Workers’ Compensation Made Simple for Hawaiʻi Employers

If you’re an employer in Hawaiʻi, workers’ compensation isn’t just a good idea — it’s the law. Under HRS Chapter 386, most businesses are required to carry workers’ compensation insurance for their employees, whether they’re full-time, part-time, or temporary. While some exemptions apply, like sole proprietors with no employees, most businesses must comply.

Workers’ compensation protects employees injured on the job by covering medical care and wage replacement, it also shields employers from costly lawsuits. Compliance isn’t just about buying insurance; it includes posting notices, reporting injuries promptly, and keeping accurate records.

In Hawaiʻi, the program is overseen by Hawaiʻi’s Disability Compensation Division (DCD) under the Department of Labor and Industrial Relations (DLIR). This division also administers Temporary Disability Insurance (TDI) and Prepaid Health Care laws.

We’re here to break down everything employers need to know, key responsibilities, and how to avoid costly fines in this quick compliance guide.

What are the core compliance requirements?

1. Secure coverage
   • Purchase workers’ compensation insurance from a DLIR-authorized carrier or apply for self-insurance approval. A self-insured employer pays statutory benefits directly to its employees.
   • Employers cannot deduct premiums from employee wages.
2. Post required notices
   • Display the official DLIR workers’ compensation notice included in the Hawaiʻi Labor Law poster in a visible workplace area.
   • Provide injured employees with the DLIR “Highlights of Hawaiʻi Workers’ Compensation Law” brochure within 3 working days of notice of injury.
3. Report injuries promptly
   • File the Employer’s Report of Industrial Injury (WC 1) within 7 working days for injuries requiring medical care or time off. Employers must file this form via portal access.
   • Give a copy of the WC1 to the employee.
   • Employers must report any work-related injury that causes lost time of one day or more or requires medical treatment beyond first aid within 7 working days after becoming aware of it.
   • Any employer who willfully refuses or neglects to file any of the required reports or give any required notice under this section shall be fined by the Director no more than $5,000.
4. Maintain records
   • Keep injury reports and workers’ compensation documentation for audits. Sample records include:
     • Employer’s Report of Industrial Injury (WC 1) – every filed report.
     • Employee’s Claim for Workers’ Compensation Benefits – if submitted.
     • Doctor’s First Report of Injury – medical documentation from treating physician.
     • Payment Records – proof of wage replacement or benefit payments.
     • Correspondence with DLIR or Insurance Carrier – letters, emails, notices.
     • Safety Incident Reports – internal reports related to the injury.
     • Return-to-Work Plans – any modified duty agreements or accommodations.
     • Proof of workers’ compensation Coverage – policy documents, renewal confirmations.
     • Posting Compliance – photo or log showing workers’ compensation notice posted in the workplace.
   • Avoid misclassification of employees—this is a common compliance pitfall. Hawaiʻi’s workers’ compensation law applies to employees, not independent contractors. Misclassifying workers can lead to audits, fines, and back premiums.

Penalties for non-compliance

• Fines: Up to $100 per employee per day, minimum $500.
• Stop-Work Orders: DLIR can halt operations until coverage is secured.
• Legal action: Injunctions and potential criminal charges for intentional evasion.

Quick Employer Checklist

• Workers’ compensation policy active and renewed annually.
• DLIR notice posted in workplace.
• Supervisors trained on injury reporting.
• WC 1 filed within 7 days of injury.
• Records retained for audits.

FAQ: Hawaiʻi Workers’ Compensation Compliance

1. Are independent contractors covered under workers’ compensation?
   Generally, no—but misclassification is a common compliance issue. If you control how and when someone works, they may legally be an employee. Use a tool such as the Independent Contractor ABC test provided by the Department of Labor to see if someone you use is a true Independent Contractor.
2. What happens if I don’t have workers’ compensation insurance?
   You could face fines of $100 per employee per day, stop-work orders, and even criminal penalties.
3. How quickly must I report an injury?
   File the Employer’s Report of Industrial Injury (WC1) within 7 working days of learning about the injury.
4. Can I deduct workers’ compensation insurance costs from employee wages?
   No. Employers must pay the full premium.
5. Where do I get the required workers’ compensation notice and brochure?
   From the Hawaiʻi DLIR website you can download the brochure and additional forms are under Workers’ Compensation forms.
6. What if my employee works remotely from another island?
   Coverage still applies— workers’ compensation is based on employment in Hawaiʻi, not physical location.
7. What if my employee works remotely in another state?
   If the employee is hired in Hawaiʻi and your business operates here, Hawaiʻi workers’ compensation law generally applies. However, you may also need additional coverage in the other state depending on its laws. Check with your insurer or DLIR for multi-state compliance.
8. Can employers challenge claims?
   Yes. Employers have the right to contest whether a claim is compensable. If a claim is disputed or delayed, cases often move to administrative hearings with medical evaluations, depositions, and documentation reviewed.

If you’re an employer in Hawaiʻi and have questions about workers’ compensation, you can reach out to the Disability Compensation Division (DCD). They can provide guidance on coverage requirements, employer responsibilities, and how to stay compliant under Hawaiʻi law. If you are a simplicityHR client, please reach out to our Risk and Safety team to learn more.