Report Title:

Relating to Workers' Compensation.

 

Description:

Gives small business owners who meet certain exclusions the option not to obtain workers' compensation insurance

 


HOUSE OF REPRESENTATIVES

H.B. NO.

1383

TWENTY-FOURTH LEGISLATURE, 2007

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

RELATING TO WORKERS' COMPENSATION.

 

 

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

 


     SECTION 1.  The purpose of this Act is to give small business owners who meet certain requirements the option to not obtain workers' compensation insurance.  This measure adds four new exclusions to the definition of employment.  These exclusions are (1) members of a limited liability company with at least fifty per cent distributional interests, (2) partners of a partnership, (3) partners of a limited liability partnership who have a transferable interest of at least fifty per cent, and (4) sole proprietors.

     Currently, state law requires individual members of a limited liability company and partners in a partnership to obtain workers' compensation coverage.

     This bill will allow members of limited liability companies and partners of partnerships and limited liability partnerships, and sole proprietors the ability to save costs by allowing them to opt out of obtaining workers' compensation coverage for themselves.

     In addition, the reference to excluded services as defined in section 386-1, Hawaii Revised Statutes, under both the workers' compensation and temporary disability insurance laws, will provide consistency in exclusions with statutes of other department programs.

     SECTION 2.  Section 386-1, Hawaii Revised Statutes, is amended by amending the definition of "employment" to read as follows:

     ""Employment" means any service performed by an individual for another person under any contract of hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully entered into.  It includes service of public officials, whether elected or under any appointment or contract of hire express or implied.

     "Employment" does not include the following service:

     (1)  Service for a religious, charitable, educational, or nonprofit organization if performed in a voluntary or unpaid capacity;

     (2)  Service for a religious, charitable, educational, or nonprofit organization if performed by a recipient of aid therefrom and the service is incidental to or in return for the aid received;

     (3) Service for a school, college, university, college club, fraternity, or sorority if performed by a student who is enrolled and regularly attending classes and in return for board, lodging, or tuition furnished, in whole or in part;

     (4) Service performed by a duly ordained, commissioned, or licensed minister, priest, or rabbi of a church in the exercise of the minister's, priest's, or rabbi's ministry or by a member of a religious order in the exercise of nonsecular duties required by the order;

     (5) Service performed by an individual for another person solely for personal, family, or household purposes if the cash remuneration received is less than $225 during the current calendar quarter and during each completed calendar quarter of the preceding twelve-month period;

     (6) Domestic, which includes attendant care, and day care services authorized by the department of human services under the Social Security Act, as amended, performed by an individual in the employ of a recipient of social service payments;

     (7) Service performed without wages for a corporation without employees by a corporate officer in which the officer is at least a twenty-five per cent stockholder;

     (8) Service performed by an individual for a corporation if the individual owns at least fifty per cent of the corporation; provided that no employer shall require an employee to incorporate as a condition of employment; [and]

     (9) Service performed by an individual for another person as a real estate salesperson or as a real estate broker, if all the service performed by the individual for the other person is performed for remuneration solely by way of commission[.];

    (10) Service performed by a member of a limited liability company for the company if the member is an individual and has a distributional interest, as defined in chapter 428, of at least fifty per cent in the company; provided that no employer shall require an employee to form a limited liability company as a condition of employment;

    (11)  Service performed by a partner of a partnership for the partnership, as defined in chapter 425, if the partner is an individual; provided that no employer shall require an employee to become a partner as a condition of employment;

    (12)  Service performed by a partner of a limited liability partnership, if the partner is an individual and has a transferable interest, as defined in section 425-127 in the partnership of at least fifty per cent; provided that no employer shall require an employee to form a limited liability partnership as a condition of employment; and

    (13)  Service performed by a sole proprietor for the sole proprietorship.

     As used in this paragraph, "religious, charitable, educational, or nonprofit organization" means a corporation, unincorporated association, community chest, fund, or foundation organized and operated exclusively for religious, charitable, or educational purposes, no part of the net earnings of which inure to the benefit of any private shareholder or individual.

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval.

 

INTRODUCED BY:

_____________________________

 

 

BY REQUEST