HB673.DOC

SECTION 1. The legislature finds that overtime and sick leave are matters that shall be excluded from the subjects of collective bargaining in public employment.

The purpose of this Act is to remove overtime and sick leave credits from the calculation of credited service for members of the employees' retirement system for public employees who have less than five years of credited service as of January 1, 2012.

SECTION 2. Section 78-23, Hawaii Revised Statutes, is amended to read as follows:

"§78-23 Leaves of absence. (a) Employees shall be eligible for vacation leave, sick leave, and other leaves of absence, with or without pay, as negotiated under chapter 89 or adjusted under chapter 89C, as applicable.

(b) When an employee is transferred from one department to another within the same jurisdiction or to another jurisdiction within the State, the employee shall be given credit for the vacation earned or accumulated in the department from which the employee transferred, and the director of finance of the State or the equivalent officers of the several jurisdictions shall make the appropriate transfer of funds to implement the employee transfer. Moneys received from any such transfer of funds by a state agency financed by the general fund of the State shall be deposited with the director of finance of the State to the credit of the general fund of the State; provided that, when an employee is transferred from one department to another within the same jurisdiction, the transfer of funds shall not be made if the employee's salary is paid from the same fund. Compensation for any period of vacation allowance shall be paid at the rate to which the employee is entitled at the time the allowance is granted.

(c) Upon discharge, an employee shall be entitled to all of the employee's accumulated vacation allowance plus the employee's current accrued vacation allowance to and including the date of discharge, notwithstanding that the current accrued vacation allowance may not have been recorded at the time. If any employee dies with accumulated or current accrued vacation earned but not taken, an amount equal to the value of the employee's pay over the period of such earned vacation, and any earned and unpaid wages, shall be paid to the person or persons who may have been designated as the beneficiary or beneficiaries by the employee during the employee's lifetime in a verified written statement filed with the comptroller or other disbursing officer who issues warrants or checks to pay the employee for the employee's services as a public employee, or, failing the designation, to the employee's estate.

(d) Whenever an employee is to be discharged, voluntarily or involuntarily, the employee, at the option of the appointing authority, may be discharged and paid forthwith, in lieu of the employee's vacation allowance, the amount of compensation to which the employee would be entitled or which the employee would be allowed during the vacation period if the employee were permitted to take the employee's vacation in the normal manner, and in such case the employee's position may be declared vacant and may be permanently filled by a new appointee before the expiration of any vacation period following the date of the discharge. For an employee hired after June 30, 1997, who is to be discharged, voluntarily or involuntarily, the amount of compensation to be paid in lieu of vacation allowance under this section shall be computed using the rate of pay and amount of accumulated and accrued vacation on the date the employee is discharged. Prompt notice upon such forms and in such manner as may be required shall be given by the department head of any action taken under this provision.

(e) Payments of vacation allowance paid pursuant to subsections (c) or (d) shall be subject to the provisions of chapter 88D.

(f) No public employee who has less than five years of credited service as of January 1, 2012, and who thereafter retires with any unused sick leave shall be entitled to additional service credit for that unused sick leave in the employees' retirement system."

SECTION 3. Section 88-21.5, Hawaii Revised Statutes, is amended to read as follows:

"§88-21.5 Compensation. (a) Unless a different meaning is plainly required by context, and except as provided in subsection (b), as used in this part, "compensation" means normal periodic payments of money for service the right to which accrues on a regular basis in proportion to the service performed; overtime, differentials, and supplementary payments; bonuses and lump sum salary supplements; and elective salary reduction contributions under sections 125, 403(b), and 457(b) of the Internal Revenue Code of 1986, as amended. Bonuses and lump sum salary supplements shall be deemed earned when payable; provided that bonuses or lump sum salary supplements in excess of one-twelfth of compensation for the twelve months prior to the month in which the bonus or lump sum salary supplement is payable, exclusive of overtime, bonuses, and lump sum salary supplements, shall be deemed earned:

(1) During the period agreed-upon by the employer and employee, but in any event over a period of not less than twelve months; or

(2) In the absence of an agreement between the employer and the employee, over the twelve months prior to the date on which the bonus or lump sum salary supplement is payable.

(b) For members who have less than five years of credited service as of January 1, 2012, "compensation" shall have the meaning ascribed to the term under subsection (a), provided that "compensation" shall not include any overtime or sick leave credits."

SECTION 4. Section 88-63, Hawaii Revised Statutes, is amended to read as follows:

"[[]§88-63[]] Credit for unused sick leave. [A] (a) Unless as provided in subsection (b), a public employee who retires or leaves government service in good standing with sixty days or more of unused sick leave shall be entitled to additional service credit in the retirement system as follows:

(1) An employee with sixty days of unused sick leave to the employee's credit shall have the employee's years of service increased by three months for the purpose of computing the employee's retirement allowance.

(2) For each additional twenty days or major fraction thereof of unused sick leave in excess of sixty days that the employee has to the employee's credit the employee shall have the employee's years of service increased by one month for the purpose of computing the employee's retirement allowance.

The allowance on service retirement of section 88-74 and the service benefit limitation therein shall not apply to retirement allowances which exceed such limitations by virtue of the application of this section in the computation of retirement allowances and no reduction in such retirement allowances shall be made on account of such limitations.

(b) This section shall not apply to members who have less than five years of credited service as of January 1, 2012."

SECTION 5. Section 88-323, Hawaii Revised Statutes, is amended to read as follows:

"[[]§88-323[]] Class H credited service. Class H credited service includes:

(1) Service by an employee rendered since becoming a class H member;

(2) Service credited under part II as a class A member or a class B member and converted to class H credited service pursuant to section 88-322(b);

(3) Service credited under part VII as a class C member and converted to class H credited service pursuant to section 88-322(a);

(4) Service in the armed forces as provided by subpart E of part II;

(5) Mandatory maternity leave as provided in part II; and

(6) Unused sick leave as provided in section 88-63; provided that any additional service credit shall not be used in determining eligibility for retirement or for any other purpose as a class H member[.]; provided further that for members who have less than five years of credited service as of January 1, 2012, unused sick leave shall not be creditable under any component of benefit calculation of this part."

SECTION 6. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	673
TWENTY-SIXTH LEGISLATURE, 2011
STATE OF HAWAII