Bill Text: HI SB2384 | 2010 | Regular Session | Introduced

Hawaii Senate Bill 2384 (Prior Session Legislation)

Introduced

Bill Title: Service Contracts

Spectrum: Partisan Bill (Democrat 5-0)

Status: (Introduced - Dead) 2010-02-05 - (S) The committee on JGO deferred the measure. [SB2384 Detail]

Download: Hawaii-2010-SB2384-Introduced.html

THE SENATE	S.B. NO.	2384
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO WAGES AND HOURS OF EMPLOYEES ON SERVICE CONTRACTS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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

"Chapter

wages and hours of employees on service contracts

PART I. GENERAL PROVISIONS

§ -1 Definitions. As used in this chapter, the following words and phrases shall have the following meanings:

"Basic hourly rate" means the hourly wage paid to a service employee for work performed during nonovertime hours, but shall not include the cost to an employer of furnishing fringe benefits whether paid directly or indirectly to the service employee.

"Department" means the department of labor and industrial relations.

"Director" means the director of labor and industrial relations of the State.

"Governmental contracting agency" means the State, any county and any officer, bureau, board, commission, or other agency or instrumentality thereof.

"Overtime compensation" means compensation based on one and one-half times the service employees basic hourly rate of pay plus the cost to an employer of furnishing a service employee with fringe benefits as described.

"Party" includes eligible bidders for any service to be provided to the State.

"Service employee" or "employee" means any person engaged in the performance of a contract entered into by the State, the principal purpose of which is to furnish services in the State (other than any person employed in a bona fide executive, administrative, or professional capacity), and shall include all such persons regardless of any contractual relationship that may be alleged to exist between a contractor or subcontractor and such persons.

"Wages", "rate of wages", "wage rates", "minimum wages", and "prevailing wages" mean the basic hourly rate and the cost to an employer of furnishing a service employee with fringe benefits, including but not limited to health and welfare benefits, vacation benefits, and pension benefits, whether paid directly or indirectly to the service employee.

§ -2 Applicability; wages, hours, and other requirements. (a) This chapter shall apply to every contract in excess of $2,000 for the furnishing of services to the State through the use of service employees, in which a governmental contracting agency is a party.

(b) Every service employee performing work under the contract shall be paid no less than prevailing wages; provided that:

(1) The prevailing wages shall be established by the director as the sum of the basic hourly rate and the cost to an employer of providing a service employee with fringe benefits. In making prevailing wage determinations, the following shall apply:

(A) The director shall make separate findings of:

(i) The basic hourly rate; and

(ii) The rate of contribution or cost of fringe benefits paid by the employer when the payment of the fringe benefits by the employer constitutes a prevailing practice. The cost of fringe benefits shall be reflected in the wage rate scheduled as an hourly rate; and

(B) The rates of wages which the director shall regard as prevailing in each corresponding classification of service employees shall be the rate of wages paid to the greatest number of those employed in the State, the modal rate, in the corresponding classes of service employees under similar contracts;

(2) The prevailing wages shall be not less than the wages payable under federal law to corresponding classes of service employees employed under contracts in the State that are prosecuted under contract or agreement with the government of the United States; and

(3) Notwithstanding the provisions of the original contract, the prevailing wages shall be periodically adjusted during the performance of the contract in an amount equal to the change in the prevailing wage as periodically determined by the director.

(c) No service employee employed under a contract with the State or any political subdivision thereof shall be permitted or required to work on Saturday, Sunday, or a legal holiday of the State or in excess of eight hours on any other day unless the service employee receives overtime compensation for all hours worked on Saturday, Sunday, and a legal holiday of the State or in excess of eight hours on any other day. For purposes of determining overtime compensation under this subsection, the basic hourly rate of any service employee shall not be less than the basic hourly rate determined by the director to be the prevailing basic hourly rate for corresponding classes of service employees under similar contracts in the State.

(d) The contractor or the contractor's subcontractor shall pay all service employees employed on the job site, unconditionally and not less often than once a week, and without deduction or rebate on any account, except as allowed by law, the full amounts of their wages including overtime, accrued to not more than five working days prior to the time of payment, at wage rates not less than those deemed to be prevailing, regardless of any contractual relationship which may be alleged to exist between the contractor or subcontractor and the service employees. The rates of wages to be paid shall be given to each service employee employed under the contract by the contractor at the time each service employee is employed, except that where there is a collective bargaining agreement the contractor does not have to provide the contractor's employees the wage rate schedules.

