SB211 SD1

SECTION 1. The purpose of this Act is to ensure that employment, work, and pay eligible for the purpose of calculating retirement benefits includes retroactive reinstatement, retroactive recission of suspension, retroactive pay differential, and back pay that are restored to an employee as part of an administrative, arbitral, or judicial proceeding, subject to certification that the retroactive reinstatement, retroactive recission of suspension, retroactive pay differential, and back pay that are restored otherwise satisfy the requirements of chapter 88, Hawaii Revised Statutes, including:

(1) The definition of "service" in section 88-21, Hawaii Revised Statutes;

(2) The calculation of credit for a year of service in section 88-50, Hawaii Revised Statutes;

(3) The definition of "compensation" in section 88-21.5, Hawaii Revised Statutes, to prevent significant non-base pay increases;

(4) Compliance with the employer reporting requirements of section 88-103.7, Hawaii Revised Statutes;

(5) Payment of the actuarial value of employee contributions; and

(6) Payment of the actuarial value of employer contributions.

SECTION 2. Chapter 88, Hawaii Revised Statutes, is amended by adding a new section to part II, subpart B, to be appropriately designated and to read as follows:

"§88- Retroactive reinstatement; retroactive recission of suspension; retroactive pay differential; back pay. (a) Retroactive reinstatement, retroactive recission of suspension, retroactive pay differential, or back pay awarded to an employee pursuant to the final adjudication of a court of competent jurisdiction, as defined in section 88-21, shall be considered service under section 88-21, compensation under section 88-21.5, or both, upon certification by the system; provided that:

(1) For:

(A) Service, the employee appeals an involuntary termination or unpaid suspension, is retroactively reinstated to employment or has the suspension rescinded in whole or in part, and is awarded back pay, pursuant to the final adjudication of a court of competent jurisdiction; provided further that:

(i) The days of retroactive employment for which back pay is awarded pursuant to the final adjudication of a court of competent jurisdiction and paid by the State or county shall be considered service;

(ii) The days of service shall not exceed the number of days that the employee would have provided service if the individual had not been suspended or terminated; and

(iii) The service shall be credited to the extent that it meets the requirements for credit as provided in this chapter; or

(B) Compensation, the employee challenges compensation and is subsequently awarded a retroactive pay or back pay differential pursuant to the final adjudication of a court of competent jurisdiction; provided further that:

(i) The amount of a retroactive pay differential awarded pursuant to the final adjudication of a court of competent jurisdiction and paid by the State or county shall be considered a differential, not to exceed the amount and type of differential available to other similarly situated employees, available by pay schedule, or comparable to the employee's own history of pay differential;

(ii) The amount of back pay awarded pursuant to the final adjudication of a court of competent jurisdiction and paid by the State or county shall be considered pay, not to exceed the amount and type of pay under normal salary adjustments available to other similarly situated employees, available by pay schedule, or comparable to the employee's own history of compensation, not to exceed the pay attributable to the number of workdays between the date that the employees absence began until the employee's date of reinstatement, and not to exceed the pay that the employee would have received had the employee not been suspended or terminated; and

(iii) Differential or pay shall be considered compensation to the extent the type of differential or pay meets the requirements of section 88-21.5;

(2) The requirements of section 88-103.7 are met with respect to any retroactive reinstatement, retroactive recission of suspension, retroactive pay differential, or back pay awarded pursuant to the final adjudication of a court of competent jurisdiction and paid by the State and county;

(3) The employee makes a lump sum payment to the system in the amount of the actuarial present value, as determined by the system, of contributions that the employee would have contributed had the employee's employment not been suspended or terminated, and compound interest thereon at the assumed rate of return; provided further that service shall be credited at no cost for Class C service;

(4) The employer makes a lump sum payment to the system in the amount of the actuarial present value, as determined by the system, of contributions that the employer would have contributed pursuant to sections 88-123 through 88-126 had the employee's employment not been suspended or terminated, along with compound interest thereon at the assumed rate of return; and

(5) If the employee was terminated, the employee repays:

(A) The actuarial present value, as determined by the system, of any amount in employee contributions that were refunded to the employee; and

(B) The actuarial present value, as determined by the system, of any service or disability allowance that was paid to the employee, at the time of the employee's termination."

