Each year, bills are introduced during the legislative session that do not address their impacts on businesses. That is why the Maui Chamber of Commerce continues to call for a "business impact statement" in drafting bills to avoid unintended consequences, address real problems and come up with real solutions.
We do this because bad bills continue to pass with harmful consequences, like Senate Bill 2424 relating to professional employer organizations. While meant to fix challenges from a prior bill, Act 129, it added further requirements detrimental to small employment agencies.
Act 129 passed in 2010 and is current law. It includes a performance bond requirement of $250,000 for professional employer organizations (deemed by the state to include smaller employment agencies who did not feel they came under this law). This bond amount is higher than all but one state with a bond requirement and created an insurmountable challenge for many employment agencies statewide.
Why? Insurance agents and businesses seeking these bonds report that all of the major bonding companies in Hawaii do not want to issue these bonds to employment agencies. The time, hurdles and added costs are huge. In fact, to get such a bond, these small businesses would have to leave cash reserves in the amount equal to the required bond amount untouched. Unable to get a bond in Hawaii, many firms are not compliant with the current law - a law passed without talking to the affected industry and without solving a real problem back in 2010. To date, despite contacting multiple state offices, we have not heard of a single case where consumers needed to be protected to justify the writing of this law.
So, we have a current law with a requirement that can put out of business smaller employment agencies and related businesses who have long done business in Hawaii. But, instead working with the industry to fix it (knowing that many are not in compliance), lawmakers elected to draft a worse law, upping the bond requirement (doubling it from $250,000 to $500,000 for numerous companies, on up to $1 million for larger firms), adding a stiff registration fee, and imposing fines of $500 per day for each day of noncompliance. To do this when we want to support small businesses and save jobs does not make sense or pass the litmus test.
The good news is that it brought members of the industry together. Backs to the wall, they began to fight. They were not against reasonable regulation, and they support a registration process with reasonable fees. However, they need relief from the bonding issue.
This group truly mobilized. They created a website. They met with lawmakers, state department heads, the governor and others to lay out their concerns and offer to help fix the legislation so that reasonable regulation could prevail.
They sought help from the Maui Chamber of Commerce, and we heeded the call. We asked the governor to veto Senate Bill 2424, publicized the situation to help the public understand the challenges they faced, reached out to the Neighbor Island chambers of commerce to build statewide support, asked the Chamber of Commerce of Hawaii to join us in taking a stand on this important small business issue and garnered unified statewide chamber support to ask the governor to veto Senate Bill 2424.
On Monday, Gov. Neil Abercrombie signaled he intended to veto 19 bills passed by the Legislature, including Senate Bill 2424. We are thrilled and look forward to seeing this bill vetoed.
However, the work does not end there because Act 129 still exists. We must address the bonding requirement to keep our smaller employment agencies in business. And, we must continue to ask elected officials to include a business impact statement in legislation affecting businesses.
* Pamela Tumpap is president of the Maui Chamber of Commerce.