Hawaii Workers' Compensation & Payroll Rules
Hawaii Payroll And Workers' Compensation Rules
Hawaii payroll professionals play an important role in workers' compensation
administration. Payroll records provide critical wage and employee information
used to administer workers' compensation claims, calculate benefits, support
insurance audits, and document an employer's compliance with Hawaii law.
Understanding Hawaii workers' compensation rules is especially important for
payroll professionals who maintain employee records, calculate wages, process
payroll after workplace injuries, respond to workers' compensation claims,
or provide payroll information to an employer's insurance carrier or
third-party administrator.
Hawaii Payroll And Workers' Compensation Compliance Overview
At A Glance
- Hawaii generally requires employers with one or more employees to provide workers' compensation coverage, subject to statutory exclusions.
- The coverage requirement generally applies to full-time and part-time employees and can include permanent and temporary employees.
- Hawaii law contains specific exclusions for certain workers, including certain domestic workers, qualifying owners, religious workers, students, and certain commission-paid real estate professionals.
- Employers generally obtain workers' compensation coverage through an authorized insurance carrier or qualify as an approved self-insured employer.
- Hawaii does not operate a state workers' compensation insurance fund from which employers purchase standard workers' compensation coverage.
- Employees should immediately report workplace injuries to their supervisor or employer.
- Employers generally must report an injury to the Hawaii Disability Compensation Division within seven working days when the injury causes an absence from work of one day or more or requires medical treatment beyond ordinary first aid.
- Employers must maintain records of workplace injuries and provide required workers' compensation information to injured employees.
- Hawaii generally calculates average weekly wages using a method designed to fairly reflect the employee's earnings and employment pattern.
- For full-time employees, average weekly wages generally cannot be less than the employee's hourly rate multiplied by 35, subject to statutory rules.
- Temporary total disability benefits are generally calculated at 66 2/3% of the employee's average weekly wages, subject to Hawaii's statutory minimum and maximum benefit limits.
- Temporary total disability benefits generally do not include the first three calendar days of disability, subject to Hawaii's statutory requirements.
- Workers' compensation benefits can include medical care, temporary disability, permanent partial disability, permanent total disability, disfigurement, death benefits, and vocational rehabilitation.
- The Hawaii Department of Labor and Industrial Relations' Disability Compensation Division administers the state's workers' compensation system.
Hawaii Workers' Compensation Employer Requirements
Hawaii generally requires employers with one or more employees to provide
workers' compensation coverage unless the employment falls within a statutory
exclusion. The requirement applies to both full-time and part-time employees.
Employers should review their workforce, business structure, employee
classifications, ownership interests, and applicable statutory exclusions
when determining whether workers' compensation coverage is required.
Hawaii Workers' Compensation Insurance
Hawaii employers may generally satisfy their workers' compensation obligations
by purchasing coverage from an insurance carrier authorized to transact
workers' compensation insurance in Hawaii.
An employer may also apply to become self-insured. Self-insured employers must
satisfy Hawaii's requirements concerning financial solvency and ability to
pay statutory workers' compensation benefits and must receive approval from
the Director of Labor and Industrial Relations.
Employers are not permitted to require employees to contribute toward the
cost of workers' compensation insurance premiums.
Hawaii Workers' Compensation Coverage For Multistate Employers
Employers operating in multiple states should review Hawaii's workers'
compensation requirements whenever employees perform services in Hawaii.
Hawaii law contains provisions addressing territorial applicability and
employers operating across state lines.
Payroll departments should maintain accurate employee work-location records,
particularly when employees travel to Hawaii, relocate to Hawaii, or perform
work for an employer based outside the state.
Hawaii Workers' Compensation Coverage Requirements
How Many Employees Trigger Workers' Compensation Coverage In Hawaii?
Hawaii generally requires an employer with one or more employees to provide
workers' compensation coverage, subject to statutory exclusions.
This means Hawaii does not generally require an employer to reach a
multi-employee threshold before workers' compensation requirements apply.
Even a small employer may have workers' compensation obligations.
Are Part-Time Employees Covered?
Generally, yes. Hawaii's workers' compensation law generally covers full-time
and part-time employees, as well as permanent and temporary employees,
unless a statutory exclusion applies.
