under contract or agreement with the government of the United States; and

(3) Notwithstanding the provisions of the original contract, the prevailing wages shall be periodically adjusted during the performance of the contract in an amount equal to the change in the prevailing wage as periodically determined by the director.

(c) No human services provider employed pursuant to this chapter by the State or any county shall be permitted or required to work on Saturday, Sunday, or a legal holiday of the State or in excess of eight hours on any other day unless the human services provider receives overtime compensation for all hours worked on Saturday, Sunday, and a legal holiday of the State or in excess of eight hours on any other day. The rate for overtime compensation and any other premium rates of pay shall be those rates specified in an applicable collective bargaining agreement when the basic hourly rate is established by a collective bargaining agreement.

For purposes of determining overtime compensation under this subsection, the basic hourly rate of any human services provider shall not be less than the basic hourly rate determined by the director to be the prevailing basic hourly rate for corresponding classes of human services providers in similar circumstances in the State.

(d) The contractor or the contractor's subcontractor shall pay all human services providers that it employs, unconditionally and not less often than once a week, and without deduction or rebate on any account, except as allowed by law, the full amounts of their wages including overtime, accrued to not more than five working days prior to the time of payment, at wage rates not less than those deemed to be prevailing, regardless of any contractual relationship that may be alleged to exist between the contractor or subcontractor and the human services providers. The rates of wages to be paid shall be posted by the contractor in a prominent and easily accessible place, and a copy of the rates of wages required to be posted shall be given to each human services provider employed under the contract by the contractor at the time each human services provider is employed, except that where there is a collective bargaining agreement, the contractor does not have to provide the contractor's employees the wage rate schedules.

(e) The governmental contracting agency may withhold from the contractor so much of the accrued payments as the governmental contracting agency may consider necessary to pay to the human services providers employed by the contractor or any subcontractor the difference between the prevailing wages and the wages received and not refunded by the human services providers.

(f) Every contract in excess of $2,000 for human services and the specifications for such contract shall include provisions that set forth the requirements of subsections (a) to (e); provided that failure by the contracting agency to include those provisions in the contract or specifications shall not be a defense of the contractor or subcontractor for noncompliance with the requirements of this chapter.

(g) For any provision of human services that is subject to this chapter but not directly caused by a governmental contracting agency, the director shall be responsible for enforcement of this chapter, including the collection and maintenance of certified copies of all payrolls that are subject to this chapter.

(h) When:

(1) A party has entered into a collective bargaining agreement with a bona fide labor union governing the party's workforce; and

(2) The collective bargaining agreement has been properly submitted to the director under section -34,

the terms of the collective bargaining agreement and associated provisions shall be deemed the prevailing wages and terms serving as the basis of compliance with this chapter for work on the contract by the party's workforce; provided that this subsection does not affect the director's enforcement powers contained in subsection (g).

As used in this subsection, "party" includes eligible bidders for the provision of human services.

§ -3 Provisions of law; waiver. No provision of this chapter may in any way be contravened or set aside by private contract.

§ -4 Payrolls and payroll records. (a) Every contract subject to this chapter and the specifications for those contracts shall contain a provision that a certified copy of all payrolls and a certified copy of a fringe benefit reporting form supplied by the department or any certified form that contains all of the required fringe benefit information shall be submitted weekly to the governmental contracting agency for review. The fringe benefit reporting form shall itemize the cost of fringe benefits paid by the general contractor or subcontractor for:

(1) Health and welfare benefits;

(2) Pension and annuity benefits;

(3) Vacation benefits;

(4) Continuing education and training benefits; and

(5) Other fringe benefit costs paid by the general contractor or subcontractor.

The general contractor shall be responsible for the submission of certified copies of the payrolls of all subcontractors. The certification shall affirm that the payrolls are correct and complete, that the wage rates contained therein are not less than the applicable rates contained in the wage determination decision of the director of labor and industrial relations attached to the contract, and that the classifications set forth for each human services provider conform with the work the human services provider performed. Any certification discrepancy found by the contracting agency shall be reported to the general contractor and the director to effect compliance.

