HB 164: Indebtedness; Salary or Wage Overpayment; Overpayment Payroll Transactions; Deductions for Recovery; Notice

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 subsections (e) and (f) to read as follows:

     "(e)  If the indebtedness has occurred as a result of salary or wage overpayment, the disbursing officer shall determine the amount of indebtedness and notify the employee in writing of the indebtedness[;] within sixty days of making the determination; provided that, to be an actionable cause of action, the determination and notice to the employee shall be made within two years from the date of the salary or wage overpayment, and not after.  If the employee contests the disbursing officer's determination of indebtedness, the employee may request a hearing pursuant to chapter 91.

     (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 deduct:

     (1)  For an employee earning a gross income of less than $2,000 per pay period:

          (A)  An amount agreed to by the employee and the appointing authority, but no less than $50 per pay period; or

          (B)  Five per cent of the salary, wage, or compensation due to the employee until the indebtedness is repaid in full;

     (2)  For an employee earning a gross income of $2,000 to $3,000 per pay period:

          (A)  An amount agreed to by the employee and the appointing authority, but no less than $75 per pay period; or

          (B)  Fifteen per cent of the salary, wage, or compensation due to the employee until the indebtedness is repaid in full; and

     (3)  For an employee earning a gross income of more than $3,000 per pay period:

          (A)  An amount agreed to by the employee and the appointing authority, but no less than $100 per pay period; or

          (B)  Twenty-five per cent of the salary, wage, or compensation due to the employee until the indebtedness is repaid in full.

In addition to [paragraph (1),] paragraphs (1) through (3), 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 July 1, 2050.

Report Title:

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

Description:

Requires disbursing officers to notify employees within sixty days of making a determination that an indebtedness has occurred to the government resulting from salary or wage overpayment.  Amends the amount that a disbursing officer may deduct from an employee's salary, wage, or compensation based on the employee's gross income.  Effective 7/1/2050.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

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 subsections (e) and (f) to read as follows:

     "(e)  If the indebtedness has occurred as a result of salary or wage overpayment, the disbursing officer shall determine the amount of indebtedness and notify the employee in writing of the indebtedness[;] within sixty days of making the determination; provided that, to be an actionable cause of action, the determination and notice to the employee shall be made within two years from the date of the salary or wage overpayment, and not after.  If the employee contests the disbursing officer's determination of indebtedness, the employee may request a hearing pursuant to chapter 91.

     (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 deduct:

     (1)  For an employee earning a gross income of less than $2,000 per pay period:

          (A)  An amount agreed to by the employee and the appointing authority, but no less than $50 per pay period; or

          (B)  Five per cent of the salary, wage, or compensation due to the employee until the indebtedness is repaid in full;

     (2)  For an employee earning a gross income of $2,000 to $3,000 per pay period:

          (A)  An amount agreed to by the employee and the appointing authority, but no less than $75 per pay period; or

          (B)  Fifteen per cent of the salary, wage, or compensation due to the employee until the indebtedness is repaid in full; and

     (3)  For an employee earning a gross income of more than $3,000 per pay period:

          (A)  An amount agreed to by the employee and the appointing authority, but no less than $100 per pay period; or

          (B)  Five per cent of the salary, wage, or compensation due to the employee until the indebtedness is repaid in full.

In addition to [paragraph (1),] paragraphs (1) through (3), 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 July 1, 3000.

Report Title:

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

Description:

Requires disbursing officers to notify employees within sixty days of making a determination that an indebtedness has occurred to the government resulting from salary or wage overpayment.  Amends the amount that a disbursing officer may deduct from an employee's salary, wage, or compensation based on the employee's gross income.  Effective 7/1/3000.  (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

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 subsections (e) and (f) to read as follows:

     "(e)  If the indebtedness has occurred as a result of salary or wage overpayment, the disbursing officer shall determine the amount of indebtedness and notify the employee in writing of the indebtedness[;] within sixty days of making the determination; provided that, to be an actionable cause of action, the determination and notice to the employee shall be made within two years from the date of the salary or wage overpayment, and not after.  If the employee contests the disbursing officer's determination of indebtedness, the employee may request a hearing pursuant to chapter 91.

     (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 deduct:

     (1)  For an employee earning a gross income of less than $2,000 per pay period:

          (A)  An amount agreed to by the employee and the appointing authority, but not less than $50 per pay period; or

          (B)  Five per cent of the salary, wage, or compensation due to the employee until the indebtedness is repaid in full;

     (2)  For an employee earning a gross income of $2,000 to $3,000 per pay period:

          (A)  An amount agreed to by the employee and the appointing authority, but not less than $75 per pay period; or

          (B)  Fifteen per cent of the salary, wage, or compensation due to the employee until the indebtedness is repaid in full; and

     (3)  For an employee earning a gross income of more than $3,000 per pay period:

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

          (B)  Five per cent of the salary, wage, or compensation due to the employee until the indebtedness is repaid in full.

