Hawaii's workers' compensation law is HRS Chapter 386. It is run by the Disability Compensation Division of the Department of Labor and Industrial Relations (DLIR), and claims are filed with the director of labor and industrial relations (HRS 386-82). The Insurance Division regulates the insurers and approves the policy form, but it does not handle comp claims. The national guide covers the general concepts: the exclusive-remedy bargain, Part One and Part Two of the policy, payroll-and-class-code rating and experience mods. These notes cover the Hawaii rules the exam tests.

Who must be covered

• An employer is anyone with one or more people in their employment, including the State and the counties (HRS 386-1).
• Private employers must secure compensation in one of these ways (HRS 386-121):
  • insurance with an authorized carrier;
  • an approved deposit of security;
  • approved self-insurance; or
  • membership in an approved self-insurance group or captive. The State, counties and other public entities are exempt from this requirement. Self-insurance authorizations run until June 30 each year.
• Hawaii is not a monopolistic state-fund state. Employers buy from private insurers or self-insure.

Excluded from "employment" (HRS 386-1) are:

• sole proprietors working for their own business;
• people owning at least 50% of the corporation they work for;
• real estate salespeople and brokers paid solely by commission;
• unpaid volunteers for charities and nonprofits;
• household workers paid less than $225 in cash per quarter.

An employer may elect voluntary coverage for people who are not employees. The election binds until January 1 and then year to year, and ending it takes 60 days' notice before year end (HRS 386-4).

Contractors and loaned workers (HRS 386-1):

• A general contractor is treated as the employer of everyone working on the contract, including subcontractors' workers. The direct employer is primarily liable.
• A loaned employee belongs to the borrowing employer that controls the work, as long as that employer has secured compensation.

What is covered

• Covered: injury by accident arising out of and in the course of employment, plus disease proximately caused by the nature of the work (HRS 386-3(a)).
• Also covered: a deliberate assault by a third person because of the job.
• An employee hired in Hawaii stays covered while working temporarily out of state (HRS 386-6).
• No compensation is paid for injury caused by:
  • the employee's wilful intent to injure;
  • intoxication;
  • unprovoked non-work fights (HRS 386-3(b)).
• Mental stress that comes solely from good-faith disciplinary action is not compensable (HRS 386-3(c)).

Exclusive remedy

Comp benefits are the employee's exclusive remedy against the employer for the work injury (HRS 386-5). Hawaii's notable exception: civil suits for sexual harassment or sexual assault and related emotional distress or invasion of privacy claims are not barred.

Benefits

An employee who cannot finish a regular shift because of the injury is treated as totally disabled for that day.

Claims and reporting

• Fatal injury: the employer notifies the DLIR within 48 hours, in person or by phone (HRS 386-95).
• Other injuries causing lost time or treatment beyond first aid: report within seven working days. Wilful failure to report can bring a fine of up to $5,000.
• Claim deadline: the employee files a written claim within two years after the effects of the injury become known, and no later than five years after the accident (HRS 386-82). Listed exposures such as asbestos instead allow two years from learning that the work caused the condition.
• Provider billing: within two years of service, or the bill is forfeited (HRS 386-21(g)).

The policy

• Hawaii comp policies use a standard form approved by the insurance commissioner. They must cover the employer's entire liability to covered employees and let employees enforce the insurer's liability in their own names (HRS 386-124).
• The employer files a notice of insurance with the director (HRS 386-122).
• A policy cannot be cancelled until at least 10 days after notice of intent to cancel is filed with the director and served on the employer (HRS 386-127).
• Comp rate filings carry a 90-day waiting period (HRS 431:14-120).

Penalties

An employer that fails to secure compensation owes the greater of $500 or $100 per employee per day, paid to the special compensation fund. After 14 days in default, it can be enjoined from doing business (HRS 386-123).

HEMIC

The Hawaii Employers' Mutual Insurance Company was created to write workers' compensation for Hawaii employers at the lowest cost consistent with sound finances (HRS 431:14A-101).

• HEMIC is a domestic mutual insurer, not a state agency (HRS 431:14A-103). It writes only workers' compensation and employers' liability.
• It took over from the old residual market and assigned-risk plan, which were discontinued.
• Its rates must comply with the Article 14 rate law.
• It may cancel or refuse coverage for nonpayment or for refusing safety inspections (HRS 431:14A-115).

Common exam traps

• Claims go to the DLIR director (Disability Compensation Division), not the Insurance Division.
• The waiting period is 3 days, the benefit rate is 66⅔%, and the first payment is due by day 10.
• Sexual harassment and assault suits are an exception to exclusive remedy.
• Commission-only real estate agents, unpaid nonprofit volunteers and sole proprietors are excluded, though voluntary coverage is possible.
• HEMIC is a private mutual, not a monopolistic state fund.