GET; Employee Leasing Exemption
Provides a GET exemption for amounts representing employee wages and benefits paid to an employee leasing company.
TWENTY-SECOND LEGISLATURE, 2003
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO EMPLOYEE LEASING COMPANIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§237- Leased employee exemption; loss of exemption;
definitions. (a) In addition to other amounts exempt from
taxation under this chapter, this chapter shall not apply to
amounts received by an employee leasing company from a client
company equal to and which are disbursed by the employee leasing
company for leased employee wages, salaries, payroll taxes,
insurance premiums, and benefits, including retirement, vacation, sick leave, and health benefits.
(b) Where any client company of any employee leasing
company utilizes the services of a leased employee, the client
company and the employee leasing company, with respect to the
leased employee, shall not be exempt from the requirements of any federal, state, or county law, including labor or employment
laws, collective bargaining rights, anti-discrimination
provisions, or other law with respect to the protection and
rights of employees, including chapters 377 and 378, that would
apply to the leased employee if the leased employee had been an
employee of the client company instead of the employee of the
employee leasing company. These rights shall not be abrogated by any contract or agreement between the client company and the
employee leasing company that contains terms or conditions that
could not be lawfully contained in a contract or agreement
directly between the client company and the leased employee if no employee leasing company was involved.
The client company shall be deemed to have satisfied its
obligations with respect to any leased employee under any
applicable law, including without limitation, workers
compensation laws including chapter 386, employee insurance
coverage including chapters 383, 385, 392, and 393, and tax
withholding and reporting laws, if and to the extent that those
obligations are satisfied by the employee leasing company acting
in its capacity as employer of the leased employee.
If, by or through any contract between the client company
and any employee leasing company, or otherwise, leased employees
are excluded from any employee rights or employee benefits
required to be provided to employees of the client company by the client company, the exemption under this section shall not be applicable. Written notification of any violation of this
paragraph to the department by any union or the department of
labor and industrial relations shall be sufficient to make this
Failure of the employee leasing company to pay any tax
withholding for leased employees or any federal or state taxes
for which the employee leasing company is responsible shall
immediately cancel the exemption under this section permanently.
(c) As used in this section:
"Assigned leased employee" means an employee under an
employee leasing services arrangement whose work is performed in
the State. The term does not include an employee hired to
support or supplement a client company's work force as temporary
"Client company" means a person that contracts with an
employee leasing company and is assigned leased employees by the
employee leasing company under that contract.
"Employee leasing company" means a business entity that
offers employee leasing services.
"Employee leasing services" means an arrangement by which
employees of an employee leasing company are assigned to work at
the client company and the leased employee's assignment is
intended to be of a long term or continuing nature, rather then
temporary. The term does not include temporary help.
"Leased employee" means the same as defined in section
414(n) of the Internal Revenue Code of 1986, as amended.
"Temporary help" means an arrangement by which an
organization hires its own employees and assigns them to a client company to support or supplement the client's work force in a special situation, including:
(1) An employee absence;
(2) A temporary skill shortage;
(3) A seasonal workload; or
(4) A special assignment or project."
SECTION 2. New statutory material is underscored.
SECTION 3. This Act shall take effect on July 1, 2003.