Report Title:

Living Wage for Hawaii



Requires private firms contracted by state government to pay covered workers a Hawaii living wage of $9.43 an hour, to begin on 7/1/03 and adjusted thereafter. Requires DLIR to implement living wage. Establishes temporary living wage advisory committee to evaluate law. Repealed 7/1/2007.


S.B. NO.









relating to the hawaii living wage law.



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



§   -1 Findings and intent. (a) The legislature finds that the state government awards contracts for services each year for substantial amounts that result in the creation and maintenance of a wide variety of employment opportunities in Hawaii. These contracts are paid for by taxpayer dollars and should be used to promote the sustenance and creation of jobs that will increase consumer income, decrease levels of poverty, invigorate neighborhood business, and reduce the need for taxpayer-funded public assistance programs.

(b) Therefore, it is the intent of this chapter to ensure that employees of private sector vendors who contract with the state government to provide certain services earn an hourly wage that is sufficient for a family of four to live at or above the federal poverty level.

§   -2 Definitions. As used in this chapter, unless the context clearly requires otherwise:

"Contracting department" means:

(1) Any state department established pursuant to section 26-4, including any boards, commissions, agencies, offices, or corporations administratively attached thereto, but excluding the University of Hawaii;

(2) The legislature;

(3) The judiciary; and

(4) The office of Hawaiian affairs.

The Hawaii health systems corporation shall not be considered a contracting department.

"Covered employee" means an individual employed by a covered vendor who directly expends or would directly expend the person's time on the service contract or the service subcontract with the contracting department.

"Covered vendor" means any for-profit employer who employs at least twenty-five full-time equivalent employees or any nonprofit employer who employs at least one hundred full-time equivalent employees who has been awarded a service contract or subcontract after the effective date of this chapter.

"Department" means the department of labor and industrial relations. The department of labor and industrial relations shall be responsible for the overall implementation, compliance, and enforcement of this chapter.

"Full-time" means forty working hours per week.

"Full-time equivalent" is a formula to calculate the number of employee work hours that equal one full-time position.

"Living wage" means the rate established by the department as the minimum hourly wage rate that shall be paid to a covered employee by a covered vendor pursuant to the formula set forth in section    -5.

"Person" means one or more of the following or their agents, employees, and representatives: individuals, corporations, partnerships, joint ventures, associations, labor organizations, educational institutions, mutual companies, joint-stock companies, trusts, unincorporated organizations, trustees, trustees in bankruptcy, receivers, fiduciaries, and all other entities recognized by law by this State.

"Service contract" means any single contract of at least $100,000 or more awarded to a vendor by a contracting department for the furnishing of services.

"Service subcontract" means a subcontract of $25,000 or more awarded to a vendor by a covered vendor, provided the subcontract is paid for by funds from the service contract.

"Vendor agreement" means a written agreement between the State, through a contracting department, and any covered vendor that is executed at the time a service contract is signed with the State or a subcontract is signed with a covered vendor.

§   -3 Applicability, exemptions, and waivers. (a) Except for the exemptions listed in subsection (b), this chapter shall apply to all covered vendors. The department of labor and industrial relations shall be responsible for the overall implementation, compliance, and enforcement of this chapter.

(b) The following types of service contracts and subcontracts shall be exempt from the requirements of this chapter:

(1) Construction contracts awarded by the State that are subject to the state prevailing wage law;

(2) Contracts awarded to work-study or cooperative educational programs, provided that the contract is for stipends to students in the programs;

(3) Contracts awarded to the department of public safety or its attached agencies where contracted employees are inmates of correctional institutions;

(4) Contracts awarded to the department of commerce and consumer affairs or its attached agencies where contracted employees are paid stipends for proctoring, grading, supervising, or recording examinations; and

(5) Contracts awarded to vendors who provide services to the State and are awarded to vendors who provide trainees a stipend or wage as part of a job-training program; provided that the trainees do not replace current state-funded positions.

(c) A covered vendor must certify and submit to the department an affidavit in a form approved by the department and provided by the contracting department and signed by a principal officer of the covered vendor, that one of the exemptions in this section applies to them before the department may grant an exemption to the covered vendor. The covered vendor shall also submit a copy of the affidavit to the contracting department.

(d) The department may grant general and hardship waivers from this chapter as follows:

(1) A general waiver may be granted where application of this chapter to a particular service contract or subcontract violates a specific state or federal statute, rule, regulation, or constitutional provision. All general waiver requests shall include the following:

(A) The service contract or subcontract to which this chapter applies;

(B) The conflicting statutory, regulatory, or constitutional provision that makes compliance with this chapter unlawful, and a copy of each such provision; and

(C) An explanation of how compliance with this chapter would violate the cited provision, and the consequences that would result if this violation were to occur.

A general waiver request shall be submitted directly to the department and a copy submitted to the contracting department.

