June 12, 2012

The Honorable Neil Abercrombie
Governor of Hawai’i Executive Chambers,
Hawai’i State Capitol
Honolulu, Hawai’i 96813

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

Dear Governor Abercrombie:

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,

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