SB 2118: Public Employers; Public Employees; Indebtedness; Salary or Wage Overpayment; Overpayment Payroll Transactions; Deductions for Recovery; Notice
- Session Year: 2025-2026
- House: Senate
- Latest Version Date: 2026-02-05
Current Status:
Failed
(2026-02-06: Report adopted; Passed Second Reading, as amended (SD 1) and referred to JDC/WAM.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Final Decking
Enacted
What does this bill do?
This bill limits payroll deductions to recover money owed by public employees to a maximum of 5% of an employee's gross pay per pay period (unless the employee agrees to a higher amount) and requires a written notice at least 30 days before any deduction. It removes the rule that payroll must begin immediate recovery while a dispute is pending. It also allows an employee and their agency to agree to apply leave or compensatory time balances to pay off remaining debt.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
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)
Amends the amount that a disbursing officer may deduct from an employee's salary, wage, or compensation based on the employee's gross income.
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THE SENATE |
S.B. NO. |
2118 |
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THIRTY-THIRD LEGISLATURE, 2026 |
S.D. 1 |
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STATE OF HAWAII |
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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)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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THE SENATE |
S.B. NO. |
2118 |
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THIRTY-THIRD LEGISLATURE, 2026 |
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STATE OF HAWAII |
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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.
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INTRODUCED BY: |
_____________________________ |
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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.
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Date
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Status
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| Feb 6, 2026 | Report adopted; Passed Second Reading, as amended (SD 1) and referred to JDC/WAM. |
| Feb 6, 2026 | Reported from LBT (Stand. Com. Rep. No. 2120) with recommendation of passage on Second Reading, as amended (SD 1) and referral to JDC/WAM. |
| Jan 28, 2026 | The committee(s) on LBT recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in LBT were as follows: 5 Aye(s): Senator(s) Elefante, Lamosao, Ihara, Moriwaki, Fevella; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none. |
| Jan 23, 2026 | The committee(s) on LBT has scheduled a public hearing on 01-28-26 3:00PM; Conference Room 225 & Videoconference. |
| Jan 22, 2026 | Referred to LBT, JDC/WAM. |
| Jan 21, 2026 | Introduced and passed First Reading. |
| Jan 14, 2026 | Pending Introduction. |
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Date
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Description
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Location
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Votes
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| Jan 28, 2026 | The committee(s) on LBT recommend(s) that the measure be PASSED, WITH AMENDMENTS | Senate Standing Committee on Labor and Technology |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
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Organization
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Position
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Date
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| Hawaii Government Employees Association, AFSCME Local 152, AFL-CIO | ** Support | |
| Libertarian Party of Hawaii | ** Against | |
| United Public Workers, AFSCME Local 646, AFL-CIO | ** Support | |
| University of Hawaii Professional Assembly | ** Support |
STAND. COM. REP. NO. 2120
Honolulu, Hawaii
RE: S.B. No. 2118
S.D. 1
Honorable Ronald D. Kouchi
President of the Senate
Thirty-Third State Legislature
Regular Session of 2026
State of Hawaii
Sir:
Your Committee on Labor and Technology, to which was referred S.B. No. 2118 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 amend the process by which a public employer may recover an employee's indebtedness, including salary or wage overpayment, by:
(1) Repealing the requirement that the disbursing officer immediately begin recovery of the indebtedness regardless of a pending contested case;
(2) Amending 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 five percent of the employee's gross income per pay period, with exceptions; and
(3) Requiring a written statement to be provided to the employee at least thirty calendar days before the deduction.
Your Committee received testimony in support of this measure from the University of Hawaii Professional Assembly; Hawaii Government Employees Association, AFSCME Local 152, AFL-CIO; and United Public Workers, AFSCME Local 646, AFL-CIO.
Your Committee received testimony in opposition to this measure from the Libertarian Party of Hawaii.
Your Committee received comments on this measure from the Department of Accounting and General Services.
Your Committee finds that due to the complexity of administrative payrolls, public employers may err in overpaying an employee, causing the employee to be indebted to their employer through no fault of their own. Your Committee further finds that the current process to recover the indebtedness does not require a notification period and allows the deduction of up to a quarter of an employee's gross compensation, subjecting employees to financial hardship. This measure establishes necessary financial safeguards to facilitate public employers' recovery of the indebtedness without unfairly overburdening employees.
Your Committee has amended this measure by:
(1) Inserting an effective date of January 1, 2077, to encourage further discussion; and
(2) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.
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 S.B. No. 2118, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2118, S.D. 1, and be referred to your Committees on Judiciary and Ways and Means.
Respectfully submitted on behalf of the members of the Committee on Labor and Technology,
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________________________________ BRANDON J.C. ELEFANTE, Chair |
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Date
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Testimony PDF
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| Jan 28, 2026 | SB2118_TESTIMONY_LBT_01-28-26_.PDF |
Discussed in Hearing
2MIN
Senate Standing Committee on Labor and Technology
Bill Author
Bill Co-Author(s):
