Hawaii Pay Transparency Law: What Employers Need to Know

Over the last few years, an increasing number of states have considered or passed pay transparency laws to help reduce pay inequities and discrimination. On July 3, 2023 Hawaii joined the growing list of states with Governor Josh Green signing a pay transparency bill into law, expanding equal pay protections. Under Act 203, Hawaii employers are required to disclose pay rates in job listings starting January 1, 2024.

What is pay transparency?

Pay transparency is the practice of openly communicating information about compensation with employees and candidates. The level of information shared varies from state to state, but for the state of Hawaii, the new law will require employers with 50 or more employees to disclose hourly rate or salary range in all external job listings.

Included in that law is an expansion to Hawaii’s existing equal pay law, which seems to apply to all employers.

What’s required to be disclosed in job listings?

An hourly rate or salary range must be included in all external job listings that “reasonably reflects the actual expected compensation.” The law does not provide a specific definition for “hourly rate” or “salary range.”

The disclosure requirements would not apply to three situations:

• Internal transfers or promotions within the company.
• Public employee positions for which salary, benefits, or other compensation are determined pursuant to collective bargaining.
• Positions with employers that have fewer than 50 employees. However, it does not specify whether the employee count refers to those within Hawaii or the total count of the company.

Employers with 50 or more employees should review policies surrounding job advertisements and update any external postings accordingly.

How does Pay Transparency affect the Equal Pay Law?

The new bill amends Hawaii’s equal pay law in two significant ways.

1. Expands the prohibition of pay discrimination to include all protected categories under Hawaii law, not just sex. This means that employees can now file claims of pay discrimination based on race, gender identity or expression, sexual orientation, age, religion, color, ancestry, disability, marital status, arrest and court record, reproductive health decision, or domestic or sexual violence victim status.
2. Replaces the previous “equal work” standard with a “substantially similar work” standard for comparing employees. Employers may not pay wages to employees at a rate less than wages paid to other employees for substantially similar work.

What can employers do to comply?

Employers should review current pay rates to ensure that jobs involving “substantially similar work” can be proven to be based on a seniority system; a merit system; a system that measures earnings by quantity or quality of production; a bona fide occupational qualification; or a differential based on any other permissible factor other than any of the protected categories. Supervisors and managers who have authority to make decisions related to pay should be trained on the new requirements to reduce the potential for employment claims under the law.

Need help with your Human Resources?

We know how difficult it can be to maintain compliance and keep up with ever-changing human resources laws and regulations. That’s where our team of HR experts can help. We monitor federal and state updates to the laws, such as the Hawaii Pay Transparency Law, and notify affected employers with the necessary information to keep their businesses compliant. To learn more about how we can help your business, contact us.

This article is for informational purposes only and does not constitute legal advice. Readers should first consult their attorney, accountant or adviser before acting upon any information in this article.