Report Title:

Relating to employment.

Description:

To establish a uniform definition of "employment" for the Department of Labor and Industrial Relations ("Department"). Currently, the determination of whether a person is an "independent contractor" or "employee" under the various labor laws is determined on a case by case basis and may vary among the different Divisions in the Department. The Department is striving to be consistent in determinations of whether an employment relationship exists.

HOUSE OF REPRESENTATIVES

H.B. NO.

702

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO EMPLOYMENT.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The current labor laws are not uniform in their definition of "employment" and may result in varying determinations regarding the relationship between an employer and an individual. The purpose of this Act is to ensure that all programs under the department of labor and industrial relations consistently apply the same criteria in determining whether an employment relationship exists.

SECTION 2. Chapter 378, Hawaii Revised Statutes, is amended by adding to part II a new section to be appropriately designated and to read as follows:

"§378- Employment relationship determination. Services performed by an individual for wages or under any contract of hire shall be deemed to be employment subject to this part unless and until it is shown to the satisfaction of the department that:

(1) The individual has been and will continue to be free from control or direction over the performance of such service, both under the individual's contract of hire and in fact; and

(2) The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and

(3) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service."

SECTION 3. Chapter 378, Hawaii Revised Statutes, is amended by adding to part III a new section to be appropriately designated and to read as follows:

"§378- Employment relationship determination. Services performed by an individual for wages or under any contract of hire shall be deemed to be employment subject to this part unless and until it is shown to the satisfaction of the department that:

(1) The individual has been and will continue to be free from control or direction over the performance of such service, both under the individual's contract of hire and in fact; and

(2) The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and

(3) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service."

SECTION 4. Chapter 387, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§387- Employment relationship determination. Except where services are specifically and expressly excluded from "employment" under section 387-1, services performed by an individual for wages or under any contract of hire shall be deemed to be employment subject to this chapter unless and until it is shown to the satisfaction of the department that:

(1) The individual has been and will continue to be free from control or direction over the performance of such service, both under the individual's contract of hire and in fact; and

(2) The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and

(3) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service."

SECTION 5. Chapter 388, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§388- Employment relationship determination. Services performed by an individual for wages or under any contract of hire shall be deemed to be employment subject to this chapter unless and until it is shown to the satisfaction of the department that:

(1) The individual has been and will continue to be free from control or direction over the performance of such service, both under the individual's contract of hire and in fact; and

(2) The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and

(3) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service."

SECTION 6. Chapter 390, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§390- Employment relationship determination. Services performed by an individual for wages or under any contract of hire shall be deemed to be employment subject to this chapter unless and until it is shown to the satisfaction of the department that:

(1) The individual has been and will continue to be free from control or direction over the performance of such service, both under the individual's contract of hire and in fact; and

(2) The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and

(3) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service."

SECTION 7. Chapter 398, Hawaii Revised Statutes, is amended by adding to part I a new section to be appropriately designated and to read as follows:

"§398- Employment relationship determination. Services performed by an individual for wages or under any contract of hire shall be deemed to be employment subject to this chapter unless and until it is shown to the satisfaction of the department that:

(1) The individual has been and will continue to be free from control or direction over the performance of such service, both under the individual's contract of hire and in fact; and

(2) The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and

(3) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service."

SECTION 8. Section 378-26, Hawaii Revised Statutes, is amended by adding two new definitions to be appropriately inserted and to read as follows:

""Employment" includes service performed for wages or under any contract of hire, written or oral, express or implied.

"Wages" means compensation for services rendered by an employee, whether the amount is determined on a time, task, piece, commission, salary, or other basis of calculation. It shall include the reasonable cost, as determined by the department under chapter 387, to the employer of furnishing an employee with board, lodging, or other facilities if such board, lodging, or other facilities are customarily furnished by the employer to the employer's employees, but shall not include tips or gratuities of any kind."

SECTION 9. Section 378-31, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Employment" includes service performed for wages or under any contract of hire, written or oral, express or implied."

