Hiring Your First Employee in Hawaii: $16 Minimum Wage, Prepaid Health Care, TDI, Workers Comp and Unemployment Insurance
Hiring Your First Employee in Hawaii: $16 Minimum Wage, Prepaid Health Care, TDI, Workers Comp and Unemployment Insurance
Hiring your first employee in Hawaii is less about one big filing and more about a sequence of obligations that all apply once someone starts working for you. If you are searching for a Hawaii hiring guide for employers, this is the practical version: what you need in place before the first paycheck, what each item costs, and which state agency to confirm each number with before you make an offer.
This guide is informational only and is not legal or tax advice. Employment and payroll rules change, and a qualified Hawaii employment attorney or CPA should review your specific situation.
Step 1: Register Your Business and Get Your GET License
Before you pay anyone, the business should exist in state records and be registered for the General Excise Tax (GET). Hawaii has no general statewide business license and no county general business license. Registering an LLC or corporation with the Department of Commerce and Consumer Affairs (DCCA), Business Registration Division (BREG), is a filing, not a license.
If you form an LLC, the Articles of Organization (Form LLC-1) carry a $50 filing fee plus a $1 State Archives fee. A corporation files Articles of Incorporation (Form DC-1) at the same $50 fee plus $1. Both entity types owe a $12.50 annual report, due by the end of the calendar quarter that matches the quarter you registered. No annual report is required in the year you register.
The one universal state registration is the General Excise Tax license. It is a one-time $20 fee, applied for on Form BB-1 or through Hawaii Tax Online, and it stays active until you close it, surrender it or it is revoked. Hawaii has no sales tax. Instead, GET is levied on the business's gross income or gross receipts, not on the customer. The rate is 4.0 percent for most retail and service activity plus a 0.5 percent county surcharge, for 4.5 percent in total. Wholesaling is 0.5 percent, and insurance commissions are 0.15 percent. Every license holder must file returns, including periods with no income.
Register your entity through Hawaii Business Express at hbe.dcca.hawaii.gov, search names at the BREG search-and-buy page, and handle the GET license through the Department of Taxation at tax.hawaii.gov/get/.
Separate licensing may also apply to your trade. That can include DCCA Professional and Vocational Licensing boards, the Department of Health for food operations, the Public Utilities Commission, county liquor commissions and county planning departments. Hawaii has four counties and no incorporated cities, so check each agency that covers your industry before you open for business.
Step 2: Pay at Least $16.00 Per Hour
Hawaii's minimum wage is $16.00 per hour, in effect since January 1, 2026, under HRS 387-2. Your first hire's offer must meet that floor, and every future raise must as well. If a position may qualify for an exemption from the minimum wage, confirm that with the Department of Labor and Industrial Relations (DLIR) in writing before you rely on it.
Hawaii does not require statewide paid sick leave or paid vacation. Whatever you offer is your policy choice, but put it in writing so the terms are the same for every employee and easy to explain later.
Federal payroll requirements also apply from day one. Obtain an Employer Identification Number (EIN) from the IRS, verify the employee's work eligibility with Form I-9, and collect Form W-4 at hire. Hawaii also requires state income tax withholding, so register your employer account with the Department of Taxation and confirm the current withholding tables and deposit schedule at tax.hawaii.gov.
Step 3: Plan for Prepaid Health Care
The Prepaid Health Care Act requires employers to provide health care coverage under its own set of rules. Because it is a separate compliance topic with its own obligations, do not treat it as an afterthought. Plan your coverage before the employee's start date, and confirm your eligibility and enrollment obligations with DLIR before you finalize the offer letter.
Step 4: Temporary Disability Insurance (TDI)
TDI is a mandatory coverage layer, and it is not paid by the employee alone. Under HRS chapter 392, you must secure TDI through an insurer, a bond, or self-insurance. You may charge the employee part of the premium, but the employer carries the rest.
