Written By ESR News Blog Editor Thomas Ahearn

On July 5, 2018, Hawaii Governor David Y. Ige signed Senate Bill 2351 (SB 2351) into law which prohibits prospective employers in the state from requesting or considering the wage or salary history of job applicants as part of an employment application process or compensation offer. SB 2351 takes effect on January 1, 2019.

The Act – one of eight Women’s Legislative Caucus bills signed by Ige – prohibits enforced wage secrecy and retaliation or discrimination against employees who disclose, discuss, or inquire about their own wages or wages of a coworker. The law amends Part I of Chapter 378 and Section 378-2.3 of the Hawaii Revised Statutes (HRS).

Chapter §378 – Employer inquiries into and consideration of salary or wage history. 

(a)  No employer, employment agency, or employee or agent thereof shall: (1) Inquire about the salary history of an applicant for employment; or (2) Rely on the salary history of an applicant in determining the salary, benefits, or other compensation for the applicant during the hiring process, including the negotiation of an employment contract.

(b)  Notwithstanding subsection (a), an employer, employment agency, or employee or agent thereof, without inquiring about salary history, may engage in discussions with an applicant for employment about the applicant’s expectations with respect to salary, benefits, and other compensation; provided that if an applicant voluntarily and without prompting discloses salary history to an employer, employment agency, or employee or agent thereof, the employer, employment agency, or employee or agent thereof, may consider salary history in determining salary, benefits, and other compensation for the applicant, and may verify the applicant’s salary history.

(c)  This section shall not apply to: (1)  Applicants for internal transfer or promotion with their current employer; (2)  Any attempt by an employer, employment agency, or employee or agent thereof, to verify an applicant’s disclosure of non-salary related information or conduct a background check; provided that if a verification or background check discloses the applicant’s salary history, that disclosure shall not be relied upon during the hiring process for purposes of determining the salary, benefits, or other compensation of the applicant, including the negotiation of an employment contract; and (3)  Public employee positions for which salary, benefits, or other compensation are determined pursuant to collective bargaining.

(d)  For purposes of this section: “Inquire” means to: (1)  Communicate any question or statement to an applicant for employment, an applicant’s current or prior employer, or a current or former employee or agent of the applicant’s current or prior employer, in writing, verbally, or otherwise, for the purpose of obtaining an applicant’s salary history; or (2)  Conduct a search of publicly available records or reports for the purpose of obtaining an applicant’s salary history; provided that this shall not include informing an applicant, in writing or otherwise, about the proposed or anticipated salary or salary range for the position. “Salary history” includes an applicant for employment’s current or prior wage, benefits, or other compensation, but shall not include any objective measure of the applicant’s productivity, such as revenue, sales, or other production reports.

Section §378-2.3 – Equal pay; sex discrimination. 

(a)  No employer shall discriminate between employees because of sex, by paying wages to employees in an establishment at a rate less than the rate at which the employer pays wages to employees of the opposite sex in the establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and that are performed under similar working conditions.  Payment differentials resulting from: (1) A seniority system; (2) A merit system; (3) A system that measures earnings by quantity or quality of production; (4) A bona fide occupational qualification; or (5) A differential based on any other permissible factor other than sex do not violate this section.

(b)  An employer shall not retaliate or discriminate against an employee for, nor prohibit an employee from, disclosing the employee’s wages, discussing and inquiring about the wages of other employees, or aiding or encouraging other employees to exercise their rights under this section.

The purpose of SB 2351 is to disrupt the cycle of wage inequality for women and minorities by prohibiting prospective employers from requesting or considering a job applicant’s prior wage or salary history in the job application process so that employers will set compensation offers based on skills and qualifications.

The law also will encourage equal pay between men and women by prohibiting enforced wage secrecy and prohibiting retaliation or discrimination against employees who disclose, discuss, or inquire about their own wages or the wages of coworkers for the purpose of exercising rights under the law.

Existing Hawaii law generally prohibits an employer from paying an employee at wage rates less than the rates paid to employees of the opposite sex.  However, the gender wage gap in Hawaii stood at sixteen cents on the dollar in 2015.  A woman earned an average of eighty-four cents to every dollar a man earned.

A 2013 study from the American Association of University Women found women get paid 6.6 percent less than men in their first jobs. When it comes to subsequent jobs, employers often inquire about a candidate’s salary history as a basis for establishing their new salary, which worsens gender pay inequality over time.

Statistics from the U.S. Census Bureau show that women earned 80 percent of what men earned In 2015. The gender wage gap has narrowed by less than one-half a penny per year in the United States since 1963, according to the National Committee on Pay Equity, when Congress passed the Equal Pay Act of 1963.

States, counties, and cities have passed laws prohibiting employers from seeking salary history as part of a growing equal pay movement to narrow the gender wage gap between women and men. This is one of the “ESR Top Ten Background Check Trends” for 2018 selected by Employment Screening Resources (ESR).

“When employers have a background screening firm perform past employment verifications, it is critical that the screening firm has knowledge about the states, counties, and cities that prohibit salary history questions and software that helps facilities compliance,” explained ESR founder and CEO Attorney Lester Rosen.

More ESR News Blogs about Bans on Salary History Questions

Employment Screening Resources (ESR) – a leading global background check provider – offers more ESR News blogs about laws banning salary history questions by employers at www.esrcheck.com/wordpress/tag/salary-history/. To learn more about background screening solutions from ESR, please visit www.esrcheck.com.

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