Report Title:

Public Services

 

Description:

Regulates privatization contracts for public services performed by private contractors; protects workers who report matters that impact on the efficiency and quality of public services performed by private contractors from discrimination or retaliation; and ensures access to contract information.

 

HOUSE OF REPRESENTATIVES

H.B. NO.

39

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO public SERVICES.

 

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

SECTION 1. The legislature finds that using private contractors to provide public services formerly provided by public employees does not always promote the public interest. To ensure that citizens of this State receive high quality public services at low cost, with due regard for the taxpayers of this State, the service recipients, and the needs of public and private workers, the legislature determines that certain measures must be taken in the interest of the public. Therefore, the purpose of this Act is to:

(1) Establish the requirements for private contractors entering contracts with government agencies to provide public services;

(2) Protect workers from discrimination or retaliation who report practices or conditions that impact on the efficiency and quality of public services provided by private contractors; and

(3) Ensure that access to public information required by the Uniform Information Practices Act (Modified), chapter 92F, Hawaii Revised Statutes, is not hindered because public services are provided by private contractors.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

PUBLIC SERVICES ACCOUNTABILITY ACT

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

"Agency" means an executive department, division, office, board, commission, or other instrumentality or officer in the executive branch of state government.

"Director" means the director of human resources development.

"Discrimination or retaliation" means a threat, intimidation, or any adverse change in an employee's wages, benefits, or terms or conditions of employment. In the case of a person who is not an employee of a private contractor, the term includes any adverse action taken against the person or the person's employer, including the cancellation of or refusal to renew a contract with the person or the person's employer.

"Employee of a private contractor" means a worker directly employed by a private contractor, an employee of a subcontractor, or an independent contractor who provides services to a private contractor. The term includes former employees of a private contractor or subcontractor and former independent contractors.

"Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, limited liability partnership, association, joint venture, government agency, public corporation, or any other legal, governmental, or commercial entity.

"Private contractor" means any entity, that enters into a privatization contract.

"Privatization contract" means an agreement, or combination or series of agreements, by which a nongovernmental person or entity agrees with an agency to provide services, valued at

$ or more, that are substantially similar to and in lieu of, services heretofore provided, or that could have been provided, in whole or in part, by regular employees of the agency. "Privatization contract" shall not include contracts subject to chapter 42F or 103F.

"Public employee" means any employee or offices of the state.

"Public record" means a government record as defined in section 92F-3. This term includes any document relating to the privatization contract or performance under the contract, prepared, received, or retained by a private contractor or subcontractor, whether the document be handwritten, typed, tape-recorded, printed, photocopied, photographed, or recorded by any other method.

"Services" means all aspects of the provision of services, supplies, or both, provided by a private contractor pursuant to a privatization contract, or any services, supplies, or both, provided by a subcontractor of a private contractor.

"Subcontractor" means a subcontractor of a private contractor for work under a privatization contractor or an amendment to a privatization contract.

§ -2 Privatization contracts; statement of services; disclosure; wages; term; offer to employees; union neutrality. (a) No agency shall make any privatization contract and no such contract shall be valid unless the agency and the contractor comply with each of the requirements in this chapter and the specific provisions in the privatization contract.

(b) The agency shall prepare a specific written statement of services proposed to be the subject of the privatization contract, including the specific quantity and standard of quality of the subject services. The agency shall solicit competitive sealed bids for the privatization contracts based upon the statement. The day designated by the agency upon which the agency will accept the sealed bids shall be the same for all parties. The statement shall be a public record and shall be filed in the agency.

(c) Every bid shall detail:

(1) The length of continuous employment of current employees with the contractor by job classification without identifying employee names. In addition, the contractor may submit information detailing the relevant prior experience of employees within each job classification. If the positions identified by the bidder shall be newly created, the bid shall identify the minimum requirements for prospective applicants for each new position;

(2) The annual rate of current staff turnover;

(3) The number of hours of training planned for each employee in subject matters directly related to providing services to state residents and clients;

(4) Any complaint issued by an enforcement agency or alleged violations of applicable federal, state, or county laws, ordinances, regulations, or rules, including laws governing employee safety and health, labor relations, and other employment requirements, and any citation, court finding, or administrative findings for violations of federal, state, or county law, ordinances, regulations, or rules. The information shall include the date, enforcement agency, the law, ordinance, regulation, or rule involved, and any additional information the contractor may wish to submit;

(5) Any collective bargaining agreements or personnel policy covering the employees that will affect the privatization contract; and

(6) Political contributions made by the bidder or employee in a management position with the bidding company to any elected officer of the State or member of the legislature, during the four years prior to the date of the bid.

