HOUSE OF REPRESENTATIVES
TWENTY-NINTH LEGISLATURE, 2017
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO EMPLOYMENT SECURITY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that the economy is changing and increasing numbers of individuals are facing decisions on whether to choose to become entrepreneurs and go into business for themselves or remain in employment relationships and maintain the protections afforded by various labor laws, including Hawaii's employment security law. The legislature further finds that many of these individuals may not be aware of the criteria used by the department of labor and industrial relations when making determinations as to whether an individual is in an employment relationship or is a bona fide independent contractor.
Accordingly, the purpose of this Act is to provide greater clarity in Hawaii's employment security law to those individuals choosing to become entrepreneurs by setting forth in greater detail the criteria used to determine independent contractor status.
SECTION 2. Section 383-6, Hawaii Revised Statutes, is amended to read as follows:
Master and servant
relationship, not required when.] Independent contract. (a)
Services performed by an individual for wages or under any contract of hire
shall be deemed to be employment subject to this chapter irrespective of
whether the common law relationship of [ master and servant] employer
and employee exists unless and until it is shown to the satisfaction of the
department [ of labor and industrial relations] that[ :] in the
department's determination, a preponderance of the factors set forth in
subsection (b) has been met and that:
(1) The individual has been and will continue to be free from control or direction over the performance of such service, both under the individual's contract of hire and in fact;
(2) The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; and
(3) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of service.
(b) The department shall consider whether a preponderance of the following factors indicates whether an individual is an independent contractor:
(1) The employer for whom services are being performed requires the individual to comply with instructions regarding when, where, and how services are performed;
(2) The employer for whom services are being performed requires particular training for the individual performing services;
(3) The services provided by the individual are part of the regular business of the employer for whom services are being performed;
(4) The employer for whom services are being performed requires the services to be performed by the individual;
(5) The employer for whom services are being performed hires, supervises, or pays the wages of the individual performing services;
(6) The existence of a continuing relationship between the employer for whom services are being performed with the individual performing services which contemplates continuing or recurring work, even if not full-time;
(7) The employer for whom services are being performed requires set hours during which services are to be performed;
(8) The employer for whom services are being performed requires the individual to devote substantially full-time to its business;
(9) The employer for whom services are being performed requires the individual to perform work on its premises;
(10) The employer for whom services are being performed requires the individual to follow a set order or sequence of work;
(11) The employer for whom services are being performed requires the individual to make oral or written progress reports;
(12) The employer for whom services are being performed pays the individual on a regular basis such as hourly, weekly, or monthly;
(13) The employer for whom services are being performed pays expenses for the individual performing services;
(14) The employer for whom services are being performed furnishes tools, materials, and other equipment for use by the individual;
(15) There is a lack of investment in the facilities used to perform services by the individual;
(16) There is a lack of profit or loss to the individual as a result of the performance of such services;
(17) The individual is not performing services for a number of employers at the same time;
(18) The individual does not make such services available to the general public;
(19) The employer for whom services are being performed has a right to discharge the individual; and
(20) The individual has the right to end the relationship with the employer for whom services are being performed without incurring liability pursuant to an employment contract or agreement.
The degree of importance of each factor may vary, depending on the occupation and the individual facts of each case as determined by the department."
SECTION 3. The director of labor and industrial relations shall submit a report to the legislature no later than twenty days prior to the convening of the regular session of 2018 on the guidelines developed by the unemployment insurance coverage committee to assist auditors in applying section 383-6, Hawaii Revised Statutes, during the auditor's investigations.
SECTION 4. The director of labor and industrial relations shall submit a report to the legislature no later than twenty days prior to the convening of each regular session regarding the number of determinations applying section 383-6, Hawaii Revised Statutes, rendered by the department of labor and industrial relations' unemployment insurance division and employment security appeals referee's office finding both independent contractor and covered employment status.
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act shall take effect on January 7, 2059.
Employment Security; Independent Contractor; Guidelines; Department of Labor and Industrial Relations
Clarifies Hawaii's employment security law for independent contractors by requiring the consideration of twenty factors by the Department of Labor Industrial Relations when determining whether an individual is considered an independent contractor. Requires the Director of Labor and Industrial Relations to report to the Legislature prior to the Regular Session of 2018 regarding guidelines developed by the unemployment insurance coverage committee. Requires an annual report to the Legislature regarding covered employment determinations. Takes effect 1/7/2059. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.