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State snapshot

Key considerations
Which issues would you most highlight to someone new to your state?

Hawaii is heavily regulated and there are laws governing every aspect of employment. Moreover, while many state employment laws appear to be similar to federal employment laws, in Hawaii there are significant differences. Employers should pay particular attention to the following areas: 

  • equal employment opportunity;
  • wage and hour;
  • employee benefits (especially healthcare); and
  • leaves of absence.

What do you consider unique to those doing business in your state?

The workforce in Hawaii is multicultural, with equal percentages of men and women and many employees well past the age of 65. The major industries in the state are tourism, government, education and research, and healthcare. These factors result in employers in highly regulated fields competing for skilled workers, while juggling a variety of equal employment opportunity issues. Combined with the state's regulatory approach, this business climate makes Hawaii a challenging place to do business. 

Is there any general advice you would give in the labor/employment area?

Employers should not assume that the policies and procedures that they may have used in another jurisdiction will work in Hawaii. The state is very different, and prides itself in being different.

Emerging issues
What are the emerging trends in employment law in your state, including the interplay with other areas of law, such as firearms legislation, legalization of marijuana and privacy?

The areas of highest activity are:

  • employment discrimination lawsuits (particularly sexual harassment and disability claims);
  • wage and hour audits; and
  • independent contractor audits. 

Significant activity also surrounds the implementation of the federal Affordable Care Act and its integration with Hawaii's Prepaid Healthcare Act. Hawaii is the only state in the country that requires employers to provide comprehensive medical coverage to all employees who work 20 or more hours per week for four or more consecutive weeks. The state law predates the Employee Retirement Income Security Act, and there is a specific exemption in the Employee Retirement Income Security Act and the Affordable Care Act that allows Hawaii's law to continue to be enforced.

Hawaii has enacted a law authorizing the creation of a statewide medical marijuana dispensary system (HRS Chapter 329D). The Hawaii Department of Health is responsible for administration of the law and posted interim administrative rules for the medical marijuana dispensary licensing program (HAR 11-850). The interim rules include requirements and restrictions on hiring, training, and monitoring dispensary employees. The interim rules will be in effect until July 1 2018, or until final rules are adopted. Applications for the eight available dispensary licenses are currently being reviewed.

Proposals for reform
Are there any noteworthy proposals for reform in your state?

The Hawaii Department of Labor and Industrial Relations is attempting to enforce a policy that would require employers to provide an unlimited leave of absence, with guaranteed reinstatement to their original positions, for employees found eligible for workers’ compensation benefits. The Hawaii Department of Labor and Industrial Relations is also actively auditing employers to determine whether they have misclassified individuals as independent contractors rather than employees.

The Hawaii State Legislature is also considering bills mandating paid sick leave and requiring equal pay for “similar work.” Final decisions on these bills are not expected until June 2016.

Employment relationship

State-specific laws
What state-specific laws govern the employment relationship?
 

  • Labor law—Hawaii Employment Relations Act (HRS Chapter 377).
  • Equal employment opportunity—Discriminatory Practices Law (HRS Chapter 378, Part I), Hawaii Civil Rights Act (HRS Chapter 368), and Unlawful Suspension or Discharge Law (HRS Chapter 378, Part III).
  • Wage and hour law—Wage and Hour Law (HRS Chapter 387) and Payment of Wages Law (HRS Chapter 388).
  • Government contractors—wages and hours of employees on public works (HRS Chapter 104).
  • Employee benefits and leaves of absence— Employment Security Law (HRS Chapter 383), Workers’ Compensation Law (HRS Chapter 386), temporary disability insurance (HRS Chapter 392), Prepaid Healthcare Act (HRS Chapter 393), Family Leave Law (HRS Chapter 398), Reciprocal Beneficiaries Act (HRS §§ 572-C1 to 572-C7), civil unions (HRS §572B), and victims leave (HRS Chapter 378, Part VI).
  • Safety and health—Substance Abuse Testing Act (HRS Chapter 329B), Occupational Safety and Health (HRS Chapter 396), employer responsibilities for commercial drivers (HRS § 286-234), and smoking (HRS Chapter 328J).
  • Economics and business transactions—Dislocated Workers Act (HRS Chapter 394B).
  • Workplace privacy—employers’ job reference immunity (HRS Chapter 663-1.95), social security numbers (HRS Chapter 487J), and protected personal information (HRS Chapter 487R).
  • Proprietary rights—Trade Secrets Act (HRS Chapter 482B) and Restraint of Trade (Non-compete Agreements) (HRS §480-4).

