Title 12, Subtitle 6, Chapter 506

HAWAII ADMINISTRATIVE RULES
TITLE 12
DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS
SUBTITLE 6
OFFICE OF EMPLOYMENT AND TRAINING ADMINISTRATION
CHAPTER 506
PLANT CLOSING NOTIFICATION AND DISLOCATED
WORKER ALLOWANCE
§12-506-1 Scope and purpose
§12-506-2 Definitions
§12-506-3 Covered establishment
§12-506-4 Closing
§12-506-5 Partial closing
§12-506-6 Relocation
§12-506-7 Notification
§12-506-8 Dislocated worker allowance
§12-506-9 Petition for declaratory ruling
§12-506-1 Scope and purpose. (a) This chapter
implements Act 377, SLH 1987, which amends chapter 394B,
HRS, relating to dislocated workers.
(b) Chapter 394B, HRS, protects employees from the
effects of unexpected and sudden lay-offs or terminations
which result from closings, partial closings, or relocations
due to the sale, transfer, merger, and other business
takeover or transaction of business interests.
(c) Chapter 394B, HRS, provides that affected
employees are to receive advance notice and a limited
dislocated worker allowance to give them an opportunity to
adjust their lives in an orderly manner, as well as to
receive retraining or other reemployment assistance from the
department. However, where an affected employee is
eligible under a collective bargaining agreement for
supplemental unemployment compensation benefits, the
employee is exempted from receiving the dislocated worker
allowance. [Eff: 8/15/88] (Auth: HRS §394B-10) (Imp:
HRS §§394B-1, 394B-9, 394B-10)
§12-506-2
§12-506-2 Definitions. As used in chapter 394B,
HRS, and in this chapter, unless the context clearly
indicates otherwise:
"Affected employee" is any individual engaged in
service to an employer and who has a reasonable expectation
of continuing employment with that employer at the time of
the closing, partial closing, or relocation.

"Average weekly wages" means a figure equal to the
total wages paid to an employee of the employer affected by
a closing, partial closing, or relocation, divided by the
number of weeks, not to exceed 52 weeks prior to the
closing, partial closing, or relocation, that the employee
actually worked or was on compensated leave with that
employer.
"Closing" shall be as defined in section 394B-2, HRS.
"Compensated leave" means authorized absence while
the employee is being paid wages, such as sick leave,
holiday leave, and vacation leave; but excluding unpaid
absences from work, and absences from work while receiving
payments, such as workers' compensation, temporary
disability insurance, and long-term disability insurance.
"Covered establishment" shall be as defined in section
394B-2, HRS.
"Department" shall be as defined in section 394B-2,
HRS.
"Director" shall be as defined in section 394B-2, HRS.
"Dislocated worker" shall be as defined in section
394B-2, HRS.
"Employee" shall be as defined in section 394B-2, HRS.
"Employer" shall be as defined in section 394B-2, HRS.
"Partial closing" shall be as defined in section 394B-
2, HRS.
"Permanent shutting down" means the cessation of a
portion or all of the business activities in a covered
establishment which results in a lay-off or termination of
employees. If the covered establishment or portion thereof
continues operations with a different owner or different
employees, the act of a lay-off or termination of employees
constitutes a permanent shutting down.
"Person" shall be as defined in section 394B-2, HRS.
"Portion of operations" for the purposes of a partial
closing means a distinct part of the operations, such as a
department, division, branch, or outlet.
§12-506-2
"Portion of the employees" for the purposes of a
partial closing means one or more employees employed in
that portion of the operations.
"Relocation" shall be as defined in section 394B-2,
HRS.
"Sale, transfer, merger, and other business takeover
or transaction of business interests" means any of the
various forms of business transactions where there is a
change in the controlling interest of a covered
establishment, or the sale, transfer, or merger of a
portion of the operations of a covered establishment.
"Transaction of business interests," as used in this
context, refers to transactions similar to sales, transfers,
mergers, and other business takeovers.

