The new year will bring three big changes to Hawaii’s pay equity efforts. The first two equal pay expansions are applicable to employers of all sizes, while the pay posting requirement only affects employers with 50 or more employees.
Equal Pay: Not Just for Men and Women Anymore
Equal pay will be required across all protected categories covered by Hawaii’s employment discrimination statute, not justbetween the sexes. These categories include race, sex (including pregnancy, childbirth, and related medical conditions as well as gender identity or expression), sexual orientation, age, religion, color, ancestry, disability, marital status, arrest and court records, reproductive health decisions, or domestic or sexual violence victim status.
The acceptable reasons for a pay differential remain the same: a seniority system, a merit system, a system that measures earnings by quantity or quality of production, a bona fide occupational qualification, or a permissible factor other than the protected classes. Additionally, Hawaii’s law only requires equal pay for employees in the same establishment, so location would be an acceptable reason for a difference in pay.
Equal Pay: A Lower Standard for Comparison—Equal Work Is Not Required
Instead of requiring that employees or groups of employees be paid the same if they do “equal” work, the standard for equal pay will now be “substantially similar” work. This opens the door to significantly more comparisons (and potential claims), even across departments or job types.
Hourly Rate or Salary Range Required in Job Postings
Employers with 50 or more employees will need to include the hourly rate or salary range in job postings. This doesn’t apply to internal transfers or promotions.
The rate or range posted needs to reasonably reflect the actual expected compensation. As an example, you might pay your project managers anywhere from $55,000–$150,000 depending on their level of experience and responsibility. If you know your project manager position will be filled by someone less experienced (and therefore less expensive), you should advertise the range you believe you’ll actually hire in, e.g., $55,000–$70,000, rather than advertising $55,000–$150,000. Aside from the fact that this is required, it benefits you by discouraging people from applying who ultimately wouldn’t accept your offer.
While the intent of the posting requirement is to promote pay equity and further close the wage gap, it benefits employers by streamlining your hiring processes and attracting more applicants.
What to Expect
In addition to applicants scrutinizing job postings with hourly rates and salary ranges, you should anticipate that employees will also see them and react. If the ranges you post seem too wide, applicants and employees may think you’re not acting in good faith and decide not to apply or to report you to the state. If your posted ranges are reasonable but current employees are below that hourly rate or range, morale in the workplace may suffer.
You should also be prepared for employees to discuss this new information with their coworkers. Discussing wages is protected by federal law, so employers shouldn’t attempt to stop or prevent these conversations or discipline employees for having them. The result of this sharing may be that employees discover one-off or systematic pay inequality, in which case you may have issues with morale, turnover, union organizing, or even lawsuits. Being ready to make necessary changes to correct these issues will be key to reducing risk.
Finally, even if your pay choices are perfectly logical across the board, employees will often not understand why a job like theirs has a lower pay range than a different type of job in your organization. While you’re not required to provide employees with explanations, for the sake of morale, retention, and your reputation as an employer, you should be prepared to provide some rationale for your choices.
What to Do Now
If you don’t have documented pay ranges, start working on them. You may want to consider hiring outside help if you don’t already have a basic, defensible pay structure and detailed job descriptions. This would also be an excellent time to do a pay equity audit to ensure that employees who do substantially similar work are being paid equally, or that their differences in pay can be reasonably explained by allowable factors.
Here are some tips to start preparing for these changes:
Each job should have a job description and each job description should have a designated pay range.
Within each pay range, you should have an explanation of how an employee moves from the bottom of the range to the top.
If you know that you’ll be advertising pay ranges that are more than what you pay current employees for the same work, strongly consider providing them with raises to bring them into that pay range (failure to do so could easily lead to pay equity claims).
If you’re already aware of pay equity issues or become aware of them, start correcting them as soon as possible. You may want to consult with an employment attorney in Hawaii to strategize how to limit your liability.