Hawaiʻi's pay transparency law went into effect on Jan. 1. It follows Colorado, California, New York and a handful of other states and jurisdictions that require companies to include salary ranges and hourly rates in job postings.
"This is part of a growing trend in shifting the information imbalance from employers who used to have all of the information about pay to employees," said Helena Almeida, the vice president of counsel at the global human resources company ADP.
The pay transparency bill also came packaged with amendments to the Hawaiʻi Equal Pay Act, which previously only protected pay discrimination based on sex. It now protects against pay discrimination based on religion, age, disability and more classes.
Hawaiʻi also enacted a pay secrecy law in 2019, which barred employers from asking applicants about their previous salary.
The Hawaiʻi Civil Rights Commissionhas issued an FAQ on the new law, as has the Hawaii Employers Council.
What does the law say?
"Job listings shall disclose an hourly rate or salary range that reasonably reflects the actual expected compensation."
The following are exempt:
- Positions that are internal transfers or promotions within a current employer
- Public employee positions for which salary, benefits, or other compensation are determined pursuant to collective bargaining
- Positions with employers having fewer than 50 employees.
What can employers do to prepare?
Almeida said the first step for a lot of companies, especially small businesses, is to ensure there is a salary range for their jobs.
"This might require an employer to look at their job descriptions and job titles and really determine whether positions that have the same title actually are the same," Almeida said. "Because if you have jobs that have the same title, but vastly different responsibilities, it'll make it hard to have a salary range that makes sense for that position."
All the factors that go into compensation decisions, such as performance, tenure, and where the employee is located, should all be considered.
"You want to make sure that there's a philosophy of compensation decisions that is clear and understood, because that can help an employer defend a salary range differential and explain why one employee might be making the high end of the range, and another employee with the same responsibilities might be at the lower end of the range," Almeida said.
Almeida also recommended employers review their current pay for internal pay equity. That means the people who are currently doing the job you are about to post are within the pay range.
"Of course, once you post the range employees, your current employees are going to see the information, you want to understand where your current employees fall in that range," Almeida said.
If an employee gets mad after seeing the salary offer for a new employee with the same job title, what should management do?
"I think when companies started going into the pay transparency world, a few of them felt that it was a post it and forget it — like, post the range and that was that was compliance," Almeida said. "But really, what these laws do is they end up requiring a culture shift, to some extent at employers, employers have to be prepared for that kind of difficult conversation with their current employees, they have to be prepared to address employee concerns about why they're below the range that's posted in a job board, or why they're near the bottom of the range."
She said there are justified reasons for paying somebody differently in the same role: tenure, experience, performance. But employers need to make sure that their human resources professionals, recruiters, and managers are comfortable discussing it with employees.
"Employers should make sure that their managers are trained to undertake, explain that to the employee to have that conversation with the employee," Almeida said.
What is a reasonable range?
Other states include the wording of reasonableness or good faith of a particular salary range, but it hasn't been tested thoroughly across the states that have the requirement.
"Of course, we have heard anecdotally about, you know, concerns about the wide range of salary ranges of salaries that have been posted," Almeida said. "The laws have different standards and and employers have different ways of calculating reasonable or good faith and those differences are permitted under the relevant laws."
Another issue is that some job titles can have a salary range between $50,000 to $100,000, but sometimes an employer is looking to hire someone with less experience.
"So, across all employees with that position, maybe $50,000 to $100,000 is the actual salary range, but the reality is that they're only going to be hiring at the low end of that range," Almeida said.
If your company is exempt, should you still post the salary range?
Hawaiʻi's current law only applies to companies with 50 or more employees.
Other states started with a larger employee count but some, like New York, have gone down to companies with as few as four employees.
"It is a trend that's growing, and impacting smaller employers," Almeida said. "One reason for a smaller employer who isn't covered by the Hawaiʻi law to consider adopting pay transparency, even though it's not required, and we have heard from job seekers who are beginning to expect transparency from their employer, so there is an advantage, potentially, in being transparent and candidates understanding that a particular employer has a transparent philosophy when it comes to compensation."
This story aired on The Conversation on Jan. 10, 2024. The Conversation airs weekdays at 11 a.m. on HPR-1.
