PEO Services for Hawaii

PEO Guide for Hawaii: Labor Laws & Payroll

Navigating Hawaii’s employment laws and HR management can be challenging. A Professional Employer Organization (PEO) handles tasks like payroll, benefits, and compliance. This guide covers everything you need to know about using a PEO in Hawaii.

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Capital City

Honolulu

Timezone

HST

(

GMT-10

)

Paid Leave

Sick & Family Leave

Income Tax

1.4% - 11%

Employer Tax

0.2% - 5.8%

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What is a PEO in Hawaii

A PEO in Hawaii serves as a co-employer, handling essential HR functions like payroll, benefits, and compliance while your business maintains control over operations and decision-making. This arrangement allows companies to focus on growth while reducing the administrative burden and legal risks associated with HR.

By partnering with a PEO in Hawaii, businesses can simplify HR, stay compliant with state regulations, and offer competitive employee benefits, all while focusing on growth. Whether you're a startup or an established company, a PEO helps you navigate Hawaii’s complex employment landscape.

Mandatory Requirements when Partnering with a PEO in Hawaii

In Hawaii, it’s mandatory for all employers, including those partnering with PEOs, to have valid workers’ compensation insurance. Failure to do so is a criminal offense with potential fines up to $100,000 USD as per Hawaii Labor Code, section 3700.

Benefits Of Using a PEO In Hawaii

Payroll Processing and Compliance. A PEO manages payroll processing, tax withholdings, and filings with Hawaii state agencies, ensuring compliance with state tax laws and employment regulations.

Benefits Administration. PEOs offer access to comprehensive employee benefits packages, including health insurance, retirement plans, and other perks that help attract and retain top talent in Hawaii.

Workers’ Compensation. PEOs ensure your business complies with Hawaii’s workers’ compensation requirements, handling claims and minimizing risk.

HR and Legal Compliance. PEOs bring expert HR support, making them especially valuable for small businesses. With constantly changing Hawaii labor laws, a PEO offers guidance on employee handbooks, harassment prevention, terminations, and safety regulations, ensuring your business stays compliant.

Employment Laws and regulations in Hawaii

A PEO (Professional Employer Organization) is an excellent solution for small businesses in Hawaii to manage HR, payroll, and compliance with the state's complex labor laws.

Hawaii has some of the most stringent regulations around minimum wage, overtime, paid sick leave, and employee classification, which can be overwhelming for small businesses without dedicated HR resources.

Here’s a brief overview of some key laws and regulations specific to Hawaii.

Hawaii Employment Laws

A PEO helps businesses comply with both federal and Hawaii-specific labor laws, which can be complex and frequently change.

  • Minimum Wage Requirements: As of January 1, 2024, Hawaii's minimum wage is $14.00 per hour, with scheduled increases to $16.00 per hour beginning January 1, 2026, and $18.00 per hour beginning January 1, 2028.
  • Overtime Compensation: Employees are entitled to overtime pay at 1.5 times their regular rate for hours worked over 40 in a workweek.
  • Meal and Rest Breaks: Employers must provide a 30-minute meal break for employees aged 14 or 15 after five consecutive hours of work. For employees 16 years or older, there is no state law requiring meal or rest breaks; federal rules apply.

Payroll Laws In Hawaii

Employers in Hawaii must maintain accurate payroll records for at least six years, documenting hours worked, wages paid, and other relevant employment details. Employees must be paid at least twice a month, with paydays not more than 15 days apart. Overtime is compensated at 1.5 times the regular pay rate for hours exceeding 40 in a workweek. Additionally, Hawaii's Prepaid Health Care Act requires employers to provide health insurance coverage to employees working 20 or more hours per week.

Benefits Laws In Hawaii

Access competitive benefits like health insurance and retirement plans, often at a lower cost through a PEO. Leverage its pooled volume for enterprise rates - resold to PEO customers, with no employment minimums in Hawaii.

  • Hawaii Prepaid Health Care Act: Employers must provide health insurance to employees working 20 or more hours per week, ensuring coverage meets minimum benefit standards.
  • Temporary Disability Insurance (TDI): Employers must provide TDI benefits to eligible employees for non-work-related injuries or illnesses, replacing a portion of lost wages.
  • Workers' Compensation: Mandatory coverage provides medical and wage benefits to employees who suffer work-related injuries or illnesses.

Additional requirements and enforcement in Hawaii

Looking to hire employees in Hawaii?

Check out our comprehensive state hiring guide.

  • check-mark

    Understand employer tax implications and payroll requirements.

  • check-mark

    Review state specific employment laws and regulations.

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    Get insights on payroll, benefits, and employee classification.

How to Choose the right PEO in Hawaii

Selecting the right PEO in Hawaii is essential for navigating the state's intricate labor laws while ensuring compliance and efficiency. Follow these key steps:

  1. Focus on Hawaii-Specific Experience. Ensure the PEO has expertise in navigating Hawaii’s labor laws. This includes understanding nuances like mandatory sick leave, wage orders, and workers’ compensation requirements.
  2. Service Flexibility. Choose a PEO that offers flexible services tailored to your business size and industry. Hawaii’s regulations can vary by sector, so a PEO with industry-specific knowledge is valuable.
  3. Track Record and Compliance History. Research the PEO’s compliance history to ensure they have a proven track record of helping businesses avoid penalties and stay compliant with Hawaii’s complex employment laws.
  4. Consider Employee Benefits. A PEO can offer access to more affordable and comprehensive employee benefits, which are crucial for attracting and retaining top talent in Hawaii’s competitive job market.
  5. Assess Customer Service. Responsive customer service, dedicated human support teams (not AI), and robust HR technology are key factors in ensuring a smooth partnership with the PEO. It’s important to find a partner who supports your people, when they need it most.
By following these steps, you can select a PEO that aligns with your business goals and ensures compliance with Hawaii’s complex labor regulations. For more detailed insights, check out Playroll’s Guide to Employment in Hawaii.

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FAQS

FAQs About PEO Services in Hawaii

How does a PEO help with Hawaii labor law compliance?

A PEO assists businesses in Hawaii by ensuring adherence to state-specific labor laws, including minimum wage requirements, overtime regulations, and mandatory benefits like health insurance under the Hawaii Prepaid Health Care Act. They manage compliance aspects, reducing the risk of legal issues.

Are PEOs regulated in Hawaii?

Yes, PEOs operating in Hawaii are subject to state regulations and must comply with Hawaii's employment laws and any applicable federal regulations to provide services to businesses within the state.

Can a PEO help small businesses in Hawaii?

Absolutely. PEOs offer small businesses in Hawaii access to comprehensive HR services, competitive benefits packages, and assistance with regulatory compliance, enabling them to focus on core business activities while ensuring employee satisfaction and legal adherence.

Can a PEO help with compliance in Hawaii?

Yes, a PEO can help with compliance in Hawaii by managing HR functions, ensuring adherence to state and federal employment laws, handling payroll taxes, and maintaining proper employee records, thereby mitigating the risk of non-compliance penalties.

What happens if I want to terminate my relationship with a PEO in Hawaii?

Terminating a relationship with a PEO in Hawaii involves reviewing the service agreement for termination clauses, providing the required notice, and ensuring a smooth transition of HR responsibilities back to the company or to another service provider. It's essential to plan the transition to maintain compliance and employee satisfaction.

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