Businesses operating in Hawaii must comply with federal labor laws in addition to myriad Hawaii state labor laws. These laws affect employers differently based on business size. Hawaii’s labor laws support Hawaiian workers with fair pay and other workforce benefits like unemployment, health insurance, disability benefits, and a safe and healthy workplace.
Outsourcing payroll and benefits to a third-party HR expert like Zenefits is an easy way to ensure your small business complies with federal and state labor laws in Hawaii. It can also save you time, by allowing employees to request time off and view their pay stubs online, as examples. You can try Zenefits free for 14 days.
How Hawaii State Labor Laws Work
Hawaii adds to federal workforce and labor laws, such as FLSA, FMLA and OSHA as examples, by further defining what constitutes discrimination, clarifying workers’ rights to a safe and healthful workplace, and dictating a minimum wage of at least $10.10 per hour (as of 2019). Hawaii also mandates health care for all employees working over 20 hours a week.
A summary of the impact of these laws is shown in the table below:
Hawaii Workforce & Payroll Laws
|Impact||Hawaii State Workforce & Payroll Laws|
|Minimum Wage||$10.10 per hour. Some tipped employees may be paid less.|
|Overtime||Overtime pay (1.5 x regular pay rate) required after 40 hours per workweek.|
|Pay Frequency||Employees must be paid at least two times per month on a regular payday.|
|Withholding Pay||You may not dock employees wages for anything beyond authorized deductions.|
|Lunch & Rest Breaks||Hawaii only mandates breaks for minors aged 14 & 15.|
|Family Leave||Larger employers must provide leave to those with at least six months’ service.|
|Lie Detector Tests||You may not mandate an employee take a lie detector test.|
|Disability & Workers' Comp||Businesses are required to provide workers' compensation insurance and disability.|
|Equal Pay||Hawaii now bans employers from asking about a job candidate’s salary history.|
|Healthcare||Health insurance must be provided to employees working 20 or more hours a week.|
|Unemployment||Employers are required to register on the state-run unemployment website|
|Safety||Hawaii OSHA (HIOSH) has mandatory posting & reporting requirements.|
|Payroll Taxes||Hawaii collects state taxes as well as requires employers to pay unemployment taxes.|
|Labor Law Posters||Hawaii requires all employers put up labor law posters.|
Like most states, Hawaii has its own labor law posting requirements to notify workers of their employment rights. This is in addition to mandatory federal labor law posters which can be found on the Department of Labor (DOL) website. You can download copies of the Hawaii posters from the Hawaii Labor Law website.
Who Hawaii Labor & Employment Laws Affect
Most of Hawaii’s labor laws affect all employers, even though federal labor laws may not be enforced for businesses earning less than $500,000 a year in revenues. In addition, all employers in Hawaii must retain their payroll records for six years — longer than is required in most other U.S. states.
Here are examples of how labor laws may affect different kinds of employers in Hawaii:
- All employers in Hawaii: Most all of Hawaii’s labor laws apply to all businesses. For example, employers can deduct payroll taxes, but may not deduct fines such as if the cash drawer is short or if the worker failed a work inspection.
- Businesses with 50 or more employees: You must abide by the Dislocated Workers Act (DLA) and give 60-days advance notice of possible mass layoffs or terminations.
- Business with 100 or more employees: Hawaii requires you to provide family medical leave for up to four weeks to employees who have at least six months on the job.
- Employers with workers who work over 20 hours a week: State law requires your business to offer health insurance to any employee who works 20 hours a week or more.
- Home-based employers: Employers of in-home health care aids, housekeepers, and nannies may be exempt from some of Hawaii’s labor laws such as overtime.
Unlike federal labor laws that tend to impact employers with 15 or more workers, Hawaii’s labor laws extend to all retail and service employers, and many are stricter for employers working on government contracts. In addition, nationally, health insurance is required for employers with 50 or more FTEs per the Affordable Care Act (ACA). But in Hawaii, employers must provide health insurance regardless of the number of employees you have.
Due to the complexity of labor law compliance in Hawaii, it’s smart to partner with an HR, benefits, and payroll provider like Zenefits. Zenefits offers easy compliance with automated deductions for payroll taxes, employer provided health insurance, and unemployment tax payments. It also provides consulting services so you have someone to call with your labor law questions. Get a free demo with a 14-day hands on trial of Zenefits.
Hawaii Labor Law Compliance Costs
You’d be surprised at how little it might cost to comply with state labor laws Hawaii. For example, you may be able to sign up for timekeeping and payroll software that costs just a few dollars per employee per month. Of course, you could also hire an HR manager, retain an attorney, or seek the services of an outsourced HR firm — any of which may run you thousands of dollars a year.
What’s most important to consider is not the cost of compliance, but the cost of non-compliance in terms of penalties and fines. Those can run you tens of thousands of dollars and might even bankrupt a small business.