There are also many administrative regulations that govern the employment relationship. To find the above statutes, as well as the state's administrative regulations, go to www.ehawaii.gov.

Who do these cover, including categories of workers?

Hawaii does not exempt small businesses from regulations. As long as a business employs one employee, it is required to comply with most of the state's employment laws.

Misclassification
Are there state-specific rules regarding employee/contractor misclassification?

Yes. In Hawaii, the legal presumption is that every worker is an employee. If a business wants to claim that a particular worker is an independent contractor, then the business bears the burden of proving that the individual is actually in business for himself or herself. Each statute has its own test for independent contractor status. However, the seminal test is contained in HRS §383-6 and Hawaii Administrative Rules §12-5-2.

Contracts
Must an employment contract be in writing?

No—a formal written employment contract is not required. Hawaii courts will treat "promises of specific treatment in specific circumstances" that an employee reasonably relies on as contractual promises and enforce them as such (Kinoshita v. Canadian Pacific Airlines, 724 P.2d 110 (1986)).

Are any terms implied into employment contracts?

No. However, Hawaii is an at-will state. Consequently, if no promises are made to an employee and the employment is for an indefinite term, the employment relationship will be considered at will. 

Are mandatory arbitration agreements enforceable?

It is unlikely that mandatory arbitration agreements will be enforced. While there are no reported decisions directly on point, the Hawaii Civil Rights Commission has expressed concerns about mandatory arbitration agreements and several statutes include provisions specifying that employers cannot require employees to "contract away" their rights. Nevertheless, most litigants prefer mediation and arbitration because they are quicker and more cost effective.

How can employers make changes to existing employment agreements?

As with business contracts, employers may approach employees with proposals for amendments that, once agreed, should be memorialized in a written amendment.

Hiring

Advertising
What are the requirements relating to advertising open positions?

If a vacancy is due to a labor dispute (e.g., a strike), the advertisement must specify whether the position is temporary or permanent.

For all other situations, employers must adhere to the state's equal employment opportunity regulations. Information on these regulations can be found at http://labor.hawaii.gov/hcrc/.

Background checks
What can employers do with regard to background checks and inquiries?

(a) Criminal records and arrests

Arrest records cannot be considered. Criminal convictions may be considered only if:

  • it has been less than 10 years since the individual was released from incarceration; and
  • the employer can show that the conviction is "rationally related" to the job duties.

(b) Medical history

Like federal law, state law prohibits employers from inquiring into an applicant's medical history, unless there is a bona fide occupational qualification issue. If a bona fide occupational qualification exists, then the inquiry must be done post-offer.

(c) Drug screening

Drug screening is similar to medical history and can be conducted post-offer. Drug screening required by federal law must comply with the applicable federal regulations. Employers that are not required by federal law to conduct drug screening, but nevertheless elect to do so, must follow state law and regulations with respect to the drug testing procedures.

(d) Credit checks

Credit checks are permissible only for managerial or supervisory employees, and those for whom credit checks are abona fide occupational qualification. Credit checks must be done post-offer.

(e) Immigration status

Federal law controls inquiries about immigration status. In short, employees are required to:

  • produce documents establishing their identity and authorization to work in the United States within three days of hire; and
  • complete an I-9 form. 

(f) Social media

The Hawaii State Legislature is currently considering a bill that would prohibit employers from requiring, requesting, or coercing an employee or potential employee to:

  • disclose the username, password or other information to enable the employer to access the account;
  • access the employee or potential employee’s personal account in the presence of the employer; or
  • add anyone to their list of contacts associated with the personal account.

The bill includes exceptions to this prohibition. Final word on the bill is not expected until June 2016.

(g) Other

Not applicable.

Wage and hour

Pay
What are the main sources of wage and hour laws in your state?

