Kuhio Day is an OT Day on State and County projects

Prince Kuhio Day
As a reminder to contractors working on State or County construction projects, Prince Kuhio Day is State Holiday and therefore all hours worked on Thursday March 26, 2015, need to be paid at the overtime rate. 

Calculating the correct OT rate
To calculate the overtime rate under Hawaii's prevailing wage law, Hawaii Revised Statutes Chapter 104, Hours and Wages of Employees on Public Works, take the basic hourly rate and multiply by 1.5*  then add the fringe benefit hourly rate amount to get the overtime prevailing wage rate.  For example, looking at the current applicable wage rate schedule, #485 for the prevailing wage rate of Carpenter the schedule shows $62.96.  Broken down it is a $42.25 basic hourly rate and $20.71 fringe benefit hourly rate.

Carpenter basic hourly rate $42.25 x 1.5 = 63.375 now add the hourly fringe benefit rate of $20.71 and get $84.08 for the overtime rate for carpenters on March 26, 2015.

How can the overtime prevailing rate be paid?
For contractors with a collective bargaining agreement in place, the certified payroll will show the carpenter being paid at least $63.38 per hour and show at least $20.71 per hour paid to the union trust fund for fringe benefits.  Other contractors who pay benefits on an hourly basis, the amount of basic hourly rate and the amount of fringe benefits paid to a third party trustee will be determined by the contractors own agreement with employees, the two amounts must add up to $84.08 per hour for all work done on March 26, 2015.

For contractors who are not parties to a collective bargaining agreement  or do not pay their fringe benefits on an hourly basis, the certified payroll must show a basic hourly rate of $84.08 for overtime work, because no credit for fringe benefits can be taken in overtime when paying fringe benefits on a monthly basis.  

Fringe benefit credit applies only for straight time.
For contractors that pay their workers benefits on a monthly basis, there is a formula that can be used to calculate an hourly credit, but the credit only applies to straight time hours.  The formula can be found in Hawaii Administrative Rule 12-22-4.  To calculate the hourly fringe benefit credit for straight time hours, take the amount paid by the employer and divide it by 173 and that quotient is the hourly credit amount that can be taken for straight time hours.

*Act 165, Regular Session 2015 modified the law to provide higher overtime rates than 1.5 where collective bargaining rates prevail in classifications.  Wage Rate Schedule 486 is the first schedule to direct overtime on Sunday at 2 x the basic hourly rate for some classifications, and 3 x the basic hourly rate on Labor Day.  See Note 13 on WRS 486. 

2015 Legislative Update

Administrative Measures
This week marks an important threshold in the legislative process of moving a bill out of one body over to the other, commonly referred to as crossover.  Wage Standards is still watching several bills that made this progress.  Both administrative measures, HB 952, HD2, Relating to Wages and Hours on Public Works Law, and its companion SB 1121, SD 1 (limited the time to file a complaint with the DLIR under the prevailing wage law to one year from the time the wages were due have been modified to allow complaints within 3 years in the current version of SB1121, and complainant confidentiality still remains in both) and SB 1122, Relating to Wage and Hour Law, which adjusts the guaranteed salary exemption to track the increases in minimum wage.

Paid Sick and Family Leave Bills
Two leave bills made the crossover.  Both perspectives initially analyzed previously in this blog under Paid Leave, are still alive.  In one, the employer pays and provides up to 40 hours of sick leave a year, (SB 129, SD2 Relating to Labor), in the other, the employee contributes one-half of one percent (.5%) of their wages into a newly created fund administered by the DLIR under the family leave law.  (HB 496, HD1 Relating to Employment). There seems to be strong support for the idea.  Twenty-one different representatives (Aquino, Brower, Cachola, Choy, Creagan, Hashem, Ichiyama, Ito,  Keohokalole, Kobayashi, Luke, Lopresti, McKelvey, Mizuno, Morikawa, Onishi, Say, Saiki, Takayama, and Woodson) and five senators  (Baker, Chun-Oakland, Espero, Galuteria, and Ihara) introduced some form of an employee-funded leave system, while  six senators (Chun-Oakland, Espero, Gabbard,  Ihara, Keith-Agarin, and Shimabukura) and one representative (Takumi) introduced some form of an employer paid leave system. Notice that three of the senators (Chun-Oakland, Espero, and Ihara) introduced both employer and employee funded measures. Legislators have made it clear that the idea of paid leave is important, but deciding how to implement it promises to be an interesting conversation.

