Like every state, Hawaii has its own unique hiring requirements and employment laws. Whether you just started a small business or have a growing operation, hiring an employee for the first time in Hawaii takes some paperwork and prep.
We’re here to help. Keep reading for six steps to hiring employees in Hawaii:
Step 1: Handle new employer logistics
The first step to hiring employees in Hawaii is registering with federal and state departments as a new employer. Here’s what you need to do:
Apply for a federal employer identification number (EIN) on the IRS website
Hawaii employers need a federal employer identification number (EIN)—also called a federal tax ID—from the Internal Revenue Service (IRS) to hire new employees. Depending on your business entity, you may or may not already have an EIN.
If you previously registered your business as a partnership, multi-member limited liability company (LLC), C corporation, or S corporation, you’re one step ahead. If you’re a sole proprietorship or single-member LLC, though, it’s time to get an EIN. Apply for an EIN on the IRS website.
Register with the Hawaii Department of Taxation
Hawaii requires employers to withhold state income tax from their employees’ wages. To pay withholding taxes, you have to open a withholding account with the Hawaii Department of Taxation (DOTAX).
Start by registering your business with Hawaii Tax Online; from there, you can add a withholding account to your profile. If you already have a login with Hawaii Tax Online, simply sign in and add a withholding account.
You can also obtain a withholding account by completing Form BB-1, and then mailing it to the below address:
Hawaii Department of Taxation
P.O. Box 1425
Honolulu, HI 96806-1425
Register with the Hawaii Department of Labor and Industrial Relations
To hire new employees in Hawaii, you also have to register as an employer with the Hawaii Department of Labor and Industrial Relations (DLIR). The state of Hawaii requires employers to make state unemployment insurance contributions, which help support Hawaii workers who need temporary unemployment assistance.
You can register your business at HUIClaims.Hawaii.gov. For more information, check out this step-by-step guide to creating an employer account or read through Hawaii’s unemployment insurance handbook for employers.
Register for workers’ compensation insurance
Under Hawaii’s Workers’ Compensation Law, the state of Hawaii requires employers with at least one part-time, full-time, temporary, or permanent employee to obtain workers’ compensation insurance. This coverage gives employees wage loss and medical benefits if they get injured while at work; at the same time, it provides some liability protection for you as the employer.
First, you need to get a Department of Labor number through Hawaii’s Unemployment Insurance Office. You can do that by signing in at HUIClaims.Hawaii.gov. Next, start searching for a private commercial insurance carrier in Hawaii.
For more information, read Hawaii’s Disability Division Compensation website FAQs.
Once you get workers’ compensation insurance, learn how to optimize your policy.
Register for temporary disability insurance
The Hawaii Temporary Disability Insurance (TDI) law requires most Hawaii employers to get temporary disability insurance in addition to workers’ compensation coverage. TDI gives partial wage-replacement assistance to employees for non-work related medical conditions, like surgeries and pregnancy.
Step 2: Understand your hiring costs and tax liability
There are a lot of costs that come with being an employer. In addition to your employee’s compensation package—which includes a base salary, bonuses, paid time off, and health insurance—you also have to budget for federal and state payroll taxes.
Below are the taxes you’ll pay as a Hawaii employer:
- FICA taxes: Under the Federal Insurance Contributions Act (FICA), all employers have to pay Social Security and Medicare taxes. Social Security tax rates are 6.2% for the employer and 6.2% for the employee. Medicare tax rates are 1.45% for the employer and 1.45% for the employee.
- SUI taxes: Employers across the country are also subject to annual state unemployment insurance (SUI) taxes. For new employers in Hawaii, the tax rate is 4% on the first $56,700 of an employee’s wages.
- FUTA taxes: The Federal Unemployment Tax Act (FUTA) is a federal unemployment program. The FUTA tax rate is 6% of the first $7,000 of employee wages. However, if you pay SUI taxes on time and in full, you can get a credit on FUTA taxes of up to 5.4%, lowering your FUTA tax liability to 0.6%.
- Federal income withholding taxes: All employers use Form W-2 to file federal income tax withholding reports to the IRS. You’ll also file Form 941 on a quarterly basis and Form 940 annually.
- State income withholding taxes: Like most states, Hawaii employers have to withhold income from employees’ wages and make regular payments. Learn more about withholding tax rates and filing deadlines on DOTAX’s website.
Once you’re familiar with the taxes you’re accountable for, use Gusto’s handy hiring calculator to create a realistic hiring budget.
Need help calculating paychecks and withholdings for your employees? Use Gusto’s Hawaii hourly paycheck and payroll calculator and Hawaii’s salary paycheck and payroll calculator.
Step 3: Check Hawaii labor laws
Before you start writing job descriptions and corresponding with job candidates, take the time to review federal labor laws and state labor laws. These laws don’t just affect your employment practices and policies—they also play a role in how you recruit and interview prospective workers.
It’s critical to know Hawaii’s wage and hour requirements, the difference between full-time employees and independent contractors, and Hawaii’s state laws around pay equity and equal opportunity.
