Hawaii Pay Transparency Law to Take Effect January 1, 2024

The basics of Hawaii’s pay transparency law

On July 3, 2023, Hawaii Governor Josh Green signed into law new legislation that requires employers to disclose salary ranges and hourly wages in job postings. These ranges must “reasonably reflect” actual expected compensation.

The legislation, SB 1057, will also expand Hawaii’s equal pay law 378.23 and 378.24 through statutes that further reduce pay inequality. These amendments prohibit discrimination against protected groups. They also require that employers assess salaries based on “equal pay for substantially similar work” rather than “equal pay for equal work” (for more information on both of these terms, please see our pay equity overview).

Bill SB 1057 also amends Chapter 378 of the Hawaii Revised Statutes.

Which employers does the Hawaii pay transparency law apply to? 

The law applies to employers with 50+ employees.

Key requirements of the Hawaii pay transparency law (SB 1057)

Effective January 1, 2024, employers with more than 50 employees are:

1. Required to disclose salary ranges and hourly rates in external job listings. These ranges must “reasonably reflect” actual expected compensation; for example, $1-$1,000,000 is not reasonable. The law does not define what “salary range” and “hourly rate” mean. 
2. Prohibited from discriminating between employees because of any protected category, meaning that they cannot receive lower compensation, in line with “equal pay for substantially similar work”, relative to other groups.

Notably, SB 1057 does not apply to internally posted job listings, internal transfers, or promotions within an employee's current employer. Neither does it apply to compensation for public sector roles (“public employee positions”) for which salary, benefits, and other compensation are determined by collective bargaining. (“Collective bargaining” is a process in which employees, through unions, negotiate contracts with employers to lay out their employment terms—those terms include pay, benefits, hours, annual leave, health and safety at work, and work-life balance, among others.)

Key amendments to Chapter 378 of the Hawaii Revised Statutes 

Within the Hawaii Revised Statutes, 378-2.3, Sections 4, 5, and 6 are updated in the following ways:

1. The Statutes have been expanded. They now prohibit wage discrimination against any “protected category listed in section 378-2(a)(l)”, whereas they formerly prohibited only gender-based wage discrimination. These categories include race, sex including 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. It redefines its approach to fair pay as “equal pay for substantially similar work” rather than “equal work”. “Substantially similar work” is determined based on jobs’ requirements for equal skill, effort, and responsibility, and similar working conditions.

The legislation does not establish whether the legislation only applies to employers with 50+ employees in Hawaii–or if an employer’s total employee count is taken into account. For example, an employer may have 49 employees in Hawaii and 1,000 outside of it; it isn’t clear if the legislation would apply in this situation. 

Related legislation in Hawaii: salary inquiry prohibition

Under HB 2137, Hawaiian employers with at least one employee in Hawaii as of January 1, 2019 are prohibited from asking job seekers about their salary history. They cannot rely on salary history to determine salary, benefits, or other types of compensation when hiring or negotiating contracts. Employers are also prohibited from searching publicly available records for salary history, or contacting former employers for this information.

The bill notes that “the legislature also believes that pay secrecy undermines efforts to close the pay gap” and that employees shall not be prohibited from discussing wages. It prohibits “retaliation or discrimination against employees who disclose, discuss, or inquire about their own or coworkers' wages”.

Which enforcement mechanisms are in place? What are the penalties for non-compliance with Hawaii’s pay transparency law (SB 1057)?

SB 1057, effective January 1, 2024, does not contain provisions for the enforcement of this law. In general, Hawaiian law allows individuals  to file a complaint alleging unlawful discrimination with the Hawaii Civil Rights Commission; they have a right to action.

Next steps for Hawaiian employers

First and foremost, employers in Hawaii should begin preparing to comply with the new law and expanded statutes by January 1, 2024. Some steps that you might take include:

1. Establishing or adopting a system that enables you to determine reasonable salary ranges.
2. Establishing or adopting a system that enables you to compare “substantially similar work” based on skill, effort, responsibility, and working conditions.
3. Evaluate the logistics of adding realistic pay ranges to postings.
4. Plan and roll out training for hiring managers, talent acquisition, and human resources.
5. Communicate these new rules to employees and identify steps that will be taken to ensure compliance.

How can PayAnalytics help Hawaiian employers meet SB 1057 requirements?

Please reach out to PayAnalytics if you’d like to demo our software to see how it can help you to comply with your local regulations. With PayAnalytics, you can:

• Get a comprehensive overview and in-depth understanding of their current salary structure. 
• Compare job roles based on “substantially similar work” in our job evaluation feature.
• Create a framework to compare different jobs and employee characteristics based on standard and objective criteria.  
• Conduct a pay equity analysis and measure and monitor pay gaps by any demographic variable.
• Address any identified pay disparities, correct pay discrepancies, and close pay gaps by making the appropriate changes suggested by the software, while understanding the associated costs. 
• Gain valuable insights into pay practices and policies that may be contributing to pay disparities. 
• Formalize and document pay policies to better respond transparently to candidates’ or employees’ requests for compensation information. 
• Prevent pay disparities and sustain fair pay with ongoing decision support. 
• Proactively reduce the risk of non-compliance and minimize the cost of remediation by conducting regular pay equity assessments.
• Report and share pay equity information with a user-friendly, flexible reporting feature.