Renowned for its idyllic beaches and rich heritage, Hawaii is also home to a dynamic economic landscape shaped by unique labor regulations. Join us on a journey through the intricate web of the Hawaii minimum wage policies and discover the additional wage laws that play a pivotal role in shaping the financial well-being of the island’s residents.
From understanding the current minimum wage rates to exploring best practices to ensure compliance, this post aims to provide a comprehensive guide so that employers in the state can navigate their way through Hawaii’s evolving employment landscape.
- Multi-Tiered Minimum Wage Structure
- History of the Hawaii Minimum Wage
- Hawaii Minimum Wage Rates
- Exemptions & Special Cases
- Additional Hawaii Wage Laws
- Wage Law Compliance Best Practices for Employers
- How Factorial Can Help You Comply with Hawaii’s Wage Laws
- Why Automated Payroll Management Software? 🚀
Multi-Tiered Minimum Wage Structure
The minimum wage in the United States is a complex system with multiple tiers, each set by a different level of government: federal, state, and municipal. This progressive approach ensures that workers across the country receive a fair wage in line with their local economic conditions.
Federal Minimum Wage
As the baseline, the federal minimum wage is the lowest hourly rate that employers are legally allowed to pay their employees. It is set by the Fair Labor Standards Act (FLSA) and currently stands at $7.25 per hour. This rate, which ensures that employers comply with a basic level of compensation regardless of their location or industry, has not been adjusted since 2009, and it is significantly lower than the median hourly wage of all workers in the United States ($18.04 per hour).
State Minimum Wages
Recognizing regional variations in cost of living and economic factors, many states have enacted their own minimum wage laws that are higher than the federal rate. These state-level mandates ensure that workers in higher-cost areas receive a wage that reflects their cost of living. For instance, California’s minimum wage is currently $16.50 per hour (a $0.50 increase from 2024 to 2025), while Georgia’s minimum wage is $5.15 per hour (although employers covered by the FLSA must adhere to the federal minimum wage).
Municipal Minimum Wages
To further address local economic realities, some cities and counties have implemented their own minimum wage ordinances that are higher than both the federal and state rates. This approach ensures that workers in urban centers, where the cost of living is often higher, receive a wage that reflects their specific circumstances. For example, Seattle in Washington state has a higher minimum wage rate to make up for the city’s high cost of living.
In addition to regional differences, the minimum wage can also be adjusted based on industry. For example, the minimum wage for tipped employees in the restaurant industry is typically lower than the minimum wage for non-tipped employees. This is because tipped employees are expected to receive a significant portion of their income from tips. However, in some states, employers are required to make up the difference if the employee’s hourly wage plus tips does not equal at least the minimum wage. More on this below.
History of the Hawaii Minimum Wage
The first minimum wage law in Hawaii was passed in 1942, setting the rate at $0.30 per hour. Since then, the Hawaii minimum wage has been raised over 50 times up to its current level of $12.00 per hour. The most significant increases have come in recent years, with the state legislature passing laws to gradually raise the minimum wage in Hawaii to $18.00 per hour by 2028.
Here is a timeline of the major Hawaii minimum wage increases to date:
- 1942: $0.30 per hour
- 1950: $0.75 per hour
- 1964: $1.25 per hour (Oahu), $1.00 per hour (neighbor islands)
- 1970: $1.60 per hour (statewide)
- 1990: $3.80 per hour
- 2003: $6.25 per hour
- 2007: $7.25 per hour (statewide)
- 2015: $7.75 per hour
- 2016: $8.50 per hour
- 2017: $9.25 per hour
- 2018: $10.10 per hour
- 2022: $12.00 per hour
- 2024: $14.00 per hour
- 2026: Scheduled to increase by $2.00 to $16.00 per hour
- 2028: Scheduled to increase by $2.00 to $18.00 per hour
There are a few key factors that have contributed to the increases in Hawaii’s minimum wage. One is the rising cost of living in the state. Hawaii has one of the highest costs of living in the United States, and workers have struggled to keep up with the cost of housing, food, and other necessities.
Another factor is the growing awareness of the economic benefits of a higher HI minimum wage. Studies have shown that raising the minimum wage can boost the economy by increasing consumer spending and reducing poverty.
The increases in the Hawaii state minimum wage have been met with mixed reactions. Some businesses have argued that the higher wages will lead to job losses, while others have said that they can afford the increase. Workers, on the other hand, have generally welcomed the increases, saying that they will help them to make ends meet.