The Wage and Hour Law (HRS Chapter 387) and the Payment of Wages Law (HRS Chapter 388) are the main sources of wage and hour law. There are also administrative regulations promulgated under these laws.

What is the minimum hourly wage?

Currently, $8.50 per hour.

  • From January 1 2017, $9.25 per hour.
  • From January 1 2018, $10.10 per hour.

What are the rules applicable to final pay and deductions from wages?

Employees who are terminated must be paid for all wages as of the date of termination. Employees who resign after giving at least one payroll period's notice of their resignation must be paid for all wages on the last date of employment. Employees who resign without giving at least one payroll period's notice of their resignation may be paid for all wages due on the payday following the effective date of their resignation.

Deductions required by law or court order may be taken from final paychecks. The employee must authorize all other deductions in writing.

Hours and overtime
What are the requirements for meal and rest breaks?

Employers that employ minors are required to provide employees aged 15 and 16 with a 30-minute meal break under the state's child labor laws. No other requirements for meal breaks exist. 

Employers must further provide nursing mothers with time to express breast milk. These requirements can be found at http://labor.hawaii.gov/hcrc/.

What are the maximum hour rules?

Employers must pay overtime to employees who work in excess of 40 hours per working week.

How should overtime be calculated?

Employers must pay employees one-and-a-half times their regular rate of pay for all hours worked in excess of 40 hours per week. Hawaii's wage and hour laws are similar to the federal regulations on overtime calculation procedures.

What exemptions are there from overtime?

The following categories of workers are exempt from overtime:

  • bona fide executives;
  • bona fide administrators;
  • bona fide supervisors;
  • bona fide professionals;
  • outside salespersons; and
  • outside collectors.

Record keeping
What payroll and payment records must be maintained?

The following data must be kept on each employee: 

  • name;
  • social security number; 
  • home address;
  • rate of pay;
  • hours;
  • straight time earnings;
  • overtime earnings;
  • deductions;
  • authorizations for deductions;
  • total wages per pay period; and
  • federal and state tax withholding forms.

In addition, records of time worked (for non-exempt employees) and evidence of payment (e.g., pay stubs) must also be maintained.

Hawaii requires all personnel records to be physically retained in the state. If a company maintains electronic records, it must be able to print copies of any e-records on demand by a government agency.

Discrimination, harassment and family leave

What is the state law in relation to:

Protected categories
(a) Age?

Age is a protected classification. Unlike federal law, employees below 40 years of age may also file claims of age discrimination (HRS §378-2; Hawaii Administrative Rules §12-46, Subpart 6).

(b) Race?

Race is a protected classification. However, unlike federal laws—which classify race in broad categories (e.g., Asian or Pacific Islander)—state law distinguishes between specific ethnic groups (e.g., Japanese, Chinese, Filipino, Hawaiian, Samoan, and Tongan) (HRS §378-2). This interpretation of "race" is not explicitly set out in the statute or regulations but can be found in the legislative history, public presentations given by the Hawaii Civil Rights Commission, and the commission’s contested case determinations (www.labor.hawaii.gov/hcrc/contested-case-decisions/).

(c) Disability?

Disability is a protected classification. State law defines "disability" more broadly than federal law. For example, unlike federal law, state regulations list conditions, diseases, and infections that are automatically considered to be impairments. State regulations also specify that the limitation resulting from an impairment is determined without regard to mitigating measures (Hawaii Administrative Rules §12-46-182). 

(d) Gender?

Gender is a protected classification. The state recognizes males, females, and transgenders under this classification.

(e) Sexual orientation?

Sexual orientation is a protected classification.

(f) Religion?

Religion is a protected classification.

(g) Medical?

Medical is generally covered under disability law. However, there are separate laws protecting: 

  • employees disabled by pregnancy, childbirth, and related medical conditions; and
  • individuals with AIDS, AIDS-related complex, or HIV.

(h) Other?

The state also protects the following: 

  • color;
  • national origin;
  • ancestry (linguistic or cultural characteristics);
  • union sentiment;
  • marital status;
  • gender identity and expression;
  • arrest and court records;
  • victims of domestic violence or sexual abuse;
  • work injury (employees who have filed claims for workers’ compensation benefits, are receiving such benefits, or have received such benefits);
  • garnished employees;
  • employees with bad credit histories; and
  • whistleblowers.