(d) For each position in which a private contractor employs any person pursuant to the privatization contract, the minimum compensation to be paid for the position shall be the greater of the wage rate paid at step one of the grade or classification under which an agency employee whose duties are most similar is paid, plus the cash value of health and other benefits provided to the agency employee, or the average private sector compensation rate, including the value of health and other benefits, for the position as determined by the director.

(e) The term of any privatization contract shall not exceed two years. No amendment to a privatization contract shall be valid if the amendment has the purpose or effect of avoiding any requirement of this chapter.

(f) Every privatization contract shall contain provisions requiring the private contractor to offer available employee positions pursuant to the contract to qualified regular employees of the agency whose state employment is terminated because of the contract. Every privatization contract shall also contain provisions requiring the private contractor to comply with a policy of nondiscrimination and equal opportunity for all persons, and to take affirmative steps to provide nondiscrimination and equal opportunity for all persons.

(g) State funds shall not be used to support or oppose unionization, including:

(1) Preparing and distributing materials that advocate for or against unionization;

(2) Hiring or consulting legal counsel or other consultants to advise the private contractor on how to assist, promote, or deter union organizing, or how to impede a union that represents the private contractor's employees from fulfilling its representational responsibilities;

(3) Holding meetings to influence employees about unionization;

(4) Planning or conducting activities by supervisors to assist, promote or deter union activities; or

(5) Defending against unfair labor practice charges brought by federal or state enforcement agencies.

§ -3 Contract costs; contractor evaluation; certification. (a) Any agency considering whether to enter into a privatization contract shall prepare a comprehensive written estimate of the costs of regular agency employees providing the subject services in the most cost-efficient manner. The estimate shall include all direct and indirect costs of regular agency employees providing the subject services, including pension, insurance, and other employee benefit costs. For purposes of this estimate, any public employee organization may, at any time before the final day for the agency to receive sealed bids pursuant to section -2(b), propose amendments to any relevant collective bargaining agreement to which it is a party. Any amendment shall take effect only if necessary to reduce the cost estimate pursuant to this subsection, below the privatization contract cost. The estimate shall remain confidential until after the final day for the agency to receive sealed bids for the privatization contract at which time the estimate shall become a public record, and shall be filed in the agency.

(b) After soliciting and receiving bids, the agency shall publicly designate the bidder to which it proposes to award the privatization contract. In selecting a contractor, the agency shall consider the contractor's past performance and the contractor's record of compliance with federal, state, and

county laws, including the disclosures as required in section

-2(c). The agency shall prepare a comprehensive written analysis of the contract cost basis upon the designated bid, specifically including the costs of:

(1) Transition from public to private operation;

(2) Additional unemployment and retirement benefits, if any; and

(3) Monitoring and otherwise administering contract performance.

If the designated bidder proposes to perform any or all of the privatization contract outside the boundaries of the State, the contract cost shall be increased by the amount of income tax revenue, if any, that will be lost to the State by the corresponding elimination of agency employees, as determined by the department of taxation to the extent that it is able to do so.

(c) The head of the agency shall certify in writing that:

(1) The head of the agency has complied with all provisions of this section and all other applicable law;

(2) The quality of the services to be provided by the designated bidder is likely to satisfy the quality requirements of the statement prepared pursuant to section -2(b), and to equal or exceed the quality of services that could be provided by regular agency employees;

(3) The privatization contract cost will be at least ten per cent less than the estimated cost pursuant to subsection (a), taking into account all comparable types of costs and all the additional costs of the contract as specified in subsection (b); and

(4) The proposed privatization contract is in the public interest in that it meets the applicable quality and fiscal standards.

Any privatization contract entered into by an agency and the agency certification described above shall be considered public records subject to disclosure pursuant to chapter 92F.

