Employers in Hawaii need to stay on top of state-specific, Hawaii employee separation laws. These employer obligations can vary significantly from state to state.
This employee separation checklist and guide to Hawaii employee termination laws provides an overview of final paycheck requirements, separation notices, and severance agreements, as well as reporting employee termination, and withdrawing registration to do business in the state.
Hawaii Employee Separation Checklist
- Provide final paycheck
- Issue separation notice
- Execute severance agreement
- Report termination
- Withdraw registration to do business
1. Final Paycheck Requirements in Hawaii
In Hawaii, the law mandates that employees who separate from their employer be paid according to specific rules. Terminated employees must receive their final paycheck immediately, or on the next working day if immediate payment is not possible. Employees who resign must be paid on the next scheduled payday, or immediately, if they provided at least one pay period’s notice.
Wages may include any compensation for board, lodging, or other facilities, depending on the employment contract. However, employers are not required to pay out accrued and unused vacation time unless specified in the employee’s contract or company policy.
Final wages can be delivered through regular pay channels, or by mail, if requested. Failure to comply may result in legal action by the Wage Standards Division, potentially leading to the recovery of unpaid wages, attorney’s fees, and other reasonable damages.
2. Firing Employees in Hawaii
Hawaii is an at-will employment state. Generally, firing employees for any reason—as long as it’s not illegal or prohibited in their contract—is permissible. Hawaii does not require employers to provide any sort of written notice or other documentation upon termination.
3. Severance Agreements in Hawaii
When drafting severance agreements in Hawaii, employers must explicitly list the claims that employees are releasing under both federal and state law. It’s important that these agreements only waive claims that have arisen before the effective date, ensuring that future claims remain unaffected.
This includes claims under laws prohibiting discrimination in employment, (H.R.S. Chapter 378), Hawaii’s family leave laws (H.R.S Chapter 398), and Hawaii’s wage and hour laws (H.R.S. Chapter 387). Furthermore, any severance agreement containing a non-disparagement clause must not prevent employees from discussing or disclosing instances of sexual harassment or sexual assault in the workplace.
Employers should also review applicable federal laws, particularly the National Labor Relations Board’s (NLRB) recent restrictions on the use of non-disparagement and confidentiality provisions in such agreements.
Employers in Hawaii planning to close, partially close, divest, or relocate operations at a covered establishment must adhere to the Hawaii Worker Adjustment and Retraining Notification (WARN) Act. This law requires employers to provide 60 days’ notice to affected employees and the Director of Labor and Industrial Relations. Affected employees include those with a reasonable expectation of continued employment, even if they work part-time.
The law defines a “covered establishment” as any business entity employing 50 or more employees in Hawaii during the preceding 12 months that is undergoing a sale, transfer, merger, or similar transaction. In addition to the notice requirement, employers must provide a dislocated worker allowance, which is the difference between the employee’s previous wages and their unemployment benefits for up to four weeks.
Notices to employees must detail the date of the planned action and inform them of their eligibility for the allowance, while notices to the Director must include specific information about the employer, the action, and the number of affected employees. Employers are not required to provide notice of a sale, transfer, or merger until a binding agreement has been finalized.
4. Reporting Employee Termination in Hawaii
If you have a Hawaii employee with an Income Withholding for Support Order (“IWO”), you should report the employee’s termination as soon as possible to the child support agency, court, or attorney that issued the IWO. Employers may register for online reporting with the Federal Office of Child Support Enforcement here.
Alternatively, you can report an employee’s termination by completing the Notification of Employment Termination or Income Status section of the IWO. Fax or mail it to the child support agency that issued it. You will need the following information:
- Employee Name
- Employee Case Identifier
- Last Known Home Address
- New Employer Address (if known)
- Date of Employee Separation
5. Withdraw Registration to do Business in Hawaii
If your organization stops doing business in Hawaii—for example, when you part ways with your last Hawaii employee—you may wish to withdraw your registration in the state. To formally withdraw, your company will need to submit the proper form to the Secretary of State. This form varies depending on legal structure.
For-Profit Corporations and Non-Profit Corporations must file this Application for Certificate of Withdrawal and submit any unpaid taxes along with the Certificate. Limited Liability Companies (LLCs) must file this Application for Certificate of Cancellation and submit any unpaid taxes along with the Certificate.
Stay Compliant with Hawaii Employee Separation Requirements
Following the Hawaii Employee Separation Agreement requirements helps employers mitigate risk, comply with federal and state regulations, and respect employee rights.
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