The employee may be charged up to half the premium, capped at 0.5 percent of weekly wages and no more than $7.50 a week. Benefits replace 58 percent of the employee's average weekly wage, beginning on the eighth day of disability and continuing for up to 26 weeks.
| TDI item (2026) | Figure |
|---|---|
| Maximum weekly wage base | $1,500.21 |
| Maximum weekly benefit | $871 |
| Employee premium share | Up to half the premium, capped at 0.5% of weekly wages and $7.50 a week |
| Benefit rate | 58% of average weekly wage |
| Waiting period | Benefits begin on the eighth day |
| Maximum duration | Up to 26 weeks |
Confirm your insurer or bonding arrangement with DLIR before the employee starts, and keep proof of coverage in your payroll file.
Step 5: Workers' Compensation
Hawaii requires every employer to insure or self-insure for workers' compensation under HRS 386-121. Failing to carry coverage is a misdemeanor, so this is not a step to put off. Get quotes before the first day of work, and do not let the employee start while the policy question is open.
Your premium depends on your industry classification, expected payroll and claims history, so ask at least two or three carriers for quotes. For 2026, the maximum weekly wage base for benefit purposes is $1,859.91, and the maximum weekly benefit is $1,240. Those figures determine what an injured worker can receive, which is useful to understand when you compare policy limits.
Step 6: Unemployment Insurance (UI)
Unemployment insurance is paid on wages to the state. Register with DLIR as a new employer, and confirm the rate assigned to your account when you do. For 2026, the figures are below.
| UI item (2026) | Figure |
|---|---|
| Taxable wage base per employee | $64,500 |
| New-employer rate | 2.40% |
| Maximum rate | 5.60% |
| Employment and Training (E&T) assessment | 0.01% |
| Maximum weekly UI benefit | $868 |
As an example, an employee earning $40,000 in 2026 generates $40,000 in taxable wages. At the 2.40 percent new-employer rate, that is about $960 in UI tax, plus a $4 E&T assessment at 0.01 percent, assuming your account is assigned the new-employer rate. Your actual rate can change, so confirm it with DLIR.
Step 7: Family Leave and Other Leave Rules
Hawaii's family leave law provides up to 4 weeks of leave per year, mostly unpaid, for employers with 100 or more employees. A first hire will not bring you near that threshold, but keep your headcount in mind as you grow and confirm the rules with DLIR.
No paid family leave law was enacted in 2026. The paid family leave bill, HB 2360, stalled in the Senate, so no state paid family leave requirement applies at this time. Check DLIR for any change before you finalize your leave policy, because the Legislature may revisit the issue.
Your First-Hire Checklist
- Form your entity with DCCA and calendar the annual report for the quarter you registered.
- Register for the General Excise Tax and obtain the one-time $20 GET license.
- Obtain an EIN from the IRS, complete Form I-9 and collect Form W-4 from the employee.
- Register your employer withholding account with the Department of Taxation.
- Register with DLIR for unemployment insurance and confirm your assigned rate.
- Secure TDI coverage through an insurer, a bond or self-insurance, and document the employee's premium share.
- Buy workers' compensation coverage before the first day of work.
- Set up Prepaid Health Care coverage and confirm your obligations with DLIR.
- Confirm the wage is at least $16.00 per hour and put your leave policy in writing.
- Check whether your trade needs a DCCA professional license, a Department of Health food permit, a Public Utilities Commission approval, a county liquor license or a county planning permit.
Where to Confirm Each Figure
Rates, wage bases and thresholds change, and the figures above reflect 2026 values. Confirm each one with the agency that administers it before you rely on it for a budget or an offer letter.
- DCCA Business Registration Division for entity and trade name rules: cca.hawaii.gov/breg/
- Hawaii Business Express for online entity filings: hbe.dcca.hawaii.gov
- Hawaii Department of Taxation for GET, withholding and tax filings: tax.hawaii.gov
- Hawaii Department of Labor and Industrial Relations for minimum wage, TDI, workers' compensation, unemployment insurance and Prepaid Health Care questions
- Hawaii Small Business Development Center for free one-on-one advising: hisbdc.org
- U.S. Small Business Administration, Hawaii district office: sba.gov/district/hawaii
Hiring your first employee is manageable when you take the layers in order and confirm each figure before you commit. This guide is informational only and is not legal or tax advice. For anything involving your specific payroll, employment contract, insurance structure or entity choice, consult a qualified Hawaii attorney or certified public accountant.