Hawaii Salary History Ban Laws: What You Need to Know About Salary Disclosure

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On July 5, 2018, Gov. David Y. Ige signed S.B. 2351 into law, which prohibits Hawaii employers from asking applicants about their prior compensation history as long as they have at least one employee who lives in Hawaii. The law intends to help protect workers from unfair pay disparities and covers many of the common topics in other salary history ban laws; it went into effect on January 1, 2019.

Hawaii has many employer laws in place to help protect workers. It can be overwhelming to keep up with them all but it is absolutely necessary to do so to avoid employment lawsuits. More and more small businesses are turning to partnerships with Professional Employer Organizations (PEOs) to ensure that they are following all Hawaii employment laws.

Hawaii Salary History Ban Laws: What You Need to Know About Salary Disclosure

Covered Hawaii employers, employment agencies, and their agents are now prohibited from asking an applicant’s “current or prior wage, benefits, or other compensation.” They are also prohibited from performing a search of publicly available records or reports to determine an applicant’s salary history.

The purpose of these rules is to take away the reliance on an applicant’s salary history to determine compensation for a job at their company. The exception to this is if the applicant voluntarily discloses their previous salary without any prompting from the employer. If an applicant voluntarily discloses their previous salary, it is not prohibited for Hawaii employers to use this information to determine the salary offer.

This law does not apply to applicants seeking internal transfers or promotions with their current employer. (Presumably the employer would have their employees’ current salary on record).

What may employers ask applicants about salary?

Covered Hawaii employers, employment agencies, and their agents may legally ask applicants about their compensation expectations for the job.

Employers are legally allowed to use “objective measure[s] of the applicant’s productivity, such as revenue, sales, or other production reports”, to help determine a salary offer.

Employers may use a background check to verify an applicant’s disclosure of non-salary-related information. If the background check happens to disclose an applicant’s salary history, it is okay for the employer to have that information as long as it is not used to set the compensation for the job.

What may employees share about their salaries?

More and more laws are being passed to encourage employees to discuss their wages with their fellow workers because it is thought to expose pay inequities. S.B. 2351 prevents employers from retaliating against employees who discuss their wages or ask about wages. Employers are also not allowed to have rules prohibiting their employees from discussing wages with each other or to prohibit employee salary disclosures.

While this law doesn’t have its own separate remedial provision, it does amend Hawaii’s anti-discrimination law. This means that anti-discrimination processes and remedies apply for violations to this law.

It is important for Hawaii employers to follow all pay equity employment laws and to make sure that any recruiting agency or other third-party agency they hire to help with the hiring process is following these laws as well.

Trends in salary laws

At least eight cities or states have passed laws that force employers to share salary details for job postings with applicants. These labor laws aim to level the playing field for applicants when it comes to salary negotiations. While no such law has yet passed in Hawaii, this is a trend for employers to keep an eye one.

Partnering with Makai HR

Not excited about employer laws? That’s okay; we’ve got you covered through HR outsourcing! When you partner with Makai HR you can get on with the business you are trying to grow while we take care of your employee needs from payroll to taxes, health insurance/benefits and worker’s compensation. You also gain peace of mind that you are compliant with all of Hawaii’s employer laws (if you’ve ever looked you know that the list is very long and changes happen). When choosing a PEO to partner with, there are many things to consider including cost, services, and technology solutions.

With the cost of doing business in Hawaii at record highs, we know how important it is to keep labor costs in line with revenue. Our plans are priced competitively and include value-added services like time-in/time-out systems. Our three tiers of PEO service plans are tailored to the size of your business and specific needs. We offer a 100% paperless solution which means that your employees can manage their needs through a computer, tablet, or phone. We can truly improve your employees’ work benefits while freeing you up to run your business.

What are you waiting for? Companies that partner with a PEO benefit from 7-9% faster growth, 10-14% lower employee turnover; and they are 50% less likely to go out of business. Contact us today to get started!

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