If your business has employees in the state of Hawaii, you’ll need to make sure you adhere to Hawaii’s Workers’ Compensation Insurance laws. Workers’ Compensation provides medical and financial benefits for employees who suffer work-related injuries or illnesses or for their survivors in the case of an employee death.

Who needs Workers’ Compensation Insurance in Hawaii?

Hawaii requires all employers with one or more employees to obtain Workers’ Compensation Insurance. In Hawaii, an “employee” is generally defined as any individual in the employment of another and is not an independent contractor. 

The Hawaii Workers’ Compensation Law (WCL) defines all of the requirements for Workers’ Comp in Hawaii, and the Hawaii Department of Labor and Industrial Relations, Disability Compensation Division (DCD) monitors, enforces, and administers the program. Ensuring your company is in compliance is critical, as there are serious penalties and fines for those who fail to abide by state regulations.

What employees are covered under Workers’ Compensation in Hawaii?

Almost all workers are covered under Workers’ Compensation in Hawaii. If you provide work or services for an employer, and you are not an independent contractor, you will likely be eligible for Workers’ Compensation Insurance. 

The following are categories of employees that are eligible for Workers’ Comp coverage:

• Full-time and part-time employees
• Apprentices and interns
• Temporary employees
• Minors

The following are categories of employees that are generally excluded from Workers’ Comp coverage:

• Independent contractors
• Domestic workers who earn less than $225 per quarter
• Volunteers for religious, charitable, education, or nonprofit organizations
• Student employees working for room, board, or tuition
• Some 25 percent stockholders and all 50 percent stockholders
• Real estate salespeople and brokers who are paid on commission only

What Workers’ Compensation benefits do employees receive?

Under Workers’ Compensation in Hawaii, employers are required to provide the following benefits to employees who are injured in the course of employment:

Medical Benefits

• Employers are required to cover all necessary medical treatment, including surgery, hospital services, prescription drugs, physical therapy, and medical supplies. 
• Injured employees have the right to choose their treating physician. They can change their physician once but must notify the employer’s insurer first. 
• Employees may be reimbursed for transportation expenses necessary for them to receive treatment.

Temporary Total Disability Benefits

• Employees who are unable to work due to a work-related injury are eligible for Temporary Total Disability (TTD) benefits, which provides 66 and two-thirds percent of the worker’s average weekly wage before injury.
• For accidents that occurred in 2021, the maximum TTD benefit was $911 per week.
• Employees can continue to receive TTD benefits until they are able to resume work. If the employee is unable to resume work, a hearing will be held to determine their degree of permanent disability.

Temporary Partial Disability Benefits

• If injured employees are able to return to work in a partial or limited capacity while recovering, they may be eligible for Temporary Partial Disability (TPD) benefits. TPD benefits provide 66 and two-thirds percent of the difference between a worker’s pre- and post-injury average weekly wage.
• For accidents that occurred in 2021, the maximum TPD benefit was $911 per week.

Permanent Partial Disability Benefits

• Employees who recover from a covered injury but suffer a permanent partial impairment may be eligible for Permanent Partial Disability (PPD) benefits. 
• When employees reach the point of maximum medical recovery, a physician will evaluate their level of permanent impairment. 
• The number of benefit weeks available from PPD can vary based on the body part that was injured and the severity of the injury. The WCL’s schedule of injuries explains how long benefits will be paid and what benefits are available for different types of injuries.
• For accidents that occurred in 2021, the maximum PPD benefit was $911 per week.

Permanent Total Disability Benefits

• Employees who are permanently disabled and unable to earn any wages may be eligible for Permanent Total Disability (PTD) benefits.
• Permanent disabilities include loss of sight in both eyes; loss of both feet, both hands, or one foot and one hand; spinal injuries resulting in paralysis of both legs, both arms, or one leg and one arm; and skull injuries causing incurable illness. 
• Hawaii’s Department of Labor and Industrial Relations will hold a hearing to determine whether an employee is eligible for PTD benefits. 
• For accidents that occurred in 2021, the maximum PTD benefit was $911 per week.