Other Matters of Interest
Under the Wages and Hours of Employees on Public Works Law, SB216 SD2, and it's companion HB391, HD1, allow the payment of overtime on public works to follow the prevailing union negotiated private contract provisions, which would authorize overtime rates to exceed the current time and one-half, on Saturdays, Sundays, State holidays and regular work days in excess of 8 hours.  A similar provision stalled in Conference Committee last legislative session. 

The bullying bill, HB 819, HD2, Relating to Bullying , being followed on the Division's Facebook Page Hawaii Teens at Work ,applies to all agencies that provide services to youth.  This includes the Wage Standards Division in the administration and enforcement of work permits for minors, under the Child Labor Law, Chapter 390, Hawaii Revised Statutes.

In the unemployment area, SB1219 SD2, Relating to Employment Security, is addressing the independent contractor determination under the Employment Security Law, Chapter 383, Hawaii Revised Statutes.  A court case on Maui where the Department was overturned in its determination of the employer-employee relationship and ruled the individual an independent contractor appears to be the motivation for this measure.  (See Maui News February 6, 2015, Chamber View).  The independent contractor classification has long been an avenue of abuse of workers in Hawaii as a method of relieving employers from their legal obligations to provide, workers compensation, health benefits, and unemployment benefits that protect employees. This is a nationwide issue and the labor departments across America struggle with finding the balance without leaving employees at risk.

Budget
HB 500 HD 1, Relating to the State Budget, has no surprises for the Division good or bad.  Our staffing and expenses are the same as last biennium, with all adjustments attributed to collective bargaining items.  (See page 419 of the Feb. 23 budget worksheets)  No restoration of the 7 positions lost since 2008, but no more reductions either.  We are in active recruitment for 3 Labor Law Enforcement Specialist positions. For the details on the positions see a former blog Open Recruitment for Labor Law Enforcement Specialists.

Keeping Up With The Minimum Wage and the Guaranteed Salary Exemption

The Governor's package submitted to the 2015 legislature includes a bill that addresses the guaranteed salary exemption under the Wage and Hour Law, Chapter 387, Hawaii Revised Statutes.  Senate Bill 1122 and House Bill 953 increase the guaranteed salary exemption from $2,000 per month to 276 times the minimum wage per month. 

What's a guaranteed salary exemption?
Currently, the law excludes certain employees from the protection of the minimum wage and overtime law in Hawaii (Chapter 387, HRS).  One of the exemptions is when the employer pays their employee a guaranteed salary of $2,000 a month See section 387-1, definition of "employee" (1).  For other exemptions see section 387-1, HRS definition of "employee" paragraphs(2) through (14).  Paying a guaranteed salary of at least $2,000 per month, would technically allow an employer to have an employee work without limits and without a requirement for overtime.

Who does it apply to?
Not all employers and employees are subject to Chapter 387, HRS in its entirety.  Hawaii Wage and Hour Law is generally considered a "gap" group protection for minimum wage and overtime for those that are not covered under the federal Fair Labor Standards Act (FLSA). See the definition of "employee" paragraph (12).  An employee is covered under FLSA for minimum wage and overtime if their employer makes  more than $500,000 a year or is involved in interstate commerce (see 27 USC 203).  What paragraph (12) also provides is that if Hawaii has a higher minimum wage rate or a higher standard of overtime, then all Hawaii employees, even those protected by FLSA, are required to get at least minimum wage and overtime protection from Chapter 387, HRS.  So now that our minimum wage has increased to $7.75 and the federal minimum wage is $7.25, the Hawaii minimum wage rate applies to all, not just small businesses.  So paragraph (12) operates to keep the higher minimum wage rate and most favorable overtime rates, either State or Federal, enforceable, but generally exempts those subject to FLSA from the application of Chapter 387, HRS. 

