Report Title:

Small Business; Bill of Rights

Description:

Establishes basic due process rights for small businesses especially in relation to the actions of state agencies. Effective date of July 1, 2020. (SD1)

THE SENATE

S.B. NO.

2687

TWENTY-SECOND LEGISLATURE, 2004

S.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO SMALL BUSINESSES.

 

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

SECTION 1. (a) The legislature finds that:

(1) Small businesses make up over ninety-five per cent of all businesses in Hawaii and employ almost sixty per cent of the State's working population;

(2) Most surveys place Hawaii last in terms of the survival of small business;

(3) The most significant detriment to developing and maintaining a small business in Hawaii is the arbitrary action or inaction of state agencies;

(4) Small businesses are disproportionately impacted (as compared to large corporations), by overly-burdensome rules and their overzealous application; and

(5) Small businesses lack the resources to cope with the adverse actions of state regulatory agencies which challenge their very existence.

(b) The legislature also supports the finding of the small business regulatory review board that there is a need to establish a small business bill of rights to specify the duties and obligations of state agencies to ensure due process and fairness to small businesses. These basic rights include the following:

(1) The right to avoid penalties by correcting any alleged violations by a small business;

(2) The right to a timely response to an application;

(3) The right to automatic renewal of an essential permit;

(4) The right to a timely and impartial hearing;

(5) The right to representation paid to the prevailing party in a dispute;

(6) The right to notice and the opportunity to remedy any workplace deficiencies alleged by employees;

(7) The right to insurance coverage;

(8) The right to privacy of proprietary information;

(9) The right to compete fairly for government procurement funds; and

(10) The right to a presumption of innocence.

SECTION 2. Chapter 103D, Hawaii Revised Statutes, is amended by adding two new sections to part IX to be appropriately designated and to read as follows:

"103D-   Financial data. Notwithstanding any other law to the contrary, no small business shall be required to disclose any financial data regarding the profitability of the small business to any governmental body as a condition to obtaining any contract or any payment under any contract with the governmental body when the contract is to be awarded, or was awarded, in a fixed bid or fixed price per unit basis and not a cost reimbursement basis.

103D-   Procurement allocation for small business. (a) Notwithstanding any other law to the contrary, every governmental body shall contract at least fifty per cent of the total dollar amount of procurements awarded by the governmental body under this chapter with small businesses.

(b) The policy office may adopt rules pursuant to chapter 91 to effectuate this section."

SECTION 3. Chapter 201M, Hawaii Revised Statutes, is amended by adding three new sections to be appropriately designated and to read as follows:

"201M-   Timely and impartial hearing; business advocate. (a) Notwithstanding any other law to the contrary, any small business aggrieved by any adverse action of an agency, including the denial or refusal of an agency to issue a license, permit, or any other application made to the agency, may submit a request for a contested case hearing pursuant to chapter 91. If requested, the contested case hearing shall be held within thirty days of the adverse action; provided that the contested case hearing shall be administered by an impartial hearings officer from an agency other than the agency that rendered the adverse decision.

(b) If the impartial hearing is not provided by the agency within thirty days of the adverse action, the adverse action and any penalties associated with it shall be nullified.

(c) Any agency may adopt rules pursuant to chapter 91 to effectuate this section.

201M-   Timely response to an application. Every agency shall notify any small business applying for a license, permit, or any other application made by a small business to the agency, regarding the disposition of the application made, within thirty days from the date the application is determined to be completed by the agency; provided that an application not rejected within thirty days of the date the application is completed shall be automatically approved by the agency.

201M-   Automatic renewal of licenses and permits. Notwithstanding any other law to the contrary, every license, permit, or other certification required of a small business by an agency, shall be automatically renewed by the agency at the expiration of that license, permit, or certification; provided that the agency may withhold the renewal for good cause after notice to the small business of at least thirty days prior to the expiration of the license, permit, or certification."

SECTION 4. Section 201M-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Business advocate" means a person, not necessarily an attorney, who represents a small business in a hearing before an agency. Any agency may adopt rules pursuant to chapter 91 to establish qualifications for a business advocate."

SECTION 5. Chapter 431, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"431-   Liability insurance for small businesses; right to obtain and maintain. (a) Notwithstanding any other law to the contrary, after December 31, 2003, all insurers regulated under this chapter that provide any type of liability insurance coverage shall provide liability insurance coverage to any small business, upon request. For the purpose of this section, "small business" shall have the same meaning as that term is defined under section 201M-1.

(b) Any insurance company regulated by this chapter shall be prohibited from canceling or refusing to renew any insurance coverage required by the State for any small business on the sole ground that the applicable premium is too small."

