Employer of record in Hawaii: PEO registration, employee leasing and what the client still owns (2026)

Hawaii does not use the term "employer of record," and "employee leasing" there can mean two different things. As of October 2026, a professional employer organization (PEO), which co-employs a client's workers on a long-term basis, must register with the Director of Labor and Industrial Relations under HRS chapter 373L before signing any Hawaii client, post a bond of $25,000 to $250,000 based on payroll, and is then deemed the employer for unemployment insurance, workers' compensation, temporary disability insurance (TDI) and prepaid health care. A staffing firm that employs its own workers and assigns them to clients is not a PEO, and in every arrangement the client keeps Hawaii's hiring rules.

This page is for a company outside Hawaii, or a staffing firm, deciding whether to employ someone in Hawaii through an employer of record (EOR), PEO or employee leasing service, or to register itself. How an EOR, a PEO, a staffing agency and payrolling differ is in what is an employer of record and payrolling services explained; the Hawaii checklist (TDI, prepaid health care, the HW-4 and new-hire reporting) is in hiring employees in Hawaii; and the employment agency license, with a short summary of PEO registration, is in staffing agency license in Hawaii. This page adds how the PEO rules work for the client, who is the employer for each program, and what stays with you.

Hawaii employer of record and PEO rules at a glance

What does "employee leasing" mean in Hawaii?

People searching for Hawaii employee leasing services usually mean one of three models, and Hawaii treats each one differently:

• A PEO. HRS § 373L-1 defines a professional employer organization as a party to a professional employer agreement "whose covered employees perform services on a long-term, rather than temporary or project-specific basis." It registers with the labor department under chapter 373L.
• A labor contracting or temporary staffing firm. The same definition says a PEO "does not include temporary help services, staff leasing, or other similar arrangements." A firm that hires workers as its own employees and sends them to client job sites is excluded from the employment agency license by rule, and the licensing program describes it as "employee leasing"; our Hawaii licensing guide quotes the rule and the program's FAQ.
• A placement firm paid a fee. A firm that places people into jobs with another employer for a fee, including temporary jobs, needs an employment agency license under HRS chapter 373.

An EOR that employs one person for you on an open-ended basis looks closest to the first model; one engaged for a defined project looks closer to the second. Ask the provider which it is before you compare prices.

Does Hawaii register employer of record companies or PEOs?

It registers PEOs. Section 373L-2(a) says every PEO "shall register with the director ... prior to entering into any professional employer agreement with any client company in this State," and registration "shall not be approved unless all of the applicable provisions of this chapter have been met." The application covers, among other things, the PEO's general excise tax number, a statement of anyone owning or controlling 25 percent or more, its senior management, "Proof of valid workers' compensation coverage," proof of compliance with the temporary disability insurance law, the Prepaid Health Care Act and the employment security law, and the Hawaii-branch financial institution it uses for payroll.

The bond under § 373L-3 is sized on the payroll shown on the PEO's most recent IRS Form W-3, and it exists for the client: it indemnifies "a client company who may suffer loss as a result of nonperformance by a professional employer organization." If the bond lapses, registration is forfeited automatically and the PEO must "immediately cease doing business in the State."

How do you check whether a Hawaii PEO is registered?

Ask the provider for its current registration and bond, then confirm with the department. The DLIR's professional employer organizations page publishes the application, the bond form and the client company list form, and names a program point of contact; we did not find a public list of registered PEOs on it as of October 2026. Because a registered PEO must report each client within 21 business days of the start and the end of an agreement, you can also ask the provider to confirm that your company has been reported.

Who is the employer for unemployment insurance, workers' compensation, TDI and prepaid health care?

The PEO, while the agreement lasts. Section 373L-6 says the PEO "shall be deemed the employer for all covered employees for purposes of complying with all laws relating to unemployment insurance, workers' compensation, temporary disability insurance, and prepaid health care coverage," and "shall provide written notification to each covered employee of this responsibility."

Those four programs are the heavy part of hiring in Hawaii. Workers' compensation applies from the first employee, TDI replaces part of wages for non-work illness or injury, and prepaid health care covers employees who work at least 20 hours a week, starting after four consecutive weeks; the details are in our Hawaii hiring checklist and on the DLIR's Disability Compensation Division pages. A provider that is not a registered PEO gets no deemed-employer status under chapter 373L, so ask in writing whose unemployment account, workers' compensation policy, TDI plan and health plan will cover the worker.

Which registrations, reports and notices still apply?

• Withholding: Hawaii has a state income tax. The employer registers with the Department of Taxation for withholding, and the employee completes Form HW-4; chapter 373L does not say which party withholds, so the agreement should.
• Pay notice at hire: HRS § 388-7 requires written notice "at the time of hiring of the rate of pay, and of the day, hour, and place of payment"; agree who sends it.
• The PEO's notice: written notice to each covered employee that the PEO is responsible for the four programs (§ 373L-6).
• New-hire report: to the Child Support Enforcement Agency within 20 days of the first day of work, at any employer size.

What does the client company still own in Hawaii?

• The hiring process. Employers with 50 or more employees put an hourly rate or salary range in job listings, and no employer or anyone acting for it may ask about salary history; see Hawaii pay transparency and the Hawaii salary history ban.
• Criminal and credit history. Conviction questions wait until after a conditional offer and must relate to the job, within a seven-year felony and five-year misdemeanor lookback; see Hawaii's ban-the-box law. Credit checks also wait for the offer.
• Interviews. A participant may record in Hawaii, but civil damages for unlawful interception start at $10,000; see Hawaii recording consent law for interviews.
• Day-to-day direction and the worksite. Chapter 373L assigns four programs to the PEO; everything else, including supervision, safety and discipline, depends on what the agreement gives each party, so read it with that in mind. See joint employer liability for staffing agencies.

When is registering your own company in Hawaii the better route?

• You expect several Hawaii employees. The four DLIR programs, withholding and the HW-4 are the same set of registrations whether you have one employee or ten.
• You want to choose the health plan. Prepaid health care sits with the PEO during the agreement.
• The work is a defined project. A staffing firm that employs and assigns the worker may fit better, since a PEO by definition serves long-term arrangements.
• The provider cannot show a registration and bond. Without them, chapter 373L gives you no deemed-employer protection.

Questions to ask an employer of record or PEO before signing for Hawaii

1. Are you registered with the DLIR under chapter 373L, and when does the registration expire?
2. What bond or letter of credit do you hold, for how much, and is it current?
3. Have you reported our company on your client list within 21 business days of signing?
4. Will you be the employer for unemployment insurance, workers' compensation, TDI and prepaid health care, and which health plan will our worker get?
5. Who registers with the Department of Taxation and withholds Hawaii income tax?
6. Who gives the § 388-7 pay notice and the § 373L-6 notice, and who files the new-hire report?
7. If you are not a PEO, are you a temporary help firm or an employment agency, and do you hold the license that requires?
8. Are you an IRS certified professional employer organization, and who is liable for federal employment taxes if you fail to pay?

Comparing states? New York also registers PEOs and requires a $75,000 net worth (employer of record in New York), and California has no PEO registration but its own test for who the employer is (employer of record in California).