This means that generally large businesses may not use the guaranteed salary exemption because those large businesses are more likely governed by the FLSA, not Hawaii Wage and Hour Law and the FLSA does not recognize the guaranteed salary exemption.  The guaranteed salary exemption is available only for those small entities that don't rise to the level of  FLSA jurisdiction.

Why do we need to increase the guaranteed salary exemption?
A guaranteed salary exemption is a good thing and can also be a dangerous thing.  It's good in that it allows a small business to be able to regulate their overtime expenses by guaranteeing a certain level of salary to their employees without a concern to the number of hours worked in a week.  The dangerous thing is that when it doesn't keep up with the minimum wage, the guaranteed salary exemption doesn't protect the very workers it is designed to safeguard.

The $2,000 figure was established in 2002 when the minimum wage was $5.75 and Act 43, Regular Session of 2002 changed the guaranteed salary exemption from $1,250 to $2,000.  The $2,000 would have covered approximately 168 hours of work a month at minimum wage and about 72 hours of overtime a month.  The current formula provides for a minimum of 168 hours of work a month at minimum wage and 72 hours of overtime in a month as well.

With minimum wage set to go up to $10.10 by 2018, this measure aims to track the increases in minimum wage with the guaranteed salary exemption formula.  The formula would increase the guaranteed salary exemption to $2,139 on July 1, 2015, $2,346  on January 1, 2016,  $2,553  on January 1, 2017 and $2,787.60 on January 1, 2018.

What's next?
SB1122 was passed out of the Senate Judiciary and Labor Committee on Tuesday February 17, 2015 and is now headed to the Senate Ways and Means Committee. No hearing date is set as yet.

Guess who came to our Administrator's meeting!

Yes, Governor Ige and his chief of staff Mike McCartney stopped by our Administrator's meeting at the Department of Labor and Industrial Relations (DLIR).  It was a surprise visit and caught everyone off guard.  He came to give us an update on what's going on.  The deputy director appointee, Leonard Hoshijo, will wait until the Senate approval before he actually starts at the DLIR.  Leonard's brother Bill Hoshijo is the Executive Director of the Hawaii Civil Rights Commission, an attached agency of the DLIR, and was present at the Administrator's meeting.  Bill had a good poker face so it was hard to tell if he knew that already. 

The Governor also told us that he is still looking for a DLIR Director candidate and does not plan to have a series of "Acting" Directors.  Both Elaine Young, Administrator of the Workforce Development Division,  and the Governor seemed committed to having Elaine as Acting Director for not more than 60 days and someone in line for confirmation by that time, or before.   Governor Ige asked everyone at the table what he could do for us.  For most it was staffing and technology upgrades to get rid of the mountains of paper we still use to process most of our work.

Governor Ige is a personable man who seems eager to learn about the hurdles we have been dealing with.  He genuinely seemed surprised at the situation that even if we have the money in our budgets we have difficulty getting approval to spend it.  Some fingers pointed to the retentions over the years from B&F, some identified the procurement process as cumbersome, and some just didn't make the priority list to be able to fill their vacancy or the State didn't pay enough to compete with the private sector.  With all the wants and needs expressed, it was clear that everyone was glad to see him sitting down with us and giving us a moment to speak. Many were eager to hear what he had in store for our Department, but today was a listening day.

He spoke briefly about goals focusing on doing a better job at collecting the money that is owed to the State and wondered why if an employer gives a check to the State why does it take so long to deposit?  What is holding us back from having the goal of depositing checks in 1/2 day?  He also acknowledged that filling the vacancy created by David Pendleton's recent departure from the Labor and Industrial Relations Appeal Board(LIRAB) would be moved higher on the list, especially if it is causing a lack of quorum and holding back the processing of workers compensation appeals that LIRAB hears.

Finally, he said a couple of times that advancements in technology do not mean layoffs.  Becoming more efficient at some jobs, will only serve to allow others to address the next level. Everyone was charged-up and feeling the energy that keeps them in public service.  It feels like this first meeting, hoping we'll have a second, Governor Ige gets an A+.  Thanks for stopping by.

