COVID-19 Update: Despite court closures in many areas, Sterling is still able to complete criminal checks with minimal disruption thanks to our proprietary end-to-end automation that allows us to access court information. For additional info on how Sterling is handling the COVID-19 situation, please visit our COVID-19 page.

August 1st, 2018 | Joe Rotondo, Sterling Talent Solutions

Hawaii to Enact Pay Equity Law

The US Census Bureau found on average, women who work full time earn about 80 cents for every dollar a full-time male worker earns. The wage gap persists across all racial and ethnic groups and is found in every state and has been going on for decades. According to an American Association of University Women study, the pay gap between men and women starts at college graduation even when the course of study is the same. Salary history laws are being enacted in certain cities and states to help reduce the wage gap between men and women workers. These laws, called Pay Equity Laws, are making HR teams and hiring managers adjust their salary questioning during the hiring process. SHRM shared this point, “Whether you work in a jurisdiction prohibiting the question or not, it may be time to revisit your hiring practices and compensation strategies—relying more on market data to set pay, focusing on a candidate’s qualifications or instituting new nationwide policies, for example”.

What is a Pay Equity Law?

Pay Equity Laws, enacted on the local and state levels, is another type of legislation that impacts background checks. These laws are being enacted to help reduce the wage gap between men and women workers. In August 2016, Massachusetts passed a law preventing employers from asking job candidates about their salary history in an interview. Since then, other states and cities have passed pay equity laws including Delaware, Oregon, Vermont, Connecticut, Albany, New York, New York City, and California. Each law has different requirements for employee size and procedures, but each legislation makes it unlawful for an employer or employment agency to ask job applicants about their current wage or salary history.

Hawaii Pay Equity Law

Hawaii is the latest state to pass a pay equity law. On July 5th, Governor David Ige signed the equal pay legislation, known as S.B. 2351, into law. The new law, which goes into effect on January 1, 2019, impacts companies with at least one employee. The main component of the law states that Hawaii employers may not ask a job applicant about his or her salary history or rely on the applicant’s salary history in determining salary, benefits, or other compensation during the hiring process or negotiation of an employment contract. Employers are specifically prohibited from searching publicly available records or reports to ascertain an applicant’s salary history. Employers also may not bar employees from disclosing their wages or discussing or inquiring about the wages of other employees.

The law does permit certain salary or wage inquiries. National Law Review further explains, “An organization may discuss compensation and benefit expectations with the job applicant and inform the applicant of the proposed or anticipated salary or salary range for the position. The law also provides that ‘any objective measure of the applicant’s productivity, such as revenue, sales or other production reports’ may be discussed with the applicant. If an applicant ‘voluntarily and without prompting’ discloses salary history information, the employer may consider salary history in determining the applicant’s salary and benefits and may verify the salary history”.

In addition, the law states 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.

Stay Up-to-Date with Background Screening Compliance Laws

Employers who have offices in multiple states should consider making company-wide changes regarding salary history inquiries during the hiring process. Employers should consult with legal counsel to review and revise all hiring documents employment applications, background check forms, or any other forms used during the hiring process to ensure that there are no inquiries regarding salary history. HR teams, recruiters and hiring managers who conduct interviews of applicants will need to be trained on the implications of the new laws.

It is imperative to stay up-to-date on the latest human resources and background screening trends, laws and compliance standards. Sterling strives to help keep its clients up-to-date on laws pertaining to the background screening industry. To find out more about FCRA Compliance and information for the background screening industry, listen to an OnDemand version of the Q2 2018 FCRA Compliance webinar and sign up for the next FCRA quarterly webinar in September.

This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.