Requires successor employers to retain incumbent employees upon
the divestiture, sale, or acquisition of a business.

THE SENATE                              S.B. NO.           1574
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  The Hawaii Revised Statutes is amended by adding
 2 a new chapter to be appropriately designated and to read as
 3 follows:
 4                             "CHAPTER
 5                         WORKER RETENTION
 6         -1 Findings and purpose.  The legislature finds that
 7 growing global interdependence has made the economy of the State
 8 greatly subject to external influence through fluctuations in
 9 world and national economies.  As a result, financial distress in
10 other geographical regions has often subjected establishments in
11 the State to change and transfer of ownership and divestiture.
12      These changes, transfers of ownership, and divestitures have
13 resulted in abrupt and unexpected unemployment for the employees
14 of such establishments.  Rising unemployment, in turn, has
15 diminished consumer purchasing strength, contributed to the
16 health and family problems associated with poverty, and increased
17 the tax burden on both businesses and individuals due to
18 expenditures for unemployment insurance compensation, welfare,
19 and other forms of social security compensation.  Transfers of

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 1 ownership and divestiture have also often led to periods of labor
 2 unrest, and disruption of the services provided to residents and
 3 visitors served by such establishments.
 4      The public interest of the State is best served by seeking
 5 to ameliorate the financial and social problems caused by these
 6 economic dislocations and resultant unemployment.  Accordingly,
 7 the legislature finds that retaining existing employees when a
 8 divestiture, sale, or acquisition occurs will not only minimize
 9 the economic and social disruption caused by these transactions
10 but will assure the harmonious continuity of needed services.
11 Incumbent employees possess invaluable knowledge and experience
12 with work practices, policies, and clientele and constitute a
13 resource worthy of preservation.  Therefore, the retention of
14 incumbent workers furthers the State's interest in providing
15 stable employment to its residents, uninterrupted and efficient
16 service for its visitors, and a healthy consumer base for its
17 businesses.
18         -2 Definitions.  As used in this chapter:
19      "Covered establishment" means any industrial, commercial, or
20 other business entity which employs at any time in the preceding
21 twelve-month period, twenty or more persons.
22      "Department" means the department of labor and industrial
23 relations.

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 1      "Director" means the director of labor and industrial
 2 relations.
 3      "Divestiture" means the transfer of any covered
 4 establishment from one employer to another due to the sale,
 5 transfer, merger, and other business takeover or transaction of
 6 business interests.
 7      "Employer" means any individual or entity which, directly or
 8 indirectly, owns, operates, or has a controlling interest in a
 9 covered establishment.
10      "Length of service" means the number of years, months, and
11 days spent by an employee in service to an employer.
12         -3 Notification.  An employer in a covered
13 establishment shall provide to each employee and the director
14 written notification of a divestiture at least ninety days prior
15 to its occurrence.  If the divestiture shall result in the loss
16 or suspension of employment, the notification shall also furnish
17 an explanation of the reasons for such action.
18         -4 Worker retention.(a)  In the event of a
19 divestiture of a covered establishment, the successor employer
20 shall retain incumbent employees of the affected establishment.
21      (b)  In the event the successor employer determines that
22 fewer employees are required to provide the required services,
23 the successor employer shall retain employees by their length of

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 1 service, within their job classifications, with employees with
 2 the longest length of service given preference over employees
 3 with shorter lengths of service.
 4      (c)  Any employee not retained in accordance with subsection
 5 (a) shall be placed on a preferential rehiring list in order of
 6 length of service, which shall be provided to each affected
 7 employee and the director.  In the event the successor employer
 8 determines a need to increase its work force, it shall hire from
 9 the preferential rehiring list, giving preference to employees
10 with the longest length of service within their classification
11 over employees with shorter lengths of service with the affected
12 classification.  The successor employer shall exhaust all
13 possibilities of hiring from the preferential rehiring list prior
14 to hiring new employees.
15      (d)  Except as provided in subsection (c), the successor
16 employer shall not discharge without cause an employee retained
17 pursuant to this chapter.  "Cause" for this purpose shall be
18 limited to misconduct connected with the individual's work.
19         -5 Wages, benefits, and other compensation.  A
20 successor employer shall compensate each employee retained in
21 accordance with section    -4 by payment of:
22      (1)  The average regular wages, benefits, and other
23           compensation received by the employee during the