In addition to [paragraph (1),] paragraphs (1) through (3), 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 upon its approval.

Report Title:

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

Description:

Requires disbursing officers to notify employees within sixty days of making a determination that an indebtedness has occurred  to the government resulting from salary or wage overpayment.  Amends the amount that a disbursing officer may deduct from an employee's salary, wage, or compensation based on the employee's gross income.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO. 1157

Honolulu, Hawaii

RE:    H.B. No. 164

       H.D. 1

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committee on Labor and Technology, to which was referred H.B. No. 164, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO INDEBTEDNESS TO THE STATE,"

begs leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Require disbursing officers to notify employees within sixty days of making a determination that an indebtedness has occurred to the government resulting from salary or wage overpayment; and

     (2)  Amend the amount that a disbursing officer may deduct from an employee's salary, wage, or compensation based on the employee's gross income.

     Your Committee received testimony in support of this measure from the United Public Workers, AFSCME Local 646, AFL-CIO; and Hawaii Government Employees Association, AFSCME Local 152, AFL‑CIO.

     Your Committee received comments on this measure from the Department of Accounting and General Services and Hawaiʻi State Public Library System.

     Your Committee finds that repaying a debt to the government caused by overpayment of salary or wage often unduly burdens public employees for a mistake that was not their own.  Existing law dictates the minimum repayment amount for an indebtedness greater than $1,000 at $100 per pay period or twenty-five percent of an employee's salary, with no consideration for how much the employee earns.  This repayment amount is harmful for low-earning employees, particularly those who make less than $3,000 per pay period.  This measure offers financial flexibility to public employees while allowing the government to collect the debt in the least destructive way by establishing a tiered system for repayment based on an employee's gross income.

     Your Committee has amended this measure by:

     (1)  Increasing the minimum repayment percentage for an employee earning more than $3,000 in gross income per pay period from five percent to twenty-five percent, to align with the existing requirement for employees with indebtedness greater than $1,000; and

     (2)  Inserting an effective date of July 1, 2050, to encourage further discussion.

     As affirmed by the record of votes of the members of your Committee on Labor and Technology that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 164, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 164, H.D. 1, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Labor and Technology,

STAND. COM. REP. NO.  910

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 164

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Finance, to which was referred H.B. No. 164, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO INDEBTEDNESS TO THE STATE,"

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Require disbursing officers to notify employees within sixty days of determining that an indebtedness has occurred as a result of salary or wage overpayment; and

     (2)  Change the amount that a disbursing officer may deduct from an employee's salary, wage, or compensation based on the employee's gross income.

     Your Committee received testimony in support of this measure from the United Public Workers, AFSCME Local 646, AFL-CIO; and Hawaii Government Employees Association, AFSCME Local 152, AFL-CIO.  Your Committee received comments on this measure from the Department of Accounting and General Services and Hawaiʻi State Public Library System.

     As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 164, H.D. 1, and recommends that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committee on Finance,

STAND. COM. REP. NO.  478

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 164

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Labor, to which was referred H.B. No. 164 entitled:

"A BILL FOR AN ACT RELATING TO INDEBTEDNESS TO THE STATE,"

begs leave to report as follows:

     The purpose of this measure is to:

     (1)  Require disbursing officers to notify employees within sixty days of determining that an indebtedness has occurred as a result of salary or wage overpayment; and

     (2)  Change the amount that a disbursing officer may deduct from an employee's salary, wage, or compensation based on the employee's gross income.

     Your Committee received testimony in support for this measure from the Hawaii Government Employees Association, AFSCME Local 152, AFL-CIO; and United Public Workers, AFSCME Local 646, AFL-CIO.  Your Committee received comments on this measure from the Department of Accounting and General Services.

     Your Committee finds that the State and counties will mistakenly overpay an employee, and seek to correct this error by collecting repayment of either $100 per pay period, or 25 percent of the employee's salary, wage, or compensation until the indebtedness is paid in full, without regard to the employee's earnings.  Your Committee believes that this measure provides a repayment plan that is manageable for low-income employees to repay the State or a county while lessening the financial strain.

     Your Committee has amended this measure by:

     (1)  Changing the effective date to July 1, 3000, to encourage further discussion; and

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 164, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 164, H.D. 1, and be referred to your Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Labor,