In almost every U.S. state, employers are required to carry workers’ compensation insurance if they have a certain number of employees. If you’re a business owner in Hawaii, you’ll need to purchase workers’ comp insurance if you have at least one employee that doesn’t meet the state’s exemptions criteria.

In this article, we’ll go over who you need to cover, who is exempt, and possible penalties for non-compliance.


How does workers’ compensation insurance in Hawaii work?


In Hawaii, employers must provide workers’ compensation coverage as soon as they have one employee. Most businesses in Hawaii can purchase coverage through a private insurer. Large companies who can meet certain payroll and other criteria can apply to become self-insurers.


Who needs workers’ compensation insurance in Hawaii?


All employees in Hawaii must be covered by workers’ compensation unless they legally opt out of coverage or are on the list of exempt employment types.

Sole proprietors, partners, members of LLCs, and corporate officers who own at least 50% of a company can opt out of coverage. They can still participate in workers’ compensation if they choose to.

Additionally, the following employment types are exempt from the workers’ compensation coverage requirement:

  • Volunteer workers for charities, religious organizations, schools or nonprofits
  • Students working for their school in exchange for tuition, room, or board
  • Priests, ministers, or rabbis
  • Domestic workers who make less than $225 per quarter
  • Domestic workers who work for welfare recipients
  • Real estate brokers and salespeople who work solely on commission

As a business owner or sole proprietor, you don’t have to purchase workers’ compensation insurance for yourself. That doesn’t mean you shouldn’t get coverage. Sustaining an injury or illness while performing your work can lead to sizable hospital bills, medical costs and a lengthy recovery period. Investing in workers’ comp for yourself could save you from a brutal financial setback.


What are the penalties for not having workers’ comp in Hawaii?


Businesses that fail to properly insure their employees are subject to steep fines and penalties from the state of Hawaii. Businesses with uninsured workers can be fined up to $100 per day. If an employee is hurt on the job, it’s up to the business owner to provide all medical care costs and lost wages.


What does workers’ comp cover?

Medical costs

If one of your employees is injured or becomes ill on the job, workers’ comp can cover their immediate medical expenses such as ambulance rides, emergency room visits, x-rays, surgery and prescription medications.

For example, if a kitchen employee reaches into a sink and slices their hand on a broken glass, they might require medical attention. Workers’ comp could cover the costs of their emergency room visit, stitches and pain management prescriptions.

Lost Wages

Many work-related incidents can leave employees unable to work for several weeks or months. Workers’ comp can provide some relief for employees in the form of partial wage replacement.

If an employee breaks their foot in a work-related accident, they could end up stuck at home for multiple months. While they’re out of work, workers’ comp would cover some of their lost wages.

Ongoing Care

Some work-related injuries require long-term care such as physical therapy or pain management. Often, these injuries are more the result of repetitive workplace stress rather than a single traumatic incident. Chronic back issues for construction workers and carpal tunnel syndrome for office employees are two common examples of the types of workers who must receive ongoing care due to repetitive stress. If their claim is approved, workers’ comp can cover the costs associated with their ongoing care.

Death Benefits

If the unthinkable happens and an employee passes away because of a workplace incident, workers’ comp can cover funeral costs and other death benefits for the deceased worker’s family or beneficiaries.