SECTION 10. Section 378-31, Hawaii Revised Statutes, is amended by amending the definition of "wages" to read as follows:

""Wages" means compensation [for labor] or services rendered by an employee, whether the amount is determined on a time, task, piece, commission, salary, or other basis of calculation. It shall include the reasonable cost, as determined by the [director] department under chapter 387, to the employer of furnishing an employee with board, lodging, or other facilities if such board, lodging, or other facilities are customarily furnished by the employer to the employer's employees, but shall not include tips or gratuities of any kind."

SECTION 11. Section 386-73.5, Hawaii Revised Statutes, is amended to read as follows:

"§386-73.5 Proceedings to determine employment and coverage. The [director of labor and industrial relations] department shall have original jurisdiction over all controversies and disputes over employment and coverage under this chapter. Except in cases where services are specifically and expressly excluded from "employment" under section 386-1, it shall be presumed that coverage applies unless [the party seeking exclusion is able to establish under both the control test and the relative nature of the work test that coverage is not appropriate under this chapter.] and until it can be shown to the satisfaction of the department that:

(1) The individual has been and will continue to be free from control or direction over the performance of such service, both under the individual's contract of hire and in fact; and

(2) The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and

(3) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service.

There shall be a right of appeal from decisions of the [director] department to the appellate board and thence to the supreme court."

SECTION 12. Section 387-1, Hawaii Revised Statutes, is amended to read as follows:

"§387-1 Definitions. As used in this chapter:

"Agriculture" means agriculture as defined in section 3(f) of the Federal Fair Labor Standards Act of 1938, or as the same may be amended from time to time.

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

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

["Employ" includes to permit or suffer to work.]

"Employee" includes any individual employed by an employer[, but shall not include any individual employed:

(1) At a guaranteed compensation totaling $2,000 or more a month, whether paid weekly, biweekly, or monthly;

(2) In agriculture for any workweek in which the employer of the individual employs less than twenty employees or in agriculture for any workweek in which the individual is engaged in coffee harvesting;

(3) In domestic service in or about the home of the individual's employer or as a house parent in or about any home or shelter maintained for child welfare purposes by a charitable organization exempt from income tax under section 501 of the federal Internal Revenue Code;

(4) By the individual's brother, sister, brother-in-law, sister-in-law, son, daughter, spouse, parent, or parent-in-law;

(5) In a bona fide executive, administrative, supervisory, or professional capacity or in the capacity of outside salesperson or as an outside collector;

(6) In the propagating, catching, taking, harvesting, cultivating, or farming of any kind of fish, shellfish, crustacean, sponge, seaweed, or other aquatic forms of animal or vegetable life, including the going to and returning from work and the loading and unloading of such products prior to first processing;

(7) As a seaman;

(8) As a driver or a vehicle carrying passengers for hire operated solely on call and from a fixed stand;

(9) As a golf caddy;

(10) By a nonprofit school during the time such individual is a student attending such school;

(11) In any capacity if by reason of the employee's employment in such capacity and during the term thereof the minimum wage which may be paid the employee or maximum hours which the employee may work during any workweek without the payment of overtime, are prescribed by the federal Fair Labor Standards Act of 1938, as amended, or as the same may be further amended from time to time; provided that if the minimum wage which may be paid the employee under the Fair Labor Standards Act for any workweek is less than the minimum wage prescribed by section 387-2, then section 387-2 shall apply in respect to the employees for such workweek; provided further that if the maximum workweek established for the employee under the Fair Labor Standards Act for the purposes of overtime compensation is higher than the maximum workweek established under section 387-3, then section 387-3 shall apply in respect to such employee for such workweek; except that the employee's regular rate in such an event shall be the employee's regular rate as determined under the Fair Labor Standards Act;

(12) As a seasonal youth camp staff member in a resident situation in a youth camp sponsored by charitable, religious, or nonprofit organizations exempt from income tax under section 501 of the federal Internal Revenue Code or in a youth camp accredited by the American Camping Association; or

(13) As an automobile salesperson primarily engaged in the selling of automobiles or trucks if employed by an automobile or truck dealer licensed under chapter 437].

"Employer" includes any individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons, acting directly or indirectly in the interest of an employer in relation to an employee, but shall not include the State or any political subdivision thereof or the United States.

