Employer’s Guide to the Hawaii Unemployment Insurance Tax

Everything an employer needs to know about paying Hawaii unemployment insurance taxes.

If your small company employs people in Hawaii, you must pay the Hawaii unemployment insurance (UI) levy. The UI tax pays for unemployment insurance programs for qualifying workers. In Hawaii, the state unemployment insurance levy is simply one of numerous taxes that companies must pay. Other major employer taxes not mentioned here include the federal unemployment insurance tax, as well as state and federal withholding taxes.

Varied states have different UI tax policies and rates. Here are the fundamental guidelines for Hawaii’s UI tax.

Become a member of the Department of Labor and Industrial Relations.

Your small company, as a Hawaii employer liable to UI tax, must open a Hawaii UI tax account with the Hawaii Department of Labor and Industrial Relations (DLIR; also sometimes called the Department of Labor or DOL). After employing an employee, you must register within 20 days. DLIR will evaluate if you are due for UI taxes when you register. (The majority of employers are accountable.) If this is the case, you will be given an identity number.

Fill out a Basic Business Application, either online or on paper, to register. If you haven’t already registered your company with a state agency, such as the Department of Taxation (DOT) or the Department of Commerce and Consumer Affairs (DCCA), you may use this application to register for numerous reasons at once. If you’ve previously registered with the DOT or DCCA, fill out a paper application (see below) and submit it to your local Unemployment Insurance office.

Use the Hawaii Business Express website to register online. Use Form BB-1, Basic Business Application, to register on paper. Blank forms may be downloaded from the DLIR website’s UI Forms area. Remember that the form includes registration for reasons other than UI tax. There is no cost to register your company with the DLIR for UI tax reasons.

You will need a federal employer identification number to set up your Hawaii UI tax account (EIN). You may get an EIN by visiting IRS.gov. In most cases, if you apply online, you will obtain your EIN very instantly.

UI Tax Liability Regulations

Unlike in most other states, Hawaii’s employment security statute does not require a certain amount of wages to be paid before an employer is subject to UI tax. Instead, it is expected that ordinary employers will be held accountable merely because they employ someone. Typical for-profit employers, on the other hand, are responsible for FUTA taxes under the Federal Unemployment Tax Act (FUTA) if, during the current or prior calendar year, they either:

paid salaries of $1,500 or more in each calendar quarter, or had one or more workers at any time in each of twenty calendar weeks.

Different restrictions apply to agricultural laborers, domestic (in-home) workers, and employees of certain (but not all) non-profit organizations, which are not included here. One piece of good news is that state UI tax payments are often deductible from FUTA taxes.

Wage Structure and Tax Rates

Each employee’s salaries are subject to UI tax up to a certain yearly limit. In Hawaii, this amount, known as the taxable salary base, often rises somewhat each year. Check the Tax Rates and Weekly Benefit Amount section of the DLIR website for information on wage bases and tax rates.

The state UI tax rate for new employers varies from year to year. It has risen and fallen during the previous 10 years. It has lately ranged between 3.0% and 4.6% on average. Based on a “experience rating,” established employers are liable to a lower or higher rate than new firms. This includes, among other things, whether your company has ever had workers file claims for state unemployment benefits.

Submit UI Tax Reports and Payments Quarterly

In Hawaii, UI tax reports and payments are due by the end of the month after the calendar quarter’s end. To put it another way:

Reports and payments for the first quarter are due on or before April 30.
Reports and payments for the second quarter are due on or before July 31.
Third-quarter reports and payments are due by October 31, and fourth-quarter reports and payments are due by January 31.

Employers with nine or more workers must submit electronically. In general, DLIR encourages all employers to submit electronically. Smaller employers, on the other hand, may submit reports and payments electronically or on paper. (There is also the option of filing reports on CD or floppy, which is not addressed here.)

Use Hawaii Unemployment Insurance (HUI) Express to file online. Use Form UC-B6, Employer’s Quarterly Wage, Contribution, and Employment and Training Assessment Report, to file on paper. At the start of each year, DLIR delivers four of these forms, one for each quarter, to employers who file on paper. There are no blank forms to download. If you want forms, please contact DLIR.

If you do not file, you will face a penalty.

Make a Public Notice (Poster)

You must display a notification (poster) about state unemployment claims in a visible location for all workers. The poster covers the basics of when an employee is qualified for unemployment benefits and how to make a claim. From the Labor Law Poster area of the DLIR website, you may download a notification that satisfies all legal criteria.

Employees should not be misclassified as independent contractors.

Employers that hire independent contractors rather than employees are exempt from the UI tax. It is critical, however, that you should not misclassify an employee as an independent contractor. If you misclassify an employee, you may face penalties or fines.

Using Payroll Service Providers

You may decide that it is easier to delegate payroll obligations, including UI taxes, to an outside payroll agency. If this is the case, bear in mind that your company, or even you personally, may be held directly liable for errors made by an outside payroll firm.