(e) The governmental contracting agency may withhold from the contractor so much of the accrued payments as the governmental contracting agency may consider necessary to pay to the service employees employed by the contractor or any subcontractor under the contract the difference between the prevailing wages and the wages received and not refunded by the service employees.

(f) Every contract in excess of $2,000 and the specifications for such contract shall include provisions that set forth the requirements of subsections (a) to (e); provided that failure by the contracting agency to include those provisions in the contract or specifications shall not be a defense of the contractor or subcontractor for noncompliance with the requirements of this chapter.

(g) For any contract that is subject to this chapter but not directly caused by a governmental contracting agency, the director shall be responsible for enforcement of this chapter, including the collection and maintenance of certified copies of all payrolls that are subject to this chapter. The director shall adopt rules pursuant to chapter 91 to effectuate the purposes of this section.

(h) When:

(1) The department of budget and finance enters a project agreement with a project party, as those terms are defined in chapter 39A, to finance or refinance a project with the proceeds of special purpose revenue bonds;

(2) The project party has entered into a collective bargaining agreement with a bona fide labor union governing the project party's workforce; and

(3) The collective bargaining agreement has been properly submitted to the director under this chapter,

the terms of the collective bargaining agreement and associated provisions shall be deemed the prevailing wages and terms serving as the basis of compliance with this chapter for work on the project by the project party's workforce; provided that this subsection does not affect the director's enforcement powers contained in subsection (g).

§ -3 Exemptions. This chapter shall not apply to:

(1) Any contract covered under chapter 104;

(2) Any contract for the carriage of freight or personnel by vessel, airplane, bus, truck, express, railway line or oil or gas pipeline where published tariff rates are in effect;

(3) Any contract for the furnishing of services by radio, telephone, telegraph, or cable companies;

(4) Any contract for public utility services, including electric light and power, water, steam, and gas; and

(5) Any employment contract providing direct services to a governmental contracting agency.

§ -4 Payrolls and payroll records. (a) Every contract subject to this chapter and the specifications for those contracts shall contain a provision that a certified copy of all payrolls and a certified copy of a fringe benefit reporting form supplied by the department or any certified form that contains all of the required fringe benefit information shall be submitted weekly to the governmental contracting agency for review. The fringe benefit reporting form shall itemize the cost of fringe benefits paid by the general contractor or subcontractor for:

(1) Health and welfare benefits;

(2) Pension and annuity benefits;

(3) Vacation benefits;

(4) Continuing education and training benefits; and

(5) Other fringe benefit costs paid by the general contractor or subcontractor.

The general contractor shall be responsible for the submission of certified copies of the payrolls of all subcontractors. The certification shall affirm that the payrolls are correct and complete, that the wage rates contained therein are not less than the applicable rates contained in the wage determination decision of the director of labor and industrial relations attached to the contract, and that the classifications set forth for each service employee conform with the work the service employee performed. Any certification discrepancy found by the contracting agency shall be reported to the general contractor and the director to effect compliance.

(b) Payroll records for all service employees working under the contract shall be maintained by the general contractor and the general contractor's subcontractors, if any, during the course of the work and preserved for a period of three years thereafter. The records shall contain the name of each employee, the employee's correct classification, rate of pay, the itemized fringe benefit reporting form pursuant to subsection (a), daily and weekly number of hours worked, deductions made, and actual wages paid.

(c) The contractor shall make payroll records available for examination within ten days from the date of a written request by a governmental contracting agency, director, or any authorized representatives thereof. Any contractor who:

(1) Fails to make payroll records accessible within ten days;

(2) Fails to provide information requested for the proper enforcement of this chapter within ten days; or

(3) Fails to keep or falsifies any record required under this chapter,

shall be assessed a penalty as provided in section -22(b).

§ -5 Termination of work on failure to pay agreed wages; completion of work; contract and specifications provision. Every contract and the specifications for such contract shall contain a provision that if the governmental contracting agency finds that any service employee employed under the contract by the contractor or any subcontractor has been or is being paid wages at a rate less than the required rate by the contract or the specifications, or has not received the laborer's or mechanic's full overtime compensation, the governmental contracting agency, by written notice to the contractor, may terminate the contractor's right, or the right of any subcontractor, to proceed with the work or with the part of the work in which the required wages or overtime compensation have not been paid and may complete such work or part by contract or otherwise, and the contractor and the contractor's sureties shall be liable to the governmental contracting agency for any excess costs occasioned thereby.

