Report Title:

GET; Independent Contractor

 

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.

783

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to employment.

 

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

SECTION 1. Section 237-9, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Licenses and applications therefor shall be in such form as the department shall prescribe, except that where the licensee is engaged in two or more forms of business of different classification, the license shall so state on its face. The license shall also state on its face whether the licensee has declared the licensee to be an independent contractor under the guidelines of Revenue Ruling 87-41 for any of the forms of business stated on the license. The license provided for by this section shall be effective until canceled in writing. Any application for the reissuance of a previously canceled license identification number after December 31, 1989, shall be regarded as a new license application and subject to the payment of the one-time license fee of $20. The director may revoke or cancel any license issued under this chapter for cause as provided by rules adopted pursuant to chapter 91."

SECTION 2. Chapter 383, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§383-    Independent contractor. In determining whether a person is an independent contractor or an employee for the recipient of services, the parties shall use the guidelines set forth in Revenue Ruling 87-41. If the person performs services for the recipient of services which are reasonably encompassed under a license granted under section 237-9 by the department of taxation and the license indicates the licensee has declared the licensee to be an independent contractor, then the burden shall be on the licensee to produce substantial evidence to the contrary to rebut the presumption that the licensee performed those services as an independent contractor. Otherwise, the burden shall be on the recipient of services to produce substantial evidence to the contrary to rebut the presumption that the licensee performed those services as an employee."

SECTION 3. Chapter 386, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§386-    Independent contractor. In determining whether a person is an independent contractor or an employee for the recipient of services, the parties shall use the guidelines set forth in Revenue Ruling 87-41. If the person performs services for the recipient of services which are reasonably encompassed under a license granted under section 237-9 by the department of taxation and the license indicates the licensee has declared the licensee to be an independent contractor, then the burden shall be on the licensee to produce substantial evidence to the contrary to rebut the presumption that the licensee performed those services as an independent contractor. Otherwise, the burden shall be on the recipient of services to produce substantial evidence to the contrary to rebut the presumption that the licensee performed those services as an employee."

SECTION 4. Chapter 392, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§392-    Independent contractor. In determining whether a person is an independent contractor or an employee for the recipient of services, the parties shall use the guidelines set forth in Revenue Ruling 87-41. If the person performs services for the recipient of services which are reasonably encompassed under a license granted under section 237-9 by the department of taxation and the license indicates the licensee has declared the licensee to be an independent contractor, then the burden shall be on the licensee to produce substantial evidence to the contrary to rebut the presumption that the licensee performed those services as an independent contractor. Otherwise, the burden shall be on the recipient of services to produce substantial evidence to the contrary to rebut the presumption that the licensee performed those services as an employee."

SECTION 5. Section 383-6, Hawaii Revised Statutes, is repealed.

["§383-6 Master and servant relationship, not required when. Services performed by an individual for wages or under any contract of hire shall be deemed to be employment subject to this chapter irrespective of whether the common law relationship of master and servant exists unless and until it is shown to the satisfaction of the department of labor and industrial relations that:

(1) The individual has been and will continue to be free from control or direction over the performance of such service, both under the individual's contract of hire and in fact; and

(2) The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and

(3) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service."]

SECTION 6. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval.

INTRODUCED BY:

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