STAND. COM. REP. NO.
Honolulu, Hawaii
APR 0 3 2024
RE: S.R. No. 22
S.D. 1
Honorable Ronald D. Kouchi
President of the Senate
Thirty-Second State Legislature
Regular Session of 2024
State of Hawaii
Sir:
Your Committee on Labor and Technology, to which was referred
S.R. No. 22 entitled:
"SENATE RESOLUTION REQUESTING THE DEPARTMENT OF LABOR AND
INDUSTRIAL RELATIONS TO CONVENE AN INTERAGENCY ENFORCEMENT
TASK FORCE TO COMBAT THE UNDERGROUND ECONOMY AND EMPLOYEE
MISCLASSIFICATION IN THE STATE,"
begs leave to report as follows:
The purpose and intent of this measure is to request the
Department of Labor and Industrial Relations to convene an
Interagency Enforcement Task Force to combat the underground
economy and employee misclassification in the State.
Your Committee received testimony in support of this measure
from the Department of Labor and Industrial Relations and Pacific
Resource Partnership.
Your Committee received comments on this measure from the
Department of the Attorney General.
Your Committee finds that the "underground economy" refers to
those individuals and businesses that utilize schemes to conceal
or misrepresent their employee population to avoid one or more of
their employer responsibilities related to wages, payroll taxes,
insurance, licensing, safety, or other regulatory requirements,
including other activities such as tax evasion, payroll fraud.
2024-2397 SR SSCR SMA docx
iiiiiiiiiiiiiiiiiiiiiiniiiniiiiii
 STTkND. COM. REP. NO.
Page 2
under-the-table work, and wage theft. Your Committee further
finds that it is critical to ensure that the State has a unified
strategy and approach toward protecting the State's economy, its
workers, and its businesses from an illegal underground economy.
This measure's Interagency Task Force will assist in ensuring safe
working conditions and proper payment of wages for workers,
creating an environment where legitimate businesses can thrive,
and supporting the collection of all taxes, fees, and penalties
due from employers.
Your Committee acknowledges that the task force requested to
be convened by this measure will not have enforcement authority,
and therefore, the term "Interagency Enforcement Task Force" may
be misleading. Your Committee also notes testimony requesting
that the scope of the task force be narrowed to the construction
industry, where most of the employee misclassification is
occurring. Your Committee further notes requests made during the
public hearing for this measure to include the Insurance
Commissioner or the Commissioner's designee as a member of the
task force, to enable the task force to recommend solutions to
prevent workers' compensation premium fraud from being committed
by employers who misclassify their employees as independent
contractors, thereby avoiding payment of workers' compensation
premiums and resulting in increased premiums for other employers
who lawfully pay the premiums. Your Committee also notes the
request from the Department of the Attorney General that the
Attorney General be allowed to have a designee participate in the
task force on behalf of the Attorney General, in line with other
agency heads listed as members to be invited to serve on the task
force. Therefore, there is a need to amend this measure to
address these matters.
Accordingly, your Committee has amended this measure by:
(1) Deleting certain references to the term "enforcement" to
clarify that the Interagency Task Force will not be
engaging in any enforcement activities;
(2) Inserting language to narrow the scope of the
Interagency Task Force to the State's construction
industry;
2024-2397 SR SSCR SMA docx
Hill IIIHHIIIBI lilial! INI'
 STAND. COM. REP. NO.
Page 3
(3) Deleting language that would have requested the
Interagency Task Force to:
(A) Encourage businesses and individuals to identify
violators by soliciting information from the
public, facilitating the filing of complaints, and
enhancing the available mechanisms by which workers
can report suspected violations;
(B) Work collaboratively with employers, labor, and
community groups to diminish the size of the
underground economy and reduce the number of
employee misclassifications by, among other means,
disseminating educational materials regarding the
applicable laws, including the legal distinctions
between independent contractors and employees, and
increasing public awareness of the harm caused by
the underground economy and employee
misclassification; and
(C) Work collaboratively with federal, state, and local
social services agencies to provide assistance to
vulnerable populations that have been exploited by
the underground economy and employee
misclassification, including but not limited to
immigrant workers;
(4) Inserting language to request the Interagency Task Force
to identify the number and types of positions required
to restore the capacity of the Department of Labor and
Industrial Relations to meaningfully administer
applicable existing laws;
(5) Clarifying that the Director of Labor and Industrial
Relations is requested to serve as the chairperson of
the Interagency Task Force;
(6) Inserting language that allows the Attorney General's
designee to be invited to serve as a member of the
Interagency Task Force on behalf of the Attorney
General;
2024-2397 SR SSCR SMA docx
iiiiiiiiiiiiiiiiniiiiiiiiiiiiiiiiiiiiiiiiMr
 STAND. COM. REP. NO. 34^
(7) Inserting language to add the Insurance Commissioner or
the Commissioner's designee to be invited to serve as a
member of the Interagency Task Force;
(8) Amending its title to reflect its amended purpose;
(9) Amending the list of recipients of certified copies to
include the Insurance Commissioner; and
(10) Making technical, nonsubstantive amendments for the
purposes of clarity and consistency.
As affirmed by the record of votes of the members of your
Committee on Labor and Technology that is attached to this report,
your Committee concurs with the intent and purpose of S.R. No. 22,
as amended herein, and recommends its adoption in the form
attached hereto as S.R. No. 22, S.D. 1.
Respectfully submitted on
behalf of the members of the
Committee on Labor and
Technology,
2024-2397 SR SSCR SMA docx
■uiiiiiiiiiiiiiiiiiniiiiiiiiiiiiiiiiiiiiiiii
 The Senate
Thirty-Second Legislature
State of Hawaii
Record of Votes
Committee on Labor and Technology
LBT
Bill / Resolution No.:* Committee Referral: Date:
Lbr %7/2.4
The Committee is reconsidering its previous decision on this measure.
If so, then the previous decision was to: ________________________________________________
The Recommendation is:
Pass, unamended Pass, with amendments __ Hold __ Recommit
2312 / 2311 2310 2313
Members Aye Aye (WR) Nay Excused
AQUINO. Henry J.C. (C)
MORIWAKI, Sharon Y. (VC)
IHARA, Jr., Les X
LEE, Chris
FEVELLA, Kurt
TOTAL
Recommendation:
1X1 Adopted __ Not Adopted
Chair’^u^NDe^gViee’s Signature:
_____________________________
Distribution: Original 'Yellow Pink Goldenrod
File with Committee Report Clerk's Office Drafting Agency Committee File Copy
*Only one measure per Record of Votes
Revised: 12/27/23