Hawaii Workers’ Comp Exemption
We file workers’ compensation exemptions for Hawaii sole proprietors, LLC members, and corporate officers. Send us your details and we’ll confirm whether you qualify and handle the filing.
When coverage is required in Hawaii
HRS 386-1 defines 'employer' as any person having one or more persons in employment (no minimum headcount carve-out). Coverage is required for essentially any employer with even one employee, other than the specific excluded categories listed in HRS 386-1(1)-(14) (nonprofit volunteers, students, clergy, small domestic workers earning under $225/quarter, certain Medicaid attendant-care workers, real estate commission-only salespeople/brokers, and the ownership-based exclusions below). This is one of the strictest 'virtually any employee triggers coverage' regimes in the US.
Who can be excluded in Hawaii
Sole proprietors
Automatically excluded from the definition of 'employee' under HRS 386-1(14) ('Service performed by a sole proprietor'). Not required to cover themselves. Employer may elect to voluntarily cover an otherwise-excluded individual under HRS 386-4 (see howToFile).
Partners
Automatically excluded if the partner is an individual, HRS 386-1(12) (ordinary partnership) — employer may not require someone to become a partner as a condition of employment. For a limited liability partnership, a partner who is an individual and holds a transferable interest of not less than 50% is excluded, HRS 386-1(13). Employer may elect coverage under HRS 386-4.
LLC members
Automatically excluded if the member is an individual with a distributional interest of not less than 50% in the LLC, HRS 386-1(11). An employer may not require an employee to form an LLC as a condition of employment. Members below the 50% threshold are not covered by this specific exclusion and would default to employee status unless another exclusion applies.
Corporate officers
Two distinct statutory exclusions, no numeric cap on the count of officers, but each has its own ownership test: (1) HRS 386-1(8) excludes service performed WITHOUT WAGES for a corporation with NO OTHER EMPLOYEES by a corporate officer who is at least a 25% stockholder; (2) HRS 386-1(9) excludes service performed by an individual for a corporation if that individual owns at least 50% of the corporation (no 'without wages'/'no employees' condition on this one). An employer may not require an employee to incorporate as a condition of employment. Employer may elect voluntary coverage for excluded officers under HRS 386-4.
Construction rules in Hawaii
For contractor licensing purposes (not the base insurance exemption itself), the DCCA Contractors License Board requires licensees claiming exclusion from Chapter 386 to file Form CT-13 ('Exclusion from Chapter 386, HRS') certifying which HRS 386-1 exclusion applies (sole proprietor with no employees; partnership with no employees; corporate officer/LLC member who is a Responsible Managing Employee with 50%+ ownership and no other employees; or corporate officer RME with 25%+ stock, no wages, no other employees). Proof of ownership (stock certificates, meeting minutes, operating agreement, or tax returns) must be provided. Hiring even one Hawaii-based employee makes coverage mandatory immediately, and the licensee must reapply for exclusion if they later shed all employees and want to reclaim exempt status.
How the exemption is filed
No general state-run exemption certificate/registry exists for the base HRS 386-1 exclusions — exclusion from 'employee' status is automatic by statute for the categories above; there is nothing to file to become excluded. The mechanism running the OTHER direction — for an employer that wants to voluntarily COVER an otherwise-excluded person — is HRS 386-4: the employer secures compensation for that person under HRS 386-121 and files the notice required by HRS 386-122 with the Director of Labor and Industrial Relations; coverage then runs at least through the following calendar year and renews annually unless cancelled with 60 days' notice before year-end. The only place a Hawaii exclusion is actually 'filed' is the DCCA Contractors License Board's Form CT-13, and that filing is for contractor licensing purposes, not a general insurance exemption certificate.
- Statute
- Haw. Rev. Stat. §386-1 (definitions of 'employee' and 'employer', exclusions (1)-(14)); §386-4 (voluntary coverage election)
- Market
- Competitive — coverage is bought from a private carrier.
Notes and open questions
The HRS 386-1 text quoted here was pulled from the official Legislative Reference Bureau PDF of Chapter 386 (data.capitol.hawaii.gov), reflecting amendments through Act 183, Session Laws 2016 (the most recent amendment shown on the section). I did not independently confirm there have been no further amendments to §386-1 since 2016 — flag for a follow-up spot-check against the current online HRS if this is going live on a page. The CT-13 form/DCCA content was pulled via a fetch of the DCCA PDF; it is a licensing-board form, not evidence of a general state exemption certificate — treat 'howToFile' language distinguishing the two carefully. Hawaii's 'virtually any employee triggers mandatory coverage' framing is well supported by the 'employer' definition (one or more persons in employment) but I did not find a single official sentence stating 'coverage is required once you have 1 employee' verbatim — it is inferred from the definitions, which is standard practice in HI WC commentary.
Sources
- https://data.capitol.hawaii.gov/sessions/session2017/HRS-Chapter-PDF's/HRS_0386.pdf
- https://cca.hawaii.gov/wp-content/uploads/2026/01/Exclusion-from-Chpt-386-HRS-CT-13_07.16R-1.pdf
- https://labor.hawaii.gov/dcd/
Source material dated HRS 386-1 text as amended through Act 183, Session Laws of Hawaii 2016 (per LRB chapter PDF); CT-13 form dated 07.16R. Compiled from official Hawaii sources as a starting point, not legal advice — rules change, and your situation may turn on facts this page cannot see. Confirm with Disability Compensation Division, Hawaii Department of Labor and Industrial Relations (DLIR); contractor-license-specific filings go to the DCCA Contractors License Board or ask us and we’ll check it for you.
Workers' comp exemption filing in Hawaii
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