§78-12 - Salary withheld for indebtedness to the government.

§78-12  Salary withheld for indebtedness to
the government.  (a)  In case any officer, agent, employee, or other person
in the service of a jurisdiction is indebted to a jurisdiction and the
indebtedness has been determined by a hearing pursuant to chapter 91, upon
demand of the officer charged with the duty of collecting the indebtedness, the
disbursing officer charged with the duty of paying the indebted officer, agent,
employee, or other person, after notice to the indebted person, shall withhold
one-quarter of the salary, wages, or compensation due the indebted person and
pay the same, from time to time as the same shall become due, to the officer
charged with the duty of collecting the indebtedness, until the full amount of
the indebtedness, together with penalties and interest thereon, is paid.

(b)  If the indebtedness has arisen or been
incurred by reason of the indebted officer, agent, employee, or other person
having embezzled, stolen, or otherwise unlawfully acquired any moneys or other
property of a jurisdiction, the whole amount of the salary, wages, or
compensation, or so much thereof as may be required to pay the indebtedness in
full, shall be withheld and paid over to the officer charged with the duty of
collecting the indebtedness.

(c)  The officer, agent, employee, or other
person in the service of the jurisdiction, alleged to be indebted to a
jurisdiction, may waive the right to a hearing to determine the indebtedness
and instead assign by contract to the officer charged with the duty of collecting
debts:

(1)  The priority right to payment of the total amount
of the alleged indebtedness; and

(2)  The right of the officer to deduct from each and
every periodic payment normally due the assignor an amount equal to the maximum
legally permissible amount deductible under garnishment law until the total
amount owing is paid in full.

For purposes of this section, a person shall be
deemed to waive the hearing if the person fails to request a hearing within
fifteen days from the date the person was notified of the indebtedness and the
opportunity to request a hearing.

(d)  The operation of all garnishment process
served upon the disbursing officer shall be stayed until the indebtedness has
been fully paid.

(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;
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.

In addition to paragraph (1), 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.

(g)  If the determination of indebtedness was
contested and is subsequently found to be incorrect:

(1)  Any moneys repaid or deducted under subsection
(e) for any indebtedness in excess of the correct amount shall be promptly
refunded with interest as specified by section 103-10; or

(2)  All leave or compensatory time credits applied to
offset any indebtedness in excess of the correct amount shall be re-credited to
the employee's respective leave or compensatory time accounts and shall not
result in a cash payment.

(h)  If an employee is entitled to contest the
determination of indebtedness under a collective bargaining grievance
procedure, that procedure shall be used in lieu of a hearing under subsection
(e).  A collective bargaining agreement may include overpayment recovery
procedures; provided that the parties do not agree on any provision that would
be inconsistent with subsections (f) and (g).

(i)  Where an officer, agent, employee, or
other person in the service of a jurisdiction is compensated in an amount
greater than or less than that to which the person is entitled, the
determination of the officer's, agent's, employee's, or other person's average
final compensation for the period of indebtedness shall be calculated in
accordance with section 88-81; provided that the compensation used to calculate
the average final compensation shall be the compensation the officer, agent,
employee, or other person should have been paid during that period. [L 1911, c
120, §1; RL 1925, §163; am L 1933, c 191, §1; RL 1935, §100; am L 1937, c 14,
§2; RL 1945, §453; RL 1955, §5-14; am L 1957, c 152, §1; HRS §78-12; am L 1975,
c 25, §1; am L 1996, c 231, §4; am L 2000, c 253, §77; am L 2001, c 55, §35 and
c 123, §§12, 13; am L 2009, c 190, §1]

Attorney General Opinions

  Withholding of salary for indebtedness to federal government
not authorized.  Att. Gen. Op. 71-11.

Case Notes

  This scheme of collecting indebtedness, as applied to one
determined after hearing to be liable on parking violations at the University
of Hawaii, is not unconstitutional.  379 F. Supp. 65.

  As a rule, salary follows title, irrespective of amount of
service performed.  8 H. 19.