Employers should evaluate the employee's actual employment status and the
applicable statutory exclusions rather than assuming that part-time status
eliminates workers' compensation coverage.
Are Corporate Officers And Owners Covered?
Hawaii law contains specific exclusions for certain corporate owners and
stockholders. The applicable treatment depends on the individual's ownership
interest and the statutory requirements.
Payroll and HR should maintain accurate ownership, officer, compensation,
and workers' compensation election records when an owner or officer is
potentially excluded from coverage.
Are LLC Members Covered?
The treatment of LLC members can depend on their ownership and role in the
business and on Hawaii's statutory definitions and exclusions.
Employers should document the status of LLC members and consult the applicable
Hawaii requirements when determining whether a member is covered or excluded.
Are Sole Proprietors And Partners Covered?
Business owners, partners, and other individuals who are not employees may
receive different treatment under Hawaii workers' compensation law.
Employers should review the applicable statutory definitions before treating
an owner or partner as either covered or excluded.
Are Independent Contractors Covered?
Worker classification is important in Hawaii workers' compensation
administration. A business should not assume that calling a worker an
independent contractor automatically removes workers' compensation
obligations.
Employers should evaluate the actual working relationship and applicable
Hawaii law when classifying workers.
Hawaii Workers' Compensation Injury Reporting
Employees should report workplace injuries immediately to their supervisor
or employer. Hawaii's Disability Compensation Division specifically advises
employees to report the date, time, and circumstances of a work injury as
soon as possible.
Hawaii Employer Report Of Injury
Hawaii employers must maintain records of workplace injuries. When an injury
causes an employee to be absent from work for one day or more or requires
medical treatment beyond ordinary first aid, the employer generally must
report the injury to the Director of Labor and Industrial Relations within
seven working days after obtaining knowledge of the injury.
The employer's report is generally made using the Employer's Report of
Industrial Injury, commonly referred to as Form WC-1.
The report includes information about the employer, injured employee, wages,
occupation, accident date and time, and the nature and cause of the injury.
Hawaii law also requires employers to provide the injured employee with a
copy of reports filed with the Director, subject to the statutory rules.
Hawaii Workers' Compensation Claim Process
After an injury is reported, the employer should follow its workers'
compensation procedures and notify the appropriate insurance carrier or
claims administrator.
Payroll may be asked to provide wage records, employment information,
dates of absence, and post-injury earnings to support administration of
the claim.
Employee Notice Of Injury
Employees should notify their employer of a workplace injury immediately.
Prompt notice allows the employer to document the incident, arrange
appropriate medical treatment, submit required reports, and begin the
claims process.
Employees should not wait for an injury to become serious before reporting
it. Early reporting can also help establish the date, location, circumstances,
and witnesses associated with the injury.
Hawaii Workers' Compensation Claim Filing
Hawaii provides an Employee's Claim for Workers' Compensation Benefits,
Form WC-5. Employees may use this form when required to pursue a workers'
compensation claim, including situations in which an employer has failed
or refused to file the claim.
Employers and employees should follow the current procedures and forms
published by the Hawaii Disability Compensation Division.
Hawaii Payroll Records And Workers' Compensation
Accurate payroll records are essential when a Hawaii workers' compensation
claim requires information about an employee's wages.
Hawaii law requires average weekly wages to be calculated in a manner that
most fairly represents the employee's wages based on the employee's
employment pattern and the duration of the disability.
When appropriate and feasible, the calculation may use the employee's
earnings from covered employment during the 12 months preceding the injury.
Hawaii law contains additional rules for periods of sickness, higher wages,
short employment periods, comparable employment, and employees working
fewer than 35 hours per week.
Payroll should therefore maintain sufficient historical information to
support the applicable wage calculation.
Payroll Records That May Be Needed
- Employee name and identification information
- Date of hire
- Date of injury
- Employment status
- Job title and occupation
- Work location
- Regular wages
- Hourly rate
- Hours worked
- Overtime
- Bonuses
- Commissions
- Gratuities
- Wage increases and decreases
- Pre-injury earnings
- Post-injury earnings
- Modified-duty wages
- Salary continuation payments
- Periods of absence
- Other compensation information relevant to the claim
How Hawaii Payroll And Workers' Compensation Work Together
Workers' compensation and payroll are closely connected. When an employee
is injured at work, payroll may need to provide historical earnings,
employment information, hours worked, wage changes, and post-injury
earnings.