"Employment" includes service performed for wages or under any contract of hire, written or oral, express or implied, but "employment" shall not include service performed by any individual:

(1) At a guaranteed compensation totaling $2,000 or more a month, whether paid weekly, biweekly, or monthly;

(2) In agriculture for any workweek in which the employer of the individual employs less than twenty employees or in agriculture for any workweek in which the individual is engaged in coffee harvesting;

(3) In domestic service in or about the home of the individual's employer or as a house parent in or about any home or shelter maintained for child welfare purposes by a charitable organization exempt from income tax under section 501 of the federal Internal Revenue Code;

(4) By the individual's brother, sister, brother-in-law, sister-in-law, son, daughter, spouse, parent, or parent-in-law;

(5) In a bona fide executive, administrative, supervisory, or professional capacity or in the capacity of outside salesperson or as an outside collector;

(6) In the propagating, catching, taking, harvesting, cultivating, or farming of any kind of fish, shellfish, crustacean, sponge, seaweed, or other aquatic forms of animal or vegetable life, including the going to and returning from work and the loading and unloading of such products prior to first processing;

(7) As a seaman;

(8) As a driver or a vehicle carrying passengers for hire operated solely on call and from a fixed stand;

(9) As a golf caddy;

(10) By a nonprofit school during the time such individual is a student attending such school;

(11) In any capacity if by reason of the employee's employment in such capacity and during the term thereof the minimum wage that may be paid the employee or maximum hours that the employee may work during any workweek without the payment of overtime are prescribed by the federal Fair Labor Standards Act of 1938, as amended, or as the same may further amended from time to time; provided that, if the minimum wage that may be paid the employee under the Fair Labor Standards Act for any workweek is less than the minimum wage prescribed by section 387-2, then section 387-2 shall apply in respect to the employees for such workweek; provided further that, if the maximum workweek established for the employee under the Fair Labor Standards Act for the purposes of overtime compensation is higher than the maximum workweek established under section 387-3, then section 387-3 shall apply in respect to such employee for such workweek; except that the employee's regular rate in such an event shall be the employee's regular rate as determined under the Fair Labor Standards Act;

(12) As a seasonal youth camp staff member in a resident situation in a youth camp sponsored by a charitable, religious, or nonprofit organization exempt from income tax under section 501 of the federal Internal Revenue Code or in a youth camp accredited by the American Camping Association; or

(13) As an automobile salesperson primarily engaged in the selling of automobiles or trucks if employed by an automobile or truck dealer licensed under chapter 437.

"Industry" means a trade, business, industry, or branch thereof, or group of industries in which individuals are employed.

"Seasonal pursuit" means one in which it is customary in each year for the volume of employment in such pursuit to be substantially increased during a regularly recurring period or periods of seasonal activity, and in the remainder of the year, owing to climate or natural conditions, for the volume of employment to be substantially decreased. Periods of seasonal activity shall be considered as "regularly recurring", within the meaning of this paragraph, notwithstanding that such periods may vary from year to year.

"Tipped employee" means any employee engaged in an occupation in which the employee customarily and regularly receives more than $20 a month in tips.

["Wage" means (except as the department may provide under section 387-11) legal tender of the United States or checks on banks convertible into cash on demand at full face value thereof and in addition thereto the reasonable cost as determined by the department, to the employer of furnishing an employee with board, lodging, or other facilities if such board, lodging, or other facilities are customarily furnished by such employer to the employer's employees. Except for the purposes of the last sentence of section 387-2, "wage" shall not include tips or gratuities of any kind.]

"Wages" means (except as the department may provide under section 387-11) compensation for services rendered by an employee, whether the amount is determined on a time, task, piece, commission, salary, or other basis of calculation. It shall include the reasonable cost, as determined by the department, to the employer of furnishing an employee with board, lodging, or other facilities if such board, lodging, or other facilities are customarily furnished by the employer to the employer's employees. Except for the purposes of the last sentence of section 387-2, "wages" shall not include tips or gratuities of any kind."

"Week" or "workweek" means a fixed and regularly recurring period of seven consecutive days."

SECTION 13. Section 388-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Employment" includes service performed for wages or under any contract of hire, written or oral, express or implied."

