THE SENATE                           S.C.R. NO.            143
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                    SENATE  CONCURRENT
                        RESOLUTION

  URGING THE CREATION OF A SYSTEM FOR LICENSING INDEPENDENT
    CONTRACTORS. 


 1        WHEREAS, advances in technology have created a global
 2   market place which encourage new and more innovative business
 3   structures and operations; and
 4   
 5        WHEREAS, these methods of business can be a starting point
 6   to stimulating the local economy that has been lagging in
 7   recent years in Hawaii; and
 8   
 9        WHEREAS, many individuals and companies are finding it
10   more advantageous to be entrepreneurs or independent
11   contractors, running and operating privately owned businesses
12   sometimes from the convenience and comfort of their own homes
13   to better reach the global, national and local markets; and
14   
15        WHEREAS, in other parts of the nation, independent
16   researchers, journalists, sales professionals, cosmetologists,
17   massage therapists, elderly and child care providers, and
18   computer technologists, have prospered as independent
19   contractors, while the same professionals in Hawaii have been
20   stymied by unnecessary governmental regulations; and
21   
22        WHEREAS, Hawaii's employment laws presume that all
23   individuals are employees and puts the burden on the "employer"
24   to prove that the individual the company has contracted with is
25   an independent contractor; and
26   
27        WHEREAS, within the Department of Labor and Industrial
28   Relations each division has its own tests for independent
29   contractors, and these tests differ from those used by the
30   federal government as well as the Internal Revenue Service to
31   determine independent contractors status; and
32   
33        WHEREAS, in the current system, one can only discover the
34   "misclassification" after a contested case or agency
35   investigation has been initiated leading to litigation between
36   company, independent contractor, and the Department of Labor

 
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 1   and Industrial Relations; and
 2   
 3        WHEREAS, individuals who want to set up their own
 4   businesses as independent contractors find it difficult to get
 5   customers because potential customers fear that the independent
 6   contractor cannot meet the vague laws and tests administered by
 7   the State, thereby stifling business initiative in this already
 8   lagging economy; and
 9   
10        WHEREAS, establishing published standards which require an
11   independent contractor to have a license would significantly
12   reduce litigation costs and operating costs for the Department
13   of Labor and Industrial Relations, for the independent
14   contractor, and for Hawaii businesses; and
15   
16        WHEREAS, the potential relief of money and time to
17   companies as well as to the contractors themselves will in turn
18   help businesses redirect funds into more constructive areas
19   such as job creation and investment; and
20   
21        WHEREAS, the Hawaii Revised Statutes often address
22   independent contractor status by providing specific exemptions,
23   which has led to an ever increasing list of professionals
24   seeking exemptions as the nature of their business or
25   profession has evolved; now, therefore,
26   
27        BE IT RESOLVED by the Senate of the Twentieth Legislature
28   of the State of Hawaii, Regular Session of 1999, the House of
29   Representatives concurring, that the legislature is committed
30   to promoting a business-friendly environment by balancing the
31   responsibility of business entities, the Department of Labor
32   and Industrial Relations, and independent contractors; and
33   
34        BE IT FURTHER RESOLVED that the Department of Business,
35   Economic Development, and Tourism (DBEDT) conduct a study and
36   draft recommended legislation on the following issues relating
37   to independent contractors:
38   
39        (1)  Adopting a uniform test for independent contractor
40             status for all state employment laws that is
41             equivalent to and does not conflict with the Internal
42             Revenue Service "20" factor; and

 
 
 
 
 
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 1   
 2        (2)  Creating a system within the Department of Commerce
 3             and Consumer Affairs to license individuals,
 4             partnerships, companies, and limited liability
 5             companies as independent contractors, these licensed
 6             independent contractors to be given registration
 7             numbers showing their independent contractor status
 8             to all potential customers;
 9   
10   and
11   
12        BE IT FURTHER RESOLVED that DBEDT work in consultation
13   with the Department of Labor and Industrial Relations, the
14   Department of Taxation, and the Department of Commerce and
15   Consumer Affairs in conducting this study; and
16   
17        BE IT FURTHER RESOLVED that DBEDT submit its findings and
18   recommendations to the Legislature not less than twenty days
19   prior to the convening of the Regular Session of 2000; and
20   
21        BE IT FURTHER RESOLVED that certified copies of this
22   Concurrent Resolution be transmitted to the Director of
23   Business, Economic Development, and Tourism, the Director of
24   Labor and Industrial Relations, the Director of Taxation, and
25   the Director of Commerce and Consumer Affairs.
26 
27 
28 
29                         OFFERED BY:  ____________________________