Harassment
What is the state law in relation to harassment?

The state's equal employment opportunity laws prohibit employers from discriminating against employees on the basis of any of the protected classifications. Furthermore, the state has a definition of “sexual harassment” that is different from that in federal law. In order to establish a hostile environment sexual harassment claim under Hawaiian law, the claimant must prove that:

  • he or she was subjected to sexual advances, requests for sexual favors, or other verbal, physical, or visual forms of harassment of a sexual nature;
  • the conduct was unwelcome;
  • the conduct was severe or pervasive;
  • the conduct had the purpose or effect of either:
    • unreasonably interfering with the claimant's work performance; or
    • creating an intimidating, hostile, or offensive work environment;
  • he or she actually perceived the conduct as having such purpose or effect; and
  • his or her perception was objectively reasonable to a person of his or her gender in the same position ( Arquero v. Hilton Hawaiian Village, 104 Hawaii 423 (2004)). 

Family and medical leave
What is the state law in relation to family and medical leave?

The Hawaii Family Leave Law (HRS Chapter 398) requires the state and private employers that employ 100 or more employees for each working day during each of 20 or more calendar weeks in a calendar year to provide an eligible employee (who has provided six months of service) with unpaid leave of absence of up to four weeks per calendar year for any of the following reasons:

  • the birth of a child;
  • the placement of an adopted child; or
  • to care for a child, spouse, parent, or grandparent with a serious health condition. 

Taking family leave may not result in a loss of any employment benefit that the employee accrued before taking the leave, except any paid leave that may have been expended by the employee during the leave. The employee is entitled to be reinstated to the same position that he or she held before the leave, or an equivalent position with equivalent benefits, pay, and other terms and conditions of employment when he or she returns.

Privacy in the workplace

Privacy and monitoring
What are employees’ rights with regard to privacy and monitoring?

The Hawaii State Constitution recognizes that each individual has a right to privacy. However, the case law on whether this right extends to employment situations in the private sector is still developing.

Privacy statutes are limited to protecting personal identifying information (e.g., social security numbers, financial accounts, and personal identification numbers) and medical information. Nevertheless, state courts will entertain common law causes of action for invasion of privacy and disclosure of private facts.

Are there state rules protecting social media passwords in the employment context and/or on employer monitoring of employee social media accounts?

Not specifically. The Hawaii State Constitution recognizes a right to privacy, and there is a state law protecting personal information (HRS Chapter 487R). However, neither the State Constitution nor HRS Chapter 487R specifically address social media passwords or employer monitoring of social media accounts. 

Bring your own device
What is the latest position in relation to bring your own device?

No state rules addressing an employee's ability or inability to use his or her own electronic devices in the workplace exist.

Off-duty
To what extent can employers regulate off-duty conduct?

No state statutes or reported cases prohibiting employers from regulating off-duty conduct exist.

Gun rights
Are there state rules protecting gun rights in the employment context?

No. Moreover, Hawaii has extensive gun regulations (HRS Chapter 134), including the following:

  • No person may acquire the ownership of a firearm (whether usable or unusable) without a permit.
  • Only law enforcement officers may carry concealed weapons.
  • The selling, giving, lending, and delivering of a firearm must comply with state regulations.
  • All firearms (usable or unusable) must be registered.
  • A minor's ability to carry and use a firearm is regulated.
  • The possession and use of firearms while hunting is regulated.
  • Fugitives, persons under indictment, felons, and persons subject to restraining orders may not possess a firearm.
  • Firearms may be seized in domestic abuse situations.
  • The manufacture, possession, sale, barter, trade, gift, transfer, or acquisition of assault pistols, automatic firearms, rifles with barrels of less than 16 inches, silencers, and similar weapons and devices is prohibited.
  • Storage of firearms is regulated.
  • There are restrictions on the possession, sale, gift, or delivery of electric guns. 

Trade secrets and restrictive covenants

Intellectual Property
Who owns IP rights created by employees during the course of their employment?

