Hawaii Severance — Ch. 394B Mini-WARN, TDI, 11% Top Rate, 2026

Hawaii WARN: what applies#

Hawaii has a state mini-WARN — the Hawaii Dislocated Workers Act, Haw. Rev. Stat. ch. 394B. Chapter 394B applies to employers conducting a 'closing' or 'partial closing' (a permanent or temporary shutdown of an industrial, commercial, or other business establishment resulting in dislocation of employees) and requires the employer to provide notice to affected employees and the State Director of Labor and Industrial Relations of the closing decision. UNIQUELY among the 50 states, Hawaii Chapter 394B also requires that the employer provide a 'dislocated worker allowance' equal to the difference between the worker's pre-dislocation wage and any subsequent earnings for a specified period — making Hawaii's mini-WARN a make-whole income subsidy beyond mere notice. The Hawaii DLIR Dislocated Workers Division administers Chapter 394B. Verify the live Haw. Rev. Stat. ch. 394B text via the Hawaii Legislature (capitol.hawaii.gov) for exact thresholds, notice period, and benefit duration — secondary sources occasionally conflict on the precise notice timing. Federal WARN (29 U.S.C. §§ 2101–2109) also applies in Hawaii for employers of 100+ FTE with the standard federal triggers (60-day notice for mass layoffs affecting 50+ at a single site of employment constituting at least 33% of the active workforce, or 500+ regardless of percentage); employers covered by BOTH must comply with the more stringent obligation. Federal WARN penalties: back pay and benefits for each day notice was not given (up to 60 days), plus a $500/day civil penalty payable to the local government.

How severance is taxed in Hawaii#

Hawaii operates a 12-bracket graduated individual income tax under Haw. Rev. Stat. § 235-51 — the MOST income tax brackets of any U.S. state. The top marginal rate is 11.0% on Hawaii taxable income above $200,000 single / $400,000 MFJ (2024 thresholds; verify against the live 2026 Booklet A Employer's Tax Guide for any inflation indexing). Act 46 of 2024 (HB 2404, signed by Governor Green on June 3, 2024) enacted a multi-year increase in the standard deduction and adjustment of bracket thresholds (phased in 2024–2031) — but the 11.0% top rate is retained. Hawaii does NOT publish a separate flat supplemental withholding rate; severance, bonuses, and commissions are typically withheld using the graduated tables (Form HW-4 method), producing an effective ~11.0% rate for top-bracket severance-recipient earners. Severance-recipient earners at the executive level commonly fall in or above the $200K single threshold. On top of Hawaii state withholding, severance is subject to the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 in a calendar year) and FICA (Social Security 6.2% to the wage base, Medicare 1.45% plus 0.9% additional Medicare on wages above $200,000 single / $250,000 MFJ). Hawaii TDI (HRS § 392, statewide mandatory) contributions are capped at 0.5% of weekly wages and apply during ongoing employment — not on post-separation severance.

Calculate your situation#

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FAQ#

Does Hawaii require severance pay?

Hawaii is one of only a few states with a state-level mini-WARN that imposes more than mere NOTICE — under the Hawaii Dislocated Workers Act, Haw. Rev. Stat. ch. 394B, employers conducting a covered 'closing' or 'partial closing' must provide a UNIQUE 'dislocated worker allowance' equal to the difference between the worker's pre-dislocation wage and any subsequent earnings for a specified period. This is essentially a make-whole income subsidy beyond traditional severance — making Hawaii distinct from Maine and New Jersey, the other two mini-WARN states with statutory severance components. Separately, no Hawaii statute generally requires private employers to pay traditional severance outside the Chapter 394B framework. Severance is therefore largely employer-discretionary in Hawaii (outside of covered closings) unless your employment agreement, written severance plan, or company handbook makes it mandatory. Hawaii is an at-will employment state.

How is severance taxed in Hawaii?

Hawaii's individual income tax operates under Haw. Rev. Stat. § 235-51 with a 12-bracket graduated structure — the MOST income tax brackets of any U.S. state. The top marginal rate is 11.0% on Hawaii taxable income above $200,000 single / $400,000 MFJ (2024 thresholds). Act 46 of 2024 (HB 2404, signed June 3, 2024) enacted multi-year standard-deduction and bracket-threshold reform phased in 2024–2031, but RETAINED the 11.0% top rate. Severance-recipient earners at the executive level commonly fall in the 11.0% top bracket. Hawaii does NOT publish a separate flat supplemental withholding rate; severance, bonuses, and commissions are withheld using the graduated tables (Form HW-4 method), producing an effective ~11.0% rate for top-bracket earners. On top of Hawaii state withholding, severance is subject to the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 in a calendar year) and FICA (Social Security 6.2% to the wage base, Medicare 1.45% plus 0.9% additional Medicare on wages above $200,000 single / $250,000 MFJ). Year-end Hawaii liability is reconciled on Form N-11 or N-15. Hawaii TDI (HRS § 392) employee contributions are capped at 0.5% of weekly wages and apply during ongoing employment — typically NOT on post-separation severance.

Does Hawaii have a mini-WARN statute?

