There is a bill awaiting Gov. Neil Abercrombie's signature that concerns employee-staffing companies and requires them to pay as much as $5,000 for a registration fee and to obtain a $500,000 bond. This may put most staffing companies out of business and could stifle any new ones from starting up.
The real irony is that these staffing companies provide payroll and employee support for small businesses that do not have the staff, knowledge or inclination to administer the plethora of state and federal laws regarding employment. Many of these small businesses were operating under the radar, not paying workers' compensation, health insurance and other employee benefits required by law. Only by joining a staffing company were they able to legitimize their operations.
Small-business owners may think this does not concern them because they own a restaurant or contracting company, real estate agency, plumbing company or some other business.
Well, it definitely does concern them, and here is why. This legislation, SB 2424, was born out of fear. One staffing company went out of business and the employees did not get paid. Although this is a terrible thing to happen to these workers, this legislation is not the solution for situations such as this.
Here is why the legislation is flawed. Let's just assume the governor signs this legislation. Thirty small businesses will close. A number of their clients will go back to doing business the old way - cash. This leaves the employees without health insurance, temporary disability insurance, workers' compensation or unemployment insurance. Not to mention that it places them back in great jeopardy with state and federal tax collectors. The employer likewise is back in a tenuous illegal situation. The big companies that can stay in business do not like to bother with companies that have fewer than five employees, which is a large number of Hawaii's businesses.
How does this affect businesses that aren't staffing companies and do not lease workers?
This is what I think can happen: A restaurant contractor (or add any type of business) goes out of business, failing to pay employees. Our legislators, inspired by the success of SB 2424, call forth the same reasoning to remedy the situation. That same thinking will create new legislation that will place unreasonable demands on the restaurant industry and force the small entrepreneur out of business, just like SB 2424 will do for employee-staffing companies.
If the governor does sign this anti-small business legislation, Hawaii will have taken the wrong fork in the road. Making staffing companies pay huge sums of money to remain in business despite the service they provide to our communities, employees and employers is just wrong. It will set the scene for more anti-business laws and anti-competition legislation and will destroy the future for all small businesses in Hawaii.
Businesses will end up in the hands of an elite, wealthy few. That's not Hawaii style. Competition, because of these additional state financial charges and mandates, will be stopped before it can ever begin.
There is still time to stop this. Please call the Governor's Office at (808) 586-0034 and ask him to veto SB 2424. Or reach Abercrombie on Facebook at www.facebook.com/GovernorAbercrombie. It takes only a minute, and this small act may allow our children and grandchildren to continue in the business, or to start a small business of their own.
* Bob Yeager is the owner of Aloha International Employment, which has offices on Maui and Oahu.