SECTION 6. Section 91-13.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]91-13.5[]] Maximum time period for business or development-related permits, licenses, or approvals; automatic approval; extensions. (a) Unless otherwise provided by law, an agency shall adopt rules that specify a maximum time period of thirty days to grant or deny a business or development-related permit, license, or approval; provided that the application is not subject to state administered permit programs delegated, authorized, or approved under a federal law[.] that requires a more lengthy maximum time period.

(b) All [such issuing] agencies under subsection (a) shall clearly articulate informational requirements for applications and review applications for completeness [in a timely manner.] within thirty days after they are received from the applicant.

(c) All [such issuing] agencies under subsection (a) shall take action to grant or deny any application for a business or development-related permit, license, or approval within the established maximum period of time, or the application shall be deemed approved.

(d) The maximum period of time established pursuant to this section shall be extended in the event of a national disaster, state emergency, or union strike, which would prevent the applicant, the agency, or the department from fulfilling application or review requirements.

(e) The maximum period of time allowed under this section shall be extended to ninety days if the agency is required to hold one or more public hearings to obtain public input prior to the issuance of any business or development-related permit, license, or approval.

[(e)] (f) For purposes of this section, "application for a business or development-related permit, license, or approval" means any state or county application, petition, permit, license, certificate, or any other form of a request for approval required by law to be obtained prior to the formation, operation, or expansion of a commercial or industrial enterprise, or for any permit, license, certificate, or any form of approval required under sections 46-4, 46-4.2, 46-4.5, 46-5, and chapters 183C, 205, 205A, 340A, 340B, 340E, 340F, 342B, 342C, 342D, 342E, 342F, 342G, 342H, 342I, 342J, 342L, and 342P."

SECTION 7. Section 103D-901, Hawaii Revised Statutes, is amended by amending the definition of "small business" to read as follows:

""Small business" means [a United States business which is independently owned] any legal entity registered to do business in the State that:

(1) Is independently owned and operated;

(2) Has an annual gross income of not more than $5,000,000;

(3) Employs not more than fifty full-time employees; and [which]

(4) That is not dominant in its field of operation or an affiliate or subsidiary of a business dominant in its field of operation.

The policy board shall adopt rules establishing more detailed criteria for defining small business[, including the number of employees]."

SECTION 8. Section 201M-1, Hawaii Revised Statutes, is amended by amending the definition of "small business" to read as follows:

""Small business" means a for-profit enterprise [consisting of fewer than one hundred] that is independently owned and operated with an annual gross income of not more than $5,000,000, and employs not more than fifty full-time [or part-time] employees."

SECTION 9. Section 201M-8, Hawaii Revised Statutes, is amended to read as follows:

"[[]201M-8[]] Waiver or reduction of penalties. (a) Except where a penalty or fine is assessed pursuant to a program approved, authorized, or delegated under a federal law, any agency authorized to assess civil penalties or fines upon a small business shall waive [or reduce] any penalty or fine as allowed by federal or state law for a violation of any statute, ordinance, or [rules] rule by a small business [under the following conditions:]; provided that:

(1) The small business is allowed to contest the penalty or fine under section 91-9;

[(1)] (2) The small business corrects the violation within a minimum of thirty days after receipt of a notice of violation or citation; and

[(2)] (3) The violation was unintentional or the result of excusable neglect; or

[(3)] (4) The violation was the result of an excusable misunderstanding of an agency's interpretation of a rule.

(b) Subsection (a) shall not apply when:

(1) A small business fails to exercise good faith in complying with the statute or rules;

(2) A violation involves wilful or criminal conduct; and

(3) A violation results in serious health, safety, or environmental impact.

(c) [An] Pursuant to chapter 91, an agency may adopt rules to implement the requirements of this section."

SECTION 10. Section 396-8, Hawaii Revised Statutes, is amended to read as follows:

"396-8 Employee responsibility and rights. (a) Employee compliance. Each employee shall comply with occupational safety and health standards and all rules, regulations and orders issued under this chapter which are applicable to the employee's own actions and conduct.

(b) Complaints to the department. Complaints may be made to the department and where reasonable grounds exist for the department to believe there may be a hazard, there shall be an inspection in response to the complaint.

(c) Opportunity for employees to participate in inspections. At the time and place of inspections under section 396-4(b)(2), (3), and (4), an opportunity shall be provided for employees and their representatives to bring possible violations to the attention of the authorized representative of the director conducting said inspection in order to aid inspections. This requirement may be fulfilled by allowing a representative of the employees and a representative of the employer to accompany the director's authorized representative during the physical inspection of the workplace, or in absence of the employees' representative, there shall be a consultation with a reasonable number of employees.

(d) Notice of nonaction to employees. The department shall notify the employees when the department decides not to take compliance action as a result of violations alleged by any employee or any representative of the employees. This notice shall state the decision not to take compliance action, the reasons therefor, and the procedures for informal review of such decision.