(2) With respect to hardship waivers, a contracting department shall monitor, and as necessary, recommend to the department, individual or group exemptions necessary in cases in which compliance with this chapter would cause undue economic hardship. These waivers shall be subject to the department’s approval after a public hearing on the request has been held.

All hardship waiver requests shall include the following:

(A) The service contract or service subcontract to which this chapter applies;

(B) The lower wage paid by the covered vendor, and

(C) A detailed explanation of how the payment of a living wage will cause undue economic hardship, including supporting financial statements.

§   -4 Notification requirements. All contracting departments engaged in the awarding of contracts shall provide in writing, an explanation designed by the department, of the requirements of this chapter in all requests for bids for service contracts with the State. All persons who have signed a service contract with the State shall forward a copy of the requirements to any person submitting a bid for a subcontract on the service contract.

§   -5 Living wage payment to employees. (a) Covered vendors shall pay no less than the living wage to covered employees.

(b) The living wage shall be calculated on an hourly basis and shall be no less than $9.43 beginning on July 1, 2003. Each July 1 thereafter, the living wage shall be recalculated according to each of the adjustments set forth in paragraphs (1) to (3). The highest of the three figures derived in this manner shall be the living wage applicable until the following June 30:

(1) Adjustment to the hourly rate which at forty hours of work a week for fifty-two weeks a year would be equal to but not less than the poverty threshold in Hawaii for a family of four as published by the United States Department of Health and Human Services; or

(2) Adjustment in proportion to the increase at the immediately preceding December 31 over the year earlier level of the annual average consumer price index for all urban consumers (CPI-U) Honolulu as published by the Bureau of Labor Statistics, United States Department of Labor applied to $9.43; or

(3) Adjustment to one hundred ten per cent of the current federal minimum wage.

§   -6 Duties of covered vendors; payroll records; vendor agreements; annual reports. Covered vendors shall have the following duties:

(1) With respect to maintenance of payroll records, each covered vendor shall maintain payrolls for all covered employees and basic records relating thereto for a period of three years. The records shall contain:

(A) The name and address of each employee;

(B) Each employee's job title and classification;

(C) The number of hours worked each day for each employee;

(D) Each employee's gross wages, deductions made, and actual wages paid;

(E) A record of fringe benefit payments including:

(i) Contributions to approved plans, funds or programs;

(ii) Additional cash payments; or

(iii) Both; and

(F) Any other data that may be required by the contracting department from time to time;

(2) With respect to examination of payrolls, each covered vendor shall permit a representative of the department or its designee to observe work being performed upon the work site, to interview employees, and to examine the books and records relating to the payrolls being investigated;

(3) With respect to vendor agreements, at the time of signing a service contract with the State or a subcontract with a vendor, the contract with the covered vendor shall include the following:

(A) The name of the program or project under which the contract or subcontract is being awarded;

(B) A local contact name, address, and phone number for the covered vendor;

(C) A written commitment by the covered vendor to pay all covered employees not less than the living wage, subject to adjustment each July 1, and to comply with this chapter;

(D) A workforce profile of covered employees paid for by the service contract or subcontract including the employees’ job titles with wage ranges; and

(E) For service contracts, a list of all service subcontracts either awarded or that will be awarded to vendors with funds from the service contract. Any covered vendor awarded a service contract shall notify the contracting department within three working days of signing a service subcontract with a vendor; and

(4) By July 31 of each year, covered vendors shall provide annual reports to the department of their employment activities including the job positions charged to the contract and the wage ranges of those positions.

§   -7 Enforcement. (a) If necessary for the enforcement of this chapter, the department may issue subpoenas, compel the attendance and testimony of witnesses and production of books, papers, records, and documents relating to payroll records necessary for hearing, investigations, and proceedings. The department may apply to a court of competent jurisdiction to enforce these provisions.

(b) An individual who believes that the individual is a covered employee, or if the individual is an applicant for a position to be filled by a covered employee, and believes that the employer is not complying with requirements of this chapter, may file a complaint with the department. Complaints by covered employees of alleged violations may be made at any time. Written or oral statements made by the individual shall be treated as confidential and shall not be disclosed to the covered vendor without the consent of the individual. A complaint of non-compliance with this chapter may be filed by any person with the department, which shall provide a copy of the complaint to each covered vendor against whom the complaint is made within five business days.

(c) If a covered vendor discharges, reduces the compensation of, or discriminates against any covered employee or any other individual for making a complaint to the department, otherwise asserting the individual's rights under this chapter, participating in any of the proceedings under this chapter, or using any civil remedies to enforce the individual's rights under this chapter, the covered vendor shall be considered in violation of this chapter. The department shall investigate allegations of retaliation or discrimination and, if found to be true, after notice and a hearing, shall order appropriate relief to the employee or individual and assess penalties against the covered vendor and may suspend the contract or order the service contractor to suspend the subcontract.