§ -4 Subcontracts; audits; access; performance standards; enforcement. (a) No private contractor shall award a subcontract for work under a privatization contract or for work under an amendment to a privatization contract without the approval of the agency head, or designee, of:

(1) The selection of the subcontractor; and

(2) The provisions of the subcontract.

Each private contractor shall file a copy of each executed subcontract or amendment to the subcontract with the agency, who shall maintain the subcontract or amendment as a public record.

(b) Any private contractor awarded a privatization contract, and any subcontractor subject to these provisions, shall file with the agency head copies of financial audits of the private contractor and subcontractor prepared at least annually during the course of the privatization contract term.

(c) All privatization contracts shall include a provision specifying that to determine compliance with the purpose of this chapter and the contract, the private contractor and subcontractor shall be required to provide the State or its agents, except where prohibited by federal or state laws, regulations or rules, reasonable access to facilities, records, and employees that are used in conjunction with the provisions of privatization contract services.

(d) The private contractor and subcontractor shall submit a report, not less than annually during the term of the privatization contract, detailing the extent to which the contractor and subcontractor have achieved the specific quantity and standard of quality of the subject services as specified by the agency pursuant to section -2(b) and its compliance with all federal, state, and county laws, including any complaint, citation, or finding issued by administrative agencies or courts.

(e) The agency may seek contractual remedies for any violation of a privatization contract. In addition, if a contractor fails to comply with section -2(d),(f), or (g), any person or entity aggrieved by the violation may bring a claim for equitable and other relief including back pay. In such a suit, an aggrieved person or entity shall be entitled to costs and reasonable attorneys' fees.

§ -5 Public records; ownership; access; penalty. (a) No private contractor or subcontractor, or employee or agent of a private contractor or subcontractor, shall have any ownership rights or interest in any public record that the contractor, subcontractor, employee, or agent possesses, modifies, or creates pursuant to a contract, subcontract, or amendment to a contract or subcontract. No private contractor or subcontractor, or employee or agent of a private contractor or subcontractor, shall impair the integrity of any public record that the contractor, subcontractor, employee, or agent possesses or creates. Public records that a private contractor, subcontractor, or employee or agent of a private contractor or subcontractor, possess, modify or create pursuant to a contract or subcontract shall at all times and for all purposes remain the property of the State.

(b) Any public record that an agency provides to a private contractor or subcontractor, or that a private contractor or subcontractor creates, shall be and remain a public record for the purposes of chapter 92F, and the enforcement provisions of that chapter shall apply to any failure to disclose records under this section.

With regard to any public record, the agency and the private contractor and subcontractor shall have a joint and several obligation to comply with the obligations of the agency under the chapter 92F; provided that the determination of whether to disclose a particular record or type of record shall be made solely by the agency.

No private contractor or subcontractor, or employee or agent of a private contractor or subcontractor, shall disclose to the public any public record:

(1) That it possesses, modifies, or creates pursuant to a privatization contract, subcontract, or amendment to a privatization contract or subcontract; and

(2) That the agency:

(A) Is prohibited from disclosing pursuant to state or federal law in all cases;

(B) May disclose pursuant to state or federal law only to certain entities or individuals, under certain conditions; or

(C) May withhold from disclosure pursuant to state or federal law.

No provision of this subsection shall be construed to prohibit any private contractor from disclosing the public records to any of its subcontractors to carry out the purposes of its subcontract.

No private contractor or subcontractor, or employee or agent of a private contractor or subcontractor, shall sell, market, or otherwise profit from the disclosure or use of any public record that is in its possession pursuant to a privatization contract, subcontract, or amendment to a privatization contract or subcontract, except as authorized in the contract, subcontract, or amendment.

Any private contractor or subcontractor, or employee or agent of a privatization contractor or subcontractor, who learns of any violation of the provisions of this chapter shall, no later than seven calendar days after learning of the violation, notify the agency head and the attorney general of the violation.

