Hiring Employees in Hawaii LLC – Wages, Laws, Compliance Guide


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Any business structure or corporation stands firm on its foundation laid by the employees. An LLC is no exception to this rule. Hiring employees in your LLC comes with some rules, regulations. Before understanding the rules of hiring employees in Hawaii LLC, we must understand what an LLC means.

A Limited Liability Company is a business structure that protects the owners from any personal responsibility of the debts or liabilities arising out of the LLC. If an employee action succeeds to liabilities, the owners get the protection against it. LLCs are a combination of the characteristics of a partnership firm & a sole proprietorship. 

Hiring Employees in Hawaii

In order to hire employees in Hawaii LLC, there are many requirements that a business has to fulfill. One should keep these points in mind while hiring employees in an LLC. These requirements include:

1. Federal & State Employment posters in Hawaii

The employers in Hawaii are required to show both Federal & State Employment posters mentioned in Equal Employment Opportunities Act, Americans with Disabilities Act, Fair Labour Standards Act (FLSA),  etc. You should seek professional help to fulfill all the norms or requirements.

2. Federal & State Required Forms

Hiring employees is a lengthier process that involves the filing of different forms & applications. Suppose you wish to hire employees in Hawaii. In that case, you must ask your employees to submit the Employment Eligibility Form, the Federal Tax withholding form, the W-4 Form, Workers Compensation Claim Form, Disability Self- Identification Form, U.S. Citizenship and Immigration Services Form, etc. These Legal forms are easy and free to download.

3. Requirements of Hawaii New Hire Reporting program

Employers of Business owners are bound by Hawaii’s New Hire Reporting Program, under which they have to submit a report consisting:

  • Company Name
  • Company Address
  • Company federal tax ID number
  • Employee’s Name
  • Employee’s Social Security Number
  • Employee’s Address
  • First Day of paid Work

In addition to the forms mentioned above, payments, taxes, tax forms, & requirements, there may be some additional compliance for hiring in Hawaii; you must adhere to those norms as well.

Can an LLC Hire Employees?

An LLC or a Limited Liability Company can be regarded as a corporation, partnership, or sole owner business. The owners of the LLC are often referred to as members. Individuals, Corporations &, in some cases, other LLCs can form an LLC as members.

The members form LLCs because of their limited or no liability provided to the owners or members. In the event of liabilities arising out of an employee’s action, the members of the LLC are not personally liable- the LLC is liable for the actionable claim.

Any LLC (even one with a single owner) can hire unlimited employees on wages or salary. (The single-member owner LLC may have different rules and regulations). In addition to the salaried employees, the LLC can appoint Independent contractors for certain tasks on a contract basis. 

Rules to Hire Employees in an LLC in Hawaii?

Just like any other business corporation, an LLC is also not immune from certain procedures & rules of hiring. An LLC files many documents & pays a number of taxes to various Government Agencies while hiring employees. Some of the essential rules or steps to hire employees in an LLC are:

