A new law meant to create jobs for local construction workers may impede industry innovation and increase the risk of discrimination, according to the president of the Hawaii Developers Council.

The measure, approved over Gov. Linda Lingle's override, mandates that 80 percent of all workers hired for state and county public works projects reside in Hawaii, or intend to reside here, at the time they are hired.

Lance Wilhelm, 45, senior vice president of Kiewit Building Group Inc., was among the many industry executives who opposed the measure as it made its way through the Legislature.

The Kamehameha Schools and University of Hawaii alum said the law will drive up construction costs without adding many jobs.

Wilhelm and his wife, Marcy, have two daughters: one is about to graduate from New York University and another attends Island Pacific Academy, a private school in Kapolei that Kiewit built.

QUESTION: What are your biggest misgivings about this law?

ANSWER: While I think it's admirable that our legislators are trying to do things to make sure our local community has work — all of us at Kiewit, the Hawaii Developers Council, the whole industry want people working — I believe that the measure itself is premature. The terms are unclear and it creates a lot of obstacles.

Q: How will they enforce this?

A: The law describes penalties, some that are really severe, but the enforcement is unclear. Who would impose these penalties? How would it be done? I don't think the measure describes a specific framework; rather it just lists a wide range of things that could happen to a contractor. Things like withholding payment, or even barring the contractor from future work, which is a really serious action, yet there's no clearly defined process for dealing with that.

Q: Will they refine the law before enforcing it?

A: I haven't heard anything like that. I think the impact will be on the community immediately.

Q: How common is it to hire outside workers?

A: In my experience, it is fairly uncommon. In general, most contractors will use local labor for the vast majority of the work on the contracts, especially public works projects, which already have minimum wage standards. It's not like you can just go out and hire somebody for less on a public works project.

Q: Does this law apply only to state and county funding? What about projects that have a mix of local, state and federal funding?

A: That's an area that also lacks clarity. A large number of projects with the state Department of Transportation, for example, also utilize federal funding, and it's not clear that the law can be applied in that case. It's also not clear whether this will affect bids already awarded (for work which has not begun), bids submitted but awards not yet made, and then there's RFPs (requests for proposal) — bids that are being put together now. It's not clear whether projects in any of those stages would also be subject to this law.

Q: So it's fair to say this law is causing concern in the industry?

A: The general contractors did come out opposed to the measure, fairly strongly, before it passed. I think they're disappointed that it came out this way. One of the concerns from the contracting community is that in order to comply with this law, which requires certification not only of the contractor but of all the subcontractors, we're going to have to add people who do nothing but paperwork. They'll just check payroll records all day, to make sure workers are residents or intend to be. That's a lot of bureaucratic effort for little value to the public.

Q: What's the standard for that — the employee's intent?

A: I don't know. That's what I'm talking about. It's left to the contractor to certify these workers, and comply with this law, and to face really serious penalties if they don't, but the terms and definitions are not clear.

Q: It seems like the potential for discrimination is very high. If somebody's going to be checking job sites, couldn't they just single out all the white guys?

A: There are risks of those things happening. I don't believe that was the intention of the legislators who worked on this. I really do think that they are just wanting to put local people to work. But the effect is that if you are not “;local,”; however you define that, then you subject that person to additional scrutiny. Any law that requires employers to treat one class of employees differently than another class of employees carries the risk of discrimination, even if it's not intended.

Q: So who is local, under this law?

A: That's the major question: What is the screen? An address that you put on your employment form might be adequate. As we think about what it takes to comply with this law, that's what we're asking ourselves: How would an auditor come back after the fact and say, “;This person is not a resident.”; I'm not going to be in a position to physically verify the address of everyone we hire on. I've never had to do that in the past. I'm not sure how we are going to gather the information, but given the severity of the potential penalty, we'll have to figure it out. Because risking disbarment is not an option.

Q: Have you quantified the impact of this law, in terms of dollars per worker per hour?

A: No, I don't have a specific number. But I think we all believe that this extra effort is going to cost the contractor something, and that something is going to be passed on to the client, including the general public. But at this point there is still so much uncertainty that it's difficult to know what it's going to require (to comply with the law) and how much it's going to cost.

Q: Any other concerns?

A: Well, one thing that I'm personally concerned about is that this law is going to impede innovation in Hawaii. Whenever there are new technologies, techniques or products in the construction industry, usually they get a foothold in the mainland markets first, because there's just more work there. Then those techniques and products find their way to Hawaii. I think this measure may inhibit that leading edge because the only people who are trained to do the work are from places other than here. For example, they're factory-trained, they come in, do the work and train the local work force, and then the local work force is ready to do the work themselves. From a Kiewit perspective, we don't bring people from the mainland unless we don't have people here in sufficient numbers who are qualified to do the work. So what happens when you can't bring those guys in? You lose that innovation.

Q: Can you get exemptions?

A: I don't know of any under the law.

Q: When I was looking up information for this article, I ran across a story about you from 2006. Then the problem was a worker shortage; it was virtually full employment. It struck me that construction is a very cyclical industry, but this law is permanent.

A: We have had conversations on that very subject. Back then, you just flat-out couldn't get enough workers, so sometimes that meant importing them. This law doesn't have the flexibility to deal with the cycles of the market. I think that 100 percent run-up period in the mid-2000s was fairly unique, but the down cycle won't be permanent, either.