2010 Hawaii Code
DIVISION 1. GOVERNMENT
TITLE 21. LABOR AND INDUSTRIAL RELATIONS
373K. Professional Employment Organizations
§373K- 2 Professional employment organization; employee rights; payroll cost exemption.

[ §373K- 2] Professional employment organization; employee rights; payroll cost exemption. (a) Where any client company uses the services of assigned employees and co-employs assigned employees with a professional employment organization, the client company and the professional employment organization, with respect to the assigned employees, shall not be exempt from the requirements of any federal, state, or county law, including labor or employment laws, collective bargaining rights, anti-discrimination provisions, or other laws with respect to the protection and rights of employees, including chapters 377 and 378, that would apply to the assigned employees if the assigned employees were employees of the client company alone, and were not co-employees of the professional employment organization.

These employee rights shall not be abrogated by any contract or agreement between the client company and the professional employment organization, or the professional employment organization and the assigned employee, which contains terms or conditions that could not be lawfully contained in a contract or agreement directly between the client company and the assigned employee in which no professional employment organization is involved. Notwithstanding any statute, local ordinance, executive order, rule, or regulation to the contrary, where the laws, rights, and protections referred to in this section define or require a determination of the "employer", the employer shall be deemed to be the client company and not the professional employment organization. The department of labor and industrial relations shall notify the department of taxation in writing of any violation of this subsection.

(b) The client company shall be deemed to have satisfied its obligations with respect to any assigned employee under any applicable law, including, without limitation, workers' compensation laws including chapter 386, employee insurance coverage laws including chapters 383, 385, 392, and 393, and tax withholding and reporting laws, if and to the extent that those obligations are satisfied by the professional employment organization acting in its capacity as co-employer of such assigned employee.

(c) Amounts received by a professional employment organization from a client company in amounts equal to and that are disbursed by the professional employment organization for employee wages, salaries, payroll taxes, insurance premiums, and benefits, including retirement, vacation, sick leave, health benefits, and similar employment benefits with respect to assigned employees at a client company shall not be subject to the general excise tax as provided by section 237-24.75.

(d) The general excise tax exemption under section 237‑24.75 shall not apply to the professional employment organization if:

(1) By or through any contract between the client company and any professional employment organization, or otherwise, employees are excluded from any employee rights or employee benefits required by law to be provided to employees of the client company by the client company; or

(2) The professional employment organization fails to pay any tax withholding for assigned employees or any federal or state taxes for which the professional employment organization is responsible. [L 2007, c 225, pt of §2]