Employment Law Journal

Legislature puts teeth into Hawaii plant closing law

By Bruce D. Voss

The Hawaii State Department of Labor and Industrial Relations has been given new enforcement powers to penalize Hawaii employers who fail to provide the required notification to affected workers of a closing, sale, or relocation of the business.

Hawaii’s so-called “plant closing” law, HRS Chapter 394B, has been on the books since the 1980s, but is generally regarded as having little or no teeth. A new law passed by the 2011 Hawaii State Legislature makes clear that the State Labor Department “shall enforce” the law’s provisions regarding dislocated workers.

In brief, Chapter 394B requires employers with 50 or more employees to (1) provide at least 60 days advance notification to the State Labor Department and all affected employees of any business operation closing or partial closing as a result of any sale, transfer, merger, bankruptcy or other business transaction; and (2) provide affected employees with a “dislocated worker allowance,” generally defined as the difference between the employees’ average weekly wage and the weekly unemployment compensation benefit, for a period of up to four weeks. Employers who violate the statute may be liable to each affected worker for an amount equal to 60 days back pay and benefits, and could be liable for civil penalties of up to $500 per day.

The new law gives the State Labor Department not only the right, but also the obligation, to enforce the law through investigations and court proceedings. The State Labor Department has staff and budget constraints, so it remains to be seen how many investigations or lawsuits are actually initiated. Nonetheless, any Hawaii employer with 50 or more employees should take heed and carefully plan in advance any major layoff or closure of part of the business.

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