THE SENATE                           S.R. NO.              87
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                    SENATE  RESOLUTION

  REQUESTING THE DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS AND
    THE DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS TO
    COORDINATE THEIR EFFORTS AND ENFORCE WORKERS' COMPENSATION
    MANDATORY COVERAGE REQUIREMENTS.



 1        WHEREAS, the Department of Commerce and Consumer Affairs
 2   provides for regulatory licensing of contractors who offer
 3   their services to the public; and
 4   
 5        WHEREAS, the Department of Labor and Industrial Relations
 6   requires that all employers carry workers' compensation
 7   insurance coverage for their employees; and
 8   
 9        WHEREAS, the Department of Commerce and Consumer Affairs,
10   Contractors License Board, allows individuals who claim not to
11   have any employees to receive their license without proof of
12   workers' compensation insurance; and
13   
14        WHEREAS, in most construction activities it is virtually
15   impossible to operate with no employees; and
16   
17        WHEREAS, it is reported that many of these individuals
18   will claim no employees in order to circumvent the workers'
19   compensation requirement because they do not have the required
20   capital to establish a workers' compensation policy; and
21   
22        WHEREAS, workers' compensation policies are paid for in
23   advance prior to performing any work and the premiums are based
24   on future estimated payroll; and
25   
26        WHEREAS, this system lends itself to contractors asserting
27   that they have no employees and subsequently hiring employees
28   after they receive their license; and
29   
30        WHEREAS, there appears to be little or no mechanism to
31   ensure that a contractor who asserts that it has no employees,
32   but in fact hires employees, does carry workers' compensation
33   insurance; and
34   

 
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 1        WHEREAS, this creates a distinct competitive disadvantage
 2   for other licensed contractors who pay for their workers'
 3   compensation insurance in advance; and
 4   
 5        WHEREAS, it is important to protect the rights of
 6   employees before they are injured; now, therefore,
 7   
 8        BE IT RESOLVED by the Senate of the Twentieth Legislature
 9   of the State of Hawaii, Regular Session of 1999, that the
10   Department of Labor and Industrial Relations and the Department
11   of Commerce and Consumer Affairs are requested to convene to
12   discuss policies and procedures to minimize this problem,
13   including but not limited to, publishing a list of those
14   contractors that do not carry workers' compensation insurance
15   and that the Department of Labor and Industrial Relations
16   cross-check that list with unemployment insurance reports,
17   temporary disability insurance reports, and pre-paid health
18   care reports; and
19   
20        BE IT FURTHER RESOLVED that both departments are requested
21   to confer with private industry on the seriousness of the
22   matter and report back to the Legislature twenty days prior to
23   the convening of the Regular Session of 2000 on ways that an
24   enforcement process can be initiated; and
25   
26        BE IT FURTHER RESOLVED that certified copies of this
27   Resolution be transmitted to the Director of Labor and
28   Industrial Relations, the Director of Commerce and Consumer
29   Affairs, the General Contractors Association of Hawaii, the
30   Building Industry Association of Hawaii, the Associated
31   Building Contractors Association of Hawaii, and the
32   Subcontractors Association of Hawaii.
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36                         OFFERED BY:  ____________________________