Re: S.B. No. 2424-- Professional Employer Organizations

Dear Governor Abercrombie:        June 12, 2012

A total of 19 representatives voted against S.B. No. 2424 on final reading including all Republican representatives. This bill would have catastrophic consequences for many professional employee organizations (PEOs), also known as employee leasing companies. Many small PEOs were not aware of this measure until very late in the legislative session. Otherwise they would have opposed the bill much earlier.

If enacted, it would be difficult, perhaps impossible, for these small businesses to comply with the bonding and registration requirements. Any PEO company that handles 100 employees must purchase a minimum $500,000 bond, and it is questionable whether these bonds are obtainable.

Registration fees run from $2,500 /biennium for PEOs that handle only 100 of their clients' employees. Fees are $10,000 for 500 employees. These fees are far in excess of what other states charge for registration which is around $100 according to testimony. $100 would be a more rational fee to do business in Hawai'i.

Please veto this measure. Thank you for your attention to this matter.

Sincerely,

With Aloha,

Representative Gene Ward, Minority Leader

Representative Cynthia Thielen, Assistant Minority Leader

Representative Corinne W.L. Ching, Assistant Minority Floor Leader

Representative George Fontaine, Minority Whip

Representative Gil Riviere, Minority Whip

Representative Barbara Marumoto, Minority Policy Leader

Representative Aaron Ling Johanson, Minority Whip