2014 Legislative Regular Session

     The legislative session is well on its way.  We started out monitoring 37 measures that affected the laws Wage Standards enforces.  The process has already brought the number of bills that we are keeping tabs on to just eleven.  Along with the link to the 2013 Annual Report here is a short summary of our assessment of the 2014 session. . .so far. 

2013 Annual Report
     The Department of Labor and Industrial Relations 2013 Annual Report to the legislature is now available for public review on the DLIR website.  To view it click here.  The Wage Standards Division appears on page 11.  It's a good exercise to summarize a year's worth of work into less than 600 words with one chart and one picture.

Minimum Wage
     Last year about this time, I was convinced we would have a new minimum wage, after all it had been six years, now seven years after the last increase in minimum wage.  2014 will be the year of minimum wage changes. The two measures that have passed out of Committee are House Bill 2580 and Senate Bill 2609.  Both measures repeal the tip credit, both measures invoke the Consumer Price Index (CPI) as a method to keep the minimum wage on the pace of the economy, and both measures propose increases in three increments until the CPI takes over any increases.  That's a lot of similarities.   House Bill 2580 was introduced by 31 representatives so there is already a lot of support.
    
     The differences between the two bills are the levels of the increments, and how the calculated amounts once the CPI increases kick in will be rounded.  The differences in the incremental amounts grow from 20 cents in 2015 to 60 cents in 2017.  In House Bill 2580, minimum wage goes to $8 on January 1, 2015, then $8.75 on January 1, 2016, and $9.50 on January 1, 2017. In Senate Bill 2609,  minimum wage goes to $8.20 in 2015, $9.15 in 2016 and then $10.10 in 2017.  In both the Senate Bill and the House Bill the CPI will be used to adjust the minimum wage as of 2018 using the CPI calculated from the prior twelve months from Sept. 1,  although in the Senate Bill, the CPI calculation can not act to lower the minimum wage.  This prohibition is absent in the House version.  The Senate version rounds the CPI calculation to the nearest 5 cents, the House version to the nearest cent. The table below summarizes the differences.

DIFFERENCES	SB2609	HB2580
As of Jan 1, 2015	$8.20	$8.00
As of Jan 1, 2016	$9.15	$8.75
As of Jan 1, 2017	$10.10	$9.50
CPI-W Adjustment Rounding	5 cents	1 cent
Limits?	No decrease	Up or down

    Connected to the minimum wage issue is the guaranteed salary compensation exemption from Hawaii minimum wage and overtime law, Wage and Hour Law, Chapter 387, Hawaii Revised Statutes.  This current exemption allows businesses not subject to the Fair Labor Standards Act (FLSA) to set their workers salary at $2,000 per month which makes them exempt from minimum wage and overtime under Hawaii law.  SB2366 SD1 contains a provision to track the minimum wage increases caused by the CPI calculation by modifying the guaranteed salary amount to a formula that multiplies the minimum wage by 320.  This equals approximately 160 hours of straight time at minimum wage and 106 overtime hours at time and half of minimum wage per month.

Prevailing Wage
     It's no secret that prevailing wage claims under the Wages and Hours of Employees on Public Works Law, Chapter 104, Hawaii Revised Statutes continue to monopolize a substantial portion of the Labor Law Enforcement Specialists (LLES) time.  Wage Standard Division LLES investigators have more than 250 pending claims against 50 employers as of this writing.  To make enforcement effective the Division proposed several concepts to address the penalties and related issues during this session.  Senate Bill 2260  and Senate Bill 2261, address those issues and have made progress in the Senate. The first senate drafts reflect the discussions Wage Standards had with Department of Attorney General and Department of Accounting and General Services in developing SB2872, and SB2873.   In the House side House Bill 2323 similar to Senate Bill 2261 SD1 was also moved out of the House Committee on Labor and Public Employment.

      Another prevailing wage proposal still moving expands overtime to be defined by the collective bargaining agreement that prevails in the specific laborer or mechanic classification.  Currently, overtime is limited to time and one-half.  The current restriction creates an uneven playing field between union and non-union bidders.  Requiring prevailing practices that pay some laborers or mechanics double-time in certain situations will level the playing field.   (See HB 1958 HD1 and SB 2704, SD1).

     The last prevailing wage proposal still on the table is whether or not our Division will get more investigators.  In the current Senate version there are two positions created and money appropriated out of the general fund.  (See SB 3039 SD1).  The House version still resembles the original proposal to create a special fund from a percentage of construction funds for public works that are subject to enforcement of the Wages and Hours of Employees on Public Works Law, Chapter 104, Hawaii Revised Statutes.   Unfortunately, the current percentage amount (.01) wouldn't generate enough funds to provide the salaries of  even one Labor Law Enforcement Specialist.  (See HB 1976 HD1 also waiting to see what the Finance Committee's HD2 looks like.)

Direct Deposit and Pay Cards

        HB 1814, HD1 (decision making after Wednesday's Feb 19 Consumer Protection hearing will be Monday) has brought some awareness to some of our posted policies about employer payments to employees.  In 2006, when the former administration made a declaratory ruling that the DLIR would allow pay cards as an acceptable form of payment to employees, Wage Standards posted the policies and practice by which direct deposit and pay cards would be acceptable forms of payment to employees.  Employees had to voluntarily choose to use direct deposit or pay cards before employers could use that form of payment.  Other requirements included the ability to withdraw the employee's full wages every pay period at least once without fees and the agreements had to be in writing including notices of the processes and the ability to stop using direct deposit or pay cards at the employee's discretion.  See Direct Deposit, Debit Cards and Electronic Policies on our "guidelines" page.   These are similar requirements that are currently part of HB1814 HD1.  The major difference is that HB 1814 HD1 requires the employer to pay any fees associated with the debit card.  Complaints against employers regarding these type of payments are usually resolved quickly without complications.  The Office of Consumer Protection recommends ensuring that Regulation E is followed. (See the testimony at pages 8-11, for Regulation E). We couldn't agree more.
    
     Change in current policy for pay cards in planning
     Note that as of April 1, 2014, in the light of this legislation, the current administration is considering withdrawing the 2006 declaratory decision that allowed direct deposit and pay cards.   If your business is currently using pay cards as a method of payment to employees you should be reviewing your payment procedures to ensure future payments to employees continue to be in compliance with any new developments.