NFIB/Hawaii End-of-Session Report

Date: June 15, 2017

Defeat – for now – of onerous paid leave and minimum wage proposals highlight accomplishments for small business. Big court victory an added bonus.

NFIB/Hawaii State Director Melissa Pavlicek reports on the small-business agenda at the end of the 2017 half of the legislative session

Several key Hawaii legislative committees preliminarily approved a bill to require employer-paid sick leave for both full-time and part-time employees. NFIB/Hawaii opposed the bill that ultimately died later in the session. House Bill 4 would have tied a mandate for employers to provide sick leave to their employees’ pay. It would have required employers to pay for up to 40 hours of leave per year for employees who earn less than $15 per hour. Although not moving this year, the bill can be taken up next year. If it is, NFIB/Hawaii will remain strongly opposed.

Flawed Carve Out for Highly Paid Employees. The bill’s attempt to carve out higher paid employees made it virtually impossible for proponents of the bill to say that similar employers would be treated fairly. Under the proposal, employers with “high wage” employees (those who make at least $5 per hour over the minimum wage) would not be required to provide paid leave, while employers with at least one employee making less than $5 over minimum wage would have to provide paid leave. The bill’s minimum wage trigger would have been applied on an “employer” basis, even though it ostensibly alleviated employers from the burden of the bill for employees making less than $15 per hour.

Potential Conflicts with Other Laws. Many employers noted that they are already flexible in accommodating employee needs and time off requests without conflict, but stated that they believe mandated leave requirements have the potential to conflict with already-existing state and federal leave laws. They pointed to Hawaii’s Temporary Disability Insurance law which already requires pay for absences due to illness.

Costs and Logistics Challenges. The creation of an entirely new system of tracking and accruing sick leave was cited as a significant cost and logistics burden for small employers. Some pointed to the potential for employees to lose their jobs over the added costs of legislative mandates. Others pointed to the existing requirement that Hawaii employers pay for health insurance, with employees contributing only up to 1.5 percent of their pay (as compared to the federal health insurance mandate which allows employees to be required to contribute up to 9.5 percent). Additional costs of all required benefits must be viewed in totality, NFIB argued in opposing the leave mandate.

State agencies were also divided on the bill. The Department of Health supported it, while the state Human Resources Department opposed the bill. The Department of Labor which would be tasked with enforcing the proposal if it was enacted noted the bill lacked funds or a plan for enforcing it.

Minimum Wage

Employers were left feeling distinctly unloved when Hawaii House legislators scheduled three minimum wage increase bills (House Bill 5, House Bill 442 and House Bill 1433) for public hearing on Valentine’s day. Current law is already scheduled to increase Hawaii’s minimum wage to $10.10 per hour on January 1, 2018.

  • HB 5 would have increased the minimum wage in Hawaii to $15 per hour. 
  • HB 442 would have authorized the counties to establish a higher minimum wage than the state minimum wage. 
  • HB 1433 would have required the state Department of Labor to adjust the hourly minimum wage in accordance with the Honolulu region consumer price index.

NFIB/Hawaii weighed in on the House measures which were defeated this session but will be alive in the 2018 Legislature. A Senate minimum wage increase bill, Senate Bill 107, was also heard on Valentine’s day. That bill was preliminarily approved but later died when it wasn’t scheduled for additional hearings. It would have increased the minimum wage to $15 per hour by 2021.

Businesses opposing the measures pointed to Hawaii’s Prepaid Health Care mandate as one of the costs already borne by employers. They pointed out that Hawaii is the only state in the nation that requires employers to provide health insurance to its employees, including part-time employees (20 or more hours per week). Other employers in the country do not have the additional responsibility toward part-time workers.

NFIB/Hawaii argued, an increase in minimum wage will create a domino effect toward other employee benefits tied to their wages such as workers’ compensation premiums, Social Security tax, Medicare tax, temporary disability insurance, and unemployment insurance.

Excise Tax Extension

Hawaii legislators wrestled with proposals to extend authorization for excise tax increases to fund Honolulu’s light rail project. The project is now anticipated to cost approximately $10 billion. The regular legislative session ended without resolving the matter. An alternative proposal was discussed late in the session which would have increased the state’s transient accommodation tax rather than extending the increased excise tax. Both measures failed to garner sufficient support to ensure passage. Small businesses would be impacted by either proposal, but tourism-related businesses would have likely felt more significant effects if the transient accommodation tax were increased. NFIB/Hawaii continues to oppose increased taxes on its members.

Hawaii Supreme Court Victory

Taking its message to the highest state court in Hawaii, the NFIB Small Business Legal Center recently helped advocate – and win — a decision by the Hawaii Supreme Court in the County of Kauai v. Hanalei River Holdings, Ltd. NFIB, speaking on behalf of Hawaii’s small-business community, sought just compensation for an eminent domain condemnation.

A key issue in the case was whether a landowner should be compensated for devaluation of a nearby property that suffers as a result of a government taking of another parcel. NFIB filed an amicus (friend of the court) brief on behalf of the defendant, a position supported by the Hawaii Supreme Court. Small-business owners often use separate properties as part of an integrated commercial operation. In a joint brief with Owners Counsel of America, NFIB argued that full and fair compensation for a taking of one parcel must cover resulting depreciation in the other parcel. “This case is a good example of how advocacy in the courts is needed to preserve small businesses’ ability to operate,” said NFIB Hawaii state director Melissa Pavlicek.

Click here for a related news release on the court’s decision.

[Photo below: NFIB member Landon Wong and NFIB State Director Melissa Pavlicek met with potential new members at a recent Small Business Expo.]

Related Content: News | State | Hawaii | Legal | Minimum Wage | Paid Leave

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