Payroll may also become involved when an injured employee:
- Misses work because of a workplace injury
- Returns to work with medical restrictions
- Works reduced hours
- Performs modified or light-duty work
- Receives wages after returning to work
- Receives salary continuation
- Experiences a change in compensation following an injury
For these reasons, Hawaii payroll departments should have a documented
procedure for responding to workers' compensation claims and producing
historical payroll information.
Hawaii Workers' Compensation Benefit Calculations
Benefit Calculations
Hawaii workers' compensation benefits depend on the nature and extent of
the employee's disability, average weekly wages, medical findings, and
other statutory requirements.
Benefits can include medical treatment, temporary total disability,
temporary partial disability, permanent partial disability, permanent
total disability, disfigurement, death benefits, and vocational
rehabilitation.
Payroll professionals should provide complete and accurate wage information
to the employer's insurer, self-insurance program, or claims administrator
rather than independently determining the final workers' compensation
award.
Average Weekly Wage
Hawaii calculates average weekly wages using a method intended to fairly
reflect the employee's employment pattern and earnings at the time of the
injury.
Where appropriate and feasible, Hawaii law generally considers earnings
from covered employment during the 12 months preceding the injury. The law
also provides special rules when an employee had periods of sickness,
earned higher wages during part of the preceding year, had only recently
started employment, or worked part-time.
For a full-time employee, average weekly wages generally cannot be less
than the employee's hourly rate multiplied by 35.
Temporary Total Disability Benefits
Hawaii generally provides temporary total disability benefits at a rate
of 66 2/3% of the employee's average weekly wages, subject to statutory
minimum and maximum weekly benefit amounts.
Temporary total disability compensation generally does not include the
first three calendar days of disability.
Hawaii law also provides that if an employee is unable to complete a
regular daily work shift because of a work injury, the employee is deemed
totally disabled for work for that day.
Temporary total disability benefits must generally be paid promptly as
they accrue, subject to the statutory rules governing controverted claims
and benefit payments.
Temporary Partial Disability Benefits
Temporary partial disability benefits may apply when an employee is able
to work but has reduced earning capacity because of a workplace injury.
Hawaii's temporary partial disability rules compare the employee's
pre-injury average weekly wages with the employee's post-injury earning
capacity and apply the statutory benefit formula and limitations.
Payroll records are particularly important in these cases because the
claims administrator may need accurate information about hours worked
and wages earned after the injury.
Permanent Partial Disability Benefits
Hawaii workers' compensation law provides permanent partial disability
benefits when a work injury results in qualifying permanent impairment.
The amount of compensation depends on the nature and extent of the
impairment and the applicable statutory requirements.
Payroll does not generally determine an employee's medical impairment
rating, but payroll records may be required to support benefit
administration.
Permanent Total Disability Benefits
Hawaii provides permanent total disability benefits when a compensable
work injury results in permanent total disability.
The weekly benefit is generally calculated at 66 2/3% of the employee's
average weekly wages, subject to Hawaii's statutory minimum and maximum
limits.
Disfigurement Benefits
Hawaii workers' compensation can provide benefits for qualifying
disfigurement resulting from a work injury. Disfigurement can include
qualifying scars, deformity, and discoloration.
The amount of compensation depends on the circumstances and applicable
statutory requirements.
Death Benefits
Hawaii workers' compensation provides benefits to qualifying dependents
when an employee dies as a result of a compensable work injury.
Death benefits can include income and indemnity benefits for qualifying
dependents as well as funeral and burial expenses subject to Hawaii law.
Hawaii Workers' Compensation Medical Care
Hawaii workers' compensation provides medical care and related benefits
for qualifying workplace injuries and occupational diseases.
Medical benefits can include necessary medical, surgical, and hospital
services and supplies related to a compensable work injury.
Hawaii's Disability Compensation Division also maintains requirements
concerning treatment plans, medical reporting, health care providers,
and medical fee schedules.
Hawaii Medical Treatment And Workers' Compensation
Payroll generally does not administer medical treatment. However, payroll
may need to coordinate with HR, management, the employee, and the
workers' compensation claims administrator when medical restrictions
affect work status, hours, wages, or return-to-work plans.
