Easily manage employment in Hawaii

Payroll management in Hawaii

Hawaii has a unique economy driven by tourism, agriculture, and military defense. With strict labor laws and specific payroll regulations, employers in Hawaii must ensure compliance with state-specific requirements, including a high minimum wage, temporary disability insurance, and paid leave mandates. Understanding these regulations is essential for businesses operating in the state.

Payroll breakdown in Hawaii

Employers in Hawaii must adhere to both federal and state payroll regulations regarding wages, taxes, and benefits. Below is an overview of key payroll components:

Minimum wage and overtime

• Minimum wage: Hawaii’s minimum wage is $14.00 per hour, with scheduled increases reaching $18.00 per hour by 2028.
• Overtime rules:
• Hawaii follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.
• Hawaii does not mandate daily overtime but has industry-specific regulations.

State income tax

• Hawaii has a progressive income tax system, with rates ranging from 1.4% to 11% based on income levels.
• Employers must withhold state income tax and remit it to the Hawaii Department of Taxation.

Unemployment insurance (UI) tax

• Employers must contribute to Hawaii’s Unemployment Insurance (UI) program, managed by the Hawaii Department of Labor and Industrial Relations (DLIR).
• The wage base for UI tax in Hawaii is $56,700.
• UI tax rates vary based on an employer’s experience rating and range from 0.2% to 5.8%.

Temporary disability insurance (TDI)

• Hawaii requires employers to provide Temporary Disability Insurance (TDI) to employees for non-work-related illnesses or injuries.
• Employers may share the cost with employees, with employee contributions capped at 0.5% of wages.

Workers’ compensation

• Hawaii law requires all employers to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.

Payroll tax filing and payment deadlines

• Employers must register for a Hawaii Withholding Tax Account Number with the Hawaii Department of Taxation.
• State withholding tax returns must be filed semi-monthly, monthly, quarterly, or annually, depending on employer classification.
• UI tax reports must be submitted quarterly to the Hawaii DLIR.
• Payroll tax payments can be made electronically through Hawaii Tax Online.

Quick facts: Important considerations for employers

• High state minimum wage: Hawaii’s minimum wage is set to increase incrementally through 2028.
• Final paycheck rules:
• If an employee is terminated, employers must provide the final paycheck on the next scheduled payday or immediately if the employee demands it.
• If an employee resigns, the final paycheck must be provided by the next scheduled payday.
• New hire reporting: Employers must report new hires to the Hawaii New Hire Reporting Center within 20 days.
• Paid sick leave: Hawaii does not mandate paid sick leave, but employers may voluntarily provide this benefit.
• Payroll recordkeeping: Employers must maintain payroll records for at least six years to comply with state and federal laws.
• Right-to-work status: Hawaii is not a right-to-work state, meaning employees may be required to join a union if applicable.

Run payroll in Hawaii with Remote

Managing payroll in Hawaii requires careful attention to state-specific regulations, including minimum wage compliance, TDI coverage, and UI tax requirements. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

To see just how easy global payroll can be, book a demo today.