Employer's Guide to Hiring Employees in Hawaii

Hiring in Hawaii offers access to a diverse, educated talent pool, but it also involves navigating one of the most detailed regulatory landscapes in the United States. Whether you're expanding operations or engaging in remote hiring for employees based on the islands, this guide to hiring employees in the State of Hawaii will walk you through each step of the hiring process, from registration and onboarding to compliance with state hiring mandates.

The employment and labor laws in Hawaii include strict guidelines around new hire reporting, wage payments, insurance requirements, and anti-discrimination rules. With oversight from agencies like the Hawaii Department of Taxation and the Hawaii Department of Labor and Industrial Relations, employers must prepare for ongoing responsibilities beyond a candidate’s date of hire.

What Do Employers Need to Know About Hiring in Hawaii?

Hawaii’s employment environment combines federal labor standards with unique state-specific obligations. New employers must tackle multiple layers of compliance before extending an offer.

Understanding Hawaii's Employment Laws

Employment in Hawaii is operated under an at-will employment model, which allows both employers and employees to end the working relationship at any time, for any lawful reason. However, this general rule is tempered by strict protections under federal law and the Hawaii Employment Practices Act. Employers in the state are prohibited from discriminating against applicants or employees on the basis of race, religion, age, disability, sex (including gender identity or expression), sexual orientation, marital status, ancestry, or other protected categories.

In addition to standard compliance requirements, Hawaii has unique employer mandates that set it apart from other U.S. states. For example, all employers are required to provide Temporary Disability Insurance (TDI) — a program that offers partial wage replacement for employees unable to work due to non-work-related illnesses or injuries. Hawaii is the only U.S. state where TDI is mandatory for most private-sector employers.

Employers must also comply with the Hawaii Prepaid Health Care Act, which requires providing health insurance coverage to employees who work at least 20 hours per week for four consecutive weeks. Coverage must meet specific minimum standards to be considered compliant under state law.

Check out the Hawaii Department of Labor and Industrial Relations website for more details.

Key Regulations for the Process of Hiring Employees in Hawaii

Before bringing on a new hire, Hawaii employers must complete a series of registrations and compliance steps at both the federal and state levels:

• Obtain a Federal Employer Identification Number (FEIN) from the IRS for payroll and tax reporting.
• Register with the Hawaii Department of Taxation to withhold and remit state income taxes from employee wages.
• Register with the Department of Labor and Industrial Relations (DLIR) to establish a state unemployment insurance (SUI) account.
• Secure required insurance coverage, including both workers’ compensation and Temporary Disability Insurance (TDI) — a coverage unique to Hawaii that provides partial wage replacement for non-work-related medical conditions.
• Display all required labor law posters in the workplace, including those related to minimum wage, equal opportunity employment, and occupational safety.

New employees must also complete IRS Form W-4, Hawaii Form HW-4, and Form I-9. Employers must retain these records for inspection and must verify an employee’s legal right to work in the United States within three business days of hire.

Common Mistakes Employers Make When Hiring in Hawaii

Failing to understand Hawaii employment rules is the most common source of legal trouble for companies. One frequent mistake is misclassifying workers as contractors in Hawaii rather than employees, which can result in back payments for wages, payroll taxes, and benefit coverage.

Others include:

• Ignoring law in Hawaii that requires TDI and health care coverage
• Delaying new hire reporting
• Not registering for state unemployment insurance
• Violating wage and hour laws by underpaying or missing overtime

Some employers also make the mistake of ignoring at-will employment limitations. While Hawaii is an at-will jurisdiction, employers still cannot terminate employees at any time without proper documentation, or if the decision appears retaliatory or discriminatory.

Avoiding these mistakes starts with building a reliable HR infrastructure, or by partnering with a global employment compliance provider.

An Employer of Record solution simplifies remote hiring, onboarding, and benefits administration in Hawaii, so you can focus on growing your team in Hawaii.

What Are the Payroll Requirements for New Hires in Hawaii?

Running payroll in Hawaii requires more than issuing paychecks. Employers must manage complex tax obligations, contribute to state-mandated insurance programs, and maintain detailed payroll records to remain compliant.