(b) Payroll records for all human services providers performing work shall be maintained by the general contractor and the general contractor's subcontractors, if any, during the course of the work and preserved for a period of three years thereafter. The records shall contain the name of each employee, the employee's correct classification, rate of pay, the itemized fringe benefit reporting form pursuant to subsection (a), daily and weekly number of hours worked, deductions made, and actual wages paid.

(c) The contractor shall make payroll records available for examination within ten days from the date of a written request by a governmental contracting agency, director, or any authorized representatives thereof. Any contractor who:

(1) Fails to make payroll records accessible within ten days;

(2) Fails to provide information requested for the proper enforcement of this chapter within ten days; or

(3) Fails to keep or falsifies any record required under this chapter,

shall be assessed a penalty as provided in section -22(b).

§ -5 Termination of work on failure to pay agreed wages; completion of work; contract and specifications provision. Every contract and the specifications for such contract shall contain a provision that if the governmental contracting agency finds that any human services provider employed by the contractor or any subcontractor has been or is being paid wages at a rate less than the required rate by the contract or the specifications, or has not received the human services provider's full overtime compensation, the governmental contracting agency may, by written notice to the contractor, terminate the contractor's right, or the right of any subcontractor, to proceed with the work or with the part of the work in which the required wages or overtime compensation have not been paid and may complete such work or part by contract or otherwise, and the contractor and the contractor's sureties shall be liable to the governmental contracting agency for any excess costs occasioned thereby.

PART II. ADMINISTRATION AND ENFORCEMENT

§ -21 Governmental contracting agency responsibilities. The governmental contracting agency shall:

(1) Pay or cause to be paid, within sixty days of a determination made by the director, directly to human services providers or to the director, from any accrued payment withheld under the terms of the contract, any wages or overtime compensation found to be due to human services providers under the terms of the contract subject to this chapter, or any penalty assessed;

(2) Order any contractor to pay, within sixty days of a determination made by the director, any wages or overtime compensation that the contractor, or any of the contractor's subcontractors, should have paid to any human services provider under any contract subject to this chapter, or any penalty assessed which the contractor, or any of the contractor's subcontractors, should have paid to the director; and

(3) Report to the director any violation of this chapter, the rules adopted thereunder, or the terms of the contract subject to this chapter.

§ -22 Investigation; penalties. (a) The department may conduct investigations to determine compliance with this chapter. The department may examine the records of any contractor, either during or after the performance of any contract, or subpoena the records. The department may also interview employees during working hours on the job.

(b) If any contractor interferes with or delays any investigation by the department, the governmental contracting agency, on receipt of written notice from the director of the interference or delay, shall withhold from the contractor all further payments until the director has notified the governmental contracting agency in writing that the interference or delay has ceased. Interference or delay includes failure to provide requested records under section -4; failure to allow employees to be interviewed during working hours on the job; and falsification of records required under this chapter. The department shall assess a penalty of $10,000 per contract for interference or delay. For each day thereafter that the employer fails to cooperate, the director shall assess a penalty of $1,000 per contract.

(c) The names of all complainants shall be withheld from the employer unless prior permission is given by the complainant to release the complainant's name.

§ -23 Notification of violation. (a) When the department, either as a result of a report by a contracting agency or as a result of the department's own investigation, finds that a violation of this chapter or of the terms of the contract subject to this chapter has been committed, the department shall issue a notification of violation to the contractor or subcontractor involved.

(b) A notification of violation shall be final and conclusive unless within twenty days after a copy has been sent to the contractor, the contractor files a written notice of appeal with the director.

(c) A hearing on the written notice of appeal shall be held by a hearings officer appointed by the director in conformance with chapter 91.

