Overtime Pay and Workers Compensation Premiums in Hawaii
In Hawaii, workers compensation premiums are calculated on the total earnings subject to the State's wage base, which includes overtime wages. Unlike some states that exclude overtime from the premium base, Hawaii's Department of Labor & Industrial Relations (DLIR) requires employers to report all wages earned, including overtime, when determining the assessable payroll.
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How the Premium is Calculated
The premium rate is applied to the assessable payroll, which is the sum of regular wages, overtime, bonuses, and other compensation up to the statutory wage ceiling. For 2024 the ceiling is $58,000 per employee per year; earnings above that amount are not subject to the premium.
Key Factors That Influence the Charge
- Employer's classification code – determines the base rate.
- Experience modification factor – reflects the employer's loss history.
- Payroll reporting frequency – quarterly reports must include overtime.
Comparative Overview
| State | Overtime Included in Premium? | Wage Ceiling (2024) |
|---|---|---|
| Hawaii | Yes | $58,000 |
| California | No (overtime excluded) | $62,500 |
| Texas | Yes | None (no ceiling) |
Compliance Tips for Hawaii Employers
1. Report total payroll, including overtime, on each quarterly DLIR filing.2. Verify that employee wages do not exceed the $58,000 ceiling; if they do, adjust the assessable amount accordingly.3. Keep detailed time‑sheet records to substantiate overtime hours in case of an audit.4. Review the experience modification factor annually and implement safety programs to lower it.
Impact on Payroll Costs
Because overtime is part of the assessable payroll, a surge in overtime hours can raise the premium dollar amount, especially for high‑risk classifications. Employers should weigh the cost of overtime against the potential increase in workers compensation expenses when scheduling extra shifts.