Hawaii Information Portal

In the main, the state’s payroll system is used to pay salary and wages to State of Hawaii employees, however, there are certain circumstances in which payroll is allowable for non-employees.  This page provides HR/Payroll departments with quick reference to these circumstances.

State of Hawaii departments, agencies, and jurisdictions are advised to coordinate adding non-employees to the payroll files passed to the Hawaii Information Portal.

1. Personal Services Contractors.  Comptroller’s Memorandum No. 2006-10 requires that a determination be made prior to placing an individual on payroll.  If it’s determined that an individual is a personal services contractor, per the memorandum, “Departments must inform any individual placed on the State payroll system that the individual must be treated as an ’employee’ for federal and state employment tax requirements only and that no additional benefits result from being placed on the State’s payroll system.”  Please note that if it’s determined that an individual is an agent, consultant, firm, or independent contractor, they should be treated as a vendor or a vendor in an employee-employer relationship.  Refer to additional guidance regarding the differences between Personal Services Contractors and Independent Contractors and the Personal Services Contractor Procedural Manual.
2. Election workers.  This is pertinent to the State of Hawaii Office of Elections only.  Per the IRS, Compensation paid for services and reimbursements paid under a non-accountable plan are taxable to election workers; however, they aren’t subject to income tax withholding under Internal Revenue Code (IRC) Section 3401(a). However, Section 3402(p) allows employers and employees to enter into voluntary agreements to withhold income tax from wages for services performed. Election workers may request this voluntary income tax withholding by completing and giving the employer a Form W-4, Employee’s Withholding Allowance Certificate.  Refer to specific reporting requirements for the State of Hawaii.  For Hawaii Employee Retirement System (ERS) purposes, certain thresholds apply to election workers.