Employees should follow the employer's workers' compensation procedures
and obtain appropriate medical treatment after a workplace injury.
Hawaii Workers' Compensation And Modified Duty
An injured employee may return to work with restrictions or modified
duties depending on the employee's medical status.
When this occurs, payroll should coordinate with HR, management, the
employee's supervisor, and the workers' compensation administrator.
Payroll should document:
- The date the employee returned to work
- Hours worked
- Wages earned
- Changes in job duties
- Modified or light-duty assignments
- Changes in compensation
- Salary continuation
- Periods of absence
- Work restrictions
- Other payments related to the employee's workers' compensation status
Accurate post-injury wage information can be particularly important when
determining temporary partial disability benefits or documenting an
employee's return to work.
Hawaii Workers' Compensation And Employee Classifications
Employee classification is an important component of workers' compensation
administration.
Payroll should maintain accurate information about:
- Job titles
- Departments
- Work locations
- Job duties
- Employee status
- Compensation
- Employment dates
- Changes in duties or work assignments
- Ownership status when relevant
- Workers' compensation exemption status
When an employee's duties, ownership status, or employment classification
changes substantially, payroll and HR should communicate the change to
the appropriate workers' compensation or insurance personnel.
Payroll Training Resources
Payroll professionals responsible for workers' compensation administration
should understand how workers' compensation rules interact with payroll
records, wage calculations, employee classifications, injury reporting,
benefits, and payroll processing.
Payroll Training Center provides payroll education and training for
professionals responsible for payroll compliance, wage administration,
employee records, and related employment requirements.
Recommended Workers' Compensation Training
Additional Hawaii Workers' Compensation Resources
The Hawaii Department of Labor and Industrial Relations, Disability
Compensation Division provides official information concerning:
- Workers' compensation coverage
- Employer requirements
- Employee claims
- Employer's Report of Industrial Injury
- Employee's Claim for Workers' Compensation Benefits
- Employee Wage Reports
- Workers' compensation insurance
- Self-insurance
- Medical treatment
- Workers' compensation benefit rates
- Vocational rehabilitation
- Hearings and appeals
Employers should use the current forms, instructions, and guidance
published by the Hawaii Disability Compensation Division when administering
Hawaii workers' compensation matters.
Hawaii Workers' Compensation Compliance Checklist
- Determine whether the business has employees covered by Hawaii workers' compensation law.
- Review applicable statutory exclusions.
- Review corporate officer and owner status.
- Review LLC member status.
- Review sole proprietor and partner status.
- Review independent contractor classifications.
- Confirm that employees working in Hawaii are properly covered.
- Review workers' compensation requirements for multistate employees.
- Obtain workers' compensation insurance from an authorized carrier or qualify for approved self-insurance.
- Maintain proof of workers' compensation coverage.
- Post required workers' compensation notices.
- Provide required workers' compensation information to injured employees.
- Maintain accurate employee classifications.
- Maintain complete payroll and wage records.
- Establish a procedure for reporting workplace injuries.
- Document when an employee reports an injury.
- Submit required injury reports within the applicable Hawaii deadline.
- Provide the employee with required copies of workers' compensation reports.
- Track pre-injury earnings.
- Track post-injury earnings.
- Maintain documentation of modified-duty work.
- Maintain documentation of salary continuation.
- Provide accurate payroll information to the claims administrator when requested.
- Monitor Hawaii workers' compensation benefit rates and administrative requirements.
- Monitor changes to Hawaii workers' compensation laws and regulations.
Frequently Asked Questions About Hawaii Workers' Compensation
Does Hawaii require workers' compensation insurance?
Generally, yes. Hawaii requires employers with one or more employees to
provide workers' compensation coverage unless a statutory exclusion applies.
How many employees must a Hawaii business have before workers' compensation is required?
Generally, one employee. Hawaii's workers' compensation law generally
applies to employers with one or more employees, subject to statutory
exclusions.
Are part-time employees covered by Hawaii workers' compensation?
Generally, yes. Hawaii generally covers full-time and part-time employees,
as well as permanent and temporary employees, unless an applicable
statutory exclusion applies.
Are temporary employees covered by Hawaii workers' compensation?