Yes — and this is one of Hawaii's MOST distinctive features for severance. The Hawaii Dislocated Workers Act, Haw. Rev. Stat. ch. 394B, requires employers conducting a 'closing' or 'partial closing' (a permanent or temporary shutdown of an industrial, commercial, or other business establishment that results in dislocation of employees) to provide notice to affected employees and the State Director of Labor and Industrial Relations of the closing decision. UNIQUELY among the 50 states, Hawaii Chapter 394B also requires that the employer provide a 'dislocated worker allowance' equal to the difference between the worker's pre-dislocation wage and any subsequent earnings for a specified period — making Hawaii's mini-WARN a make-whole income subsidy beyond mere notice. The Hawaii DLIR Dislocated Workers Division administers Chapter 394B. Verify the live Haw. Rev. Stat. ch. 394B text via the Hawaii Legislature (capitol.hawaii.gov) for exact thresholds, notice period, and benefit duration. Federal WARN (29 U.S.C. §§ 2101–2109) also applies in Hawaii for employers of 100+ FTE; employers covered by both must comply with the more stringent obligation.

Does OWBPA apply in Hawaii?

Yes. OWBPA is federal (29 U.S.C. § 626(f)) and applies in all states. If you are age 40 or older and your Hawaii employer asks you to sign a waiver of age-discrimination claims under the ADEA in your severance agreement, the waiver is enforceable only if you receive at least 21 days to consider the agreement (45 days for group exits — a 'reduction in force' or 'exit incentive program'), and 7 days after signing to revoke. Group exits additionally require disclosure of the ages and job titles of all selected and non-selected employees in the decisional unit. The Hawaii Employment Practices Law (HRS § 378-2) separately prohibits age discrimination by employers with 1 or more employees — a substantially lower threshold than the federal ADEA's 20-employee minimum, so virtually all Hawaii employers are covered by state law. A release of state-law age claims under HRS § 378 does not require OWBPA-compliant 21/45/7 procedures, but the federal ADEA release portion still does.

Can I collect Hawaii unemployment while receiving severance?

It depends on how the severance is structured. Hawaii's unemployment disqualification rules are primarily at HRS § 383-29 and related sections. In practice, the Hawaii Unemployment Insurance Division of DLIR treats severance pay based on allocation: severance designated as 'wages in lieu of notice' or salary continuation tied to a specific notice period typically offsets UI benefits week-by-week during the allocated weeks; a lump-sum severance not designated to specific weeks is more likely to be allocated to the separation date. Practical takeaways: (a) file your Hawaii UI claim with DLIR on or shortly after your last day worked at uiclaims.hawaii.gov to establish your benefit year; (b) fully disclose the severance amount, structure, and any employer designation when you apply and on weekly certifications — failure to report severance is fraud; (c) Hawaii's UI maximum weekly benefit amount is in the $796 range (one of the higher in the country) — verify the live figure at labor.hawaii.gov before relying on net-of-benefits figures.

Are non-competes enforceable in Hawaii after a layoff?

Depends entirely on whether you work in the TECHNOLOGY SECTOR. Hawaii's HB 1090 of 2015 (codified at HRS § 480-4(d)) made non-competes UNENFORCEABLE against employees of 'technology businesses' (defined narrowly in HRS § 480-4(e) to include businesses primarily engaged in the design, development, or marketing of software, internet, telecommunications, or biotechnology products) — Hawaii is one of only a handful of states with a sector-specific statutory non-compete ban (compare California § 16600 and North Dakota § 9-08-06 universal voids). For TECHNOLOGY-SECTOR Hawaii employees: a post-separation non-compete is generally UNENFORCEABLE under HRS § 480-4(d) — the non-compete release clause in your severance offer may be releasing nothing of real value. For NON-TECH Hawaii employees: non-competes are evaluated under common-law reasonableness; leading cases include 7's Enterprises, Inc. v. Del Rosario, 111 Hawai'i 484, 143 P.3d 23 (2006). A non-compete reasonable in time, geographic scope, and activity scope is generally enforceable for non-tech workers; Hawaii courts have judicial blue-pencil authority. Confidentiality and non-solicitation provisions remain enforceable across both sectors to the extent reasonable. Practical takeaway: if you are a Hawaii tech-sector worker, don't credit the 'non-compete release' as a meaningful concession — your covenant is already statutorily unenforceable. For non-tech, common-law reasonableness applies.

How does Hawaii TDI (HRS § 392) interact with severance and disability?

Hawaii's Temporary Disability Insurance program under Haw. Rev. Stat. ch. 392 is the ORIGINAL statewide STD program in the United States (enacted 1969, predating CA SDI, NJ TDI, NY DBL, RI TDI, and the more recent WA / CO / MA PFML programs). Hawaii TDI provides partial wage replacement when an employee is unable to work due to off-the-job sickness or injury — 58% of average weekly wages up to a maximum weekly benefit amount set annually by the DLIR Disability Compensation Division. The employee's contribution cannot exceed 0.5% of weekly wages or the maximum weekly deduction. Employers may elect a private plan that meets or exceeds statutory minimum benefits. TDI is SEPARATE from Workers' Compensation (which covers occupational injury) and from the Hawaii Prepaid Health Care Act (which mandates employer-sponsored health insurance for employees working 20+ hours/week). For severance recipients: (a) TDI premium contributions apply during ongoing employment, NOT on severance pay, so severance does not generate ongoing TDI obligations; (b) if you become disabled BEFORE your separation date, you may file a TDI claim against your then-current employer's plan; (c) if you become disabled AFTER separation, TDI eligibility typically requires that the disability arise during a covered employment relationship — consult DLIR for your specific situation. Hawaii has no statewide paid family leave (unlike CA, WA, MA, NJ, NY, CO, OR), though the Hawaii Family Leave Act (HRS § 398) provides up to 4 weeks UNPAID family leave for employers of 100+.