Section 7 of Senate Bill No. 2424/CD1 imposes onerous and unreasonable PEO bond requirements which are the highest in the nation.
It will be difficult and very expensive for most PEO companies to obtain a bond meeting the requirements of Section 7 (A-rated surety bond in the amount of $250,000 to $1,000,000). Bonds of this type will likely require the PEO to provide collateral equal to the bond amount ($250,000 to $1,000,000) while paying an additional premium for the bond. Consequently, this bill will eliminate and/or prevent small PEOs from doing business in Hawaii and allow big PEOs like Altres and ProService to continue to get bigger. Further, Hawaii PEOs and their clients (including many small Hawaii businesses) will be forced to bear the increased costs associated with the bond requirements. Thus, Senate Bill No. 2424/CD1 is anti-competitive and anti-business.
HPR2: The Conversation — Bonding or bondage for Hawaii’s professional employer organizations…?
“Matthew Delaney is Hawaii Human Resources’ Co-Founder and CEO. He has created the Hawaii Group, Inc. family of of companies. Mr. Delaney is the spokesperson for the Hawaii Association of Professional Employer Organizations, which is lobbying for a Veto on SB2424.”
June 18, 2012: Hawaii News Now: Howard's Business Report: Nelson Befitel
ProService is against this bill as well.
June 15, 2012: KHON2: Bill aimed to protect small businesses may do the opposite
Coverage on KHON2 News. ‘Organizations that serve small businesses with their human resources needs say a bill awaiting the governor’s signature is flawed and could shut down several companies.’
May 3, 2012: Rep. Cynthia Thielen addresses SB2424: Bond Requirements
Representative Cynthia Thielen addresses and reads from a letter delivered to her by Talent HR Solutions explaining how Hawaii’s smaller PEOs were not privy to the writing of SB2424 and will be put out of business if it passes.
May 3, 2012: Bipartisan Support in Addressing SB2424: Bond Requirements
Many representatives from both sides of the aisle weigh in with reservations about and opposition to SB2424.
The HRO marketplace in Hawaii is small, with two firms holding a large share. Passing of SB2424 would only further this monopolistic landscape.
Bond Requirements by State (Source: NAPEO)
These numbers are estimates based on publicly available data published in trade publications and business journals. Exact, current volume of clients and co-employees may differ and can only be verified by the PEOs themselves.
I am employed by TNT Payroll Services… Does the Governor realize that if this passes a lot of us will be out of a job?? Is this how he is helping the economy of the state? I pay taxes, I pay a mortgage, I pay all of my bills, but without a job, I may lose everything…. Is this how other employees feel??
—Kathy Kuikahi, Administrative Assistant, TNT Payroll Services, Inc.