Hearings on appeal shall be held within sixty days of the notice of appeal and a decision shall be rendered by the hearings officer within sixty days after the conclusion of the hearing, stating the findings of fact and conclusions of law. The hearings officer may extend the due date for decision for good cause; provided that all parties agree.

§ -24 Violations; penalties. (a) Where the department finds that a first violation of this chapter has been committed, the department, after proper notice and opportunity for hearing, shall assess and order the person or firm in violation to be jointly and severally liable for a penalty equal to twenty-five per cent of the amount of back wages found due or $250 for each offense, up to $2,500, whichever is greater.

(b) Where the department finds that a second violation of this chapter has been committed, whether on the same or another contract, within two years of the first notification of violation, the department, after proper notice and opportunity for hearing, shall assess and order the person or firm in violation to be jointly and severally liable for a penalty equal to the amount of back wages found due or $500 for each offense, up to $5,000, whichever is greater.

(c) Where the department finds that a third violation of this chapter has been committed, whether on the same or another contract, within three years of the second notification of violation, the department, after proper notice and opportunity for hearing, shall assess and order the person or firm in violation to be:

(1) Jointly and severally liable for a penalty equal to two times the amount of back wages found due or $1,000 for each offense, up to $10,000, whichever is greater; and

(2) Suspended from doing any new work for a governmental contracting agency for a period of three years, except as provided in section -25(a)(2). The suspension shall be effective on the later of the twenty-first day after the notification of violation has been sent, or upon the issuance of a decision pursuant to section -23(c).

(d) A first, second, or third violation refers to each contract in which the department finds that a contractor has failed to comply with this chapter.

(e) Both the person and firm shall be listed on each notice of violation.

(f) As used in this section:

"Firm" includes a non-profit, corporation, limited liability company, partnership, and limited partnership.

"New work on a contract" includes any contract in which the suspended person or firm has not begun work as of the date of the suspension order.

"Offense" means each section of this chapter under which the contractor is cited; provided that, with respect to prevailing wage and overtime citations under section -2, each employee and each contract shall be considered a separate offense.

"Person" includes a sole proprietor and the principal responsible managing employee of a firm.

§ -25 Suspension. (a) The director shall suspend a person and firm as follows:

(1) For a first or second violation, if a person or firm fails to pay wages found due or any penalty assessed, or both, the person and firm shall be immediately suspended from doing any work on any contract with a governmental contracting agency until all wages and penalties are paid in full;

(2) For a third violation, the suspension shall be as prescribed in section -24(c); provided that if the person or firm continues to violate this chapter or fails to pay wages found due or any penalty assessed, or both, then the person and firm shall immediately be suspended from doing any work on any contract with a governmental contracting agency for a mandatory three-year period. If after the three-year suspension period, the wages found due or penalties assessed are still unpaid, the suspension shall remain in force until payment is made in full; or

(3) For falsification of records, or for delay or interference with an investigation pursuant to section -22, the person and firm shall be immediately suspended for a period of three years.

(b) The director shall immediately notify the governmental contracting agency, comptroller, auditor or director of finance of the county, and, in the case of a suspended subcontractor, general contractor of any suspension order.

(c) No contract shall be awarded to the person and firm so suspended or to any firm, corporation, partnership, or association in which the person or firm has an interest, direct or indirect, until three years have elapsed from the date of suspension, unless the period of suspension is reduced or extended as herein provided. Any contract awarded in violation of this subsection shall be void.

(d) As used in this section, "person" includes a sole proprietor and the principal responsible managing employee of a firm.

§ -26 Judicial review. (a) Any party to an appeal under this chapter may obtain judicial review of the decision on the appeal in the manner provided in chapter 91.

(b) Any suspension or dismissal of any complaint under this chapter shall be subject to appeal in circuit court by the aggrieved party, under section 91-14 and rule 72 of the Hawaii rules of civil procedure.

