Hawaii Financial Responsibility, Taxes & Exam Logistics
Beyond the exams, a Hawaii contractor must show financial responsibility, carry workers' compensation, and handle Hawaii's General Excise Tax. This chapter reviews the Recovery Fund, insurance, the 4% GET, and the closed-book exam format.
Financial responsibility and the Contractors Recovery Fund
Hawaii applicants must show financial solvency and satisfy the board's financial-responsibility rules, which include participation in the Contractors Recovery Fund (HRS §444-16.5 and related sections). The Recovery Fund can compensate consumers harmed by a licensed contractor's misconduct up to statutory caps, and a contractor whose actions trigger a payout must reimburse the fund. This consumer-protection backstop is one reason Hawaii keeps its licensing and financial standards strict.
Workers' compensation
Under Hawaii's Workers' Compensation Law (HRS Chapter 386), an employer with one or more employees generally must carry workers' compensation coverage. This is a single-employee trigger, stricter than states that require coverage only at three or more workers, so a Hawaii contractor should secure coverage as soon as the first employee is hired.
General Excise Tax and the closed-book exam
Hawaii has no retail sales tax; instead it imposes a General Excise Tax (GET) under HRS Chapter 237 on business gross income, generally at 4% (4.5% on Oahu with the county surcharge). Contractors must register for a GET license and account for GET on their gross receipts, including a wholesale rate on payments to subcontractors. On the examination side, remember Hawaii's format is closed book with a 75% passing score — candidates cannot rely on an open reference and must know the licensing law, lien rules, and tax basics from memory.