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Hawaii Labor Department Imposes Massive Penalties, Sends Clear Message to Employers

By Andrew L. Pepper and Jeffrey W. Brecher
  • September 22, 2016

Taking advantage of a new law that substantially increases penalties, the Wage Standards Division of the Hawaii State Department of Labor & Industrial Relations (“DLIR”) has issued penalties totaling $767,095 to a construction company remodeling a hotel in Waikiki, Hawaii. The penalties were imposed for a failure to provide Prepaid Health Care, Temporary Disability Insurance (“TDI”), and Workers’ Compensation insurance.

Act 187 of the 2016 Hawaii Legislature significantly increased the penalties for violations of workers’ compensation and temporary disability insurance laws.

Sending an clear message to all Hawaii employers, Hawaii Labor Director Linda Chu Takayama said of the leverage that the increased penalty amounts provide to Hawaii regulators, “We believe that the increase in penalties from $1 per day to $100 for TDI and worker’s compensation from $10 per day to $100 serves as a powerful incentive for employers to provide these coverages instead of just waiting till they are caught.”

The construction industry employer that faces the large penalties is alleged to have misclassified 65 construction workers as independent contractors for purposes of evading its obligation to provide TDI, Prepaid Health Insurance, and Workers’ Compensation Insurance.

The employer’s woes are far from over: The U.S. Department of Labor’s Wage and Hour Division, the Hawaii Occupational Safety and Health Division, the Hawaii Unemployment Division, and the Hawaii Department of Commerce & Consumer Affairs are conducting separate investigations and are expected to assess their own penalties.

Jackson Lewis is available to answer inquiries regarding Act 187 and other workplace developments.

©2016 Jackson Lewis P.C. This Update is provided for informational purposes only. It is not intended as legal advice nor does it create an attorney/client relationship between Jackson Lewis and any readers or recipients. Readers should consult counsel of their own choosing to discuss how these matters relate to their individual circumstances. Reproduction in whole or in part is prohibited without the express written consent of Jackson Lewis.

This Update may be considered attorney advertising in some states. Furthermore, prior results do not guarantee a similar outcome.

Jackson Lewis P.C. represents management exclusively in workplace law and related litigation. Our attorneys are available to assist employers in their compliance efforts and to represent employers in matters before state and federal courts and administrative agencies. For more information, please contact the attorney(s) listed or the Jackson Lewis attorney with whom you regularly work.

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