Report Title:

Special Pay Plan

Description:

Requires compensation for accrued vacation to be paid out to a state employee through a contribution to a qualified retirement account under section 401(a) of the Internal Revenue Code.

HOUSE OF REPRESENTATIVES

H.B. NO.

592

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to leaves of absence.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The purpose of this Act is to implement a special pay plan approved by the Internal Revenue Service for all eligible state and county employees that will enhance existing special pay benefits. The special pay plan is a qualified retirement plan under section 401(a) of the Internal Revenue Code that reduces the federal tax burden on special compensation payments which, if paid directly to an employee, would be taxable as compensation income.

SECTION 2. Section 78-23, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) Whenever an employee is to be discharged, voluntarily or involuntarily, the employee, at the option of the appointing authority, [may] shall 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[,]. The employee shall be paid through a contribution to a qualified retirement plan under section 401(a) of the Internal Revenue Code that shall be considered supplemental compensation for each full day of accumulated vacation leave credited on the effective date of separation from service, and [in such case] the employee's position may then 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."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:

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