Hiring Employees in Hawaii

Classifying Your Workers Correctly

Your company must decide whether each hire in Hawaii is an employee or an independent contractor using federal IRS common‑law tests and state guidance. You should focus on behavioral control, financial control, and the overall relationship, including whether you set hours, provide tools, or offer benefits. Hawaii follows federal rules but the Department of Labor and Industrial Relations (DLIR) can audit you if classifications look inconsistent.

If you misclassify workers, you may owe back wages, unpaid overtime, Hawaii General Excise Tax impacts, plus federal and state payroll taxes and penalties. You should document why you treated someone as a contractor and review roles regularly as responsibilities change. For a deeper overview of risks and red flags, you can review Playroll’s guide at https://www.playroll.com/blog/employee-misclassification-guide.

Verify Employee Work Eligibility

For every employee you hire in Hawaii, you must complete federal Form I‑9 within 3 business days of the start date to verify identity and work authorization. You must physically or remotely inspect acceptable documents from List A, or a combination of List B and List C, and keep I‑9s separate from general personnel files. Hawaii does not currently mandate E‑Verify for most private employers, but you may choose to use it voluntarily if it fits your compliance strategy.

You must retain each I‑9 for at least 3 years after the hire date or 1 year after termination, whichever is later. Your company should set a calendar reminder system to track these retention deadlines and ensure that only trained staff access I‑9 records to protect employee privacy.

Create an Employee Onboarding Process

When onboarding employees in Hawaii, you should issue a clear written offer letter outlining pay rate, pay schedule, exempt or nonexempt status, and key benefits. On or before day one, collect federal Form W‑4, Hawaii Form HW‑4 for state withholding, direct deposit details if the employee opts in, and signed acknowledgments for your handbook and key policies. You must also provide any required state notices, such as workers’ compensation information and disability insurance coverage details.

Your company should standardize onboarding checklists so every Hawaii hire receives the same compliant documentation and training. As you plan headcount, use Playroll’s tools to understand the full cost of hiring in Hawaii – including wages, taxes, and mandatory benefits – before you extend offers.

Pay Frequency & Methods

In Hawaii, you must pay employees at least twice per month, with no more than 15 days between paydays, unless you obtain state approval for a different schedule. If an employee is terminated, you must pay all final wages, including earned vacation if your policy treats it as wages, no later than the next regular payday or within 7 days, whichever is sooner; employees who resign must be paid by the next regular payday. Failure to pay on time can lead to DLIR wage claims, liquidated damages, and civil penalties, so you should lock in a predictable payroll calendar.

Payment Methods (How You Can Pay)

You can choose from several payment methods in Hawaii, but you must always ensure employees receive full wages on time and a clear wage statement each pay period.

• Payroll Check: You may pay by check as long as it is payable at full face value in cash at a bank without fees to your employee.
• Cash: You can pay wages in cash, but you must provide a written wage statement showing hours, rates, deductions, and net pay each pay period.
• Direct Deposit (EFT): You may use direct deposit only if the employee voluntarily consents and can choose the financial institution receiving the funds.
• Paycards: You can use paycards if employees have fee‑free access to their full wages, clear disclosures, and at least one free withdrawal per pay period.
• Outsourced Payroll: You may outsource payroll to a provider, but your company remains responsible for compliance with Hawaii wage, timing, and recordkeeping rules.

When you hire in Hawaii, you must handle federal payroll taxes plus several state‑level contributions. You will need to register with the Hawaii Department of Taxation (DOTAX) and the DLIR before running payroll so you can withhold and remit correctly.

Employer Tax Contributions

As an employer, you are responsible for state unemployment insurance, temporary disability insurance, and potentially other assessments in addition to federal FICA and FUTA. You must register for a Hawaii withholding tax ID and an unemployment insurance account before your first payroll and file returns on the schedules assigned by the agencies.

Employee Payroll Tax Contributions

Your company must withhold federal income tax, Hawaii state income tax, and the employee share of FICA from each paycheck. You may also withhold a portion of TDI premiums and other voluntary deductions, but only as allowed by law and with proper authorization.

Minimum Wage in Hawaii

As of January 1, 2024, Hawaii’s minimum wage is 14 dollars per hour for most nonexempt employees, with scheduled increases in future years under state law. You must also comply with any higher local minimums if adopted and ensure tipped employees still earn at least the full minimum wage when tips are included and tip credits are used correctly.

