REPORT TITLE:
Independent Contractor; Empl


DESCRIPTION:
Changes standard for determination of independent contractor
status to that followed in IRS regulations for purposes of
several state labor laws.  Authorizes declaration of independent
contractor status in the general excise tax license.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           733
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
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                   A  BILL  FOR  AN  ACT

RELATING TO EMPLOYMENT.



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

 1      SECTION 1.  Section 237-9, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (b) to read as follows:
 
 3      "(b)  Licenses and applications therefor shall be in such
 
 4 form as the department shall prescribe, except that where the
 
 5 licensee is engaged in two or more forms of business of different
 
 6 classification, the license shall so state on its face.  The
 
 7 license shall also state on its face whether the licensee has
 
 8 declared the licensee to be an independent contractor under the
 
 9 guidelines of Revenue Ruling 87-41 for any of the forms of
 
10 business stated on the license.  The license provided for by this
 
11 section shall be effective until canceled in writing.  Any
 
12 application for the reissuance of a previously canceled license
 
13 identification number after December 31, 1989, shall be regarded
 
14 as a new license application and subject to the payment of the
 
15 one-time license fee of $20.  The director may revoke or cancel
 
16 any license issued under this chapter for cause as provided by
 
17 rules adopted pursuant to chapter 91."
 
18      SECTION 2.  Chapter 383, Hawaii Revised Statutes, is amended
 
19 by adding a new section to be appropriately designated and to
 

 
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                                     S.B. NO.           733
                                                        
                                                        

 
 1 read as follows:
 
 2      "383-     Independent contractor.  In determining whether a
 
 3 person is an independent contractor or an employee for the
 
 4 recipient of services, the parties shall use the guidelines set
 
 5 forth in Revenue Ruling 87-41.  If the person performs services
 
 6 for the recipient of services which are reasonably encompassed
 
 7 under a license granted under section 237-9 by the department of
 
 8 taxation and the license indicates the person has declared the
 
 9 person to be an independent contractor, then the burden shall be
 
10 on the person to produce substantial evidence to the contrary to
 
11 rebut the presumption that the person performed those services as
 
12 an independent contractor.  Otherwise, the burden shall be on the
 
13 recipient of services to produce substantial evidence to the
 
14 contrary to rebut the presumption that the person performed those
 
15 services as an employee."
 
16      SECTION 3.  Chapter 386, Hawaii Revised Statutes, is amended
 
17 by adding a new section to be appropriately designated and to
 
18 read as follows:
 
19      "386-     Independent contractor.  In determining whether a
 
20 person is an independent contractor or an employee for the
 
21 recipient of services, the parties shall use the guidelines set
 
22 forth in Revenue Ruling 87-41.  If the person performs services
 
23 for the recipient of services  which are reasonably encompassed
 

 
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                                     S.B. NO.           
                                                        
                                                        

 
 1 under a license granted under section 237-9 by the department of
 
 2 taxation and the license indicates the person has declared the
 
 3 person to be an independent contractor, then the burden shall be
 
 4 on the person to produce substantial evidence to the contrary to
 
 5 rebut the presumption that the person performed those services as
 
 6 an independent contractor.  Otherwise, the burden shall be on the
 
 7 recipient of services to produce substantial evidence to the
 
 8 contrary to rebut the presumption that the person performed those
 
 9 services as an employee."
 
10      SECTION 4.  Chapter 392, Hawaii Revised Statutes, is amended
 
11 by adding a new section to be appropriately designated and to
 
12 read as follows:
 
13      "392-     Independent contractor.  In determining whether a
 
14 person is an independent contractor or an employee for the
 
15 recipient of services, the parties shall use the guidelines set
 
16 forth in Revenue Ruling 87-41.  If the person performs services
 
17 for the recipient of services  which are reasonably encompassed
 
18 under a license granted under section 237-9 by the department of
 
19 taxation and the license indicates the person has declared the
 
20 person to be an independent contractor, then the burden shall be
 
21 on the person to produce substantial evidence to the contrary to
 
22 rebut the presumption that the person performed those services as
 
23 an independent contractor.  Otherwise, the burden shall be on the
 

 
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                                     S.B. NO.           
                                                        
                                                        

 
 1 recipient of services to produce substantial evidence to the
 
 2 contrary to rebut the presumption that the person performed those
 
 3 services as an employee."
 
 4      SECTION 5.  Section 383-6, Hawaii Revised Statutes, is
 
 5 repealed.
 
 6      ["383-6 Master and servant relationship, not required
 
 7 when.  Services performed by an individual for wages or under any
 
 8 contract of hire shall be deemed to be employment subject to this
 
 9 chapter irrespective of whether the common law relationship of
 
10 master and servant exists unless and until it is shown to the
 
11 satisfaction of the department of labor and industrial relations
 
12 that:
 
13      (1)  The individual has been and will continue to be free
 
14           from control or direction over the performance of such
 
15           service, both under the individual's contract of hire
 
16           and in fact; and
 
17      (2)  The service is either outside the usual course of the
 
18           business for which the service is performed or that the
 
19           service is performed outside of all the places of
 
20           business of the enterprise for which the service is
 
21           performed; and
 
22      (3)  The individual is customarily engaged in an
 
23           independently established trade, occupation,
 

 
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 1           profession, or business of the same nature as that
 
 2           involved in the contract of service."]
 
 3      SECTION 6.  This Act does not affect rights and duties that
 
 4 matured, penalties that were incurred, and proceedings that were
 
 5 begun, before its effective date.
 
 6      SECTION 7.  Statutory material to be repealed is bracketed.
 
 7 New statutory material is underscored.
 
 8      SECTION 8.  This Act shall take effect upon its approval.
 
 9 
 
10                           INTRODUCED BY:  _______________________