SECTION 3. Section 88-21, Hawaii Revised Statutes, is amended as follows:

1. By adding a new definition to be appropriately inserted and to read:

""Final adjudication of a court of competent jurisdiction" means:

(1) The final decision of a court, an administrative proceeding, or an arbitration proceeding from which no appeal may be filed or which no appeal has been filed within the time allowed;

(2) A stipulated judgment

(3) A court-approved settlement;

(4) A settlement adopted by court order or referenced in an order of dismissal;

(5) A third-party arbitrator decision from which no appeal may be filed or from which no appeal has been filed within the time allowed; or

(6) Other final resolution of an appeal or challenge from which no appeal may be filed or from which no appeal has been filed within the time allowed."

2. By amending the definition of "service" to read:

""Service": service as an employee paid by the State or county, and also: [~~service~~]

(1) Service during the period of a leave of absence or exchange if the individual is paid by the State or county during the period of the leave of absence or exchange; [~~and service~~]

(2) Service during the period of an unpaid leave of absence or exchange if the individual is engaged in the performance of a governmental function or if the unpaid leave of absence is an approved leave of absence for professional improvement; provided that, for the period of the leave of absence or exchange without pay, the individual makes the same contribution to the system as the individual would have made if the individual had not been on the leave of absence[.]; and

(3) Service pursuant to section 88- .

Cafeteria managers and cafeteria workers shall be considered as paid by the State, regardless of the source of funds from which they are paid."

SECTION 4. Section 88-21.5, Hawaii Revised Statutes, is amended to read as follows:

"§88‑21.5 Compensation. (a) For a member who became a member before July 1, 2012[~~, unless~~]:

(1) Unless a different meaning is plainly required by context, "compensation" as used in this part[~~, "compensation"~~] means:

[~~(1)~~] (A) Normal periodic payments of money for service the right to which accrues on a regular basis in proportion to the service performed;

[~~(2)~~] (B) Overtime, differentials, and supplementary payments;

[~~(3)~~] (C) Bonuses and lump sum salary supplements; [~~and~~]

[~~(4)~~] (D) Elective salary reduction contributions under sections 125, 403(b), and 457(b) of the Internal Revenue Code of 1986, as amended[.]; and

(E) Back pay or retroactive pay differentials of those payments authorized in subparagraphs (A) through (D), and certified pursuant to section 88- ; and

(2) 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)~~] (A) 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)~~] (B) 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 a member who becomes a member after June 30, 2012, unless a different meaning is plainly required by context, "compensation" as used in this part:

(1) Means:

(A) The normal periodic payments of money for service, the right to which accrues on an hourly, daily, monthly, or annual basis;

(B) Shortage differentials;

(C) Elective salary reduction contributions under sections 125, 403(b), and 457(b) of the Internal Revenue Code of 1986, as amended; [~~and~~]

(D) Twelve-month differentials for employees of the department of education; and

(E) Back pay or retroactive pay differentials of those payments authorized in subparagraphs (A) through (D), and certified as compensation pursuant to section 88- ; and

(2) Shall not include any other additional or extra payments to an employee or officer, including overtime, supplementary payments, bonuses, lump sum salary supplements, allowances, or differentials, including differentials for stand-by duty, temporary unusual work hazards, compression differentials, or temporary differentials, except for those expressly authorized pursuant to [~~subsection (b)~~] subparagraphs (1)(B)[~~, (b)(1)(C), and (b)(1)(D).~~]through (1)(E)."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on January 1, 2050.

THE SENATE	S.B. NO.	211
THIRTY-SECOND LEGISLATURE, 2023		S.D. 1
STATE OF HAWAII