Intro to Hawaii Employment Laws
The landscape of labor laws in Hawaii is unique compared to other states for a variety of reasons. The most important distinction of Hawaii’s labor laws is that they provide protections to employees that are usually not given in other states. Specifically, these protections include the payment of sick time and paid vacation time . Additionally, it is important to note that employers in the state of Hawaii are required to give employees a minimum amount of notice before terminating their employment. These three protections are not commonplace in other states where salaried employees work. Hence, becoming aware of your rights as an employee is vitally important to achieving a satisfying work experience.
How Hawaii Defines “Salaried” Worker
In Hawaii, a salaried employee must be paid a minimum of $2,000 per month and perform exempt job duties, including an executive, administrative or professional role. The federal Fair Labor Standards Act (FLSA) sets the minimum salary level at $684 per week, but Hawaii law has no such blanket requirement. However, if employees earn more than $684 per week, they are exempt from overtime pay requirements under both state and federal law.
Under Hawaii law, each industry can have its own salary level for exempt employees, and that amount may exceed the $2,000 per month minimum. For example, exempt employees in the motion picture and profession field must earn at least $2,200 per month. Employees in the IT industry must make at least $3,250 per month, while those engineers and architects in the professional field must earn a minimum salary of $4,000 per month. Neither the Oahu Minimum Wage and Hour Ordinance nor the Kauai County Code set forth any minimum salary requirements.
If your industry has a higher standard under state law, you must compensate salaried employees according to that standard. Note that 17 occupations identified by the U.S. Department of Labor as "long jobs" are not subject to state law. Thus, jobs that are exempt under federal law are also exempt under state law, regardless of salary.
Minimum Salary Laws
While Hawaii does not have a state minimum wage for exempt employees like Florida, public and private employers must still be aware of Hawaii’s minimum salary requirement because it is now markedly higher than federal requirements. Federal law contemplates increasing the minimum salary for exempt white collar employees from $455 to $1,059 per week (equivalent to ~$55,000) in December 2016, but that increase has been delayed and is now unlikely to occur until 2020, if at all. Conversely, Hawaii’s minimum salary for exempt employees (i.e., clients are likely going to spend more time dealing with the State Department of Labor than U.S. Department of Labor) has already increased to $1,000 per week effective October 1, 2017, and increasing to $1,125 per week effective January 1, 2018. An additional increase is expected to $1,230 per week on January 1, 2019.
While Hawaii has not increased its salary basis level for non-exempt salaried workers in over 35 years, the minimum salary for Hawaii non-exempt employees has consistently been equal to the minimum wage rate multiplied by 40. On January 1, 2018, the minimum wage for non-exempt employees will increase to $10.10 per hour, and thus the minimum salary for exempt employees will be $420 per week ($10.10 x 42 hours at 1.5 time the regular rate of pay for overtime). This change will apply to both public and private employers.
Overtime Eligibility and Regulations
The overtime rules can be a little nuanced and tricky. Hawaii law does provide for a number of exemptions from overtime and the question whether an employee is eligible for overtime pay often depends on the particular nature of their work.
One common misconception is that the exemption for salaried employees means that all salaries are exempt from overtime calculations. This is simply not true. The state of Hawaii as well as the federal Fair Labor Standards Act apply a series of tests to determine whether a salaried worker is considered exempt for overtime purposes. Simply paying someone a salary is not enough to render them ineligible for overtime pay; it is only one piece of a much bigger puzzle.
Generally speaking, to be exempt from eligibility for overtime while also being classified as a salaried employee is a high bar for employers to meet. Wage and Hour law provides exemptions for "White Collar Workers." These workers are exempt from overtime pay requirements if they are paid a weekly salary of at least $1,000 (this number is currently less than the minimum salary expected for managers of food and beverage establishments), and their professional duties involve:
For example, while computer professionals are often expected to be on the higher end of the pay scale, simply paying them a fixed salary may not fully satisfy the requirements of the exemption unless they fall into another of the following categories:
Even among those taxable wage earners that fall within the "White Collar Worker" exemption, not all employees are exempt from overtime pay requirements. Exemptions can become vague and confusing fairly quickly and there are many pitfalls that employers should be aware of. Chief among these considerations is the question of duties with regard to their jobs. For example, many companies have had difficulty justifying the professional duties of IT employees in order to make them exempt from overtime pay requirement. Another common issue employers face is how to distinguish between entry level and mid-level administrative employees. While they are fast friends, their job duties are distinctly different enough to warrant different pay scales.
Paid Leave & Other Benefits
Salaried employees in Hawaii are entitled to paid leave for sickness. Employers may provide sick leave on a daily basis and may decide how many days to give an employee for each year of employment. However, Hawaiian law provides that the maximum one may accrue is no more than 9 working days for every 6 months of employment. Hawai`i Rev. Stat. § 388-6(g). Hawaii also has a Kin Care law which entitles employees to used up to half of any sick leave benefits in order to care for a sick family member.
Vacation leave is important to employees. Under Hawaiian employment law , employers are not obligated to provide vacation pay to their employees but those who do must pay for all accumulated and unused vacation time when the employee separates from employment. Thus, employers must clearly establish a policy that clearly indicates how and when vacation time may be used if it will not be paid out at the time of separation.
