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Kaua‘i council increases disclosure requirements for contractors

LIHU‘E — Mayor Derek Kawakami said Monday he planned to sign a bill that would increase disclosure requirements for contractors operating in the county.

Bill No. 2873, passed by Kaua‘i County Council last week in a 6-1 vote, adds a section to the county code requiring contractors to keep their permits up to date with current information on the subcontractors working on their projects, and requires disclosure of any violations and disciplinary actions against permitted contractors.

Proponents hope the bill will discourage those who misclassify workers as independent contractors in order to avoid paying benefits, while helping federal authorities build cases against those engaged in illegal practices.

“By law contractors have to pay workers compensation, unemployment, and state and federal taxes for all of their employees,” said Executive Director of the Hawaiʻi Construction Alliance Nathaniel Kinney in a statement to The Garden Island.

“Some bad actors break the law and call all their employees ‘independent contractors’ and artificially lower their bids to steal jobs away from reputable businesses. This law is one small step to help state and federal agencies combat this problem by having contractors fill out a simple form when they get a building permit.”

HCA and other union groups, have pushed for this legislation, often coming into conflict with contractors’ organizations who argue the measure would be burdensome and redundant. Discussions with contractors led to several changes being made to the bill including the exemption of affordable housing projects, small-scale residential construction and subcontractors who complete less than 5 percent of a given project.

With these changes in place, General Contractors Association representative Ryan Sakuda made only a tepid criticism of the bill at final reading on Wednesday, Nov. 2.

“We don’t think it’s necessary, we think it will add another level of regulation,” he said. “There’s already a state law in place to address bad actors. That said, we’re not opposed to the specific language contained in this measure.”

Often alluded to in these discussions are reports of misconduct by contractors on Kaua‘i.

“I heard of situations where workers are coming over from the mainland as independent contractors, not needing to be paid health insurance and other benefits,” said county council chair Arryl Kaneshiro on Wednesday. “They’re getting these jobs and taking jobs away from local contractors who have to pay benefits.”

The specific contractors involved in these reports have not been named.

Licensing issues are currently reported to the Regulated Industries Complaints Office, a state agency tasked with investigating these complaints.

In a correspondence requested by council member Felicia Cowden, RICO reported there had been 54 contractor-related complaints on Kaua‘i in 2022, 33 in 2021, 25 in 2020, and 33 in 2019.

Cowden was the lone “no” vote, citing increased construction costs and delays as the reason for her opposition, along with carveouts that made the bill ineffective.

Instead, she advocated for seeking state funding for a Regulated Industries Complaints Office position focused specifically on investigating complaints against contractors on Kaua‘i.
Source: The Garden Island

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