Hawaii Minimum Wage Rates
So, what is the minimum wage in Hawaii? Is the minimum wage going up in Hawaii next year?
The current Hawaii minimum wage is $14.00 per hour for non-tipped employees and $12.75 per hour for tipped employees who earn at least $21.00 in total earnings (wage + tips). However, get ready for another bump! On January 1, 2026, the standard minimum wage will jump to $16.00 per hour, with further increases due over the coming years, ultimately reaching $18 per hour by 2028.
Hawaii’s tiered system recognizes that tipped employees, like servers and bartenders, often receive additional income through gratuities. However, the lower base rate can still leave them vulnerable if tips fall short. The scheduled increase in the standard Hawaii minimum wage aims to address this, gradually closing the gap between tipped and non-tipped wages.
It’s worth noting that these rates apply to the entire state of Hawaii. However, some municipalities within the state have enacted their own higher minimum wage ordinances. It’s always advisable to check your local regulations to ensure you’re aware of the applicable minimum wage in your specific area.
With the upcoming increase just around the corner, Hawaii is taking a proactive stance in tackling income inequality and making life more affordable for its residents. This tiered system, coupled with potential variations in municipal ordinances, highlights the complex landscape of minimum wage regulations within the state.
Exemptions & Special Cases
While the Hawaii minimum wage rate is generally $14.00 per hour, there are a few exemptions and special cases that employers need to be aware of.
- Federal exemptions. Certain occupations are exempt from the Hawaii minimum wage through federal law. These are primarily those classed as executive, administrative, or professional workers. Examples include managers, certain computer professionals, and outside salespeople.
- State exemptions. Hawaii exempts a few specific categories of workers from its minimum wage, including:
- Full-time students working in limited capacities for on-campus employers.
- Volunteers working for non-profit organizations.
- State government employees covered by separate wage policies.
- Individuals with disabilities participating in certain sheltered workshops or vocational programs.
- Special cases. Some industries have unique regulations within the Hawaii minimum wage framework. For instance, agricultural workers generally follow a lower minimum wage, currently set at $10.50 per hour. Additionally, apprentices and learners in certified training programs may have temporarily reduced wages during their training period.
Regardless of the above exemptions and special cases, employees in Hawaii must still receive at least the federal minimum wage of $7.25 per hour.
Additional Hawaii Wage Laws
While the Hawaii minimum wage is a crucial baseline, ensuring full compliance requires delving deeper into other wage laws governing various aspects of work life. Let’s explore some key areas beyond minimum wage that require your attention.
Overtime
- General rule. Under Hawaii law, most employees working beyond 40 hours per week in a workweek are entitled to overtime pay at 1.5 times their regular rate (time and a half).
- Exemptions. Certain professions like executives, farmworkers, and some computer professionals may be exempt from overtime requirements.
- Daily overtime. While not a standard rule, some public works construction projects in Hawaii require overtime pay for working more than 8 hours in a day.
Recordkeeping
- Employer obligations. Employers must maintain detailed records of employee information, including hours worked, wages earned, deductions made, and tax information. These records must be kept for at least six years following termination of employment.
- Electronic records. Hawaii allows employers to maintain records electronically, provided they ensure the data is secure and readily accessible for inspection.
- Wage statements. Employees must receive accurate and detailed pay stubs outlining earnings, deductions, and net pay for each pay period.
Timekeeping
- Accurate tracking. Firstly, employers must implement a reliable system for recording employee work hours, such as an electronic time clock or timesheets. For remote workers, geofencing technology can help ensure accurate timekeeping and location verification.
- Accessibility. Moreover, employees should have access to their recorded work hours for verification and record-keeping purposes.
Equal Pay & Pay Transparency
- Gender and race discrimination. In line with the federal Equal Pay Act, Hawaii prohibits any employer from paying someone less because of their gender or race. This applies to both salaried and hourly employees performing similar work in the same establishment. This is known as pay parity.
- Comparable pay analysis. Businesses with 100 or more employees in Hawaii must conduct annual comparable pay analyses to identify and address any gender or race-based pay discrepancies.
- Pay transparency. In addition, Hawaii has recently enacted a pay transparency law known as Senate Bill 1057. It will go into effect on January 1, 2024, and apply to most employers with 50 or more employees in the state. According to this new law, employers must include an hourly rate or salary range in all job postings for positions based in Hawaii.
