STAND. COM. REP. NO.400-02

Honolulu, Hawaii

, 2002

RE: H.B. No. 1966

H.D. 1




Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii


Your Committees on Labor and Public Employment and Economic Development and Business Concerns, to which was referred H.B. No. 1966 entitled:


beg leave to report as follows:

The purpose of this bill is to require successor employers to retain incumbent employees upon the divestiture of a business employing 20 or more persons.

The Hawaii State AFL-CIO, ILWU Local 142 and a number of concerned citizens testified in support of this measure. The Department of Labor and Industrial Relations, Chamber of Commerce of Hawaii, and the National Federation of Independent Business-Hawaii testified in opposition to this measure.

In these troubled economic times, many employees live in fear of losing their jobs because of business takeovers. A mass layoff caused by a divestiture poses problems, not only to the employees directly affected, but to the community at large because of increased unemployment and decreased state tax revenues.

At the same time, your Committees understand concerns that this measure may also cause undue hardship for employers. Nevertheless, your Committees feel that a compromise solution can be worked out and that this issue warrants further discussion.

Instead of creating a new chapter in the Hawaii Revised Statutes (HRS), this bill has been amended by providing for worker retention provisions within the framework of the Dislocated Workers Program in chapter 394B, HRS. As amended, this bill:

(1) Allows for retention of at least 50 percent of incumbent nonsupervisory workers in the event of a divestiture of a business;

(2) Defines "divestiture" as the transfer of any covered establishment from one employer to another because of the sale, transfer, merger, and other business takeover or transaction of business interests;

(3) Defines "covered establishment" as any industrial, commercial, or other business entity which employs at any time in the preceding twelve-month period more than 100 employees;

(4) Requires the employer to provide notification of divestiture 60 days prior to its occurrence; and

(5) Takes effect on July 1, 2002.

Your Committees would like to note that concerns were raised regarding the definition of "divestiture" because it is possible to be an owner and not an employer. In that instance, it is not clear whether the employer or owner would be responsible for the incumbent employees. After further consideration, your Committees agreed that this was an important matter worthy of further discussion and respectfully request your Committee on Finance to further scrutinize this issue.

As affirmed by the records of votes of the members of your Committees on Labor and Public Employment and Economic Development and Business Concerns that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1966, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 1966, H.D. 1, and be referred to the Committee on Finance.


Respectfully submitted on behalf of the members of the Committees on Labor and Public Employment and Economic Development and Business Concerns,