Payroll Taxes and Withholding for Hawaii Employees

Employers in Hawaii are responsible for the following payroll tax withholdings and contributions:

• Federal income tax and FICA (Social Security and Medicare), withheld based on IRS Form W-4.
• Hawaii state income tax, determined using Form HW-4.
• Employer-matched FICA contributions.
• State Unemployment Insurance (SUI) contributions, with rates varying by employer experience.
• Temporary Disability Insurance (TDI) contributions, partially funded by employees and supplemented by employers.

These taxes must be remitted on time to the IRS and the Hawaii Department of Taxation. Employers are required to file Form HW-14 quarterly and Form HW-3 annually for state tax reconciliation.

Setting Up Payroll for Your New Employee

To legally compensate employees in Hawaii, employers must:

• Collect completed W-4 (federal) and HW-4 (state) withholding forms.
• Establish a regular pay schedule — Hawaii law mandates employees be paid at least semi-monthly.
• Calculate and withhold the correct payroll taxes.
• File and remit taxes through EFTPS (federal) and Hawaii Tax Online (state).
• Maintain payroll records for a minimum of six years.
• Provide itemized pay stubs and ensure employees can access wage records promptly.

Accurate recordkeeping and timely tax submissions are essential to avoid penalties from both state and federal agencies.

Understanding Minimum Wage in Hawaii

As of 2024, Hawaii’s minimum wage is $14.00 per hour. Scheduled increases will raise it to $16.00 in 2026 and $18.00 in 2028. Employers may apply a tip credit for tipped employees, but only if the employee’s total compensation exceeds the minimum wage by at least $7.00 per hour.

In addition, Hawaii follows federal overtime laws, requiring employers to pay 1.5 times the regular hourly rate for any hours worked over 40 hours per week by non-exempt employees.

If you are planning to start onboarding in the U.S., check out our guide on How to Hire Employees in California.

How to Report a New Hire in Hawaii?

New hire reporting isn’t just a best practice, it’s a legal requirement for all Hawaii employers. Timely reporting helps state and federal agencies enforce child support orders, detect fraud in unemployment insurance claims, and ensure overall tax compliance.

New Hire Reporting Process in Hawaii

Reporting new hires is a legal requirement in Hawaii and plays a key role in supporting child support enforcement and reducing benefit fraud. All Hawaii employers must report newly hired or rehired employees to the Hawaii Child Support Enforcement Agency (CSEA), even if the new hire is part-time, seasonal, or returning after a separation of 60 days or more.

Required Information and Reporting Methods

Employers must report basic details including the employee’s name, Social Security number, address, and date of hire, along with the employer’s name, address, and FEIN (Federal Employer Identification Number).

Reports can be submitted in several ways:

• Online via the Hawaii New Hire Reporting Center
• Fax or mail by sending the employee’s completed Form HW-4 to CSEA

For high-volume reporting, employers may use electronic file uploads through the state portal.

Deadlines and Penalties

Hawaii law requires new hires to be reported within 20 days of their first day of paid work. Employers submitting electronically may batch reports every 12–16 days.

Failure to report on time can result in:

• A $25 fine per unreported employee
• Up to $500 per violation if the omission was intentional to evade legal obligations

Why It Matters?

Timely new hire reporting helps government agencies locate parents for child support collection, prevent benefit duplication, and ensure that public resources are protected. To stay compliant and avoid penalties, it’s best to incorporate this reporting into your standard onboarding checklist.

What Are the Unemployment Insurance Obligations in Hawaii?

When hiring employees in Hawaii, employers must participate in the state’s unemployment insurance (UI) system. This program provides temporary financial support to eligible workers who lose their jobs through no fault of their own. Failing to meet your obligations can result in costly penalties and jeopardize your eligibility for federal unemployment tax (FUTA) credits.

Understanding State Unemployment Insurance in Hawaii

All Hawaii employers are required to contribute to the State Unemployment Insurance (SUI) fund, which is administered by the Hawaii Department of Labor and Industrial Relations. These contributions fund benefit payments to unemployed workers who meet state eligibility requirements.