(c) In addition to any remedy provided under the chapter 92F:

(1) If any person violates subsection (a) or (b), the attorney general may bring an action against the person seeking:

(A) Damages on behalf of the State for the violation;

(B) Restitution for damages suffered by any person as a result of the violation; or

(C) Imposition and recovery of a civil penalty of not more than $50,000 for the violation;

(2) In addition to the remedies under subsection (c)(1), any person aggrieved by a violation of any provision of subsection (a) or (b) may bring an action in any state court of competent jurisdiction to recover any damages suffered as a result of the violation;

(3) In any action brought under subsection (c)(1) or (2), the court may:

(A) Order disgorgement of any profit or to the benefits derived as a result of a violation of subsection (a) or (b);

(B) Award punitive damages, costs, and reasonable attorneys' fees; and

(C) Order injunctive or other equitable relief.

Proof of public interest or public injury shall not be required in any action brought under subsection (c)(1) or (2). No action may be brought under subsection (c)(1) or (2) more than three years after the occurrence of the violation; and

(4) Any person who knowingly and willfully violates any provision of subsection (a) or (b) shall, for each violation, be fined not more than $5,000 or imprisoned not less than one year nor more than five years, or both.

§ -6 Retaliation and discrimination; disclosure of information; unprotected disclosure; good faith; confidentiality of identity; enforcement; penalty; burden of proof; notice. (a) No person shall discriminate or retaliate in any manner against any public employee or employee of a private contractor because that employee, or any person acting on behalf of the employee, in good-faith:

(1) Engages in any disclosure of information relating to the services provided by a private contractor pursuant to a privatization contract;

(2) Advocates on behalf of service recipients with respect to the care or services provided by the private contractor; or

(3) Initiates, cooperates, or otherwise participates in any investigation or proceeding of any governmental entity relating to the services provided pursuant to a privatization contract.

(b) No person shall discriminate or retaliate in any manner against any public employee or employee of a private contractor because the employee has attempted or has an intention to engage in an action described in subsection (a).

(c) No person shall by contract, policy, or procedure prohibit or restrict any employee of a private contractor from engaging in any action for which a protection against discrimination or retaliation is provided in subsection (a).

(d) This section shall not protect disclosures that would violate federal or state law, diminish, or impair the rights of any person to the continued protection of confidentiality of communications provided by federal or state law.

(e) With respect to the conduct described in subsection (a)(1), an employee of a private contractor shall be considered to be acting in good faith if the employee reasonably believes:

(1) The information is true; and

(2) The information disclosed by the employee:

(A) Evidences a violation of any law, rule, regulation, or a generally recognized professional or clinical standard; or

(B) Relates to the care, services, or conditions that potentially endanger one or more recipients of service, or employees employed pursuant to a privatization contract.

(f) The identity of an employee of a private contractor who complains in good faith to an agency or any member or employee of the legislature about the quality of services provided by a private contractor shall remain confidential and shall not be disclosed by any person except:

(1) Upon the knowing written consent of the employee of the private contractor; or

(2) In the case in which there is an imminent danger to health, public safety, or an imminent violation of criminal law.

(g) Any current or former public employee or employee of a private contractor who believes that the employee has been discriminated or retaliated against in violation of subsection (a), (b), or (c) may file a civil action in any state court of competent jurisdiction against the person believed to have violated subsection (a), (b), or (c).

If the court determines that a violation of subsection (a), (b), or (c) has occurred, the court shall award the damages that result from the unlawful act or acts, including compensatory damages, reinstatement, reimbursement of any wage, salary, employment benefit, or other compensation denied or lost to the employee by reason of the violation, punitive damages, reasonable attorneys' fees, and costs, including expert witness fees.

The court may issue temporary, preliminary, and permanent injunctive relief restraining violations of this chapter, including the restraint of:

(1) Any withholding of the payment of wages, salary, employment benefits, or other compensation, plus interest, found by the court to be due; and

(2) Any other change in the terms and conditions of employment.

The court may award other equitable relief as may be appropriate, including employment, reinstatement, and promotion.

An action shall be brought under this subsection not later than two years after the date of the last event constituting the alleged violation for which the action is brought.

(h) Any person who violates subsection (a), (b), or (c) shall be subject to a civil penalty not to exceed $10,000 for each violation. In determining the amount of any penalty under this subsection, the appropriateness of the penalty to the size of the business of the person charged and the gravity of the violation shall be considered. The amount of any penalty under this subsection, when finally determined, may be:

(1) Deducted from any sum owing by the State to the person charged; or

(2) By court order, utilized to pay any judgment entered in an action for violation of subsection (a), (b), or (c) in favor of the employee who suffered discrimination or retaliation.