Open Recruitment for Labor Law Enforcement Specialist (LLES) at Wage Standards

   (NOTE: as of August 3, 2015 all positions have been filled.)
 The Wage Standards Division is recruiting for Labor Law Enforcement Specialists IV.  There are three positions available, all on Oahu.  Individuals may qualify to interview at lower levels.  That means that entry level applicants (LLES I, II, and III) will be considered.  If hired at a lower level, you can progress through the series until you reach LLES IV.  Typically those hired at LLES I, will take approximately 2 1/2 years to progress to a LLES IV.   For all levels you need to have a 4-year college degree and at least one class of bookkeeping (specialized experience may qualify but check the requirements in the recruitment notice).

What does it pay?
    Salaries for the LLES I level start at $37,464 (SR 16), in six months you may qualify for LLES II, which is $40,548, (SR 18),  after a year at LLES II, you have the time experience to qualify for LLES III, (SR 20) which currently pays $43,812.  Finally, after a year of being a LLES III, you would have the time experience to qualify for LLES IV (SR 22), which is the top of the series.  The range of annual salary for LLES IV is currently $47,400 to $70,188 annually.  A complete list of the Unit 13 salaries can be found here.  Increases to the salary schedules have already been finalized for 2016 and 2017.  A complete description of benefits offered to the State civil service employees can be found on the Department of Human Resources Development webpage.

What does an LLES do?
    LLESs  are the Division's investigators.  They meet with employers and employees, review records, interview witnesses and identify and cite violations of the law.  Being a LLES IV at the Wage Standards Division means that every day will be different and interesting.  You will learn investigation techniques, communication tools, record keeping and reporting processes.  Individuals who have strong communication abilities, are organized, good listeners, and problem-solvers will likely enjoy this career very much.  This is a rare opportunity that the positions are opened up for public recruitment because many of the people in the Division come here and stay until they retire because the job is both challenging and personally rewarding via the public service provided.  Check out our website to see the many things we do here at WSD, and see if you think this type of work is something you would excel at. (edited 10/20/15)

Paid Leave

        Paid leave for employees is a hot issue.  President Obama mentioned it in his State of the Union address, "Today, we're the only advanced country on Earth that doesn't guarantee paid sick leave or paid maternity leave to our workers. Forty-three million workers have no paid sick leave." The National Conference of State Legislatures (NCSL) maintains a web page with developments in the paid leave area.  The Wage Standards Division is currently tracking 8 paid leave bills this session.
   
Who pays for the benefits?
     Here in Hawaii there are several approaches to achieving paid leave benefits in current measures at the 28th Hawaii State Legislature.  Who pays for the benefits is one big difference in the measures.  Four of the measures have employer paid benefits. Four have employee funded benefits.

Employer paid benefits
     When the employer pays for the benefits the measures are couched as sick leave and placed in the Wage and Hour Law, Chapter 387, Hawaii Revised Statutes, or  a new chapter, and include using the leave for the care of family member (HB 9, SB 129 SB 1025, SB1047).   
      The employer funded measures earn paid leave on a per hour basis.  Three have provisions earning 1 hour per 30 hours worked,( HB 9, SB 1025, SB1047) while one is 1 hour per 40 hrs worked (SB 129), with limits of 40 or 56 hours per year.
      Three of the employer funded measures have retaliatory protection (SB 129 SB 1025, SB1047).

Employee funded benefits
     When the employee pays a percentage of their wages into a trust fund the focus is on paid family leave. (HB496, HB535, SB965, HB1049).   The employee trust fund approach is placed in the Hawaii Family Leave Law, Chapter 398, Hawaii Revised Statutes. 
      The trust fund approach also amends the application of the Hawaii Family Leave Law from employers with 100 employers to all employers with at least one employee.  This adjustment applies to the application of the protected leave, as well as any paid leave added to the law in the proposed legislation.
        The eligibility of the employee trust fund bills look to Chapter 398, HRS, which currently requires employees to have worked for 6 months before they are eligible to be protected under Hawaii Family Leave Law. (See 398-1, HRS, definition of "employee",  and HAR 12-27-5)

What's next?
     So far, three of these measures have been heard in committee.  SB 129, an employer paid benefit, was heard by the Senate Judiciary and Labor Committee on Thursday, January 29, (testimony available here) and decision making was deferred to February 17.  Today, on Tuesday, February 3, the House Committee on Labor and Public Employment heard HB496 and HB535, employee funded benefits, (testimony available here and here) and deferred both for decision making until Friday, February 6.  Stay tuned.
      

