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Here in the City and County of Honolulu, lots of people are out of work, especially in the hospitality industry. At some point the economy will reopen, and people will start occupying hotels again. Then, according to a proposal before the Honolulu City Council, we force the hotels to rehire people to their old jobs. Or comparable ones.
The proposal is called Bill 80. One of its first provisions says, “A hotel employer shall recall to active employment the same number of employees in substantially the same classifications as the hotel employer’s active workforce on March 1, 2020, adjusted by the ratio the occupancy of the hotel bears to 100 percent. A hotel employer must clean and sanitize every occupied guest room every day and must employ a number of housekeeping employees to ensure that this standard is met.”
The bill then mandates that an employer offer its laid-off employees all job positions which become available for which the laid-off employees are qualified. Qualified means that the employee held the same or similar position at the enterprise at the time the employee was laid off, or the employee is or can be qualified for the position with the same training that would be provided to a new employee.
The positions the employer would need to offer would need to be in the same classification or job title with substantially the same employment site (with some exceptions), duties, compensation, benefits, and working conditions as applied to the laid-off employee before March 21, 2020.
The provisions in the ordinance could be enforced by private lawsuit, and if the employee wins the employer would need to pay the employee’s attorney’s fees.
So far, the hotel workers’ unions are pushing the bill and are getting individual employees (or former employees) to testify in favor of it. The hotels are screaming bloody murder. The bill has been cleared by one Council committee, paving the way for it to receive a public hearing before the Council.
One of the fundamental questions this bill raises is, how far does government power extend? We as a country brag about the free enterprise system in our economy. But is it really free when government can dictate who to hire and how much to pay?
We raised concerns about minimum wage legislation which is, when you look at its structure, a prohibition upon hiring unless the employer can pay a certain amount. The upshot is that employers are given a disincentive to hire. The same can be said here. Would hotels really want to reopen if the government shoves hiring decisions down their throats?
There are also sovereignty issues. Our federal government has a National Labor Relations Act, and the Supreme Court held in San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959), and many cases since, that the Act displaced state and local power to regulate broad aspects of labor relations. We also have a State Department of Labor and Industrial Relations, and various statutes that regulate the balance between management and labor. If those statutes are to have meaning, counties arguably should not have the power to upset that balance.
It seems to us that rehiring and recall decisions should not be made by a government less acquainted with the economic damage that has befallen employers as well as employees. The weighing of woes, the back-and-forth, and the agreements can and should be made at the bargaining table.
And while we’re at it, perhaps we should be re-examining other employer and employee mandates, including payroll taxes, to see if they really are necessary or are at an appropriate level, especially when the normal management-labor dynamic has been scrambled by the pandemic.
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Tom Yamachika is the President of the Tax Foundation of Hawaii, a private, nonprofit educational organization dedicated to informing the taxpaying public about the finances of our state and local governments in Hawaii. Tom is also a tax attorney in solo practice and has been since early 2013. Prior to 2013, he was with the accounting firm Accuity LLP, which was formed in 2006 from the Honolulu office of Coopers & Lybrand (which later became PricewaterhouseCoopers). Before that, he served as an Administrative Rules Specialist in the State of Hawaii Department of Taxation from 1994 to 1996, where he drafted rules, interpretive releases, and legislation on several different state taxes. Prior to that, he practiced litigation and tax law with Cades Schutte Fleming & Wright in Honolulu.