On July 5, 2018, Governor David Y. Ige signed Senate Bill 2351 into law, adding Hawaii to the list of jurisdictions generally prohibiting employers from asking applicants about their prior compensation history.¹ As long as employers have at least one employee in the state, they are covered. 

The new law will become effective on January 1, 2019.  It covers several topics now common in many of the salary history ban laws:

Prohibited Inquiries: Employers, employment agencies, and their agents (hereafter “Covered Entities”) may not inquire about an applicant’s “current or prior wage, benefits, or other compensation” (hereafter “Salary History”).  Employers are specifically prohibited from searching publicly available records or reports to ascertain an applicant's salary history.

Reliance:  Covered Entities are prohibited from relying upon Salary History to determine the applicant’s compensation for the job, except in the case of a voluntary disclosure, addressed below.

Permissible Inquiries:  The law states that Covered Entities may discuss applicants’ compensation expectations for the job without violating the law.  The law also provides that “objective measure[s] of the applicant’s productivity, such as revenue, sales, or other production reports,” are not off-limits.  Further, the law provides that Covered Entities do not violate the law if a background check is used to verify an applicant’s disclosure of non-salary-related information and incidentally discloses an applicant’s Salary History, as long as the Salary History information is not then relied upon to set the compensation for the job.

Voluntary Disclosures: If an applicant “voluntarily and without prompting” discloses Salary History to a Covered Entity, the information can then be considered in setting compensation for the job, and the Covered Entity can verify that information.  Of course, employers using salary history to potentially set compensation must exercise caution, both due to evolving federal court jurisprudence (the U.S. Court of Appeals for the Ninth Circuit, which covers Hawaii, issued a relevant ruling earlier this year) and Hawaii’s pre-existing pay equity law.  

Current Employees: The law does not apply to “[a]pplicants for internal transfer or promotion with their current employer.”

With the passage of the law, Hawaii also joins the trend of encouraging employee dialogue about wages.  The law prevents employers from retaliating against employees who discuss their wages or inquire about wages and also prevents employers from prohibiting wage employee disclosures and discussions.

Like most of the rest of these salary history ban laws, the new Hawaii law does not explicitly address thorny coverage issues, such as how the law applies when the individual resides in one state, the job is in another state, and the employer’s headquarters is in yet another location, or situations involving a mobile workforce.

The law does not have its own separate remedial provision, but does amend Hawaii’s anti-discrimination law, meaning that typical anti-discrimination processes and remedies apply for violations. 

Recommendations

In light of the continuing salary history ban trend, employers should continue to evaluate employment application materials and screening and interview scripts to ensure compliance with the law.  Employers may want to discuss the new law's requirements with third parties that act on their behalf such as third-party recruiters and background screening vendors.  As more jurisdictions pass these laws, it is also important for employers to pay attention to the overarching pay equity trend and initiate or continue discussions about other methods to evaluate compensation and value positions.