Gov. Neil Abercrombie will have the final say on the fate of SB 2424, an ill-conceived measure that will destroy jobs and may put some small Hawaii firms out of business.
The governor has until June 24 to sign or veto the measure.
The bill sets up fees and bond requirements for Professional Employer Organizations that are so onerous that some small firms could see their cost of doing business increase by over $1 million.
As detailed in a news story in Sunday's Maui News, PEOs "act as an outsourced human resources department for businesses and perform such functions as payroll, collecting and paying various payroll taxes and administering benefits for employees."
While 38 other states regulate the organizations, Hawaii's proposed charges would be the highest in the nation. For example, firms covering fewer than 100 employees would have to post a $250,000 bond larger ones might have to post bonds up to $1 million. California's bonding requirement is $200,000.
Some of these small business owners maintain such a bond is not obtainable in Hawaii - they will have to put up cash on a dollar-for-dollar basis.
We know of no egregious violations by Hawaii PEOs. It almost seems that SB 2424 is a solution in search of a problem.
As Jennifer Brittin of Employers Options here on Maui wrote in a letter to the governor:
"If this bill is passed, no doubt it will force many of the smaller PEOs out of business and, quite frankly, after more than 30 years of operating a viable business that has put thousands of people to work in Hawaii, I may be forced to shut my doors. And, invariably my company will be taken over by a large Mainland PEO."
We would join Ms. Brittin and other operators of small PEOs in asking Gov. Abercrombie to veto this bill. Its effects will be calamitous for these small businesses in Hawaii.
* Editorials reflect the opinion of the publisher.