(d) The department or its designee shall investigate all complaints of non-compliance. Investigations may include routine reviews, spot checks, and investigations pursuant to complaints. The department shall examine promptly all payrolls for compliance upon receiving a complaint in furtherance of any investigation.

(e) If the department finds evidence that the covered vendor is not in compliance or has violated any of the provisions of this chapter, the department shall order any remedial measures that may be required to ensure compliance including, but not limited to ordering back pay to covered employees for non-compliance with section    -5. If the covered vendor does not comply with the department’s order within ten working days, the department shall review the facts of the finding and may proceed with a formal hearing and investigation. If the department decides not to proceed with a hearing, it shall provide a statement of the reasons for the decision.

§   -8 Penalties; remedies. (a) In the event that the department determines, after notice and hearing, that any covered vendor has failed to pay the living wage rate or has otherwise violated this chapter, the department may impose any or all of the following penalties or remedies:

(1) A fine not to exceed $300 for each affected covered employee for each day that the covered vendor is in violation of this chapter;

(2) The filing of a complaint with the pertinent state or federal agency;

(3) Wage restitution for each affected employee;

(4) Suspension of ongoing contract and subcontract payments;

(5) Ineligibility to bid for future contracts with the State for three years or until all penalties and restitution have been paid in full; and

(6) Any other action deemed appropriate and within the discretion and authority of the State.

(b) No remedy set forth in this chapter is intended to be exclusive or a prerequisite for asserting a claim for relief to enforce the right granted under this chapter in a court of law. This chapter shall not be construed to limit an employee’s right to bring common law cause of action for wrongful termination.

§   -9 Earned income credit notification. Covered vendors shall inform their covered employees earning less than $12 per hour, or any other amount as determined by the department, of their possible right to apply for and receive the federal earned income credit. The department shall assist any covered vendors to the fullest extent possible to implement this section."

SECTION 2. Living wage advisory committee established; duties; composition and term; meetings; rules; conflict of interest. (a) There is established the living wage advisory committee, which shall be attached to the department of labor and industrial relations for administrative purposes only.

(b) The living wage advisory committee shall:

(1) Review and evaluate the effectiveness of this chapter in creating and retaining living wage jobs in Hawaii;

(2) Review and evaluate the implementation and enforcement of this chapter; and

(3) Submit to the legislature and the governor:

(A) An interim preliminary report no later than twenty days prior to the convening of the regular session of 2004;

(B) Two interim annual reports no later than twenty days prior to the convening of the regular sessions of 2005 and 2006; and

(C) A final report no later than twenty days prior to the convening of the 2007 regular session, which shall include recommendations, including specifically whether or not to reenact a living wage law for Hawaii.

(c) The living wage advisory committee shall be comprised of five members who shall serve until the committee is terminated pursuant to subsection (i) and whom the governor shall appoint as follows:

(1) One member representing a labor union;

(2) One member representing a living wage advocacy organization;

(3) One member representing a community-based organization operating solely within the State of Hawaii;

(4) One member representing the Chamber of Commerce of Hawaii; and

(5) One member representing small businesses in Hawaii.

The committee shall appoint from its members a chairperson and secretary. Three members shall constitute a quorum, whose affirmative vote shall be necessary for all actions by the committee.

(d) Members shall serve without compensation, but may be reimbursed for the necessary expenses, including travel expenses, incurred in the performance of their duties.

(e) The committee shall meet quarterly or more frequently as required. All meetings of the committee shall be open to the public.

(f) The committee shall adopt rules in accordance with chapter 91 governing public participation and testimony at hearings and meetings; provided that the committee shall have the power to issue interim rules, which shall be exempt from the public notice, public hearing, and gubernatorial approval requirements of chapter 91. The interim rules shall be valid for not longer than one year.

(g) No person shall serve on the committee who has any actual or potential conflict of interest as defined in chapter 84. No member of the committee shall participate in any proceeding concerning a covered vendor, covered employee, or applicant for waiver or exemption, if the member or any of the member's immediate family has a direct or indirect financial interest in the covered vendor, covered employee, or applicant for waiver or exemption, or in the award of a service contract, subcontract, or the granting of relief to the covered vendor, covered employee, or applicant for waiver or exemption.

(h) The department of labor and industrial relations shall provide staff assistance to the committee and shall provide all information relating to the implementation of chapter     , Hawaii Revised Statutes, to the committee at least quarterly and upon the committee's request for the committee's review and evaluation.

(i) The committee shall terminate on December 31, 2007.

SECTION 3. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 4. This Act shall take effect on July 1, 2003 and shall be repealed on July 1, 2007, except that section 2, which establishes the living wage advisory committee, shall be repealed on December 31, 2007.