Here are some common labor law topics from the Hawaii Department of Labor:
- Minimum wage: The Hawaii minimum wage is currently $12/hour. However, the minimum wage will increase to $14/hour in 2024, $16/hour in 2026, and $18/hour in 2028.
- Overtime: Per federal law (under the Fair Labor Standards Act, or FLSA), non-exempt Hawaii employees who work more than 40 hours in a workweek must be paid overtime pay at a rate of 1.5 times. Here are more Hawaii wage and hour laws.
- Pay frequency: Hawaii employers are required to pay employees at least twice a month on regularly scheduled paydays. Employees who are laid off or who quit must be paid the wages owed to them on the next regularly scheduled payday.
- Breaks at work: Hawaii law mandates rest or meal breaks for workers who are aged 14 or 15.
- At-will employment: The state of Hawaii is an at-will state. As an employer, you have the right to fire employees at any time without reason or cause. Your employees also have the right to leave their jobs at any time without reason or warning.
- Sick leave, jury duty leave, and vacation: There’s no employment law in Hawaii that requires employers to provide sick leave, jury duty leave, or paid vacation. You get to choose what you offer your employees, but it’s worth noting that offering employee benefits, like paid time off and healthcare, can help you attract better job candidates and improve employee happiness on the job.
- Domestic violence or sexual assault leave: Hawaii employers with 50 or more employees are required to provide up to 30 days of unpaid leave for employees (or their children) who’ve experienced domestic or sexual abuse. Any employer with fewer than 50 employees is also required to provide unpaid leave, up to five days.
- Voting time leave: Employers in Hawaii have to give employees two hours of unpaid time off to vote during elections (unless the employee works a 9–5 shift).
- Bone marrow and organ donation leave: Employers are required to provide up to seven days of paid leave for employees donating bone marrow and up to 30 days for organ donation.
- Salary history: Hawaii employers cannot ask job candidates about their salary history or use salary history to determine a new hire’s pay or benefits. See which other states have salary history laws.
- Pay transparency: In 2023, Hawaii enacted a pay transparency law that requires Hawaii employers with at least 50 employees to disclose an hourly rate or salary range in job listings. The law goes into effect January 1, 2024.
- Paid leave: The Hawaii Family Leave Law applies to employers with 100 or more employees. Under this law, covered employers have to provide employees with up to four weeks of paid leave for qualifying events, like new parent bonding and caregiving.
- Discrimination laws: Under the Hawaii Employment Practices Act, employers cannot discriminate against employees on the basis of race, sex (including gender identity or expression), sexual orientation, age, religion, color, ancestry, disability, or marital status.
- Pay equity: Hawaii’s Pay Equity Law makes it illegal for employers to pay an employee less than another employee of the opposite sex for equal work.
- Criminal history: Hawaii’s Ban the Box law prohibits employers from using arrest history or court records as a basis for employment discrimination.
Step 4: Fill out the Hawaii new hire reporting form
Part of the process of hiring new employees in Hawaii is completing new hire reporting. New hire reporting is a national system used primarily to locate parents who are late on their child support payments.
In Hawaii, you need to report new hires (part-time, full-time, and seasonal employees) to the Hawaii Child Support Enforcement Agency within 20 days of the employee’s official date of hire. The hiring date is the first date an employee performs payable services or is able to earn a commission.
When reporting newly hired employees or rehired employees, you’ll provide your employee’s name, address, Social Security number, date of birth, and work start date, as well as your business information. There are two ways to report new hires in Hawaii:
1. You can fax or mail the employee’s HW-4 form to the below address:
Child Support Enforcement Agency
New Hire Reporting
601 Kamokila Blvd., Suite 251
Kapolei, HI 96707
Fax:( 808) 692 7001
2. Use the new hire file format to send your employee’s information.
For more information, read these new hire reporting FAQs.
Step 5: Complete other hiring documents
After you report new hires, carve out some time to complete these other key hiring documents (and make sure you save copies of everything for your records):
- Employment contract: Writing an employment contract for new employees keeps everyone on the same page. In the contract, explain your employee’s job responsibilities and expected pay, as well as your business’s workplace policies and employee handbook.
- Form I-9: Form I-9, the Employment Eligibility Verification Form, verifies that employees are able to work in the US. As an employer, you have to complete the I-9 form for every employee you hire, and each employee has to attest to their employment authorization. You don’t have to file Form I-9 with the US Citizenship and Immigration Services (USCIS) or Immigration and Customs Enforcement (ICE). Instead, just hold onto the form as a record for at least three years from the date of hire or from one year after employment ends. You can download Form I-9 and read the completion instructions here.
- Form W-4: Every new employee you hire needs to complete IRS Form W-4, The Employee’s Withholding Certificate, on or before the date of their employment. Form W-4 determines how much federal income tax will be withheld from the employee’s paychecks. Download the form.
- Form HW-4: You also need to give employees Form HW-4, the Hawaii Employee’s Withholding Allowance and Status Certificate, to fill out.
Step 6: Display labor law posters and required notices
The Hawaii DLIR requires employers to post labor law signs in the workplace that list basic employee rights and workplace obligations, like minimum wage standards and anti-discrimination policies.
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