REPORT TITLE:
G.E.T.; Employee Leasing


DESCRIPTION:
Exempts from the general excise tax amounts received by employee
leasing companies that are received and charged for leased
employees' compensation and benefit amounts.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
HOUSE OF REPRESENTATIVES                H.B. NO.838        
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO LEASED EMPLOYEES AND EMPLOYERS OF LEASED EMPLOYEES.



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

 1      SECTION 1.  Employee leasing companies provide a service
 
 2 that handles the payroll and related labor issues of employees.
 
 3 The employees' compensation and payments for fringe benefits are
 
 4 simply passed through the employee leasing company to the leased
 
 5 employee and cannot be included as the employee leasing company's
 
 6 gross revenues.  The legislature finds that exempting these
 
 7 amounts from the general excise tax is a fair treatment for the
 
 8 employee leasing companies.  The legislature also finds that
 
 9 leased employees are entitled to the same rights, benefits, and
 
10 responsibilities as regular employees, so if these rights are
 
11 denied by the employee leasing company's actions then the general
 
12 excise tax exemption will be denied.
 
13      The purpose of this Act is provide an exemption from the
 
14 general excise tax for amounts received by employee leasing
 
15 companies that are passed through as leased employees'
 
16 compensation.  This Act also provides protection for leased
 
17 employees by withdrawing the exemption to employee leasing
 
18 companies who deny rights to leased employees.
 
19      SECTION 2.  Chapter 237, Hawaii Revised Statutes, is amended
 

 
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 1 by adding a new section to be appropriately designated and to
 
 2 read as follows:
 
 3      "�237-     Leased employees; exempt amounts.  There shall be
 
 4 exempted from, and excluded from the measure of, the taxes
 
 5 imposed by this chapter all of the value or gross proceeds that
 
 6 are received by a licensed employee leasing business that are
 
 7 attributable and charged to compensation, fringe benefits,
 
 8 workers' compensation, and payroll taxes or assessments, paid for
 
 9 on behalf of a leased employee; provided that:
 
10      (1)  Exempt amounts shall not include any service fee,
 
11           service charge, profit, mark-up of, or amounts
 
12           allocated to the overhead of any employee leasing
 
13           business; and
 
14      (2)  The exemption has not been withdrawn under section
 
15           378-   .
 
16      For the purposes of this section, "leased employee" means
 
17 the same as defined in section 414(n) of the Internal Revenue
 
18 Code of 1986, as amended, but shall not include an employee who
 
19 is hired by a temporary hire service and assigned to support or
 
20 supplement the work force of a temporary help service's client."
 
21      SECTION 3.  Chapter 378, Hawaii Revised Statutes, is amended
 
22 by adding a new section to be appropriately designated and to
 
23 read as follows:
 

 
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 1      "�378-     Leased employees; rights; employer's
 
 2 responsibilities.  (a)  Any law to the contrary notwithstanding,
 
 3 no employer, regardless of the use of leased employees, shall be
 
 4 exempt from any requirements of any state, county, or federal
 
 5 law.  Leased employees shall have the same rights, privileges,
 
 6 and responsibilities as if the employee were directly employed
 
 7 for the leasing employer.
 
 8      (b)  The leasing employer of leased employees shall be
 
 9 deemed to have satisfied requirements under chapters 383, 385,
 
10 386, 392, and 393, and the income tax withholding and reporting
 
11 requirements to the extent the employee leasing business has
 
12 satisfied those requirements in the name of the leasing employer.
 
13      (c)  If any leased employee is deprived of any rights and
 
14 benefits through contract negotiations between the employee
 
15 leasing company and the leasing employer, the exemption from
 
16 general excise tax under section 237-    shall be withdrawn and
 
17 all general excise tax plus penalties and interest with respect
 
18 to amounts received for the leased employee shall be due."
 
19      SECTION 4.  New statutory material is underscored.
 
20      SECTION 5.  This Act shall take effect on July 1, 1999.
 
21 
 
22                              INTRODUCED BY:______________________
 

 
 
 
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