Hawaii-Specific Wage Deductions
Under Hawaii state laws, wage deductions for salaried employees in most cases are limited. Employers operating in Hawaii may not deduct wages for prior disciplinary actions or poor work performance. The only reasons for deductions that are clearly defined by law include:
Hawaii state laws also define the specific circumstances under which employers may make deductions from wages for non-exempt and exempt employees. In general, employers may not make deductions for exempt employees who are away from work for partial-day absences in any of these categories:
• Sickness
• Casual reasons (e.g. tior home event).
• Personal reasons (e.g. involved in an automobile accident or medical emergency).
• Non-work related education.
• Visits to a dentist or doctor.
Under Hawaii state laws, an employer is prohibited from making deductions in any of the following situations:
• Sick days not scheduled in advance.
• Medical appointments made in advance.
• Time off for personal reasons.
• Time off for annual leave.
• Time off for bereavement.
• Paid holidays.
• Time off for holidays not scheduled in advance.
• Time off to vote.
• Opening new bank accounts.
• Employment related injury.
• Time off for jury duty.
• Workers’ compensation.
• Time off needed to take care of an injured child.
• Time off needed to deal with domestic violence.
• Time off needed to take care of the death of a family member.
• Time off for other family issues.
• Fortuitous events.
In addition to these situations, it is also illegal for Hawaii employers to deduct from employee wages to cover responsibilities for medical insurance.
Terminating a Salaried Worker
Terminating salaried employees in Hawaii requires an understanding of Hawaii law. At-will employment relationships can be severed with or without just cause, provided the termination is not the result of discrimination on the basis of age, race, sex, religion, disability, or other protected characteristics set forth in the state and local anti-discrimination laws. However, Hawaii has two laws which an employer must be aware of in the context of discharging an employee.
The first of those laws is the Hawaii temporary disability benefits law. Employers with more than 20 employees (or who have over one employee for at least 20 weeks) are required to pay into Hawaii’s Temporary Disability Insurance ("TDI") program. The TDI program provides cash benefits to employees who become temporarily unable to work due to a non-work-related injury or illness. Employers are required to pay 0.05% of an employee’s gross wages to support the TDI program, up to a wage base of $52,800. Employers can deduct from the employee’s wages up to 0.5% of gross wages, not to exceed $5 a week, to cover the costs of the TDI payments.
TDI benefits begin after an eligible employee has been unable to work for a minimum of seven days, up to a maximum of 26 weeks. Claims for TDI filed by workers who are laid off or fired will be investigated for suspected fraud. Individuals who have separated from employment with a covered employer are also eligible to receive unemployment insurance benefits if otherwise qualified. Temporary Disability Insurance benefits do not necessarily eliminate or reduce Unemployment Insurance eligibility.
The second law that employers need to be aware of is Hawaii’s Wage Payment and Collection Law ("WPCL"). Under the WPCL, if an employer discharges an employee, the employer must pay all wages within 3 working days of the employee’s discharge. Employers may pay these wages via check or direct deposit. Likewise, if an employee quits employment, all wages are to be paid no later than the next ordinary pay day.
In either case, the employer must pay the employee for wages already earned, including bonuses, commissions, and vacation pay (although whether an employer must pay for sick leave depends on an employer’s sick leave policies). If an employee is laid off due to action by the employer, compensation must be paid whether or not the employer has a policy of paying out unused vacation pay. However, employers may state in their policies that unused sick leave will not be paid upon termination.
Failure to comply with the WPCL exposes employers to penalties of interest on the owed wages as well as attorneys’ fees and costs.
Important Hawaii Legal Resources and Help
Salaried employees in Hawaii have access to a range of avenues for legal assistance and information on their rights. Governmental organizations like the Department of Labor and Industrial Relations (DLIR) are valuable resources. The Division of Labor Standards & Statistics within the DLIR provides solicitations for wage claim complaints and guidance on filing wage claims. Mediators and Hearing Officers may also assist in resolving claims of wage determinations, and if needed, Appeals Boards will review administrative decisions. Those with questions about their current or past wages can contact the State’s Wage Standards Division at (808) 586-9090 for assistance. Labor rights organizations and professional unions are also important legal resources to stay updated on the latest labor law developments. Labor unions like the Hawaii Government Employees Association and the United Public Workers organize the workforce, represent them in dispute settlements and do their best to make sure that Hawaii’s labor laws are upheld . The ACLU of Hawaii is another organization that makes a point of studying and explaining labor laws in the state. Employees may also consider seeking professional legal aid or advice should they need to settle a dispute. Organizations like the Volunteer Legal Services of Hawaii and the Legal Aid Society of Hawaii are dedicated to helping qualifying individuals seeking legal assistance. The Hawaii State Bar Association offers voluntary lawyer referral services for individuals in need of legal counsel. While it may seem burdensome to some, the strict labor laws and recording requirements that Hawaii enforces are there to protect individuals from unfair treatment and ensure that employers are following the law. Employers have no excuse for not understanding the law when it comes to employee pay. Salaried employees in Hawaii have a number of professional options available to them when they need a deeper understanding of the law or assistance.