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Hawaii PEO Laws: Registration, Bonding and Payroll Requirements

Every PEO must register with Hawaii's Department of Labor (HRS ch. 373L) and post a payroll-scaled $25,000-$250,000 bond, renewing biennially. Registered PEOs are deemed employers for UI, workers' comp, TDI and prepaid health (HRS 373L-6). 2026: wage base $64,500, new employer rate 2.4%, minimum wage $16.00.

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Hawaii: PEO regulatory and payroll facts. Each populated field links to the statute, agency page or filing it came from.
PEO registration or licensing requiredYes - every professional employer organization must register with the director (DLIR) before entering any professional employer agreement with a client company in Hawaii (HRS 373L-2(a)). The application requires a certificate of authority, proof of workers' compensation, temporary disability insurance and prepaid health care compliance, the client company list (PEO-3), the most recent IRS Form W-3, and the surety bond or letter of credit. source (opens in new window)
Regulating agencyHawaii Department of Labor and Industrial Relations (DLIR) - the PEO registration program (Chapter 373L) is administered by DLIR, which also runs the Unemployment Insurance Division under Chapter 383; the Disability Compensation Division covers TDI and the Hawaii Compliance Express is used to verify compliance. source (opens in new window)
Bond or security requirementSurety bond or irrevocable letter of credit scaled to the PEO's prior-year IRS Form W-3 total payroll (HRS 373L-3): $25,000 for payroll up to and including $25,000,000; $75,000 for payroll over $25,000,000 up to $150,000,000; $250,000 for payroll above $150,000,000. The amount is re-evaluated from the annual W-3 filing due each June 30. source (opens in new window)
Registration renewal cycleBiennial - registrations expire June 30 of each even-numbered year (HRS 373L-2(c)); renewal fee $750, initial registration $500, restoration $1,500. A PEO must also file its most recent IRS Form W-3 annually by June 30, and obtain a new bond if payroll has moved to a higher tier. source (opens in new window)
SUI taxable wage base$64,500 for 2026, up from $62,000 in 2025 (DLIR 2025 annual UI trust fund evaluation). The base equals the state's average annual wage of employers contributing to the trust fund, computed at the start of each calendar year (HRS 383-61; DLIR employer handbook). source (opens in new window)
New-employer SUI rate2.4% for 2026, unchanged from 2025. Schedule C is in effect for 2026: experience-rated rates run from 0% to a maximum of 5.6%, with an estimated average rate of about 1.1% of taxable wages; the maximum weekly benefit for 2026 is $868 (DLIR trust fund evaluation; Bloomberg Tax). source (opens in new window)
State workers' comp fundNo - HRS 386-121(a): employers secure compensation by insuring with any stock, mutual, reciprocal or other insurer authorized to transact workers' compensation insurance in Hawaii, or by security deposit, self-insurance, a certified self-insurance group, or a group captive; there is no state fund. Hawaii Employers' Mutual Insurance Company is an independent private mutual, not a state agency (HRS 431:14A-103). source (opens in new window)
State paid leave mandateNot verified
State minimum wage$16.00 per hour (DOL state minimum wage table, updated July 1, 2026), with weekly overtime premium after 40 hours; employees earning a guaranteed monthly compensation of $4,000 or more are exempt from the minimum wage and overtime law. source (opens in new window)
PEO SUI reporting basisPEO is the employer: HRS 373L-6 provides that during the term of the professional employer agreement the PEO is deemed the employer of covered employees for complying with all laws relating to unemployment insurance, workers' compensation, temporary disability insurance and prepaid health care, and must notify each covered employee in writing. UI reporting and contributions therefore run through the PEO's accounts, and the GET exemption in HRS 237-24.75(3) applies only to registered PEOs and only to amounts disbursed for employee wages, payroll taxes, insurance premiums and benefits. source (opens in new window)

Sources

What we know about Hawaii

Hawaii is a registration state with a small regulatory apparatus that carries unusual weight: HRS Chapter 373L (enacted 2010, Act 129) requires every professional employer organization to register with the director of the Department of Labor and Industrial Relations before entering into a professional employer agreement with any client company in the state (HRS 373L-2(a)). Registration is not a rubber stamp: the PEO-1 application demands a certificate of authority from the Director of Commerce and Consumer Affairs, proof of compliance with the workers' compensation, temporary disability insurance and prepaid health care laws (verified through the Hawaii Compliance Express), the client company list on Form PEO-3 with each agreement's effective date, and the most recently filed IRS Form W-3, which also anchors the financial requirement (HRS 373L-2(b)). The financial requirement is a surety bond or irrevocable letter of credit sized to the W-3 payroll in three tiers: $25,000 for total payroll up to $25,000,000, $75,000 for payroll above $25,000,000 through $150,000,000, and $250,000 above $150,000,000 (HRS 373L-3; DLIR PEO-1 application). Registrations expire on June 30 of each even-numbered year, the renewal fee is $750 against a $500 initial fee and a $1,500 restoration fee, and every PEO must file its latest W-3 annually by June 30 and increase its bond if payroll moved into a higher tier (HRS 373L-2(c)-(d)). The reason the registration matters beyond licensing is HRS 373L-6: during the term of a professional employer agreement, the PEO is deemed the employer of all covered employees for purposes of complying with all laws relating to unemployment insurance, workers' compensation, temporary disability insurance, and prepaid health care, and it must give each covered employee written notice of that responsibility. That statutory deeming is reinforced by the tax code: HRS 237-24.75(3) exempts from general excise tax the amounts a registered PEO receives from a client company and disburses for employee wages, salaries, payroll taxes, insurance premiums and benefits - but only while the PEO maintains its registration and pays its withholding obligations, and only for the pass-through amounts, not the PEO's own fees. On the unemployment side, DLIR's trust fund evaluation confirms the 2026 numbers: the taxable wage base rose nearly 4% to $64,500 from $62,000 in 2025 under the 100% average-annual-wage formula, Schedule C governs 2026 with experience-rated rates from 0% to 5.6% and an estimated average of about 1.1% of taxable wages, the new employer rate is 2.4%, and the maximum weekly benefit climbs to $868. Workers' compensation is a private market: HRS 386-121(a) permits coverage through any stock, mutual, reciprocal or other insurer authorized in the state, or through security, self-insurance, a certified self-insurance group, or a group captive, and the Hawaii Employers' Mutual Insurance Company is an independent private mutual insurer rather than a state agency (HRS 431:14A-103). The minimum wage is $16.00 per hour with weekly overtime after 40 hours, and salaried employees guaranteed $4,000 or more per month are exempt (DOL state table). Hawaii has no statewide paid sick or family leave mandate (its TDI and prepaid health care programs are distinct, insurance-based mandates).

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