(e) Discharge or discrimination against employees for exercising any right under this chapter is prohibited. In consideration of this prohibition:

(1) No person shall discharge, suspend or otherwise discriminate in terms and conditions of employment against any employee by reason of:

(A) The employee's failure or refusal to operate or handle any machine, device, apparatus, or equipment which is in any unsafe condition; or

(B) The employee's failure or refusal to engage in unsafe practices in violation of this chapter or of any standard, rule, regulation, citation or order issued under the authority of this chapter;

(2) Upon discretion of the director or request, names of complainants may be withheld from the employer;

(3) No person shall discharge or in any manner discriminate against any employee because the employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter, or has testified or intends to testify in any such proceeding, or acting to exercise or exercised on behalf of the employee or others any right afforded by this chapter;

(4) Any employee who believes that there has been a discharge or discrimination against the employee by any person in violation of this subsection may, within sixty days after the violation occurs, file a complaint with the director alleging unlawful discharge or discrimination and setting forth the circumstances thereof;

(5) Upon receipt of the complaint, the director shall investigate to determine if a discharge or discrimination in violation of this subsection has occurred;

(6) If upon investigation the director determines that the provisions of this subsection have been violated, the director shall order the employer to provide all appropriate relief to the employee, including rehiring or reinstating the employee to the former position with back pay and restoration of seniority;

(7) Within ninety days of receipt of a complaint filed under this subsection, unless extended by the director, the director shall notify the employee of the final determination and any subsequent action the department will take to resolve the complaint; and

(8) Nothing in this subsection shall preclude any employee or representative of an employee from simultaneously pursuing a cause of action for injunctive relief or any other remedy provided by law.

(f) Except for those complainants alleging violations under subsection (e) above, names of all complainants and witnesses shall be withheld from the employer unless prior permission is given by the complainant or witness to release the complainant's or witness' name.

(g) The department shall notify, in writing, any small business of any complaint alleging violations against the small business no later than thirty days of the filing of a complaint with the department; provided that if the small business resolves the alleged violation to the satisfaction of the department within thirty days from the agency's receipt of the notification of the alleged violation, it shall not be subject to a fine or penalty. For purposes of this section, "small business" shall have the same meaning as that term is defined in section 201M-1."

SECTION 11. Section 661-12, Hawaii Revised Statutes, is amended to read as follows:

"[[]661-12[]] Awards of [attorney's] fees against agencies. (a) Any law to the contrary notwithstanding, in any civil proceeding initiated by a small business against any agency [in a state court], the court or the agency, as the case may be, shall allow the small business, reasonable [attorney's] fees[,] for attorneys or business advocates hired by the small business, if the court finds that the agency lacked a reasonable basis for its action[.], or the small business prevails at the agency hearing.

(b) Any agency against which a civil proceeding is initiated in any state court may request and shall be awarded reasonable attorney's fees, if the court finds that the small business' action was frivolous and wholly without merit.

(c) Whenever any court awards [attorney's] fees pursuant to this section, the award shall not exceed $7,500. The award shall be limited to the attorney's or business advocate's normal hourly rate, but in no event more than $75 an hour multiplied by the number of hours reasonably spent [in litigating] on claims and issues upon which the claimant clearly and substantially prevails. If a small business is represented by counsel from a publicly funded legal service organization, attorney's fees shall not be awarded.

(d) The small business or agency shall provide the court with evidence to establish the attorney's or business advocate's normal hourly rate and the number of hours spent representing the claimant on each issue or claim which the claimant asserts. Each request for attorney's or business advocate's fees shall be accompanied by itemized records detailing the nature of the services provided or performed and the amount of time spent coincidental to the time when the [legal] services were actually provided or performed. A claimant that fails to comply with this section shall not be awarded [attorney's] any fees.

(e) All attorney's or business advocate's fees awarded against an agency pursuant to this section shall be payable only after a budget request for the amount is submitted to and approved by the legislature. The amount of attorney's or business advocate's fees awarded against an agency shall be identified by the agency and included in the agency's budget request submitted to the legislature for the fiscal year immediately following the year the award was made against the agency. If the budget request is approved by the legislature, that amount shall be included in the program appropriation for the agency in the appropriation bill for that fiscal year.

(f) As used in this section:

"Agency" means any state or county board, commission, department, or officer authorized by law to make rules or to adjudicate contested cases except those in the legislative or judicial branches.

"Business advocate" means the same as the definition of that term under section 201M-1.

"Civil proceeding" means any proceeding other than a criminal proceeding or a proceeding before a family court.

"Small business" [means an independently owned business with less than fifty employees.] shall have the same meaning as that term is defined under section 201M-1."

SECTION 12. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 13. This Act shall take effect on July 1, 2020.