Working Hours in Hawaii

Hawaii generally follows federal Fair Labor Standards Act principles for hours worked, requiring you to pay for all hours an employee is suffered or permitted to work. You should track actual time worked, including certain travel, training, and on‑call time, and provide at least one 24‑hour rest period in every consecutive 7‑day period for many covered employees in specific industries.

Overtime in Hawaii

In Hawaii, nonexempt employees must receive overtime pay at 1 point 5 times their regular rate for all hours worked over 40 in a workweek, with some additional protections for certain industries such as construction and retail. You must accurately calculate the regular rate by including nondiscretionary bonuses and differentials, and keep detailed time records for at least 6 years under state law.

Hawaii has one of the most regulated benefits landscapes in the United States, including the Prepaid Health Care Act that requires most employers to provide health coverage to eligible employees working 20 or more hours per week. If you average 50 or more full‑time employees, you must also comply with federal ACA employer‑mandate rules, so your company should coordinate plan design and reporting carefully to stay competitive and compliant.

Mandatory Leave Policies in Hawaii

Paid Time Off in Hawaii

Hawaii does not require employers to offer general paid vacation or PTO, but many companies do so to compete for talent in a high‑cost market. If your company offers PTO, you should put accrual, carryover, and payout rules in writing and follow them consistently. Under Hawaii law, whether you must pay out unused PTO at termination depends on your written policy and past practice, so clarity is essential.

Maternity & Paternity Leave in Hawaii

Parental leave in Hawaii is governed by a combination of the federal FMLA and the Hawaii Family Leave Law for covered employers. Eligible employees may take unpaid, job‑protected leave for birth, adoption, or to care for a new child, and TDI may provide partial wage replacement for the birthing parent’s medical recovery. You should coordinate your policies so employees understand how parental leave interacts with PTO, TDI benefits, and any company‑paid parental leave you choose to offer.

Sick Leave in Hawaii

Hawaii does not mandate a general paid sick leave program, but your required TDI coverage provides partial wage replacement for qualifying non‑work‑related illnesses or injuries after a short waiting period. Many employers still offer separate paid sick days or a PTO bank to support short‑term absences and reduce presenteeism. Your company should define eligibility, accrual, and documentation requirements clearly and ensure they align with disability and family leave laws.

Military Leave in Hawaii

Employees in Hawaii who serve in the armed forces, including the National Guard and reserves, are protected by federal USERRA and state law. You must allow unpaid leave for military service, training, or activation and reinstate eligible employees to their positions with the same seniority, status, and pay when they return. Your policies should explain how benefits such as health insurance and PTO accrual are handled during periods of military leave.

Jury Duty in Hawaii

Hawaii law prohibits you from firing, threatening, or penalizing an employee because they are called for jury duty or serve as a juror. You are not required to pay employees for time spent on jury service, but you must allow the necessary unpaid time off and may request proof of service. Many employers choose to provide some paid jury leave as a goodwill benefit and to support civic participation.

Voting Leave in Hawaii

In Hawaii, you must provide up to 2 hours of paid time off to vote if an employee does not have a 2‑hour nonworking period while the polls are open. You may require employees to request this time in advance and can deduct any time beyond 2 hours from pay or PTO if they are absent longer than reasonably necessary. You should communicate the process before election days so managers handle requests consistently.

Bereavement Leave in Hawaii

Hawaii does not require private employers to provide bereavement leave, paid or unpaid, but many companies include it as part of their standard benefits. If you offer bereavement leave, define who qualifies as a family member, how many days are available, and whether the leave is paid. Clear written policies help ensure fair treatment and reduce disputes during emotionally difficult times for your employees.

Termination Process

Hawaii is generally an at‑will employment state, but you must still follow your written policies, contracts, and any collective bargaining agreements when ending employment. You should document performance issues, provide required notices, and avoid discriminatory or retaliatory motives, as employees can file claims with the Hawaii Civil Rights Commission or DLIR.

Notice Period

Hawaii law does not require a general notice period for individual terminations, though certain mass layoffs or plant closings may trigger federal WARN Act obligations. If your company promises notice in contracts or policies, you must honor those commitments or provide pay in lieu of notice where appropriate.

Severance

Severance pay is not required under Hawaii law, but many employers offer it in exchange for a signed release of claims, especially for long‑tenured or higher‑level employees. If you provide severance, apply your criteria consistently and ensure any release complies with federal and state requirements, particularly for age‑discrimination waivers.