Meal and Rest Breaks
- Federal requirements. While Hawaii doesn’t have specific laws on meal and rest breaks for most private-sector employees, federal regulations still apply. This means that employers must provide minors aged 14 and 15 with a 30-minute uninterrupted break after 5 consecutive hours of work.
- Employer policy. Many employers, however, set their own policies on meal and rest breaks, offering paid or unpaid breaks depending on the work schedule and industry.
Other Relevant Wage Laws
- Paid sick leave. Hawaii mandates all employers to provide paid sick leave to employees. This is accrued at a rate of one hour per 40 hours worked.
- Wage garnishment. Hawaii imposes limitations on the percentage of an employee’s wages that employers can garnish for court-ordered debts. Specifically, the state caps wage garnishment at 25% of an employee’s disposable earnings for most types of debts. This ensures that employees keep enough income to meet their basic needs while still fulfilling their legal obligations.
- Child labor. Finally, specific regulations govern the working conditions and restrictions for minors employed in Hawaii. For example, minors under 14 are generally prohibited from any employment except for in-family farms or certain types of limited, supervised volunteer work. Teens aged 14 and 15 can work in specified jobs like babysitting or at family businesses, but only under strict limitations on hours, work types, and safety requirements. These regulations help ensure that young people in Hawaii can contribute meaningfully while prioritizing their education and well-being.
Wage Law Compliance Best Practices for Employers
Navigating Hawaii’s intricate web of wage laws can be daunting for employers. But staying compliant is crucial to avoid hefty fines and penalties.
Here are some best practices to help you stay compliant and build a happy and productive workforce:
- Master the Hawaii minimum wage. Firstly, make sure you know the current rates for both standard and tipped employees, and the upcoming increases scheduled for 2024 and beyond. In addition, be aware of exemptions and special cases within the minimum wage framework but remember the federal minimum wage of $7.25 always applies.
- Track time accurately. Secondly, implement a reliable timekeeping system to accurately record regular and overtime hours for all employees. Moreover, maintain these records for at least six years, as required by state law.
- Payday procedures. Thirdly, provide accurate and detailed pay stubs outlining earnings, deductions, and net pay each payday. In addition, ensure timely wage payments, either on the designated day or upon termination (not later than the next workday).
- Overtime rules. In addition, remember that most employees are entitled to overtime pay at 1.5 times their regular rate for any hours exceeding 40 per week. However, make sure you understand exemptions for specific occupations like executives or certain computer professionals.
- Pay transparency. Also, familiarize yourself with the upcoming Pay Transparency Law which comes into effect on January 1, 2024. In addition, be prepared to disclose salary ranges for open positions upon request during the hiring process.
- Technology. Finally, use payroll software to automate calculations, track records, and simplify complex wage compliance tasks.
How Factorial Can Help You Comply with Hawaii’s Wage Laws
As a Hawaii employer, juggling complex wage laws while managing payroll can feel like a high-wire act. But fret no more! Factorial, your comprehensive payroll software, can help you ensure effortless compliance.
Here’s how our comprehensive HR and payroll software can help you comply with Hawaii’s wage laws and build a happy and productive workforce:
- Payroll simplified. Ditch spreadsheets and manual calculations. Factorial automates your entire payroll process, from pay period setup to tax deductions and Hawaii-specific calculations like minimum wage adjustments, Hawaii state holidays, and holiday pay.
- Timely and accurate payments. Say goodbye to late paychecks. Factorial guarantees timely delivery, whether you choose bi-weekly, monthly, or customized pay periods. It even accommodates on-demand pay requests for employees who need a financial boost between cycles.
- Data security. Rest easy knowing your payroll data is safe. Factorial boasts industry-leading payroll security with multi-factor authentication and bank-level encryption.
- Precise time tracking. Eliminate time-tracking disputes with Factorial’s integrated electronic time clock. Employees can clock in/out from any device, and geofencing ensures accuracy while remote. This helps you comply with Hawaii’s time-tracking legal requirements.
- Streamlined recordkeeping. Factorial doubles as employee record management software, storing vital information like contact details, emergency contacts, and pay stubs securely. No more paper clutter!
- Employee policies. Access a library of ready-made employee handbook templates pre-loaded with essential Hawaii-specific policies and information, including Hawaii minimum wage regulations, holiday pay details, and leave policies.
