Hawaiʻi's pay transparency law went into effect on Jan. 1, but last year's employment numbers show that most companies in the state might not be legally required to follow the new rules.
Act 203 requires that companies must put a reasonable salary range or hourly rate in their job listings. Exempt are internal promotions or transfers, public sector employees subject to collective bargaining agreements, and companies with 50 or fewer employees.
The bill was combined with the expansion of Hawaiʻi's Equal Pay Act, which previously only protected employees against pay discrimination based on sex. The amended version now includes protected classes based on religion, marital status, age, sexual orientation and more.
By combining the two, the state Legislature hoped to narrow the gap in pay disparity through transparency.
However, because of the 50-employee requirement, most Hawaiʻi companies do not legally need to participate.
According to 2022 data from the state Department of Business, Economic Development and Tourism, the new law only affects 1,498 companies — or about 13% of companies with more than 5 workers. HPR noted that there are nearly 30,000 companies with four or fewer employees excluded from this total, due to insufficient state data.
More than 348,000 people, or two-thirds of the workforce, are with companies of 50 or fewer employees. This total excludes government employees, according to DBEDT.
The employee count requirement was added late in the 2022 legislative session during a conference committee meeting.
Business advocates raised the most opposition to the bill.
The Retail Merchants of Hawaiʻi testified on an early version of the bill that did not have the employee requirement and said, "We need to protect our small businesses as well in Hawaiʻi. A lot of times, the larger companies are able to offer a lot more than what the smaller companies are. And they're not even looking at what the benefits are offered."
The law also does not specify if companies need to disclose whether the 50 employees are full-time, part-time, seasonal or a combination of the three. The Hawaiʻi Employers Council, in an FAQ, recommends employers count all employees until administrative rules are published.
Constance Yonashiro, chief counsel of the Hawaiʻi Civil Rights Commission, said the law is new and administrative rules will take time to create.
It requires vetting, approval by the governor, and public comment.
"Once we begin receiving inquiries or complaints, we will look to see if there are areas of confusion in the language of the statute that are commonly cited that we can clarify or address appropriately with new administrative rules," Yonashiro told HPR via email.
"But we’re not at that point yet."
Concerns of fewer applicants and resentment
Last legislative session, many opponents of the bill expressed a handful of concerns to lawmakers.
The Chamber of Commerce Hawaii said in written testimony that posting the salary range could limit a company's ability to negotiate a compensation package with potential hires.
"While the intention is to promote transparency, it could actually limit the opportunities available to job seekers who might otherwise be willing to consider a position with a lower advertised salary, but with the potential for greater compensation and benefits down the line," the group wrote.
Additionally, they stated that the bill could lead to a "standstill in the growth of salary ranges" for certain job types. They feared that the new law would "stifle competition and innovation in the marketplace and overall hurt the job seeker."
It is still too early to see the long-term effects of pay transparency laws on the workforce, said Helena Almeida, VP-Counsel for ADP.
But Almeida said it is part of a growing trend in shifting the information imbalance from employers to employees.
"It used to be that employers could freely ask candidates for positions what their past prior salary history is ... and they would be able to use that information in making their offer of new salary," Almeida said.
Hawaiʻi employers asking potential job seekers about salary history was banned in 2019.
"So the information that used to be in the employers' hands is now being transferred to the employees, and employees now can kind of review competitors and look at information across potential opportunities to see what best meets the compensation requirements that they have," Almeida said.
"But pay transparency laws are also ways of shifting power in the workplace."
The Retail Merchants of Hawaii also noted in written testimony that the requirement to include an hourly rate or salary range in job postings "may spark jealousy and resentment therefore making the workplace a toxic environment," for current employees.
Almeida recommends that employers need to start at the beginning and make sure there is a salary range for a job and reviews for job titles and job descriptions.
Employers should also review their current pay, internal pay equity, " which essentially means are people who are in that position and doing that job right now — where do they fall in that range that you intend to post that particular open position?"
Since the job posting will be seen by current employees, she said they should be prepared to talk to their staff about where they are at on the pay scale.
Penalties for no salary listings
The language of the law does not have any specific penalties for violating it. But HCRC's Yonashiro notes that the pay transparency rules came into the bill as amendments to equal pay.
"By including it in the same bill, the legislature likely intended that pay transparency in job listings will reduce instances of pay inequalities based on unlawful reasons (e.g. discrimination based on a protected category such as race, sex, religion, age, ancestry, etc.)," Yonashiro said in an email.
"It's likely that complaints about job listings that have failed to provide a pay rate or salary range may also include other discriminatory practices based on the protected categories found in HRS sec. 378-2."
As far as penalties go, Yonashiro said that while every case is fact-specific, remedies for complaints filed under Chapter 378 Part I may include compensatory and punitive damages or legal and equitable relief.
After the first week of January, the HCRC has yet to receive a complaint of a company violating the pay transparency law.
Those seeking to file a complaint against a company for violating the pay transparency law or any part of Hawaiʻi's Equal Pay Act can fill out a pre-complaint questionnaire form and submit it to HCRC.
An intake investigator will contact the individual to do an assessment and file a complaint, if appropriate.
Pre-complaint questionnaire forms can be found here.
Interested individuals can call HCRC's main office at (808) 586-8636 / TDD: (808) 586-8692 for more information or assistance, or email us at: DLIR.HCRC.INFOR@hawaii.gov. Language and auxiliary aids are available upon request.