(i) In any civil action brought under this chapter, the complainant shall have the initial burden of making a prima facie case showing that any behavior described in subsection (a), (b), or (c) was a contributing factor in the adverse action or inaction alleged in the complaint. A prima facie case shall be established if the complainant can show that:

(1) The respondent knew of the complainant's protected activities at the time that the alleged action or inaction was taken; and

(2) The discriminatory or retaliatory action occurred within the period of time that a reasonable person could conclude that an activity protected by subsection (a) or (b) was a contributing factor in the discriminatory or retaliatory treatment.

Once the complainant establishes a prima facie case, the burden shall shift to the respondent to demonstrate, by clear and convincing evidence, that it would haven taken the same adverse action or inaction in the absence of the complainant's behavior.

(j) Each private contractor shall post and keep posted, in conspicuous places on its premises where notices to employees and applicants for employment are customarily posted, a notice, to be prepared or approved by the director, setting forth excerpts from, or summaries of, the pertinent provisions of this chapter and information pertaining to the filing of a charge hereunder.

Any employer that willfully violates this section may be assessed by the director a civil penalty not to exceed $100 for each separate offense.

§ -7 Rules. The director may adopt rules necessary for the proper application and enforcement of this chapter pursuant to chapter 91.

§ -8 Preemption. Nothing in this chapter shall be construed to preempt, supersede, or modify the operation of any state law related to this chapter including contracts covered by chapter 103D. In the event of a conflict between the terms and provisions of this chapter and any other law of the subject, the more beneficial provisions favoring employees shall prevail."

SECTION 3. Section 92F-12, Hawaii Revises Statutes, is amended by amending subsection (a) to read as follows:

"(a) Any other law to the contrary notwithstanding, each agency shall make available for public inspection and duplication during regular business hours:

(1) Rules of procedure, substantive rules of general applicability, statements of general policy, and interpretations of general applicability adopted by the agency;

(2) Final opinions, including concurring and dissenting opinions, as well as orders made in the adjudication of cases;

(3) Government purchasing information, including all bid results, except to the extent prohibited by section 92F-13;

(4) Pardons and commutations, as well as directory information concerning an individual's presence at any correctional facility;

(5) Land ownership, transfer, and lien records, including real property tax information and leases of state land;

(6) Results of environmental tests;

(7) Minutes of all agency meetings required by law to be public;

(8) Name, address, and occupation of any person borrowing funds from a state or county loan program, and the amount, purpose, and current status of the loan;

(9) Certified payroll records on public works contracts;

(10) Regarding contract hires and consultants employed by agencies: the contract itself, the amount of compensation, the duration of the contract, and the objectives of the contract;

(11) Building permit information within the control of the agency;

(12) Water service consumption data maintained by the boards of water supply;

(13) Rosters of persons holding licenses or permits granted by an agency that may include name, business address, type of license held, and status of the license;

(14) The name, compensation (but only the salary range for employees covered by or included in chapters 76 and 77, and sections 302A-602 to 302A-640, and 302A-701, or bargaining unit (8)), job title, business address, business telephone number, job description, education and training background, previous work experience, dates of first and last employment, position number, type of appointment, service computation date, occupational group or class code, bargaining unit code, employing agency name and code, department, division, branch, office, section, unit, and island of employment, of present or former officers or employees of the agency; provided that this paragraph shall not require the creation of a roster of employees; and provided further that this paragraph shall not apply to information regarding present or former employees involved in an undercover capacity in a law enforcement agency;

(15) Information collected and maintained for the purpose of making information available to the general public; [and]

(16) Information contained in or compiled from a transcript, minutes, report, or summary of a proceeding open to the public[.]; and

(17) Information relating to privatization contracts as provided in chapter ."

SECTION 4. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2001; provided that:

(1) Section -6, Hawaii Revised Statutes, in section 2 of this Act shall apply to acts of retaliation or discrimination occurring on or after the first day of the first month that begins after this Act takes effect; and

(2) The remaining sections in section 2 of this Act shall be applicable to any privatization contract entered into after the effective date of this Act.

INTRODUCED BY:

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