  • Federal Employer Identification Number – Every LLC must obtain an Employer Identification Number (EIN) from the Internal Revenue Service. EIN helps report taxes & a few other documents to the IRS.
  • Employee Eligibility Form – It is mandatory for an LLC owner to check if the employee is eligible for employment in the U.S. An LLC has to ask the employees to submit the I-9, Employment Eligibility Verification Form to verify the identity of the employee & to authorize the employment. the I-9 form is a mandatory requirement while hiring an employee.
  • Employee’s Social Security Number – The employee has to have a valid Social Security Number (SSN) to work. LLCs have to ask the new employees to submit their SSN before employment. The SSN is helpful in payment & tax purposes.
  • Setting up a process for collection & payment of the appropriate taxes – There has to be a due process for the employees’ future collection & payment of taxes. This process needs to be set up by the employer (in this case, the LLC)
  • Employee handbook – In the hiring process, one of the crucial elements of hiring paperwork is an Employee Handbook. Although it is not essential in Hawaii, it is usually needed as one of the legal documents in many other states. An Employee Handbook consists of a complete list of all the basic rules & policies of the company.
  • Hawaii payroll Taxes – An LLC that is running a business with employees or businesses with employees has to pay many federal taxes & state Taxes. Following the rules on payroll taxes is also an essential requirement.  After hiring employees, an LLC is subject to the State Unemployment Compensation Act. Under the said Act, an LLC will have to pay Unemployment tax to the state & to do that; the LLC must register itself with the Hawaii Workforce Commission. The process involves simple steps & can be completed in 20 minutes. 
    Payroll taxes also include Federal Income Tax withholding, an employer can withhold money from the employee’s account for the income tax.
  • Workers’ Compensation Insurance An LLC operating in the state of Hawaii has to carry workers’ compensation insurance & has to display relevant posters.
  • New Hire Report or Report of the New Employee – An LLC has to
    • Report about hiring the new employees in the form of “Report of New Employee(s)” to the Hawaii Workforce Commission within 20 days from the date of hire.
    • Deposit and report federal employment taxes as per the IRS procedures for payroll reporting & payment.

Laws Relating to Wages of Employee

Hawaii has laws that give employees more safeguards than federal law, including minimum wage higher than the determined wage, stronger anti-discrimination protections, disability insurance, etc. Though, with respect to some other aspects like occupational health and safety, the State follows the federal provisions. 

The employers must ensure their compliance with both federal and state laws. They must also adhere to any municipal law duties impacting the job relationship.

Structure of The Wages of Employee

Wage and hour laws exist in every state, and they safeguard employees’ rights by regulating the working hours performed every day and every week and establishing minimums for hourly pay, weekend pay, and overtime compensation. We have mentioned below some of the important aspects of the wage structure followed in Hawaii.

Hawaii Minimum wage

Employers in Hawaii must pay their employees at least $10.10 per hour and follow the state’s overtime requirements unless the employee is assured to make at least $2,000 per month (except for the exempted employees).

  • For tipped employees who earn a minimum of $7.00 through tips, then the employers can take $0.75 as the tip credit, which results in $9.35 as the minimum wage for the tipped employees. The employers cannot accept the tip credit if the total wage of the employee does not add up to at least $16.25. In such a scenario, the employee’s basic minimum wage is settled at $10.10.
  • For trainees, Hawaii’s minimum wage rules prohibit companies from paying trainees less than the state’s legal minimum wage.
  • For minor employees, Hawaii’s child labour regulations limit the kind of jobs that children can do, as well as the amount of hours and times they can work. Many activities that children are actively authorised to engage in are included in child labour regulations, including cashiering, selling, modelling, and office and administrative work.

Overtime Wage

For all hours worked in excess of 40 hours in a workweek, Hawaii law requires an employer to pay covered employees overtime at one and one-half times the standard rate. Hawaii uses various formulas to determine an employee’s regular rate, such as the frequency of payment and whether the employee’s pay includes additional costs, etc. Depending on whether the employee earns less than $2,000 per month or more than $2,000 per month, the method for determining overtime compensation varies.

Hawaii Employee Rights

Hawaii state government has set some employee rights which all the business structures, especially the LLCs have to consider. Here are the rights below,

Right to Fair Compensation

Every employee in the State of Hawaii has the right to receive their wages and salaries as part of their employment terms.

Time Off and Leaves of Absence:

The Hawaii Family Leave Law (HFLL) requires employers with 100 or more employees to provide eligible employees with up to four weeks of job-protected leave per calendar year for medical and family reasons, such as childbirth or taking care of a family member with serious illness.

A Hawaii company must also follow other leave and time off requirements, such as in case of pregnancy and parental leave, disability, donation leave, etc. Leaves for domestic and sexual violence, jury duty, witness leave, and military leave are all available.

Right against Discrimination and harassment at Workplace

The federal legislation, the Civil Rights Act prohibits employers from discriminating between the employees based on race, color, gender, sex, origin, disability, etc. at the workplace.

