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Governor Signs Bill Regarding Employer Appeals of Unemployment Tax Rates

The Governor has signed Act 013 into law, which clarifies the process for how an employer can appeal their unemployment insurance (“UI”) contribution tax rates for the year.

The current law, Section 383-69 of the Hawaii Revised Statutes (“HRS”), provides that employers have 15 days from the mailing of their contribution rate notice to file an application for review and redetermination.  As it is currently written,  HRS § 383-69 does not specify that the Employment Security Appeals Referees’ Office (“ESARO”) is the agency responsible for hearing the appeal (it just states that the “department” will hear the appeal.)  Therefore, to clear up any confusion, this bill specifies that rate determination appeals shall be filed with ESARO.

This bill was introduced as an administration bill, and more specifically, as a “housekeeping” measure.  Despite such a seemingly innocuous label for this bill, however, things should be noted:

First, this bill deleted language from HRS  § 383-69 that previously provided that appeals made to the circuit court (after ESARO issues its ruling) “shall be heard in a summary manner and shall be given precedence over all other civil actions, except for proceedings arising under section 383-41 and the workers’ compensation law of the State.”  Thus, this is actually a significant but overlooked component of this new law, because employers’ appeals of their rate determination are no longer required be addressed in an expeditious manner by the courts.  This change in the law may end up being a point of concern for employers, because it will take employers longer to contest their UI contribution rates.

Second, and more alarmingly, the initial draft of this bill contained language that would have taken away employers’ rights to appeal the ESARO decision to the circuit court.  Rather, the ESARO decision would have become final and binding upon an employer.  This  would have been a major infringement on employers’ rights to challenge their UI contribution tax rates.  Fortunately, later drafts of this bill, including the draft signed by Governor Abercrombie, included employers’ right to file administrative appeals with circuit court.

A copy of this measure can be read here.