Here are examples of what it might cost you to comply with Hawaii labor laws:
- Lawyer: You could retain an attorney paying a few hundred dollars an hour to help you build your policies, audit your files, and defend you in case of a lawsuit.
- Outsourced HR: An HR consultant can run from about $100 an hour into the thousands. However, some online HR consulting firms cost as little as $99 per month.
- HR manager: Hiring an HR manager costs between $23,000 to $153,000 per year based on job level and experience — with an average annual salary of about $54,000.
- HRIS software: One of the more affordable options is HR software that costs about $40 per month with additional per employee fees that range between $6 to $12 a month.
- Professional employer organization (PEO): A PEO is a co-employer and typically costs upwards of $100 a month per employee. In turn, it may offer discount rates on health insurance and workers comp based on its buying power.
Depending on your comfort level with HR and workplace rules, one of the lower cost options to comply with Hawaii’s unique labor laws is to sign up with a payroll service provider. Many offer HR consulting services as well … empowering you to manage compliance on your own.
Zenefits is a great example of an HR software provider that can manage your employee payroll, offer benefits like health insurance, and assist you one-on-one with HR and payroll consulting questions. Zenefits also provides an HR portal for your staff, saving you time from answering routine questions like, how much did I get paid for overtime? Employees can view their pay stub details online. Try Zenefits free for 14 days by requesting a demo.
Hawaii Labor Law Providers
As Hawaii labor laws impact many stages within an employee’s life cycle such as recruiting, hiring, and termination, you may need multiple kinds of software and services. Some, like time and attendance software, help you manage breaks and overtime for hourly workers. Others store online compliance documentation should you be audited, and still others provide employee benefits or serve as HR expert consultants.
Below are the kinds of providers you could employ to help manage labor law compliance in Hawaii:
Time & Attendance Software
Time and attendance software, like When I Work, provides leave management and overtime compliance by tracking employee leave requests and balances. Each employee’s time worked data is stored electronically to be shared with your payroll software, reducing duplicate data entry and potential errors, while meeting payroll document-retention requirements. Many, including When I Work, offer free versions of the software to smaller employers.
HR software makes labor law compliance easy by tracking all aspects of an employee’s work — from their hiring documents to their pay rate as well as eligibility for benefits like disability and family leave. Many HR software providers can hook you up with required labor law postings, too. Some, like Zenefits, also provide Hawaii state-required health insurance programs. Zenefits as an example, starts at $5 per employee, per month, with a $40 monthly service fee.
Small business payroll software tools like Gusto offer HR compliance services including online document storage and payroll cycles that comply with Hawaii’s unique requirements. Gusto has these features in its HR/payroll/benefits software starting at just $45 per month. That’s compared to other payroll software and services that charge extra for the HR compliance components or that may not offer benefits administration at all.
Startups and small firms that can’t afford to upgrade their software or hire an HR manager may want to work with an outsourced HR consulting service. Firms like Bambee offer unlimited monthly HR consulting beginning as low as $99 per month. They also have a package to conduct a complete HR compliance audit of your business for about $500.
Hawaii State Labor Law Compliance
Multiple agencies oversee workforce and employment laws in Hawaii. The most overarching one is the Hawaii Revised Statutes (HRS), which includes wage and hour compliances. Other laws, like family leave, are covered under Hawaii Administrative Rules (HAR). We’ve provided a table below with links to each agency so that you can find additional information as well as employer FAQs about how Hawaii state labor laws apply to your business.
Hawaii State Labor Law Links
|Law||Where to Find More Info|
|Wage and Hour Law||Hawaii Wage & Standards Division|
|Child Labor Law||Hawaii Department of Labor & Industrial Relations|
|Family Leave Law||Hawaii Family Leave Law|
|Temporary Disability||Hawaii Disability Compensation Division|
|Unlawful Suspension||Hawaii Wage & Standards Division|
|Unemployment||State of Hawaii Unemployment Insurance|
|Safety Rules||Hawaii Occupational Safety and Health (HIOSH)|
|Taxes||Hawaii Department of Taxation|
|Anti-Discrimination Laws||Hawaii Civil Rights Commission|
|Dislocated Workers Act||Hawaii Workforce Development|
Risks of Non-compliance With Hawaii Labor Laws
Even if you think you’ll never be fined, it’s crucial to comply with federal labor laws as well as Hawaii labor laws due to the potential for your business to be negatively impacted. Angry or disgruntled employees may post bad reviews of your company online, or worse, they may report your business’ non-compliance activities to any one of the various enforcement agencies.
Here are some of the risks of non-compliance:
- Recruiting: Job seekers read online reviews, and you may find yourself having trouble recruiting if you violate workers’ rights — they’re likely to share their experience online.
- Employee Retention: Thanks to labor law posters, employees tend to be aware of their workforce rights. Even if they don’t file a claim, they may jump ship once they realize you don’t play by the rules.
- Company Brand: Word will get around if you violate labor laws and customers may not appreciate working with a vendor that does so. That can affect your brand and revenues.
