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The Hawaii minimum wage isn’t set to increase this year, but it’s important to make sure you’re up to date on regulations to stay compliant. As a business owner, you need to be aware of potential changes so you can plan for the future.
To make sure you’re on top of the latest, here’s a rundown on the minimum wage requirements in the Aloha State.
What is the minimum wage in Hawaii?
The current minimum wage in Hawaii is $10.10 per hour, which is $2.85 higher than the federal minimum wage of $7.25. The state minimum wage last changed in January 2018, when it increased from $9.25. This was the fourth and final rise in a series of gradual increases approved in 2014.
Some additional minimum wage regulations apply for specific categories of employee in Hawaii, including:
- Tipped employees. Employers can take a tip credit for employees who make at least $20 per month in tips. With a tip credit, they can pay a lower minimum cash wage of $9.35 per hour, and take a tip credit of up to $0.75 per hour toward the state minimum wage. However, employers may only take the maximum tip credit if their employees still make at least $7 per hour over the state minimum wage, or $17.10 ($10.10 + $7.00). This means employees must average a minimum of $7.75 per hour in tips in order for the employer to pay the minimum cash wage of $9.35 per hour.
- Full-time students, who can be paid 85 percent of the Hawaii minimum wage as long as they are registered students.
- Employees considered exempt under the Fair Labor Standards Act (FLSA).
- Federal contractor employees, who must be paid a minimum wage of $10.60, effective January 1, 2019.
- Overtime employees, who work more than 40 hours in a week are entitled to $15.15 per overtime hour.
Keep in mind that some counties, cities, and towns may have their own minimum wage laws. Be sure to check what local wage laws may apply to you.
Will the minimum wage change in 2022?
As of now, there’s no definitive plan for a minimum wage increase, and the Hawaii minimum wage in 2021 will stay at $10.10. However, since the beginning of 2020, lawmakers have discussed raising the minimum wage to $13 by 2024.
Are there plans to change the minimum wage beyond 2022?
Hawaii’s minimum wage is a regular topic of conversation, given the cost of living. Hawaii’s Department of Business and Economic Development (DBED) estimates the basic minimum living wage for a single person in Hawaii is approximately $17 per hour. And during future legislative sessions, it seems likely the state legislature will be considering bills to gradually increase the Hawaii minimum wage.
How should small business owners prepare for changes to the minimum wage?
While there’s not an immediate plan for a Hawaii minimum wage increase, it’s smart to proactively prepare for potential changes. To ensure you’re ready, we suggest taking the following steps:
- Reevaluate your budget: Review your monthly sales and overhead costs to determine if you need to cut costs. Based on your monthly cash flow, decide if you need to make adjustments to your staffing plan. If you have a seasonal business, for example, it may be more cost-effective to hire contract employees instead of full-time staff.
- Make smart hires (and keep them): There’s no question the hiring process is expensive. To make sure you find the right employees the first time around, use best hiring practicesand ask smart interview questions. Once you hire employees, focus on retention and engagement. By doing this, you’re more likely to keep them around, which saves time and money.
- Upgrade your technology: Take advantage of available technology to save time and money. If you automate time-consuming tasks like payroll, you have more time to focus on your customers and growing your business. Square helps you easily learn how to do payroll yourself and how to avoid common payroll mistakes.
While these are helpful guidelines to follow, to make sure your business is prepared and stays in compliance, you should discuss Hawaii minimum wage laws with your accountant and lawyer.