PART II. ADMINISTRATION AND ENFORCEMENT

§ -21 Governmental contracting agency responsibilities. The governmental contracting agency shall:

(1) Pay or cause to be paid, within sixty days of a determination made by the director, directly to service employees or to the director, from any accrued payment withheld under the terms of the contract, any wages or overtime compensation found to be due to service employees under the terms of the contract subject to this chapter, or any penalty assessed;

(2) Order any contractor to pay, within sixty days of a determination made by the director, any wages or overtime compensation which the contractor, or any of the contractor's subcontractors, should have paid to any service employee under any contract subject to this chapter, or any penalty assessed which the contractor, or any of the contractor's subcontractors, should have paid to the director; and

(3) Report to the director any violation of this chapter, the rules adopted thereunder, or the terms of the contract subject to this chapter.

§ -22 Investigation; penalties. (a) The department may conduct investigations to determine compliance with this chapter. The department may enter any job site at which services under the contract are provided, examine records of any contractor, either during or after the performance of any contract, or subpoena the records. The department may also interview employees during working hours on the job.

(b) If any contractor interferes with or delays any investigation by the department, the governmental contracting agency, on receipt of written notice from the director of the interference or delay, shall withhold from the contractor all further payments until the director has notified the governmental contracting agency in writing that the interference or delay has ceased. Interference or delay includes failure to provide requested records under section -4; failure to allow employees to be interviewed during working hours on the job; and falsification of records required under this chapter. The department shall assess a penalty of $1,000 per project for interference or delay. For each day thereafter that the employer fails to cooperate, the director shall assess a penalty of $100 per project.

§ -23 Notification of violation. (a) When the department, either as a result of a report by a contracting agency or as a result of the department's own investigation, finds that a violation of this chapter or of the terms of the contract subject to this chapter has been committed, the department shall issue a notification of violation to the contractor or subcontractor involved.

(b) A notification of violation shall be final and conclusive twenty days after a copy was mailed to the violator, unless within the twenty-day period the violator files a written notice of appeal with the director.

(c) A hearing on the written notice of appeal shall be held by a hearings officer appointed by the director in conformance with chapter 91. Hearings on appeal shall be held within sixty days of the notice of appeal and a decision shall be rendered by the hearings officer within sixty days after the conclusion of the hearing, stating the findings of fact and conclusions of law. The hearings officer may extend the due date for decision for good cause; provided that all parties agree.

§ -24 Violations; penalties. (a) Where the department finds that a first violation of this chapter has been committed, the department shall assess a penalty equal to ten per cent of the amount of back wages found due or $25 per offense, whichever is greater.

(b) Where the department finds that a second violation of this chapter has been committed, whether on the same contract or another, within two years of the first notification of violation, the department, after proper notice and opportunity for hearing, shall order the person or firm in violation to pay a penalty equal to the amount of back wages found due or $100 for each offense, whichever is greater.

(c) Where the department finds that a third violation of this chapter has been committed, whether on the same contract or another, within two years of the second notification of violation, the department, after proper notice and opportunity for hearing, shall order the person or firm in violation:

(1) To pay a penalty equal to two times the amount of back wages found due or $200 for each offense, whichever is greater; and

(2) To be suspended from doing any new work under any contract with a governmental contracting agency for a period of three years except as provided in section ‑25(a)(2).

(d) A first, second, or third violation refers to each investigation involving one or more contracts in which the department finds that a contractor has failed to comply with this chapter.

(e) For purposes of this section, "offense" means each section of this chapter under which the contractor is cited; provided that, with respect to prevailing wage and overtime citations under section -2, each employee and each project shall be considered a separate offense.

§ -25 Suspension. (a) The director shall suspend a person or firm as follows:

(1) For a first or second violation, if a person or firm fails to pay wages found due, any penalty assessed, or both, the person or firm shall be immediately suspended from doing any work under any contract with a governmental contracting agency until all wages and penalties are paid in full;

(2) For a third violation, the suspension shall be as prescribed in section -24(c); provided that, if the person or firm continues to violate this chapter or fails to pay wages found due or any penalty assessed, or both, then the contractor shall immediately be suspended from doing any work under any contract with a governmental contracting agency for a mandatory three-year period. If after the three-year suspension period the wages found due or penalties assessed are still unpaid, the suspension shall remain in force until payment is made in full; or

(3) For falsification of records, or for delay or interference with an investigation pursuant to section -22, the contractor shall be suspended for a period of three years.

(b) The director shall immediately notify the comptroller and the auditor or director of finance of the county of any suspension order.

(c) No contract shall be awarded to the person or firm so suspended or to any firm, corporation, partnership, or association in which the person or firm has an interest, direct or indirect, until three years have elapsed from the date of suspension, unless the period of suspension is reduced as herein provided. Any contract awarded in violation of this subsection shall be void.