Workplace Health and Safety

Under the Occupational Safety and Health Act, employers need to provide a safe, secure and healthy working environment to their employees. In case the employees sustain any injuries or suffer losses due to such injuries at their workplace, they can raise a legal claim for compensation for the injuries sustained or the losses suffered due to the workplace accident.

Mass Layoff Notifications

Employers with 50 or more employees must follow the Dislocated Workers Act if they plan to close a facility. In addition to their federal WARN Act requirements, affected companies must comply with the Dislocated Workers Act, which includes paying a four-week displaced worker’s stipend to each impacted employee who is eligible for unemployment benefits.

How to Hire Employees Fast in Your Hawaii LLC

To hire employees for your Hawaii LLC you need to verify if the person is eligible to work in the US and then report him/her as ‘new hires’ to the state.

Having employees is one of the most important aspects of running a business. However, it can be a daunting process to hire employees in Hawaii. You have to register your business with the Hawaii Workforce Commission, comply with payroll taxes, and meet other employment laws. Fortunately, there are many resources available to help you in the process.

The first thing to do when hiring employees in Hawaii is to obtain a federal employer identification number (FEIN). This number is a social security number for your business. You can apply for an FEIN online. Once you receive your FEIN, you can hire employees and open a business bank account. FEIN is used to withhold federal payroll taxes.

The next step is to form your LLC. You can form a LLC online or by fax. You can find a formation company online that will help you form your LLC for a fee. You can also form your LLC by filing Form LLC-1 – Articles of Organization with the Department of Commerce and Consumer Affairs. The process can take up to three business days by fax, or seven to fourteen business days by mail. You can also file an expedited form for a $25 fee.

Then you have to file an annual report with the state. The annual report is important because it keeps the state updated on any significant changes to the LLC’s structure. It usually includes the names of all LLC managers and the company’s mailing address. You will also have to include the company’s registered agent. The registered agent is the business entity’s official contact for the state. The registered agent can be a business entity or a individual. The registered agent must be a resident of Hawaii.

If you are hiring employees in Hawaii, you will need to file a payroll tax registration form. The process for this will take about 20 minutes. This is a straightforward process, but you must follow the federal income tax withholding laws. This is also the time to ask your employees to fill out employment eligibility forms.

The process for hiring employees in Hawaii also includes filing an annual report. This report should contain information on the Hawaii LLC’s management structure, the company’s name, and the mailing address. It should also include the names of the LLC members. You can file a Hawaii LLC annual report online or by fax. If you need to hire employees in Hawaii quickly, you can contact Tax Services Oahu to provide Full Service Hawaii Employer and Payroll Services for a low fee.

You will also need to register your Hawaii LLC with the Hawaii Workforce Commission. You can find information about this in your Hawaii operating agreement. An operating agreement is a legal document that details your company’s ownership and operating procedures. An operating agreement is a binding document that is enforceable on all members of the LLC.

Hiring employees in Hawaii requires you to follow payroll tax laws and federal employment laws. You will also need to register your business with the Hawaii Workforce Center and display state employment posters. You may also need to obtain industry specific licenses.

FAQs

What Is an LLC?

An LLC is a business entity that can be treated as either a corporation, a partnership, or a sole owner business.

Is the LLC liable for damages caused by employees?

The owners of the company are not personally liable for the actions of the employees, the LLC is liable for any such actions.

What is the IRS Form I-9?

Before hiring an employee, under federal law, the business has to verify an employee’s eligibility to work in the United States with the (IRS Form I-9). The business owner also has to make sure the employee has a valid SSN or Social Security Number.

What is LLC self-employment?

LLC members, or LLC owners, are self-employed according to the IRS because they pay themselves through the earnings of LLC.

In Conclusion

All the LLCs with employees are bound by many rules and regulations with reference to wages. It is always advisable to register a registered agent service to understand the laws better. Feel free to share your feedback with us in the comment section below.

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