Hawaii Amended Equal Pay Act: Ensuring Fair Compensation

Hawaii is the latest state to take steps to eliminate pay discrimination with an amendment to its Equal Pay Act.?Hawaii SB1057 ?was signed into law by Governor Josh Green on July 3, 2023.?

As well as requiring employers to disclose salary information in job listings, the bill expands legislation for protected classes, and amends its standard of equal work. The law takes effect on January 1, 2024.?

Hawaii’s Equal Pay Act: A summary of key changes

As pay transparency reaches Hawaii, here’s a summary of the amendments to its Equal Pay Act:

• Employers will be required to?include hourly rates or salary ranges in job listings?that reasonably reflect the actual compensation for the role. According to SB1057, this “helps to increase pay transparency and equal pay for all employees.”
• Unlike some other states, Hawaii?does not?require employers to include salary information in job listings for roles that are internal transfers or promotions.?
• Employers with?fewer than 50 employees are excluded?from this requirement.?So too are?public employee positions,?for which “salary, benefits or other compensation are determined pursuant to collective bargaining.” Guidance on whether the threshold refers to employees located in Hawaii or an organization’s total headcount has not yet been provided.??
• Most significant is the expansion of Hawaii’s Equal Pay Act to include a wider range of protected classes. Hawaii SB1057?prohibits pay discrimination based on any protected category, not sex alone. Employees may?bring pay discrimination claims based on any protected class?listed, namely, “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.”
• Hawaii’s?standard of “equal work” is amended to “substantially similar work”, applying to jobs with “equal skill, effort, and responsibility, and that are performed under similar working conditions.” The amendment prevents employers from pay discrimination by paying wages “at a rate less than the rate at which the employer pays wages to other employees in the establishment for?substantially similar work.”?

What is a protected class??

A protected class is a group of people granted special legal protection against?workplace discrimination ?based on certain identified traits. In the US, these include sex (including pregnancy, sexual orientation, and gender identity), race, color, religion, national origin, age/people over 40, people with physical or mental disabilities, and generic information (including family medical history).

Hawaii SB1057 also notes that similar pay transparency laws in other states have benefited employers who “spend less time interviewing because prospective employees will not apply to jobs with a pay level that they feel is too low.” Prospective applicants now have more access to information they can use “to seek higher wages, thereby helping to reduce pay inequalities.”

Understanding Hawaii’s gender pay gap?

Latest figures from the?US Bureau of Labor Statistics ?show that Hawaii women working full-time earned 86.4 percent of the median weekly wage of their male counterparts in 2021. Previous figures ranged from 75.7 percent in 2002 to a peak of 92.8 percent in 2014.?

As is often the case, it is unlikely that these figures reveal the whole picture. The?National Women’s Law Center ?notes that the full-time, year-round wage gap for Native Hawaiian and Other Pacific Islander women across all states omits part-time workers. It believes that true pay disparities are wider.

Taking steps to end pay discrimination?

Hawaii joins?Colorado ,?California ,?Washington ,?New York City , and?New York State ?(expected September 2023) in expanding pay transparency laws.?Additional laws are also anticipated in?Massachusetts,? and?Illinois , where HB3129 awaits Governor Pritzker’s signature.?

They are all part of a wider movement towards?national pay transparency ?legislation.?On Equal Pay Day 2023 Congresswoman Eleanor Holmes Norton introduced?HR1599 . If enacted, the bill will amend the Fair Labor Standards Act (FLSA), requiring employers to disclose the “wage range” in public and internal job listings.?

Complying with pay transparency legislation

Savvy employers can take steps now to comply with Hawaii SB1057 and other state pay transparency laws:?

• Employers with workers in Hawaii should prepare for compliance with the new law, and monitor updates for final guidance on employee thresholds.?
• The first step to compliance is to carry out a pay equity audit.?Trusaic Payparity ?conducts an audit across your workforce at the intersections of gender, race/ethnicity, age, disability, and more in one statistical regression analysis.?Intersectionality ?is the only way of truly understanding the extent of pay disparities in compensation structures. It examines multiple factors or demographics that affect pay, versus focusing on individual factors.?
• To prepare for pay transparency laws, learn how to?select fair and equitable pay ranges ?for all job listings. That involves integrating market data with the outcome of your pay equity audit.?Trusaic Salary Range Finder ?can help to determine competitive and fair salary ranges by overlaying internal pay equity audit data with that of external labor market data. Fair salary ranges are determined for your job listings by combining the two data points.

Hawaii’s amended Equal Pay Act is a progressive step to reducing pay inequalities and fostering more inclusive workplaces. It is a bold statement of the state’s commitment to closing its gender pay gap.?

But as Josh Bersin states,?pay equity ?is “not just the right thing to do, it’s also good for businesses.” Pay equity leads to improved customer satisfaction, innovation, financial returns, and happier employees.??

Prepare to comply with Hawaii SB1057. Speak to one our pay equity experts today.?

Download: Pay Equity Definitive Guide

Conducting a pay equity audit is a key component to ensuring equitable compensation within your organization. Just as important as the analysis is how you communicate findings and progress with various stakeholders. Download?The Pay Equity Communications Planner ?to learn best practices for discussing compensation, both internally and externally.