SECTION 14. Section 388-1, Hawaii Revised Statutes, is amended by amending the definition of "wages" to read as follows:

""Wages" means compensation [for labor] or services rendered by an employee, whether the amount is determined on a time, task, piece, commission, salary, or other basis of calculation. It shall include the reasonable cost, as determined by the [director] department under chapter 387, to the employer of furnishing an employee with board, lodging, or other facilities if such board, lodging, or other facilities are customarily furnished by the employer to the employer's employees, but shall not include tips or gratuities of any kind, provided t hat for the purposes of section 388-6, "wages" shall include tips or gratuities of any kind."

SECTION 15. Section 390-1, Hawaii Revised Statutes, is amended by adding two new definitions to be appropriately inserted and to read as follows:

""Employment" includes service performed for wages or under any contract of hire, written or oral, express or implied.

"Wages" means compensation for services rendered by an employee, whether the amount is determined on a time, task, piece, commission, salary, or other basis of calculation. It shall include the reasonable cost, as determined by the department under chapter 387, to the employer of furnishing an employee with board, lodging, or other facilities if such board, lodging, or other facilities are customarily furnished by the employer to the employer's employees, but shall not include tips or gratuities of any kind."

SECTION 16. Section 392-21.5, Hawaii Revised Statutes, is amended to read as follows:

"§392-21.5 Proceedings to determine employment and coverage. The [director] department shall have original jurisdiction over all controversies and disputes over employment and coverage under this chapter. Except in cases where services are specifically and expressly excluded from "employment" under section 392-5, it shall be presumed that coverage applies unless [the party seeking exclusion is able to establish under both the control test and the relative nature of the work test that coverage is not appropriate under this chapter.] and until it can be shown to the satisfaction of the department:

(1) The individual has been and will continue to be free from control or direction over the performance of such service, both under the individual's contract of hire and in fact; and

(2) The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and

(3) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service.

There shall be a right of appeal from decisions of the [director] department to the circuit court and thence to the supreme court."

SECTION 17. Section 398-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Wages" means compensation for services rendered by an employee, whether the amount is determined on a time, task, piece, commission, salary, or other basis of calculation. It shall include the reasonable cost, as determined by the department under chapter 387, to the employer of furnishing an employee with board, lodging, or other facilities if such board, lodging, or other facilities are customarily furnished by the employer to the employer's employees, but shall not include tips or gratuities of any kind."

SECTION 18. Act 202, Session laws of Hawaii 2004, is amended by amending section 43 to read as follows:

"SECTION 43. Section 386-73.5, Hawaii Revised Statutes, is amended to read as follows:

"§386-73.5 Proceedings to determine employment and coverage. The [director of labor and industrial relations] department shall have original jurisdiction over all controversies and disputes over employment and coverage under this chapter. Except in cases where services are specifically and expressly excluded from "employment" under section 386-1, it shall be presumed that coverage applies unless [the party seeking exclusion is able to establish under both the control test and the relative nature of the work test that coverage is not appropriate under this chapter.] and until it can be shown to the satisfaction of the department that:

(1) The individual has been and will continue to be free from control or direction over the performance of such service, both under the individual's contract of hire and in fact; and

(2) The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and

(3) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service.

There shall be a right of appeal from decisions of the [director] department to the appellate board and thence to the intermediate appellate court, subject to chapter 602."

SECTION 19. Act 202, Session Laws of Hawaii 2004, is amended by amending section 46 to read as follows:

"SECTION 46. Section 386-21.5, Hawaii Revised Statutes, is amended to read as follows:

"§392-21.5 Proceedings to determine employment and coverage. The [director of labor and industrial relations] department shall have original jurisdiction over all controversies and disputes over employment and coverage under this chapter. Except in cases where services are specifically and expressly excluded from "employment" under section 392-5, it shall be presumed that coverage applies unless [the party seeking exclusion is able to establish under both the control test and the relative nature of the work test that coverage is not appropriate under this chapter.] and until it can be shown to the satisfaction of the department that:

(1) The individual has been and will continue to be free from control or direction over the performance of such service, both under the individual's contract of hire and in fact; and

(2) The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and

(3) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service.

There shall be a right of appeal from decisions of the [director] department to the appellate board and thence to the intermediate appellate court, subject to chapter 602."

SECTION 20. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 21. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 22. This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

BY REQUEST