Generally, yes. Temporary employees are generally covered when they are
employees within the meaning of Hawaii's workers' compensation law and
no statutory exclusion applies.
Are corporate officers and owners covered by Hawaii workers' compensation?
Hawaii has specific statutory exclusions affecting certain owners and
stockholders. Employers should review ownership percentages and the
individual's role in the business before determining coverage.
Are LLC members covered by Hawaii workers' compensation?
Coverage can depend on the member's ownership status, role, and applicable
Hawaii statutory provisions. Employers should review the specific
circumstances before treating an LLC member as covered or excluded.
Are sole proprietors and partners covered by Hawaii workers' compensation?
Business owners and partners may be treated differently from employees
under Hawaii law. The applicable statutory definitions and circumstances
should be reviewed before determining whether an owner or partner is
covered.
Are independent contractors covered by Hawaii workers' compensation?
Worker classification depends on the actual working relationship and
applicable law. Employers should not rely solely on a written contract
or job title when determining whether a worker is an independent contractor.
How quickly should an employee report a workplace injury in Hawaii?
Employees should immediately report workplace injuries to their supervisor
or employer. Prompt notice helps the employer document the incident and
begin the workers' compensation process.
How quickly must a Hawaii employer report a workplace injury?
When an injury causes an absence from work for one day or more or requires
medical treatment beyond ordinary first aid, the employer generally must
report the injury to the Director of Labor and Industrial Relations within
seven working days after obtaining knowledge of the injury.
What is the Hawaii WC-1 form?
The WC-1 is the Employer's Report of Industrial Injury. Employers use this
form to report qualifying workplace injuries to the Hawaii Disability
Compensation Division.
What is the Hawaii WC-5 form?
The WC-5 is the Employee's Claim for Workers' Compensation Benefits.
It is available through the Hawaii Disability Compensation Division and
may be used by an employee to pursue a workers' compensation claim.
How is the Hawaii workers' compensation average weekly wage calculated?
Hawaii calculates average weekly wages using a method designed to fairly
represent the employee's earnings based on the employee's employment
pattern and the duration of the disability. Where appropriate and feasible,
the calculation may use earnings from covered employment during the
12 months preceding the injury.
Is there a minimum average weekly wage calculation for full-time employees in Hawaii?
Generally, Hawaii law provides that a full-time employee's average weekly
wages cannot be calculated below the employee's hourly rate multiplied
by 35, subject to the statutory rules governing part-time employees and
other circumstances.
How are Hawaii temporary total disability benefits calculated?
Temporary total disability benefits are generally calculated at 66 2/3%
of the employee's average weekly wages, subject to Hawaii's statutory
minimum and maximum benefit limits.
Is there a waiting period for Hawaii workers' compensation disability benefits?
Hawaii temporary total disability benefits generally do not include the
first three calendar days of disability, subject to the requirements of
Hawaii law.
What workers' compensation benefits are available in Hawaii?
Hawaii workers' compensation can provide medical benefits, temporary total
disability, temporary partial disability, permanent partial disability,
permanent total disability, disfigurement benefits, death benefits, and
vocational rehabilitation, depending on the circumstances of the claim.
What payroll records are important for a Hawaii workers' compensation claim?
Payroll may need to provide wages, hourly rates, hours worked, overtime,
bonuses, commissions, gratuities, employment dates, wage changes,
pre-injury earnings, post-injury earnings, modified-duty wages, and
other compensation information relevant to the claim.
What happens when an injured Hawaii employee returns to work?
An injured employee may return to regular, light, part-time, or restricted
work depending on medical authorization and the circumstances of the claim.
Payroll should accurately track hours, wages, work restrictions, and changes
in duties or compensation.
Where can employers find official Hawaii workers' compensation information?
Official information is available from the Hawaii Department of Labor and
Industrial Relations, Disability Compensation Division, including workers'
compensation forms, employer guidance, benefit information, and contact
information.
Important Disclaimer
This page is provided for general educational and informational purposes
only and should not be considered legal advice. Hawaii workers' compensation
requirements can change, and individual claims may involve exceptions or
special circumstances. Employers should consult the Hawaii Department of
Labor and Industrial Relations, Disability Compensation Division, applicable
statutes and regulations, their workers' compensation carrier or claims
administrator, and qualified legal counsel when appropriate.
