By Chamber of Commerce Hawaii Staff

Hawaii’s high cost of living puts pressure on working families, who must balance housing, childcare, and other expenses with job demands. Access to affordable, reliable early childhood care remains a significant barrier, with childcare shortages limiting workforce participation and costing the state an estimated $1.18 billion annually in lost economic activity.

The Chamber of Commerce Hawaii (COC Hawaii) has prioritized early childhood care as a critical economic issue, convening business leaders, policymakers, and community partners through initiatives such as the Care Summit to advance employer-driven and public-private solutions. Addressing both childcare availability and paid leave will be essential to strengthening workforce stability and supporting Hawaii’s long-term economic growth. Learn more here.

Paid family and medical leave programs aim to ease some of the burden on employees, allowing them to take time off for major life events such as the birth of a child, caring for a sick or elderly family member, or addressing personal health needs. COC Hawaii frames its position on paid family leave within the 2030 Blueprint for Hawaii, which emphasizes policies that strengthen economic competitiveness, improve workforce skills, diversify the economy, and build local wealth. The Chamber supports policies that help workers navigate life’s critical moments, but it also highlights the financial and operational challenges such programs can impose, particularly on small- and medium-sized businesses operating with tight margins.

In 2025, House Bill 755 House Draft 2 proposed a statewide paid family and medical leave program administered by the Department of Labor and Industrial Relations, funded through payroll contributions from both employers and employees. COC Hawaii opposed the measure, citing multiple challenges for businesses. As written, the program’s mandatory payroll contributions would place financial strain on businesses of all sizes, particularly small companies with limited resources.

COC Hawaii also highlighted the administrative and operational burdens of the program. With job protection requirements and mandates to maintain employee health benefits during leave, businesses could face staffing gaps and scheduling challenges. Employers need the ability to coordinate leave schedules in a way that balances operational demands with employee needs, rather than being constrained by a uniform mandate that could create financial and logistical strain. HB 755 HD2 ultimately did not advance to the House Finance Committee.

More recently, in 2026, legislators introduced House Bill 2360 (HB2360), which crossed over to the Senate as House Draft 2. While similar to HB 755 HD 2 in creating a state-administered family and medical leave insurance program funded by payroll contributions, HB 2360 makes several notable adjustments. The bill pushes back the program’s key deadlines by one year, with contributions scheduled to begin January 1, 2029, and claims and benefit payments set to start January 1, 2030. The current version of the bill, HB360 HD2, also excludes paid family and medical leave benefits from income tax and places added emphasis on the need for actuarial validation before contribution rates are finalized.

In 2025, the Legislature created the Paid Family Leave Working Group through Senate Concurrent Resolution 145 Senate Draft 1 (SCR 145 SD1), to study options for a statewide paid family and medical leave program. COC Hawaii was among the participants, advocating for a formal actuarial study to project program costs, estimate utilization, determine contribution levels, and assess long-term trust fund solvency. Such an analysis would help ensure that payroll contributions are based on financial modeling rather than rough estimates, giving employers, particularly small- and medium-sized businesses, greater predictability for staffing, payroll, and operational planning while reducing the risk of unexpected costs.

COC Hawaii supports the desire to help employees navigate major life events, but it views changes to paid family leave cautiously. While the later timeline gives businesses more lead time to prepare, the Chamber stresses that uncertainty over final contribution rates remains a significant concern. Employers still face potential operational and financial strain from extended benefit durations and continued health benefits requirements, particularly small businesses with limited staffing flexibility. By highlighting actuarial validation, HB 2360 HD 2 addresses one of the Chamber’s key recommendations from the previous bill, but the organization maintains that clear guidance on costs and administrative responsibilities is essential to prevent undue burden on Hawaii’s businesses.

The Chamber encourages lawmakers to carefully weigh both employee needs and business realities as HB 2360 HD 2 moves through the Senate. Thoughtful policy design can support families, maintain workforce stability, and protect the economic health of Hawaii’s businesses.

Learn more about the 2030 Blueprint for Hawaii here: https://www.cochawaii.org/2030-blueprint/

Learn more about the Chamber’s work in early childhood care here: https://www.cochawaii.org/childcare-in-hawaii/