A Hawaii workers comp exemption lets certain business owners legally go without workers’ compensation coverage on themselves — In Hawaii, owners are not covered by default; their exclusion comes from the statute, not from an exemption certificate. Sole proprietors and partners are excluded, and the Hawaii DLIR Disability Compensation Division (DCD) says they may elect to be covered.
Anyone who owns at least 50 per cent of a corporation is excluded. An LLC member who holds a distributional interest of at least 50 per cent is excluded. A corporate officer who owns at least 25 per cent of the stock is excluded only when the officer works without wages for a corporation that has no employees. There is no limit on how many officers can be excluded.
The coverage requirement for employees still applies. — while the law still requires coverage for employees once a business has 1 or more. This guide explains who qualifies for the Hawaii workers comp exemption, the exact form, where to file it, what it costs, and what an exempt owner gives up. Verified against Hawaii sources as of October 2026.
Hawaii at a Glance
| Coverage required at | 1 employee(s) |
| Who may elect out | In Hawaii, owners are not covered by default; their exclusion comes from the statute, not from an exemption certificate. Sole proprietors and partners are excluded, and the Hawaii DLIR Disability Compensation Division (DCD) says they may elect to be covered. Anyone who owns at least 50 per cent of a corporation is excluded. An LLC member who holds a distributional interest of at least 50 per cent is excluded. A corporate officer who owns at least 25 per cent of the stock is excluded only when the officer works without wages for a corporation that has no employees. There is no limit on how many officers can be excluded. The coverage requirement for employees still applies. |
| Exemption form | There is no general DLIR exemption form. Owner exclusions apply automatically by statute, and an owner who wants coverage elects it on the insurance policy. Licensed contractors use the Contractors License Board form “Exclusion from Chapter 386, HRS” (CT-13). A contractor files CT-13 when the business is a sole owner with no employees, a partnership with no employees (this option does not apply to LLPs), or has a Responsible Managing Employee who owns at least 50 per cent of the corporation, LLC or LLP and there are no other employees. |
| Filed with | No filing with DLIR is needed for the statutory exclusions. Contractors file form CT-13 with the Contractors License Board at the Hawaii Department of Commerce and Consumer Affairs (DCCA), Professional and Vocational Licensing Division: https://cca.hawaii.gov/pvl/boards/contractor/maintain-and-update-insurance-requirements/ . Form PDF: https://cca.hawaii.gov/wp-content/uploads/2026/01/Exclusion-from-Chpt-386-HRS-CT-13_07.16R-1.pdf |
| Renewal | For contractors, the CT-13 exclusion lasts only while the business has no employees. If the business hires an employee, it must get workers’ comp coverage and send a certificate of insurance to the Board. If it later releases the employee and wants the exclusion again, it must sign a new CT-13. I found no fixed expiration period. |
| Penalty for being uninsured | Under HRS §386-123, an employer that fails to secure coverage as required by §386-121 owes a penalty of at least 500, or 100 per employee for every day the failure continues, whichever is greater. For good cause, the director may waive any part of the penalty above 500. The section also allows the employer to be enjoined (court-ordered to stop operating) until coverage is in place. |
In This Hawaii Guide:
Who Qualifies for A Hawaii Workers Comp Exemption
In Hawaii, owners are not covered by default; their exclusion comes from the statute, not from an exemption certificate. Sole proprietors and partners are excluded, and the Hawaii DLIR Disability Compensation Division (DCD) says they may elect to be covered. Anyone who owns at least 50 per cent of a corporation is excluded. An LLC member who holds a distributional interest of at least 50 per cent is excluded.
A corporate officer who owns at least 25 per cent of the stock is excluded only when the officer works without wages for a corporation that has no employees. There is no limit on how many officers can be excluded. The coverage requirement for employees still applies.
HRS §386-1, definition of “Employment.” Two kinds of work are not “employment”: (a) work an individual does for a corporation the individual owns at least 50 per cent of, and (b) work a corporate officer who owns at least 25 per cent of the stock does without wages for a corporation that has no employees.
The statute also says no employer may require an employee to incorporate as a condition of employment.
HRS §386-1 excludes work by an LLC member who holds a distributional interest of at least 50 per cent, and work by a partner of a partnership. In both cases the statute says no employer may require an employee to form an LLC, become a partner, or form a partnership as a condition of employment. Sole proprietors and partners may elect coverage through an insurer.
How to File the Hawaii Workers Comp Exemption
The form is There is no general DLIR exemption form. Owner exclusions apply automatically by statute, and an owner who wants coverage elects it on the insurance policy. Licensed contractors use the Contractors License Board form “Exclusion from Chapter 386, HRS” (CT-13).
A contractor files CT-13 when the business is a sole owner with no employees, a partnership with no employees (this option does not apply to LLPs), or has a Responsible Managing Employee who owns at least 50 per cent of the corporation, LLC or LLP and there are no other employees.. It is filed with No filing with DLIR is needed for the statutory exclusions.