If a creation is made, written, or developed by an employee during working hours or using company resources, the employer will own the IP rights. If the creation is made, written, or developed by an independent contractor while providing services to a company, the independent contractor will own the IP rights, absent a written "work for hire" agreement.

Restrictive covenants
What types of restrictive covenants are recognized and enforceable?

Non-compete agreements are generally permitted, except in the technology and software industries. However, each agreement will be reviewed in light of surrounding circumstances to determine whether it is enforceable. When reviewing non‑compete agreements, courts must balance the interests of the employer (e.g., protection of trade secrets, proprietary information, and the company’s investment in the employee) against the interests of the employee (e.g., continuing to earn a living) and the “public good” (e.g., unrestrained trade and broader access to goods and services).

Courts will uphold a non‑compete agreement only if the restraint is “reasonable” (Technicolor, Inc. v. Traeger, 57 Hawaii 113, 551 P.2d 163 (Haw. 1976)).

Non-compete
Are there any special rules on non-competes for particular classes of employee?

Yes. Employers engaged in businesses that derive the majority of their gross income from the development of software and/or technology are prohibited from including non-compete or non-solicitation clauses in their employment contracts (HRS §480-4(d)).

Labor relations

Right to work
Is the state a “right to work” state?

No.

Unions and layoffs
Is the state (or a particular area) known to be heavily unionized?

Yes. Hawaii is the second most unionized state in the country. In addition, unions are heavily involved in state government – for example:

  • public employees are unionized;
  • many union leaders sit on state and county boards and commissions;
  • most politicians actively seek out union endorsements while campaigning for office; and
  • most unions are actively involved in lobbying both during and after legislative sessions. 

What rules apply to layoffs? Are there particular rules for plant closures/mass layoffs?

Yes. The Dislocated Workers Act (HRS Chapter 394B) requires employers with 50 or more employees to:

  • provide each employee and the director of the Department of Labor and Industrial Regulations with 60 days’ advance written notice of a closure, partial closure, relocation, or divestiture; and
  • pay each affected employee found eligible for unemployment compensation benefits a dislocated workers’ allowance for four weeks. The allowance is the difference between the employee’s average weekly wages before the closure and the weekly unemployment benefits that he or she receives.

An employer wishing to give less than 60 days’ advance written notice of a closure, partial closure, or relocation may provide pay in lieu of notice (i.e., one day’s pay for each day that notice is not given).

The regulations specify that, in order for there to be a closure or divestiture, there must be:

  • a sale, transfer, merger, bankruptcy, or other business takeover or transaction of business interests;
  • a permanent shutting down of all or a portion of the operations within a covered establishment due to the transaction; and
  • an actual or potential layoff or termination of employees of a covered establishment by the employer as a result of the shutdown. 

Because of the way the state laws define “employment” and “employer,” every sale of a business automatically results in a termination of employment and triggers the obligations under the act.

Failure to give the requisite notice, or to pay the dislocated workers’ allowance to affected employees, could result in claims by employees for civil penalties under the act. These penalties would be an amount equal to the value of employees’ wages, benefits, and other compensation for the three months preceding the sale.

Discipline and termination

State procedures
Are there state-specific laws on the procedures employers must follow with regard to discipline and grievance procedures?

No.

At-will or notice
At-will status and/or notice period?

Hawaii is an at-will employment state.

What restrictions apply to the above?

Hawaii recognizes the public policy and implied contract exceptions to at-will employment. Under the public policy exception, a discharge is actionable if the employer’s reason for discharge is deemed to violate a "clear mandate of public policy." In determining whether a clear mandate of public policy exists, courts must inquire into whether the employer’s conduct contravenes the letter or purpose of a constitutional, statutory or regulatory provision, or scheme (Parnar v. Americana Hotels, Inc., 65 Haw. 370, 652 P.2d 625 (1982)).

Under the implied contract exception, promises of specific treatment in specific circumstances may create binding contractual obligations (implied contracts) (Kinoshita v. Canadian Pacific Airlines, 724 P.2d 110 (1986)). An employer will not be allowed to discharge an employee or take action against an employee if it contravenes the implied contractual obligation.

Final paychecks
Are there state-specific rules on when final paychecks are due after termination?

Yes. Employees who are terminated must be paid for all wages due as of the date of termination.