Informational Briefing Testimony for Wage Standards before the House Labor and Public Employment Committee

Wage Standards Division LBR 152

 OVERVIEW

The Wage Standards Division (“Division”) protects Hawaii’s workers  by administering and enforcing six different labor laws related to wages in the Hawai‘i Revised Statutes (HRS). The laws operate to keep young workers safe in the workplace (Child Labor Law, Chapter 390, HRS); ensure employees are paid their wages due, (Wage and Hour Law, Chapter 387, HRS; Payment of Wages and Other Compensation, Chapter 388, HRS; Wages and Hours of Employees on Public Works, Chapter104, HRS) and provide job protection when family members need care or an employee is fired or discriminated against because of a lie detector test, a workers compensation injury, or taking an on-site drug test. (Hawaii Family Leave Law, Chapter 398, HRS, Employment Practices Law, Part II – Lie Detector Test and Part III – Unlawful Suspension or Discharge.)

SIGNIFICANT EVENTS

·         The general-funded Division remains without a full staff contributing to a backlog of 341 cases that translates to more than a two year back-log of work.

·         A significant shift in the case work in the Division is away from serving a higher number of low income workers to serving more laborers and mechanics working on public works jobs.  The average claim has tripled from $973 to $3,176 per employee, and the number of employees served annually has decreased from 574 to 231 since 2009.

 

·         Two pending appeals, one at the ICA, (BCI Coca Cola Bottling Co. Inc. v DLIR, ICA CAAP 14-1135), by the DLIR from the Circuit Court reversal of DLIR’s finding of a wrongful termination due to a workers compensation injury, and one at the Circuit Court (Pacific Isles Equipment Rental, Inc. v DLIR, 1CC12-1-3053) determining the standard for state of mind on falsification of records under the Chapter 104 law for suspension,  have the potential to change processes in the Division.  We are proceeding status quo until their resolution.

 

SUCCESSES 

 

In the area of Workforce Management, the Division focused on making Hawaii a more compliant arena for wage related issues.

The Compliance Branch resolved 435 complaints including issuing 4 Notice of Violations to contractors on public works projects who had violated the prevailing wage law under Chapter 104, HRS, and ordered 3-year suspensions of 2 contractors for falsification of certified payrolls.  A full list of suspended contractors is available on WSD website. 

The Compliance Branch identified $646,329 back wages found due for 231 workers. Penalties due to the State were $41,170 and penalties due to claimants totaled $44,404. The Hearings Branch disposed of 65 unlawful termination claims and resolved two Chapter 104 appeals.

The Intake and Certification Branch (ICB) took in 587 complaints against employers that were referred to either the Hearings Branch or Compliance Branch.

The ICB also issued 10,298 child labor permits, including 89 variances and addendums required for productions like “Hawaii Five-0”, and other commercial productions that included minors under age 16 working outside the hours permitted by law.  All outreach to the child labor audience of working minors, parents and employers of minors was accomplished via the WSD Facebook page Hawaii Teens at Work.

The Division responded to 9481 inquiries and used the blog Inside Wage Standards Division and DLIR as a resource to supplement education and outreach.

BUDGET

 

The Division has requested funds for several years to restore the lost positions over the years from the initial reduction in force in 2009, combined with retirements of which positions were never replaced.  This has left the Division without a properly structured team, ie office assistants without supervisors, single member branches and offices (Intake and Certification Branch, Hearings Branch, and Technical Services and Support Office), which we have also asked for funds to re-organize.  Finally, the work load in Maui has become increased to a point that justifies an additional Labor Law Enforcement Specialist.  Wage Standards had presented an additional budget request 7 Labor Law Enforcement Specialists and for the re-organization of the Division at a cost of $384,474 and an additional operating budget of $7,200 for a total of 24 positions at annual cost of $1,485,00 for the Division.