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 1           twelve-month period prior to divestiture; or
 2      (2)  The wages, benefits, and other compensation in effect
 3           at the time of divestiture.
 4         -6 Collective bargaining.  Notwithstanding this
 5 chapter, any contractual agreement arrived at through collective
 6 bargaining that provides benefits in excess of those contained in
 7 this chapter shall supersede the benefits required under this
 8 chapter.  In the event, however, that a collective bargaining
 9 agreement is silent or provides benefits less than those provided
10 by this chapter, this chapter shall supersede the collective
11 bargaining agreement.
12         -7 Civil penalties.  Any employer who fails to conform
13 to this chapter shall be liable to each of the employees affected
14 in an amount equal to the value of their wages, benefits, and
15 other compensation, including interest, for the duration of the
16 employer's violation of this chapter.
17         -8 Employee remedies.(a)  An action by an employee to
18 enforce this chapter may be maintained in any court of competent
19 jurisdiction by any one or more employees, or the employee or
20 employees may designate an agent or representative to maintain
21 the action.
22      (b)  The court in any action brought under this section, in
23 addition to any judgment awarded to the plaintiff or plaintiffs,

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 1 shall allow costs of action, including costs of fees of any
 2 nature, and reasonable attorney's fees, interest, and
 3 consequential damages, if any, as deemed appropriate, to be paid
 4 by the defendant.
 5      (c)  The court may also provide injunctive relief in
 6 appropriate circumstances.
 7      (d)  In the alternative, an employee who alleges the rights
 8 afforded by this chapter have been violated, may, at the
 9 employee's election, file a charge with the department which
10 shall state the name and address of the employer alleged to have
11 committed the violation, a summary of the facts upon which the
12 charge is based, and any other information the department may
13 require.  The department shall serve the charge upon the employer
14 by delivery or mail.  The employer may answer the charge within
15 twenty days following its service.
16      (e)  Where the department finds there to be reasonable cause
17 that this chapter has been violated, and cannot obtain voluntary
18 compliance from the employer, the director shall appoint a
19 hearings officer and schedule a contested case hearing in
20 accordance with chapter 91.  Following the completion of the
21 contested case hearing, the hearings officer shall issue a
22 proposed decision containing a statement of reasons including a
23 determination of the issues of fact or law necessary to the

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 1 proposed decision which shall be served upon the parties.  The
 2 hearings officer may order any relief specified in subsection
 3 (b).
 4      (f)  Any party adversely affected by the proposed decision
 5 may file exceptions and present argument to the director.  If the
 6 director sustains a finding that a violation of this chapter has
 7 occurred, the director shall issue a decision and order in
 8 accordance with chapter 91 requiring the respondent to cease and
 9 desist from the violation and ordering such other authorized
10 relief as is just and proper.  If the director finds no
11 violation, the charge shall be dismissed.
12         -9 Judicial review.  Any person aggrieved by the order
13 of the director shall be entitled to judicial review as provided
14 by section 91-14.
15         -10  Coexistence with other available relief.  This
16 chapter shall not be construed to limit an employee's right to
17 bring legal action for wrongful termination, or to participate in
18 the dislocated workers program under chapter 394B in the case of
19 a permanent shut down of operations within a covered
20 establishment.
21         -11  Rules.  The director shall adopt rules under
22 chapter 91 as the director deems necessary for the purpose of
23 carrying out this chapter."

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 1      SECTION 2.  This Act shall take effect upon its approval.
 3                           INTRODUCED BY:  _______________________