Bill’s pass into law is a victory for already struggling Hawaii businesses & employers
HONOLULU – Governor Ige’s signing of bill HB 1278 today signaled a hard earned victory for Hawaii’s leader in human resource management, ProService Hawaii, and approximately 350 of their clients and other industry partners who joined in their fight to moderate payroll tax increases that loomed for Hawaii employers in the wake of the pandemic.
ProService sounded the alarm in late 2020 as the government proposed to increase payroll taxes to the highest level in order to restock the approximately $1 billion trust fund deficit that came with the pandemic’s sky-rocketing unemployment. Their proposal meant employer tax increases as high as $1,500 per employee, which would have dealt a catastrophic blow to Hawaii employers and the state’s economic recovery. Gathering its client partners and industry stakeholders, ProService raised visibility of the issue and inspired testimony in favor of more modest tax increases. With the signing of HB 1278, employers can expect increases of under $300 per employee on average, far less than the original proposal.
“The signing of HB 1278 is not only a huge win for businesses, but also an important step to economic recovery for Hawaii,” says Ben Godsey, President and CEO of ProService Hawaii. “Our team, led by our Chief Counsel Nelson Befitel, worked diligently to alert our clients about the impact of a potential payroll tax increase, and created advocacy around the issue which resulted in dozens of client testimony submissions to the legislature.”
Aside from client engagement, Befitel worked with legislators, the Governor’s Chief of Staff, the Department of Labor director, and the unemployment insurance team at the Department of Labor and Industrial Relations to create bills that would remediate the tax issue. ProService initiated much of their efforts in the 4th quarter of 2020 and leading up to the start of the legislative session in January.
“This legislation is the product of successful collaborative efforts months in the making,” says Befitel. “We thank our colleagues within the legislature and the state government for working with us, but we want to especially thank our clients who shared in our concern and acted upon this issue in any way they could help.”
HB 1278 is also not the first legislation ProService has rallied around. In 2010, the company helped prevent a significant tax increase by working with lawmakers to pass HB 2169 following the Great Recession. Subsequently named Act 2, the law lowered mandated unemployment tax rate increases and spread them out, allowing businesses more time to recover.
“Small businesses are pretty self-reliant and are not looking for someone to solve problems for them,” says Ross Anderson, owner of Waioli Kitchen and Bakeshop, a ProService client. “But this tax increase was a big problem and ProService has done a great job of keeping us abreast of this legislation and educating the community of its impacts.”