THE SENATE	S.B. NO.	2118
THIRTY-THIRD LEGISLATURE, 2026		S.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO INDEBTEDNESS TO THE STATE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Section 78-12, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) [Regardless of whether a contested determination of indebtedness is pending, the disbursing officer shall commence immediate recovery of the indebtedness as provided in this subsection. If the indebtedness is equal to or less than $1,000, the disbursing officer shall immediately deduct from any subsequent periodic payment normally due the employee any amount up to the total amount of indebtedness and for indebtedness greater than $1,000, the disbursing officer shall deduct:

(1) An amount agreed to by the employee and the appointing authority, but not less than $100 per pay period; or

(2) One-quarter of the salary, wages, or compensation due the employee until the indebtedness is repaid in full.]

The disbursing officer shall commence recovery of the indebtedness; provided that the disbursing officer or appointing authority provides a written statement to the employee at least thirty calendar days before the deduction. The written statement shall include the total amount owed and the amount to be deducted from any subsequent periodic payment normally due the employee.

The disbursing officer shall deduct not more than five per cent of the employee's gross income per pay period, unless the employee otherwise requests and specifies that a greater percentage or amount be deducted.

[In addition to paragraph (1), an] An employee and the appointing authority may agree to offset any remaining amount of indebtedness by applying the current value of appropriate leave or compensatory time credits posted in the employee's respective accounts as balances that would otherwise be payable in cash upon separation from service; provided that credits shall not be applied to any extent that would require a refund of any moneys already deducted or repaid or that would require the payment of any moneys to the employee equivalent to a cashing out of leave or compensatory time credits."

SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 3. This Act shall take effect on January 1, 2077.

Report Title:

Public Employers; Public Employees; Indebtedness; Salary or Wage Overpayment; Overpayment Payroll Transactions; Deductions for Recovery; Notice

Description:

Repeals the requirement that the disbursing officer immediately begin recovery of the indebtedness regardless of a pending contested case. Amends the maximum amount that a disbursing officer may deduct from an employee's salary, wage, or compensation as recovery of an employee's indebtedness to 5% of the employee's gross income per pay period, with exceptions. Requires a written statement to be provided to the employee at least thirty calendar days before the deduction. Effective 1/1/2077. (SD1)

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