Contractors file form CT-13 with the Contractors License Board at the Hawaii Department of Commerce and Consumer Affairs (DCCA), Professional and Vocational Licensing Division: https://cca.hawaii.gov/pvl/boards/contractor/maintain-and-update-insurance-requirements/ . Form PDF: https://cca.hawaii.gov/wp-content/uploads/2026/01/Exclusion-from-Chpt-386-HRS-CT-13_07.16R-1.pdf. Renewal: For contractors, the CT-13 exclusion lasts only while the business has no employees. If the business hires an employee, it must get workers’ comp coverage and send a certificate of insurance to the Board.
If it later releases the employee and wants the exclusion again, it must sign a new CT-13. I found no fixed expiration period.. Filing on the state’s own site costs nothing beyond any statutory fee — the “exemption filing services” that advertise on this search charge for the same form.
Hawaii Workers Comp Exemption Rules at a Glance
The exact Hawaii workers comp exemption rules every owner should check before deciding to go without coverage:
| Employee threshold | 1 |
| Who may elect out | In Hawaii, owners are not covered by default; their exclusion comes from the statute, not from an exemption certificate. Sole proprietors and partners are excluded, and the Hawaii DLIR Disability Compensation Division (DCD) says they may elect to be covered. Anyone who owns at least 50 per cent of a corporation is excluded. An LLC member who holds a distributional interest of at least 50 per cent is excluded. A corporate officer who owns at least 25 per cent of the stock is excluded only when the officer works without wages for a corporation that has no employees. There is no limit on how many officers can be excluded. The coverage requirement for employees still applies. |
| Corporate officers | HRS §386-1, definition of “Employment.” Two kinds of work are not “employment”: (a) work an individual does for a corporation the individual owns at least 50 per cent of, and (b) work a corporate officer who owns at least 25 per cent of the stock does without wages for a corporation that has no employees. The statute also says no employer may require an employee to incorporate as a condition of employment. |
| LLC members and partners | HRS §386-1 excludes work by an LLC member who holds a distributional interest of at least 50 per cent, and work by a partner of a partnership. In both cases the statute says no employer may require an employee to form an LLC, become a partner, or form a partnership as a condition of employment. Sole proprietors and partners may elect coverage through an insurer. |
| Workers exempt by law | Under HRS §386-1, as summarized by DLIR DCD, these workers are excluded: domestic workers paid less than 225 in cash in the current calendar quarter and in each completed quarter of the previous 12 months; domestic workers of public welfare recipients; voluntary or unpaid workers for religious, charitable, educational or nonprofit organizations; student workers who work for a school or college club in return for room, board or tuition; ordained, commissioned or licensed ministers, priests and rabbis; real estate salespersons and brokers paid only by commission; insurance agents paid only by commission; people under 18 who deliver or distribute newspapers; certain family employees; student nurses and interns; and federal employees. Bona fide independent contractors are not “employees,” but no employer may require a worker to incorporate, form an LLC or become a partner as a condition of work. |
| Form | There is no general DLIR exemption form. Owner exclusions apply automatically by statute, and an owner who wants coverage elects it on the insurance policy. Licensed contractors use the Contractors License Board form “Exclusion from Chapter 386, HRS” (CT-13). A contractor files CT-13 when the business is a sole owner with no employees, a partnership with no employees (this option does not apply to LLPs), or has a Responsible Managing Employee who owns at least 50 per cent of the corporation, LLC or LLP and there are no other employees. |
| Where to file | No filing with DLIR is needed for the statutory exclusions. Contractors file form CT-13 with the Contractors License Board at the Hawaii Department of Commerce and Consumer Affairs (DCCA), Professional and Vocational Licensing Division: https://cca.hawaii.gov/pvl/boards/contractor/maintain-and-update-insurance-requirements/ . Form PDF: https://cca.hawaii.gov/wp-content/uploads/2026/01/Exclusion-from-Chpt-386-HRS-CT-13_07.16R-1.pdf |
| Renewal | For contractors, the CT-13 exclusion lasts only while the business has no employees. If the business hires an employee, it must get workers’ comp coverage and send a certificate of insurance to the Board. If it later releases the employee and wants the exclusion again, it must sign a new CT-13. I found no fixed expiration period. |
| Proof of exemption or coverage | Employers that do business with a state or county agency get a Certificate of Vendor Compliance through Hawaii Compliance Express (https://vendors.ehawaii.gov/hce/). It includes the DLIR certificate of compliance, Form LIR#27, which covers workers’ compensation, unemployment insurance, temporary disability insurance (TDI) and prepaid health care. In private dealings, a client or general contractor usually gets a certificate of insurance from the employer’s carrier. Licensed contractors keep either a certificate of insurance or a CT-13 exclusion on file with the DCCA Contractors License Board. |
What A Hawaii Workers Comp Exemption Gives Up
An excluded owner is not an “employee” under HRS Chapter 386. If the owner is injured on the job and has not elected coverage, they generally cannot receive workers’ comp benefits (medical, wage loss or disability). Workers’ comp exclusive remedy rules also would not govern that owner’s own injury. Confirm the details with the DLIR Disability Compensation Division and a licensed attorney.
One honest paragraph on the “ghost policy”: a minimum-premium policy with no employees sold to owners who need a certificate of insurance. It is legal in many states, but it is not a Hawaii workers comp exemption — it is coverage with nobody on it. If you add a worker, it must be reported, or the audit will find them.
Workers Exempt by Law in Hawaii
Under HRS §386-1, as summarized by DLIR DCD, these workers are excluded: domestic workers paid less than 225 in cash in the current calendar quarter and in each completed quarter of the previous 12 months; domestic workers of public welfare recipients; voluntary or unpaid workers for religious, charitable, educational or nonprofit organizations; student workers who work for a school or college club in return for room, board or tuition; ordained,
commissioned or licensed ministers, priests and rabbis; real estate salespersons and brokers paid only by commission; insurance agents paid only by commission; people under 18 who deliver or distribute newspapers; certain family employees; student nurses and interns; and federal employees.
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Bona fide independent contractors are not “employees,” but no employer may require a worker to incorporate, form an LLC or become a partner as a condition of work.
Proving A Hawaii Workers Comp Exemption or Coverage
Employers that do business with a state or county agency get a Certificate of Vendor Compliance through Hawaii Compliance Express (https://vendors.ehawaii.gov/hce/). It includes the DLIR certificate of compliance, Form LIR#27, which covers workers’ compensation, unemployment insurance, temporary disability insurance (TDI) and prepaid health care. In private dealings, a client or general contractor usually gets a certificate of insurance from the employer’s carrier.
Licensed contractors keep either a certificate of insurance or a CT-13 exclusion on file with the DCCA Contractors License Board.
Why the Hawaii Workers Comp Exemption Matters
The Hawaii workers comp exemption is a trade: lower cost today against no safety net if you are hurt. The second half of the trade is the one the search results never lead with. Hawaii requires coverage for any employer with 1 or more employees, whether full-time, part-time, permanent or temporary.
Each ownership exclusion comes with a statutory rule that an employer cannot force a worker to incorporate, form an LLC or become a partner to avoid coverage. The 25 per cent officer exclusion applies only to unpaid officers of corporations with no employees. Hawaii also has separate mandatory TDI and prepaid health care programs, run by the same DCD, which have their own exclusions.
If the Hawaii workers comp exemption rules above leave any doubt about whether a worker counts, ask the state agency before you decide — the answer is free, and the penalty for guessing wrong is not.
Employer side: the Hawaii requirements guide covers the threshold, who counts and the penalties in full. Hurt while exempt? You may still have a claim against a third party — a licensed attorney can say.
Frequently Asked Questions
Who can file a workers comp exemption in Hawaii?
In Hawaii, owners are not covered by default; their exclusion comes from the statute, not from an exemption certificate. Sole proprietors and partners are excluded, and the Hawaii DLIR Disability Compensation Division (DCD) says they may elect to be covered. Anyone who owns at least 50 per cent of a corporation is excluded. An LLC member who holds a distributional interest of at least 50 per cent is excluded.
A corporate officer who owns at least 25 per cent of the stock is excluded only when the officer works without wages for a corporation that has no employees. There is no limit on how many officers can be excluded. The coverage requirement for employees still applies.
What form is the Hawaii workers comp exemption?
There is no general DLIR exemption form. Owner exclusions apply automatically by statute, and an owner who wants coverage elects it on the insurance policy. Licensed contractors use the Contractors License Board form “Exclusion from Chapter 386, HRS” (CT-13).
A contractor files CT-13 when the business is a sole owner with no employees, a partnership with no employees (this option does not apply to LLPs), or has a Responsible Managing Employee who owns at least 50 per cent of the corporation, LLC or LLP and there are no other employees.. File it on the state’s own site; filing services charge for the same form.
Can an exempt owner in Hawaii still collect benefits if hurt?
No. An exemption removes the owner from coverage, so there is no claim for medical care or lost wages. That is the trade.
Official Hawaii Sources & Resources
- Hawaii Hawaii Department of Labor and Industrial Relations (DLIR), Disability Compensation Division (DCD). Appeals go to the Labor and Industrial Relations Appeals Board (LIRAB).: https://labor.hawaii.gov/dcd/
- Hawaii Workers’ Comp Statute: https://www.capitol.hawaii.gov/hrscurrent/Vol07_Ch0346-0398/HRS0386/HRS_0386-0001.htm
- U.S. Department of Labor — Workers’ Comp: dol.gov
- Insurance Information Institute: iii.org
This Hawaii workers comp exemption guide was last verified against official Hawaii sources in October 2026. Rules change — confirm the current figure with the state agency or a licensed attorney.
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Disclaimer: This guide is informational only and is not legal, medical, or financial advice. Workers Comp Explained is an independent educational resource, not a law firm or insurer. Workers’ comp benefits, settlement values, deadlines, and requirements vary by state and by the specific facts of your injury and change over time, and any settlement figures here are illustrative only.
Confirm your rights and any deadline with your state’s workers’ compensation board and a licensed attorney before you act.