§ -26 Judicial review. (a) Any party to an appeal under this chapter may obtain judicial review of the decision on the appeal in the manner provided in chapter 91.

(b) Any suspension or dismissal of any complaint under this chapter shall be subject to appeal in circuit court by the aggrieved party, under section 91-14 and rule 72 of the Hawaii rules of civil procedure.

§ -27 Liability. If the accrued payments withheld under the terms of the contract are insufficient to reimburse all the service employees for wages or overtime compensation due under this chapter, and the contractor has failed to pay the wages or overtime compensation, the contractor and the contractor's sureties shall be liable to the service employees in the amount of the unpaid wages and overtime compensation due, and in an additional equal amount as liquidated damages. However, any claim for liquidated damages, insofar as the surety or sureties are concerned, shall not be paid until the claims of all other creditors have been satisfied.

§ -28 Civil action. (a) The following civil actions may be instituted in any court of competent jurisdiction:

(1) An action to recover unpaid wages or overtime compensation may be maintained by any one or more service employees for and on behalf of oneself or themselves and others similarly situated; and

(2) An action for injunctive and other relief against an employer that fails to pay the prevailing wage to its employees as required by this chapter by a joint labor-management committee established pursuant to section 175a of the federal Labor Management Cooperation Act of 1978 (29 U.S.C. 175a).

(b) The court, in its action and in addition to any judgment awarded to the plaintiff or plaintiffs, shall allow reasonable attorney's fee and costs of the action to be paid by the defendant.

(c) It shall be no defense that the service employees accepted or agreed to accept less than the required rate of wages or overtime compensation or voluntarily made refunds.

(d) When a written request is filed by any service employee with the director claiming unpaid wages or overtime compensation under this chapter, the director, after receiving an assignment from the service employee, may bring an action in any court of competent jurisdiction to recover the amount of the claim. The consent of any service employee to the bringing of such action by the director, unless the action is dismissed without prejudice on motion of the director, shall constitute a waiver by the service employee of any right of action the service employee may have under subsection (a). Any amount recovered by the director before suit and accepted by the service employee as payment in full shall constitute a waiver of any rights under this chapter.

§ -29 Rules. Subject to chapter 91, the director shall adopt reasonable rules for determining the prevailing wages, enforcement, administration, and general purposes of this chapter. These rules shall have the force and effect of law.

§ -30 Application of this chapter to contracts entered into without regard to other laws. The fact that a contract is or was entered into without regard to chapter 103D, or upon a cost-plus-a-fixed fee basis, or cost-plus-a-fixed percentage basis, or without advertising for proposals, shall not render this chapter inapplicable to the contract, if otherwise this chapter would be applicable.

§ -31 Effect on other laws. Neither this chapter nor any rule or other action under this chapter shall supersede or impair any minimum wage or maximum hour law or any authority otherwise granted by law to provide for the establishment of specific minimum or other wage rates.

§ -32 Suspension during emergency. During a national emergency declared by the President or the Congress of the United States, or a state of emergency declared by the governor, subject to the provisions of section 127-10 or 128-7, the governor, by executive order in writing, may suspend this chapter; provided that the governor may not suspend this chapter except in the event such an emergency occurs and is so proclaimed.

§ -33 Inspection. (a) If work performed in accordance with this chapter, in excess of eight hours in any day or on a Saturday, Sunday, or legal holiday of the State, requires inspection by the State or any political subdivision thereof, the inspection shall be conducted by the State or a political subdivision, as the case may be.

(b) In the event an inspection is required, it shall be lawful, notwithstanding any other provision of law to the contrary, for the State or any political subdivision thereof to alter the normal working hours of public employees, as may be needed for these purposes, and to pay these public employees for all hours worked in excess of eight hours per day or on a Saturday, Sunday, or legal holiday of the State.

§ -34 Submission of collective bargaining agreement to the director. (a) Parties to a collective bargaining agreement covering classes of service employees, which are included in the prevailing wage determinations made pursuant to this chapter, shall submit a copy of the agreement to the director within five days after execution of the agreement.

(b) Except as otherwise provided herein, the terms of agreement shall be kept confidential by the director. The director may disclose terms of the agreement to any federal or state agency for the purpose of enforcing this chapter."

SECTION 2. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 3. This Act shall take effect on July 1, 2010.

INTRODUCED BY:	_____________________________

Report Title:

Service Contracts

Description:

Extends little Davis-Bacon rights regarding prevailing wages to employees on service contracts with governmental contracting agencies.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.