HB 1656: 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 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 no 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  Statutory material to be repealed is bracketed and stricken.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 July 1, 2050.

Report Title:

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

Description:

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 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 no 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 July 1, 3000.

Report Title:

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

Description:

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 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 no 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 upon its approval.

Report Title:

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

Description:

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.  799-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 1656

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Finance, to which was referred H.B. No. 1656, 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 amend the amount that a disbursing officer may deduct from an employee's salary, wage, or compensation based on the employee's gross income to recover debt owed by the employee to a jurisdiction.

     Your Committee received testimony in support of this measure from the United Public Workers, AFSCME Local 646, AFL-CIO; Hawaii Government Employees Association, AFSCME Local 152, AFL-CIO; and University of Hawaii Professional Assembly.  Your Committee received comments on this measure from the Department of Accounting and General Services; Department of Budget and Fiscal Services of the City and County of Honolulu; 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. 1656, 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.  282-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 1656

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Labor, to which was referred H.B. No. 1656 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 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 Hawaiʻi State Public Library System; University of Hawaii Professional Assembly; 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 Department of Budget and Fiscal Services of the City and County of Honolulu.

     Your Committee finds that existing law permits relatively large automatic payroll deductions when recovering salary or wage overpayments, which may create financial hardship for affected employees.  Your Committee further finds that there is limited advance notice before deductions begin, reducing an employee's ability to plan for the financial impact.  Your Committee believes that limiting deductions and requiring at least thirty days' written notice before deductions provides a more reasonable and transparent repayment process that balances the State's need for recovery with employee financial stability.

     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. 1656, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1656, H.D. 1, and be referred to your Committee on Finance.

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