Disfigurement Benefits

• Employees may be eligible for disfigurement benefits if they suffer scars, deformity, or discoloration as a result of an injury or surgery. Scars from laceration and surgery are reviewed six months after occurrence, while burn scars are evaluated after one year. 
• Disfigurement benefits are awarded in addition to any PPD benefits. 
• Disfigurement benefits may not exceed $30,000. 

Vocational Rehabilitation Benefits

• Workers who are permanently disabled by an occupational injury and are unable to return to work may be eligible for vocational rehabilitation services paid for by the employer. These benefits are voluntary. 
• Employees may continue to receive TTD benefits while receiving vocational rehabilitation benefits. 

Death Benefits

• Employers must pay funeral expenses up to 10 times the maximum weekly benefit rate and burial expenses up to five times the maximum weekly benefit rate. 
• The deceased employee’s surviving dependents may be eligible for up to 66 and two-thirds percent of the worker’s average weekly wage, up to the maximum set by the DCD. For accidents that occurred in 2021, the maximum death benefit was $911 per week.
• Death benefits can be paid to a surviving spouse for life but will be terminated upon remarriage. Dependent children can receive benefits until they are 18, or until they are 21 if they are full-time students and are not married.

What are the penalties for breaking Hawaii Workers’ Compensation laws?

Failure to adhere to the Workers’ Compensation laws set out by the WCL can result in significant fines and even imprisonment. In order to avoid any costly penalties, it’s important to consult the WCL or your insurer to ensure you are in compliance. Below are the major ways in which companies can be penalized:

Failure to Obtain Coverage

• Employers that fail to obtain Workers’ Compensation coverage may be fined $100 per employee for each day of non-compliance. The minimum fine is $500. 
• Employers that misrepresent facts in order to claim that they have coverage are guilty of a misdemeanor punishable by up to one year in jail and a fine of up to $2,000.
• Employers that fail to maintain coverage for 14 days or more may be ordered to stop operating until the coverage is obtained. 

Employees Paying Premiums

• If an employer requires employees to pay any portion of the Workers’ Compensation premium or deducts money from their wages for this purpose, they will be fined up to $5,000.

Failure to Pay Compensation

• Employers or insurers must pay compensation within 31 days of its due date once the case has reached a final decision or judgment. TTD benefits must be paid within 10 business days. Employers that fail to pay compensation in a timely manner must pay an additional 20 percent of the unpaid benefit amount. 

Failure to Report

• Employers must report all injuries and deaths to the DCD. The employer must also file an annual report of all compensation paid. Employers who fail to file necessary reports may be subject to fines of up to $5,000. 

Fraud

• In cases involving benefits of less than $2,000, employers may be charged with a misdemeanor up to one year in jail and a fine of up to $2,000.
• In cases involving benefits of $2,000 or more, employers may be charged with a class C felony punishable by up to five years imprisonment and a fine of up to $10,000.
• If false information was provided but no monetary loss occurred as a result, employers may be charged with a petty misdemeanor punishable by up to 30 days in jail and a fine of up to $1,000.
• Employers may be required to pay restitution to an insurer or another person for any financial loss caused by fraud. 
• Administrative penalties included restitution of fraudulently received benefits or payments and a fine of up to $10,000 for each violation.

How much does Workers’ Compensation Insurance cost in Hawaii?

According to the National Academy of Social Insurance Workers’ Compensation Report (November 2020), the average employer cost for Workers’ Compensation in Hawaii was $1.67 per $100 of covered wages. This figure is estimated across all insurers and all industries, so the cost to your particular business may vary.

How does the Workers’ Compensation claims process work in Hawaii?

Employees should immediately report injuries to their employer, either verbally or in writing. Claims should be filed within five years. Employers must file a report of the injury to the DCD within seven working days. If a claim is denied or other issues arise, both the employer and the employee may request a hearing. A decision will be made within 60 days after the hearing. Either party may appeal the decision within 20 days of the date of the decision. 

Hawaii Workers’ Compensation Insurance Resources

For more information on Hawaii Workers’ Compensation laws and requirements, please visit the following resources:

• Hawaii Department of Labor and Industrial Relations, Disability Compensation Division
• Hawaii Workers’ Compensation FAQ