New employers in Hawaii are generally assigned a standard SUI tax rate, which may vary depending on the industry classification. Over time, your rate may be adjusted based on your experience rating, i.e., the number of unemployment claims filed against your account.

Employer Responsibilities for Unemployment Insurance

To comply with Hawaii’s UI program, employers must:

• Register with the DLIR before paying any wages, using the HUIClaims Hawaii portal
• Submit quarterly wage reports detailing each employee’s earnings
• Pay UI contributions quarterly, even if no wages were paid in that period

These reports and payments are due by the last day of the month following each quarter (i.e., April 30, July 31, October 31, and January 31).

Failure to submit accurate and timely reports, or failure to make required payments, can result in late fees, penalties, and interest. In addition, noncompliance may disqualify your business from receiving the full FUTA tax credit, increasing your overall federal unemployment tax liability.

What Is the Impact of Labor Laws on Hiring Practices in Hawaii?

Hawaii’s labor laws create specific responsibilities for employers that go beyond the hiring decision itself. From civil rights protections and wage garnishments to state-mandated insurance coverage, understanding how these laws affect employment practices is essential to remaining compliant throughout the employee lifecycle.

At-Will Employment and Its Implications in Hawaii

Hawaii follows the at-will employment doctrine, allowing either the employer or employee to end the working relationship at any time, with or without cause. However, this principle is limited by state and federal civil rights protections, union contracts, and individual employment agreements.

Employers must avoid terminations that could be construed as discriminatory, retaliatory, or in violation of public policy. To mitigate legal risk, it’s important to document disciplinary actions, conduct fair investigations, and ensure termination decisions are based on lawful, non-discriminatory grounds.

Child Support Enforcement Agency Regulations

Under Hawaii law, employers must comply with garnishment orders issued by the Child Support Enforcement Agency (CSEA). Upon receiving a withholding notice, the employer is required to:

• Begin wage withholding immediately, regardless of the employee’s consent
• Continue deductions until notified otherwise by the CSEA
• Remit payments within seven business days of each payroll date

Failure to comply can result in penalties and employer liability for the unpaid amounts.

Temporary Disability Insurance Requirements

Hawaii is the only U.S. state that mandates Temporary Disability Insurance (TDI) for private-sector employees. TDI provides partial wage replacement for employees who are unable to work due to non-work-related illness or injury.

Key employer obligations include:

• Securing TDI coverage through an approved private carrier or self-insuring with DLIR approval
• Paying at least 50% of the premium, with the remaining portion optionally withheld from employee wages (up to 0.5% of weekly earnings, capped)
• Displaying required TDI notices in the workplace

Noncompliance may lead to administrative penalties and civil liability for unpaid benefits.

How to Ensure Compliance with Hawaii’s Payroll and Tax Laws?

Payroll and tax compliance in Hawaii involves multiple state agencies, precise recordkeeping, and timely filings. Employers are responsible not only for deducting the correct taxes but also for staying on top of local business regulations. Failure to comply can lead to penalties, interest charges, and even the loss of good standing with the state.

Hawaii Department of Taxation Guidelines

The Hawaii Department of Taxation (DOTAX) oversees key tax obligations for employers, including:

• State income tax withholding from employee paychecks
• Payroll tax filings and reconciliation forms (e.g., HW-14 and HW-3)
• General Excise Tax (GET) filings, if your business engages in taxable commercial activity in Hawaii

Employers must register with DOTAX, submit accurate forms on time, and ensure that tax payments are made in full by the designated due dates. Late filings or underpayments may result in fines and loss of compliance status.

Best Practices for Staying Compliant

To maintain compliance with Hawaii’s tax and payroll regulations, employers should:

• File required tax forms on time, including quarterly and annual returns
• Retain payroll and tax records for at least six years, in line with Hawaii’s statutory retention period
• Regularly audit payroll data to ensure withholding amounts, employee classifications, and benefit deductions are accurate
• Respond promptly to any notices or audits issued by DOTAX or the Department of Labor

Rivermate can handle your payroll tax filings, wage reporting, and benefits administration in Hawaii helping you stay compliant while focusing on business growth.

Contact Rivermate and get started right away.