§ -27 Liability. If the accrued payments withheld under the terms of the contract are insufficient to reimburse all the human services providers for wages or overtime compensation due under this chapter, and the contractor has failed to pay the wages or overtime compensation, the contractor and the contractor's sureties shall be liable to the human services providers in the amount of the unpaid wages and overtime compensation due, and in an additional equal amount as liquidated damages. However, any claim for liquidated damages, insofar as the surety or sureties are concerned, shall not be paid until the claims of all other creditors have been satisfied.

§ -28 Civil action. (a) The following civil actions may be instituted in any court of competent jurisdiction:

(1) An action to recover unpaid wages or overtime compensation may be maintained by any one or more human services providers for and on behalf of oneself or themselves and others similarly situated; and

(2) An action for injunctive and other relief against an employer that fails to pay the prevailing wage to its employees as required by this chapter by a joint labor-management committee established pursuant to section 175a of the federal Labor Management Cooperation Act of 1978 (29 U.S.C. 175a).

(b) The court, in its action and in addition to any judgment awarded to the plaintiff or plaintiffs, shall allow reasonable attorney's fees and costs of the action to be paid by the defendant.

(c) It shall be no defense that the human services providers accepted or agreed to accept less than the required rate of wages or overtime compensation or voluntarily made refunds.

(d) When a written request is filed by any human services provider with the director claiming unpaid wages or overtime compensation under this chapter, the director, after receiving an assignment from the human services provider, may bring an action in any court of competent jurisdiction to recover the amount of the claim. The consent of any human services provider to the bringing of such action by the director, unless the action is dismissed without prejudice on motion of the director, shall constitute a waiver by the human services provider of any right of action the human services provider may have under subsection (a). Any amount recovered by the director before suit and accepted by the human services provider as payment in full shall constitute a waiver of any rights under this chapter.

§ -29 Rules. The director shall adopt reasonable rules pursuant to chapter 91 to determine the prevailing wages, enforcement, administration, and general purposes of this chapter. These rules shall have the force and effect of law.

§ -30 Application of this chapter to contracts entered into without regard to other laws. The fact that a contract is or was entered into without regard to chapter 103D, or upon a cost-plus-a-fixed fee basis, or cost-plus-a-fixed percentage basis, or without advertising for proposals, shall not render this chapter inapplicable to the contract, if this chapter would otherwise be applicable.

§ -31 Effect on other laws. Neither this chapter nor any rule or other action under this chapter shall supersede or impair any minimum wage or maximum hour law or any authority otherwise granted by law to provide for the establishment of specific minimum or other wage rates.

§ -32 Suspension during emergency. During a national emergency declared by the President or the Congress of the United States, or a state of emergency declared by the governor, subject to the provisions of section 127-10 or 128-7, the governor, by executive order in writing, may suspend this chapter; provided that the governor may not suspend this chapter except in the event such an emergency occurs and is so proclaimed.

§ -33 Inspection. (a) If work performed in accordance with this chapter, in excess of eight hours in any day or on a Saturday, Sunday, or legal holiday of the State, requires inspection by the State or any county, the inspection shall be conducted by the State or county, as applicable.

(b) In such event, it shall be lawful, notwithstanding any other provision of law to the contrary, for the State or any county to alter the normal working hours of public employees, as may be needed for these purposes, and to pay these public employees for all hours worked in excess of eight hours per day or on a Saturday, Sunday, or legal holiday of the State.

§ -34 Submission of collective bargaining agreement to the director. (a) Parties to a collective bargaining agreement covering classes of human services providers, which are included in the prevailing wage determinations made pursuant to this chapter, shall submit a copy of the agreement to the director within five days after execution of the agreement.

(b) Except as otherwise provided herein, the terms of the agreement shall be kept confidential by the director. The director may disclose terms of the agreement to any federal or state agency for the purpose of enforcing this chapter."

SECTION 2. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1568
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII