TDI in Hawaii: What Employers Need to Know About Temporary Disability Insurance

If you employ people in Hawaii, you almost certainly have a TDI obligation. Temporary Disability Insurance is one of those Hawaii-specific requirements that trips up new employers and mainland companies expanding to the islands. Unlike workers' compensation (which covers on-the-job injuries), TDI covers situations where an employee can't work because of something that happened outside of work: a broken leg from a weekend hiking trip, surgery, a serious illness, or pregnancy-related disability.

This guide walks through everything Hawaii employers need to know about TDI: who must be covered, what TDI pays, how to get coverage, cost-sharing rules, and your ongoing obligations.

1. What Is TDI?

Temporary Disability Insurance (TDI) is a state-mandated insurance program that provides partial wage replacement to employees who are unable to work due to a non-work-related illness, injury, or pregnancy. Hawaii's TDI law is found in Hawaii Revised Statutes Chapter 392.

Hawaii is one of five states (along with California, New Jersey, New York, and Rhode Island), plus Puerto Rico, with a long-standing TDI law. Several other states have since added paid family and medical leave programs, which work differently. If you've only operated on the mainland, this may be a completely new obligation for you.

The key distinction: TDI covers disabilities that are not work-related. If an employee is injured on the job, that falls under workers' compensation, which is a separate program with separate requirements. TDI covers everything else: the illness that keeps someone home for two weeks, the surgery that requires a month of recovery, the pregnancy-related disability that prevents an employee from working.

Why TDI Exists

Hawaii enacted its TDI law in 1969 to ensure that employees who suffer short-term disabilities outside of work still receive some income while they recover. Without TDI, an employee who breaks an ankle playing weekend basketball or who needs surgery for a non-work condition would have zero income protection unless they had private disability insurance or generous employer-paid sick leave.

2. Who Must Be Covered

Not every worker qualifies for TDI, but most regular employees do. An employee is eligible for benefits, and must be covered, once they have 14 weeks of Hawaii employment in the 52 weeks before the disability, where in each of those weeks they were:

• Paid for 20 or more hours
• Paid at least $400 in wages

The 14 weeks need not be consecutive or with one employer. The employee must also be in current employment when the disability starts. This means most regular full-time and part-time employees will qualify.

Who Is Typically Exempt

• Federal government employees (covered by federal programs)
• Insurance agents paid solely by commission
• Domestic workers in a private home paid less than $225 in cash in a calendar quarter
• Family members: someone working for their own spouse, son, or daughter, and a child under 21 working for a parent
• Real estate salespeople and brokers paid solely by commission

3. What TDI Covers (and What It Does Not)

TDI Covers

• Non-work-related illness: the flu, pneumonia, cancer treatment, heart conditions, mental health conditions that prevent the employee from working
• Non-work-related injury: a broken bone from a weekend activity, a car accident that wasn't work-related, a sports injury
• Pregnancy-related disability: the period during which a pregnant employee is medically unable to work due to pregnancy, childbirth, or related conditions (typically the weeks before and after delivery, as certified by a physician)
• Surgery and recovery: any medically necessary surgery and recovery period that prevents the employee from performing their job

TDI Benefit Amounts

• Weekly benefit: 58% of the employee's average weekly wage, rounded up to the next dollar, with a 2026 maximum of $871 per week
• Waiting period: 7 consecutive days of disability before benefits begin (no benefits paid for the first week)
• Maximum duration: Up to 26 weeks of benefits in a benefit year

TDI Does NOT Cover

• Work-related injuries or illnesses: that is workers' compensation, a separate program entirely
• Unemployment: TDI is for employees who have a job but cannot work due to a medical condition
• Elective cosmetic procedures (unless medically necessary)
• Childcare or bonding time: TDI covers the period of medical disability related to pregnancy/childbirth, not general parental leave (FMLA may apply for bonding time)

4. How to Get TDI Coverage

Unlike some states that have a state-run TDI fund, Hawaii requires employers to obtain TDI coverage from the private insurance market, to self-insure, or to provide it through a collective bargaining agreement with sick leave at least as good as the law requires. You cannot simply pay into a state fund.

Option 1: Purchase from a Private Insurance Carrier (Most Common)

The vast majority of Hawaii employers purchase TDI coverage from an approved private insurance carrier. The Hawaii Department of Labor and Industrial Relations maintains the official list of authorized TDI carriers. As of April 2025, there are 21 approved carriers:

All Authorized Hawaii TDI Carriers (DLIR, April 2025)

Source: Hawaii DLIR, Authorized TDI Insurance Carriers (April 2025). Only carriers on this official list are authorized to write TDI policies in Hawaii.

Work with a licensed insurance broker in Hawaii who specializes in employee benefits to shop rates across these carriers and find the best plan for your company. Rates vary by carrier, industry, workforce size, and claims history.

Option 2: Self-Insurance

Employers with sufficient financial resources can apply to the Hawaii Department of Labor and Industrial Relations (DLIR) for permission to self-insure their TDI obligations. The plan is submitted on Form TDI-15, and the employer must prove financial solvency with audited financial statements, deposited securities, or a surety bond. Self-insurance is typically only practical for larger employers.

5. Cost Sharing: Who Pays for TDI?

TDI is not entirely employer-paid. Hawaii law allows employers to share the cost with employees:

• Employee share: The employer may deduct up to half the premium cost, but not more than 0.5% of the employee's weekly wages. In 2026 the maximum deduction is $7.50 per week (0.5% of the $1,500.21 weekly wage base).
• Employer share: The employer pays the remainder of the TDI premium cost

The employee pays the smaller of half the premium or 0.5% of weekly wages. For example, if an employee earns $300 a week and the premium for that employee is $2.40, the employee's share can be up to $1.20 (half the premium), which is under the $1.50 limit (0.5% of $300). The employer pays everything above the employee's share. You may not deduct anything from an employee who has not yet met the 14-week eligibility rule.

Some Employers Pay 100%

Some Hawaii employers choose to pay the full TDI premium as an employee benefit, deducting nothing from wages. This is a competitive advantage in recruiting and retention, but it is not required by law.

6. Employer Obligations

Beyond obtaining and maintaining coverage, Hawaii employers have several ongoing TDI obligations:

Maintain Continuous Coverage

Your TDI coverage must be in effect at all times. If you switch carriers, there must be no gap between the old policy ending and the new policy beginning. Even a one-day gap can create liability.

Post a TDI Notice in the Workplace

Hawaii law requires employers to display a notice informing employees of their TDI rights and how to file a claim. This notice must be posted in a conspicuous location where employees can see it, such as a break room or common area. The Disability Compensation Law section of DLIR's free Labor Law Poster covers TDI, workers' comp, and prepaid health care.

Provide Claim Forms When Employees Report a Disability

When an employee tells you they will be out of work due to a non-work-related illness or injury, you must provide them with the appropriate TDI claim form (Form TDI-45 or the equivalent form from your carrier). Do not delay. The employee needs this to start the claim, and a claim filed more than 90 days after the disability begins can lose benefits. You complete Part B, the Employer's Statement.

Notify Your TDI Carrier

When an employee reports a disability, promptly notify your TDI insurance carrier. The carrier handles the actual claims processing, benefit determination, and payment. Your role is to facilitate the process by providing employment and wage information to the carrier as requested.

Be Careful With Job Actions

The TDI law itself does not make it unlawful to discharge an employee because of a non-work disability. Other laws may still protect the job: FMLA, the Hawaii Family Leave Law (after a birth, for employers with 100+ employees), and Hawaii's disability and pregnancy discrimination laws, enforced by the Hawaii Civil Rights Commission. Get advice before you act.

Keep Records

Maintain records of TDI coverage, employee deductions, and claims for at least the period required by DLIR regulations. Your TDI carrier and payroll provider (such as Gusto or Paychex) will help generate these records.

7. Penalties for Non-Compliance

Operating without TDI coverage is more than a technical violation. It creates real financial exposure for your business.

Direct Liability for Benefits

If you do not have TDI coverage and an employee becomes disabled, the state's TDI Special Fund pays the employee's benefits and then recovers what it paid from you (HRS 392-65). That means you end up paying 58% of the employee's average weekly wage for up to 26 weeks. At the 2026 maximum of $871 a week, one claim can reach $22,646.

DLIR Penalties

An employer who fails to provide TDI coverage owes a penalty of $500 or $100 per employee for every day without coverage, whichever is greater (HRS 392-47). If the failure lasts 30 days, a court can bar you from doing business in Hawaii until you comply. These penalties are in addition to any benefits you owe to employees.

Multiple Claims Can Stack

If you have multiple employees who become disabled while you lack coverage, you are liable for benefits to each of them. The costs can accumulate rapidly for an uninsured employer.

8. TDI vs. Workers' Comp vs. FMLA

Hawaii employers often confuse TDI, workers' compensation, and FMLA because they all relate to employees who cannot work. Here is how they differ:

An employee who breaks their wrist at a weekend barbecue cannot work for six weeks? TDI. The same employee breaks their wrist while lifting boxes at work? Workers' comp. In both cases, if the employee qualifies for FMLA, their job is also protected for up to 12 weeks, but FMLA alone does not provide any pay.

These programs can overlap. An employee with a serious non-work illness might simultaneously receive TDI wage replacement benefits and FMLA job protection. Understanding which programs apply in each situation is critical for compliance.

TDI withholding, employer premium tracking, and remittance are part of the ongoing administrative work that a Hawaii payroll service provider can manage alongside your regular payroll, so nothing falls through the cracks between pay periods.