On July 3, 2023, Governor Josh Green signed Senate Bill 1057 into law, adding Hawaii to the list of states with active pay transparency legislation.

The Hawaii pay transparency law, which took effect on January 1, 2024, introduces new requirements for employers and expands existing equal pay protections

Key Provisions of the Hawaii Pay Transparency Law

Salary Range Disclosure

The Hawaii pay transparency law requires employers with 50 or more employees to disclose hourly rates or salary ranges in all external job listings.

These ranges must “reasonably reflect” the actual expected compensation for the position

This means that employers need to be honest and realistic when they list salary ranges in job postings. Reasonably reflect means the salary range should be close to what the employer actually plans to pay.

Exceptions to Disclosure Requirements

The law provides exceptions for certain job listings:

1. Public employee positions with salaries determined by collective bargaining agreements
2. Positions with employers that have fewer than 50 employees
3. Internal transfers or promotions within the current employer

Expanded Equal Pay Protections

The Hawaii pay transparency law also amends the state's existing equal pay legislation:

1. It prohibits wage discrimination based on any protected category, not just sex.
2. Employers must provide equal pay for “substantially similar work” rather than just “equal work”.

Enforcement and Penalties

The Hawaii pay transparency law does not specify enforcement mechanisms or penalties for non-compliance.

However, individuals may file complaints with the Hawaii Civil Rights Commission, potentially leading to investigations and legal action

Comparison to Other States with Pay Transparency Laws

Hawaii joins a growing list of states implementing pay transparency laws. While the specifics vary, these laws generally aim to reduce pay inequality and promote fair compensation practices.

Some notable differences between Hawaii's law and those in other states include:

1. Employee threshold: Hawaii's law applies to employers with 50 or more employees, while many other states have lower thresholds.
2. Internal job postings: Unlike some other states, Hawaii's law does not require pay disclosure for internal transfers or promotions.
3. Salary history inquiries: While not part of the new pay transparency law, Hawaii already prohibits employers from asking about salary history during the hiring process.

Compliance Strategies for Employers

To prepare for the Hawaii pay transparency law, employers should consider the following steps:

1. Review and update job postings: Ensure all external job listings include appropriate hourly rates or salary ranges.
2. Conduct pay equity audits: Evaluate current compensation practices to identify and address any potential disparities.
3. Train hiring managers and HR staff: Educate relevant personnel on the new requirements and best practices for compliance.
4. Establish salary range determination processes: Develop a system for determining reasonable salary ranges that reflect expected compensation.
5. Review internal policies: Update policies related to hiring, promotions, and compensation to align with the new law.

Potential Challenges and Considerations

As employers prepare to comply with the Hawaii pay transparency law, they may face several challenges:

1. Defining reasonable salary ranges: The law does not provide specific guidance on what constitutes a reasonable range, leaving room for interpretation.
2. Balancing transparency with flexibility: Employers must find ways to provide meaningful salary information while maintaining the ability to negotiate compensation packages.
3. Addressing employee concerns: Current employees may have questions or concerns about pay equity once salary ranges are publicly disclosed.
4. Coordinating multi-state compliance: Companies with operations in multiple states may need to navigate different pay transparency requirements across jurisdictions.

Future Developments

Here's how we think Hawaii's pay transparency laws will develop in the future:

1. Continued implementation: In the near future, employers and regulators will likely focus on implementing and enforcing the current requirements.
2. Potential refinements: As with other states, Hawaii may consider refining its law based on early experiences and feedback. This could include clarifying ambiguities, such as whether the 50-employee threshold applies to employees in Hawaii or nationwide.
3. Expanded coverage: In the future, the state might consider lowering its 50-employee threshold to cover more employers, aligning with states like California and Colorado that have lower thresholds.
4. Enforcement mechanisms: Future amendments might introduce clearer enforcement procedures and penalties for non-compliance.
5. Additional disclosure requirements: Hawaii might expand the law to require disclosure of other compensation components, such as benefits or bonuses, which are currently not mandated.
6. Internal job posting requirements: Unlike some other states, Hawaii's law doesn't require pay disclosure for internal transfers or promotions.
7. Data reporting requirements: Following the lead of states like Massachusetts, Hawaii might introduce requirements for larger employers to submit pay-related data to the state.

Hawaii will likely continue to monitor developments in other states and adjust its approach accordingly to remain competitive and effective in promoting pay equity.