Examples:
Employer A is a construction company which employs
100 workers on a construction project. When the
project is completed, all 100 workers are laid off.
For purposes of the definition, no sale,
transfer, merger, and other business takeover or
transaction of business interests has taken place.
Employer B is a retail store employing 200 workers.
The employer hires an additional 50 temporary
workers for the Christmas shopping period. All 50
temporary workers are laid off after the Christmas
shopping season. For purposes of the definition,
no sale, transfer, merger, and other business
takeover or transaction of business interests has
taken place.
"Supplemental unemployment compensation
benefits" means any remuneration or benefit, such as
severance pay, that are given upon the employee's
termination from employment.
"Wages" means all remuneration for services
constituting employment. It includes the market
value of board, lodging, fuel, and other advantages
having a cash value which the employer has paid as a
part of the employee's remuneration and gratuities
received in the course of employment from others than
the employer to the
§12-506-2
extent that they are customary and expected in that type of
employment or accounted for by the employee to the employer.
[Eff: 8/15/88] (Auth: HRS §394-B-10) (Imp: HRS §394B-2)
§12-506-3 Covered establishment. (a) In order to be
considered a covered establishment, an entity shall:
(1) Be an industrial, commercial, or other legal
business entity which is a party to a sale,
transfer, merger, and other business takeover or
transaction of business interests as defined
herein; and
(2) Employ at any time in the preceding twelve-month
period, fifty or more persons in the State or
Hawaii as determined by any payroll or other
reasonable accounting period within the twelve
consecutive calendar months preceding the
closing, partial closing, or relocation.
[Eff: 8/15/88] (Auth: HRS §394B-10) (Imp: HRS
§394B-2)
§12-506-4 Closing. (a) In order for there to be a

closing, there shall be:
(1) A sale, transfer, merger, and other business
takeover or transaction of business interests;
(2) A permanent shutting down of all operations
within a covered establishment due to paragraph
(1); and
(3) An actual or potential lay-off or termination of
employees of a covered establishment by the
employer as a result of paragraph (2).
(b) Business shutdowns which occur as a direct result
of or in connection with factors such as business failure,
bankruptcy, or loss of lease or contract are not considered
closings for the purposes of chapter 394B, HRS.
Examples:
Employer A employs 100 employees but suffers
financial setbacks due to lack of business. The
employer files for bankruptcy and lays off all
100 employees as a result. No closing has taken
place for the purposes of chapter 394B, HRS.
§12-506-5
Employer B is a retail store employing 50
employees. The employer loses the lease in
the shopping center in which the store is
located. As a result, all employees are
laid off. No closing has taken place for
the purposes of chapter 394B, HRS.
Employer C owns and operates a shrimp farm
employing 200 workers. The shrimp farm is
totally devastated by a hurricane, which forces
the employer to lay off all employees. No
closing has taken place for the purposes of
chapter 394B, HRS.
Employer D is a local hotel employing 75
employees. The hotel is sold to a foreign
investor and all employees are laid off, although
the hotel continues to operate with different
employees. For the purpose of chapter 394B, HRS,
a closing of the hotel has occurred. [Eff:
8/15/88] (Auth: HRS §394B-10) (Imp: HRS §394B-2)
§12-506-5 Partial closing. (a) In order for there
to be a partial closing, there shall be:
(1) A sale, transfer, merger, and other business
takeover or transaction of business interests;
and
(2) A permanent shutting down of a portion of
operations within a covered establishment due to
paragraph (1); and
(3) An actual or potential termination of a portion

of the employees of a covered establishment by
the employer as a result of paragraph (2).
(b) Business shutdowns which occur as a direct result
of or in connection with factors such as business failure,
bankruptcy, or loss of lease or contract are not considered
partial closings for the purposes of chapter 394B, HRS.
Examples:
Corporation A has branch operations in various
cities throughout the country. Corporation A
sells the Hawaii branch with 80 employees to a
§12-506-5
Honolulu hui. As a result of the sale, 30
employees of the Corporation A Hawaii branch are
laid off. For the purposes of chapter 394B,
there has been a partial closing of Corporation A
and a lay-off of a portion of the employees.
Exetor Company, with 200 employees, recently was
purchased by M Enterprises. Exetor decides that
the data processing department is no longer
needed because they are able to get data
processing from M Enterprises' data processing
division and thus lays off the data processing
employees. For the purpose of chapter 394B, HRS,
there has been a partial closing of Exetor
Company and a lay-off of a portion of the
employees.
Pine Company was purchased outright by Company M.
As a direct result of the sale, 300 of the 400
employees of Pine Company are laid off gradually
over a two-year period. For the purposes of
chapter 394B, HRS, there has been a partial
closing of Pine Company and a lay-off of a
portion of employees. [Eff: 8/15/88] (Auth: HRS
§394B-10) (Imp: HRS §394B-2)
§12-506-6 Relocation. (a) In order for there to be
a relocation for the purposes of chapter 394B, HRS, there
must be a removal of all or substantially all of the
industrial, commercial, or business operations in a covered
establishment to a location outside of the State of Hawaii.
(b) A relocation requires a notification and
dislocated worker allowance if it occurs due to a sale,
transfer, merger, and other business takeover or
transaction of business interests which results in or may
result in a lay-off or termination of employees of a covered
establishment by the employer.
(c) Relocations that occur due to factors such as
business failure, bankruptcy, or loss of lease or contract

