Report Title:

Corporate Accountability


Establishes safeguards to encourage corporate accountability and provides mechanisms to ensure efficient use of state funds given to corporations in the form of economic incentives. (HB2765 HD1)


H.B. NO.



H.D. 1









SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:



-1 Short title. This Act shall be known and may be cited as the "Corporate Accountability Act".

-2 Applicability. This Act shall apply to any corporation doing business in the State.

-3 Definitions. For the purposes of this chapter:

"Corporation" means any person, association, corporation, joint venture, partnership, limited liability company, limited liability partnership, or any other type of business entity.

"Department" means the department of business, economic development, and tourism.

"Economic incentives" means any tax credit, tax exemption, tax abatement, fee waiver, bond, loan, loan guarantee, financing, grant, subsidy, matching fund, or any other form of assistance that has a monetary value that is provided to a corporation subject to this chapter by the State, counties, or any State or county department or agency.

"Granting body" means any agency, board, office, or authority of the State or any county that provides an economic incentive.

-4 Economic incentives. Any corporation that qualifies as a "party" and bids for a "public work" as those terms are defined under section 104-2, and receives economic incentives in any calendar year that exceed a total of $500,000 shall comply with the wage and hourly requirements under chapter 104, for any contract awarded in the succeeding calendar year.

-5 Job creation and job quality standards. (a) All granting bodies shall perform the following analyses concerning projected wages and benefits before entering into a contract with a corporation:

(1) Compare the aggregate projected wage to be paid to employees with existing wages as specified under the United States Bureau of Labor Statistics or the United States Department of Commerce. To derive the aggregate projected wage, the granting body shall compute the weighted hourly average wage for all employees, including full-time, part-time, and temporary status employees. If the aggregate projected wage is less than eighty-five per cent of existing wages, or if the wage requirements under section -4 are applicable and unmet, then the contract with the granting body shall be denied. For small businesses, if the aggregate projected wage is less than seventy-five per cent of existing wages, the application shall be denied; and

(2) Perform a second wage computation to consider the value of health care coverage provided to full-time employees. If the corporation is not providing health care coverage to full-time employees, the granting body shall subtract $1.50 an hour from the projected wage. If the corporation projects some health care costs to be borne by new full-time employees, the granting body, based on data from the corporation, shall estimate the hourly cost to new full-time employees and subtract that amount from the projected wage. If the amount resulting from that subtraction is less than eighty per cent of existing wages as determined under paragraph (1), the contract with the granting body shall be denied. For small businesses, if the amount resulting from this calculation is less than seventy per cent of existing wages, the contract shall be denied.

(b) Granting bodies shall perform a third eligibility analysis. All granting bodies shall divide the value of the economic incentives provided by the number of projected full-time jobs. If the resulting sum exceeds $35,000, the contract with the granting body shall be denied; provided that:

(1) Exceptions to this rule may be granted; and

(2) Any granting body that allows an exception shall submit a report to the legislature on all exceptions granted no later than twenty days prior to the convening of the regular session.

(c) A granting body's requirement under subsection (a) may be waived in a bona fide collective bargaining agreement that covers employees at the specific project site of the applicant corporation, but only if the waiver is explicitly set forth in the collective bargaining agreement in clear and unambiguous terms. Unilateral implementation of terms and conditions of employment by either party to a collective bargaining agreement shall not constitute, or be permitted as, a waiver of subsections (a) and (b).

-6 Unified economic development budget. Notwithstanding chapter 37 or any other law to the contrary, the department shall submit an annual unified economic development budget to the legislature no later than three months after the end of the State's fiscal year. The report shall present all types of expenditures for economic development during the prior fiscal year, including:

(1) The amount of uncollected state tax revenues resulting from every economic incentive provided by the State or county;

(2) The name of each corporation that claimed any economic incentive with a value of $5,000 or more, together with the dollar amount received by each corporation; provided that, any economic incentive of less than $5,000 each shall not be reported. The department shall report an aggregate dollar amount of these expenditures and the number of companies so aggregated for each tax expenditure; and

(3) All state appropriated expenditures for economic development, including line-item budgets for every state-funded entity concerned with economic development.

-7 Corporate reports. Every corporation employing more than ten employees that is awarded a state or county contract shall annually report to the department during the term of the contract on the total dollar amount and number of state or county economic incentives assistance received.

-8 Recapture. (a) A corporation shall fulfill its job creation, wage, health care, and other benefit requirements for a contract within two years of receiving an economic incentive or contract. The corporation shall maintain its wage and benefit goals as long as the economic incentive is in effect, or for five years, whichever is longer.

(b) The corporate parent of a corporation shall maintain at least ninety per cent of its employment in the State as long as the economic incentive is in effect, or not less than five years, whichever is longer.

(c) If the requirements under subsections (a) and (b) are not fulfilled, the granting body shall recapture the development subsidy from the corporation as follows:

(1) Upon a failure by the corporation to create the required number of jobs, or to pay the required wages or benefits, the amount recaptured shall be fifty per cent of the economic incentives provided to the corporation; and

(2) Upon a failure of the corporate parent to maintain ninety per cent of its employment in the State, the rate of recapture shall equal twice the percentage by which the employment is less than ninety per cent.

(d) The granting body shall provide notice and explanation to the corporation of its intent to recapture the economic incentive and state the amount to be recaptured. The recipient corporation shall remit to the granting body the amount within sixty calendar days of the date of the notice.

-9 Penalties. (a) Any corporate director, officer, or executive who covers-up any fraudulent representation or covers-up the investigation of any document, record, or any other written material that they know to be false or misleading, in order to qualify for economic incentives provided by this chapter, shall be fined not more than $100,000.

(b) Any corporation that withholds information regarding the fraud under subsection (a) or any cover-up regarding that fraud shall be fined not more than $1,000,000.

(c) The circuit court shall have jurisdiction to hear and determine cases of fraud and cover-up under this section that are committed within the circuit."

SECTION 2. Section 378-62, Hawaii Revised Statutes, is amended to read as follows:

"378-62 Discharge of, threats to, or discrimination against employee for reporting violations of law. An employer shall not discharge, threaten, or otherwise discriminate against an employee regarding the employee's compensation, terms, conditions, location, or privileges of employment because:

(1) The employee, or a person acting on behalf of the employee, reports or is about to report to the employer, or reports or is about to report to a public body, verbally or in writing, a violation or a suspected violation of:

(A) A law, rule, ordinance, or regulation, adopted pursuant to law of this State, a [political subdivision of this State,] county, or the United States; or

(B) A contract executed by the State, a [political subdivision of the State,] county, or the United States,

unless the employee knows that the report is false; [or]

(2) An employee is requested by a public body to participate in an investigation, hearing, or inquiry held by that public body, or a court action[.]; or

(3) The employee refuses to participate in an illegal activity or reports an illegal activity committed by an employer."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.