Stop SB2424.

UPDATE: SB2424 Vetoed!

On Tuesday, July 20, 2012, Governor Abercrombie has vetoed Senate Bill 2424.

An Industry at Risk

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.

SB2424 Impact Summaries # Link to this section

Download the two-page summary PDF presented to Governor Neil Abercrombie

Download the PDF presented to the Chamber of Commerce

Download the information packet presented to Governor Abercrombie


Legislation # Link to this section

  1. SB2424 SD2 HD2 CD1 Bill Status at
  2. July 10, 2012: News Release from Governor Abercrombie
  3. July 10, 2012: Legislative Message 1396 from Governor Abercrombie regarding SB2424
  4. SB2424 SD2 HD2 CD1 (full text of bill)
  5. May 9, 2012: Professional Employer Organization (PEO) Summary
  6. May 1, 2012: SB2424 CD1 CCR156 — Conference Committee Report 156-12
  7. Official constitutional provision regarding the legislature’s allowance to amend a vetoed bill to meet the governor’s objections
  8. February 7, 2012: House Bill No. 2645 testimony
  9. Previous versions of the bill:

Correspondence # Link to this section

  1. Email Correspondence between Matt Delaney (HiHR) and Senator Roz Baker
  2. Email Correspondence between Matt Delaney (HiHR) and Senator Slom Saiki

Letters to Governor Abercrombie Regarding SB2424 # Link to this section

  1. July 9, 2012: Matthew Delaney, Hawaii Human Resources: Final Request for Veto of Senate Bill No. 2424/CD1
  2. June 26, 2012: Jim Tollefson, Chamber of Commerce of Hawaii
  3. June 21, 2012: Nadine Stollenmaier, Dunhill Professional Staffing of Hawaii
  4. June 21, 2012: Melissa Pavlicek, SHRM
  5. June 19, 2012: Sam Slom, Smart Business Hawaii
  6. June 18, 2012: Senators Carol Fukunaga and Les Ihara, Jr.
  7. June 18, 2012: NAPEO
  8. June 13, 2012: Ray M. O’Leary, PACE
  9. June 13, 2012: Harry L. Alonso, President of Filipino Chamber of Commerce of Hawaii
  10. June 12, 2012: House Minority Caucus SB2424 Veto Request
  11. June 6, 2012: Senator Chun Oakland
  12. June 4, 2012: D. Aguinaldo-Helsham, Onesource
  13. June 4, 2012: Jack Schneider, JS Services
  14. May 31, 2012: Ryan Jensen, SOS Staffing
  15. May 31, 2012: Anela Sanchez, Aloha International Employment
  16. May 30, 2012: Robert Joerger, Aloha International Employment
  17. May 25, 2012: Jennifer Brittin-Fulton, Employers Options
  18. May 24, 2012: Jesus Menendez, HR Benefix
  19. May 23, 2012: Mark Watson, Hawaii Workplace
  20. May 22, 2012: Terri Toki, TNT Payroll Services
  21. May 22, 2012: Will A. Wong, Human Resources Administration of Hawaii
  22. May 11, 2012: Pamela Brown, Insurance Factors
  23. May 10, 2012: Matthew Delaney, Hawaii Human Resources (HiHR)
  24. May 8, 2012: Matthew Delaney, Hawaii Human Resources (HiHR)

Press & Media Coverage # Link to this section

  1. November 30, 2012: Nahelani Webster: The 2013 Legislative Session (SHRM Newsletter)
  2. July 25, 2012: NAPEO E-Source Newsletter
  3. July 18, 2012: Jack Schneider (JS Services): Letter to Governor
  4. July 11, 2012: Pacific Business News: Abercrombie vetoes PEO bill, 13 other measures
  5. July 11, 2012: Star Advertiser: Abercrombie prevents 14 bills from becoming law
  6. July 7, 2012: The Star Advertiser: Put these bills back on the shelf
  7. June 30, 2012: The Maui News: Pamela Tumpap, The Chamber View: Businesses successfully rally against Senate bill
  8. June 26, 2012: Star Advertiser: Veto looms for levying of fees on hospitals
  9. June 26, 2012: Maui News: Bill regulating PEOS 'broad', on governor’s likely veto list
  10. June 26, 2012: Hawaii Tribune Herald: Employee leasing firms likely to be spared added costs
  11. June 26, 2012: Pacific Business News: Abercrombie to veto PEO bill, hospital sustainability fee, extension of rental car surcharge tax, among others
  12. June 26, 2012: NAPEO: Gov. Abercrombie Issues Intent to Veto Notice for SB2424
  13. June 19, 2012: Star Advertiser: Veto Bait
  14. June 15, 2012: Pacific Business News: Local PEOs could have nation’s highest bonds
  15. June 12, 2012: Star-Advertiser: Human resources firms fight bill
  16. June 10, 2012: The Maui News: Legislation called ‘attack on small businesses’
  17. June 4, 2012: Hawaii Public Radio: Howard Dicus, Report on Air (transcript)
  18. May 25, 2012: Pacific Business News: Hawaii PEOs carry fight over restrictions to state labor officials
  19. May 18, 2012: Pacific Business News: Hawaii PEOs face tighter restrictions, higher fees if bill becomes law
  20. May 15, 2012: KHON 2: Bill aimed to protect small business may do the opposite

Editorials # Link to this section

  1. June 22, 2012: Mark Watson — More Hawaii jobs will be lost if bill passes (West Hawaii Today)
  2. June 21, 2012: Jennifer Brittin (Employers Options) — Gov. Abercrombie Should Veto SB2424 (The Maui News)
  3. June 15, 2012: Honolulu Star-Advertiser, Publisher Editorial — Flawed PEO bill should be vetoed
  4. June 12, 2012: Bob Yeager (Aloha International Employment) — Legislation hurts small business (The Maui News)
  5. June 12, 2012: The Maui News, Publisher Editorial — Governor, veto SB 2424
  6. June 10, 2012: Pamela Tumpap (Maui Chamber of Commerce President) — Stop bad legislation from moving forward (The Maui News)
  7. June 8, 2012: Matthew Delaney (HiHR) — Abercrombie Should Just Say No to SB2424 (PACE)
  8. June 7, 2012: Matthew Delaney (HiHR) — Abercrombie Should Just Say No to SB2424 (Civil Beat)
  9. June 6, 2012: Jack Schneider (JS Services) — Legislation Would Kill Hawaii’s Employee Leasing Industry (Hawaii Reporter)
  10. June 5, 2012: Jack Schneider (JS Services) — Bill 2424 will hurt smaller employee leasing firms (Star-Advertiser)
  11. June 4, 2012: Jack Schneider (JS Services) — PEO Bill Bad for Competitive Small Businesses (Smart Business Hawaii)
  12. June 2, 2012: Veto PEO Bill (PACE News)
  13. May 16, 2012: Senator Sam Slom (Smart Business Hawaii) — SB2424: Veto the PEO Bill (Hawaii Free Press)

Additional Resources # Link to this section

  1. NAPEO: State-by-State Bonding Requirements
  2. June 14, 2012: Bonding Issue Letter from Jerry Hay, Inc. General Insurance

Audio # Link to this section

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.”

Listen below:

Video # Link to this section

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.

See For Yourself # Link to this section

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.

Comments & Letters # Link to this section

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.

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