Yes, there are official regulations governing riding in the back of a pick up. How to be seated. Which way to face, that sort of thing. But riding this way is legal here.
Last year someone on the county council was pressured by some mainland newcomer to make riding in truck beds illegal. But wisely the county brought it to public discussion and rejected the idea. Why allow it? Because Hawaii Island has a lot of poor people who have large families. A pickup is often their ONLY vehicle, which is necessary for them to have for farming or their work. So it has to accommodate the whole family, too. If riding this way were made illegal, lots of people wouldn't get to work, get to doctor appointments, go shopping, go visiting, go a family outing, etc. It's a traditional means of transportation on this island.
If seeing people riding like this drives you crazy, then I'd suggest you may be happier not coming to Big Island.