- Penalties and Fines: You can be fined for labor law violations. For example, not paying overtime may cost double what the original pay would have been — plus you’ll be fined for each occurrence across every employee and pay period in violation. That adds up.
- Lawsuits: One small lawsuit can cost tens of thousands of dollars, time away from your business, and a bad reputation. Consider, as an example, that a sexual harassment claim alone may cost your business up to $100,000 to defend against.
Alternative Ways to Manage Hawaii Labor Law Compliance
If labor law compliance is stressing you out, consider other ways to get work done for your business without hiring employees. There are options that can take most of the complex paperwork and Hawaii labor law risk off your shoulders. Consider these outsourced staffing providers that can provide you workers who aren’t actually your employees.
These are some employment alternatives you might consider:
Partner With a PEO
Businesses that want an easy way to ensure labor law compliance may want to work a professional employer organization (PEO) as a co-employer. A PEO hires the employees on your behalf, managing their paperwork and employment relationship while you oversee their day-to-day work activities.
Some businesses choose to work with a PEO merely to reduce their workers’ comp or employee health insurance costs. However, PEOs can also mitigate your employment risk, maintain all required documentation electronically and, thus, help you manage labor law compliance.
Hire Freelance Contract Workers
Some businesses never hire employees — they work with independent freelance contractors or gig workers instead. However, there are tax rules for who can be hired and paid as a 1099 independent contractor and who must be hired as an employee based on factors like how much control the person has over their own work. If you got this route, first check to make sure you abide by the rules for employees vs contractors to avoid tax fines due to misclassification.
Find a Virtual Assistant
A virtual assistant (VA) can either be a contract worker found on a freelance website or the employee of a virtual assistant company. VAs often do administrative, project, or other knowledge work remotely. For example, they may manage your website, provide customer phone support, or input accounting data. It’s the VA company that manages the employee relationship — they then bill your business (by hour or by task) for the work done.
Lease Temporary Employees
Staffing agencies and employment services often hire and manage employees that are leased out to work at your job site. You’ll pay the firm about 30% more than you’d pay to hire that same person as an employee. The benefit of using temps is that you pay the staffing agency for the employee’s time while the agency is the one who hires, provides benefits, and processes the worker’s payroll.
Regardless of whether you hire employees directly or outsource staffing to a third party, you can’t avoid all labor law compliance. For instance, it’s best to avoid any type of age, gender, or disability discrimination in your work practices.
Frequently Asked Questions (FAQs) About Labor Laws in Hawaii
Labor and employment laws in Hawaii may leave a small business with questions and concerns. We’ll address a few below.
When did the new salary history ban come into play in Hawaii?
As part of the Equal Pay Act, Hawaii joined many other states as of Jan. 1, 2019 in banning employers from asking about salary history during the recruitment process or when discussing a compensation plan. It’s an attempt to level the playing field in Hawaii, where females are still paid somewhat less than males in similar jobs.
Is holiday pay required in Hawaii?
Hawaii does not mandate holiday pay or vacation pay. In fact, paid time off benefits aren’t mandated at the federal level either. However, many employers provide paid time off programs to aid their recruiting and retention efforts.
How should employers handle breaks in Hawaii?
Providing workers with unpaid lunch breaks and paid rest breaks is a workforce best practice. However, Hawaii, similar to the FLSA does not mandate breaks be provided, with one exception. Teenagers ages 14 and 15 who work for your company must be provided a lunch break of 30 minutes if they work a five hour shift.
Who is eligible for temporary disability in Hawaii?
Disability benefits are available to any employee who has worked for you two weeks or longer (if they have a least 14 weeks of recent employment). That includes women who are pregnant and need medical leave due to complications related to their pregnancy.
If there’s a conflict between Hawaii labor laws and federal labor laws, which one wins?
Businesses in Hawaii must abide by both sets of labor laws — if there’s a conflict, the law most favorable to the employee is the one you should choose. Case in point: The federal Family Medical Leave Act requires employers with 50 or more FTE employees to give workers up to four months family / medical leave (if the worker has been with your company for 12 months). In Hawaii, if a company has 100 employees, they have to give four weeks of leave for workers who have only been on the job six months. In other words, employers with 100 or more employees have to do both:
- Employees with six or more months on the job can receive four weeks unpaid leave
- Employees with one year or more on the job can receive four months unpaid leave
Abiding by your state’s workforce labor laws in Hawaii makes good business sense. Your employees will be happier and you’ll avoid the cost and embarrassment of potential labor law violations. However, managing both federal and state laws can be tricky, especially if you lack resources to stay on top of the ever-changing employment landscape. That’s why you may wish to subscribe to sign up for online software or services to assist.
Zenefits is Human Resource Information System (HRIS) software designed to keep your business in compliance with all U.S. state labor laws, including those in Hawaii that require you to provide employee health benefits. In addition, with Zenefits, you can pick and choose the modules you need — including HR, benefits, payroll, HR compliance consulting, and more. Get your free demo account, good for 14-days.