are not covered by this section. [Eff: 8/15/88] (Auth: HRS
§394B-10) (Imp: HRS §394B-2)
§12-506-7
§12-506-7 Notification. (a) Any employer subject to
the provisions of chapter 394B, HRS, shall provide written
notification not less than sixty calendar days prior to the
closing, partial closing, or relocation to each affected
employee and to the director.
(b) Written notification to the affected employee
shall include:
(1) Date of proposed closing, partial closing, or
relocation; and
(2) Information that the employee, upon lay-off or
termination, may be eligible for dislocated
worker allowance, for which the employee must
receive a determination of eligibility for
unemployment compensation benefits from the
department.
(c) Written notification to the director shall
include:
(1) Name and address of the employer;
(2) Person to contact;
(3) Date of the closing, partial closing, or
relocation;
(4) Number of employees at the covered establishment;
(5) Approximate number of employees to be laid off or
terminated.
(d) Any employer who fails to provide each employee
and the director with timely written notification of a
closing, partial closing, or relocation shall be liable for
the civil penalties applicable under chapter 394B, HRS.
[Eff 8/15/88; am 8/15/02] (Auth: HRS §394B-10) (Imp:
HRS §394B-9)
§12-506-8 Dislocated worker allowance. (a) To
receive a dislocated worker allowance, an affected employee
shall:
(1) Be laid off or terminated as a result of a
closing, partial closing, or relocation;
(2) Not receive any supplemental unemployment
compensation benefits as a result of any
contractual agreement arrived at through a
collective bargaining process;
(3) Apply for and be eligible under section 383-
29(a), HRS, and not be disqualified under section
383-30, HRS, to receive payment for
§12-506-7

unemployment compensation for that
particular week under chapter 383, HRS; and
(4) File a claim to receive the dislocated worker
allowance with the employer in accordance with
procedures established by the employer.
(b) The employer shall determine the amount of
dislocated worker allowance payable to the employee. The
dislocated worker allowance payment is the difference
between the employee's average weekly wages prior to the
closing, partial closing, or relocation and the unemployment
insurance weekly benefit amount.
(c) An employee who is eligible for the dislocated
worker allowance shall receive directly from the employer
such allowance for a total of four weeks upon determination
of eligibility for each week.
(d) Upon receipt of an eligibility determination from
the employee, the employer shall promptly make payment of
the dislocated worker allowance to the employee. [Eff:
8/15/88] (Auth: HRS §394B-10) (Imp: HRS §394B-10)
§12-506-9 Petition for declaratory ruling. Any
interested person may petition the director for a
declaratory order as to the applicability of any provision
of chapter 394B, HRS, or of any rule promulgated or order
rendered thereunder, pursuant to section 91-8, HRS. In
any such proceeding, in addition to section 12-1-5, Hawaii
Administrative Rules, the director may require any other
person to file any data or memoranda on any positions taken
by an employer or employee on the petition, and may further
require the person to take part in any hearing on the
petition ordered by the director. Any other person may
request a hearing by filing a requests in writing and
stating in detail why a hearing is necessary for a fair
consideration of the petition. Orders disposing of
petitions in these cases shall have the same status as
other departmental orders. [Eff: 8/15/88] (Auth: HRS §394B-
10) (Imp: HRS §394B-10)