Hawaii Employment Law Basics: Anti-Nepotism Policies

Under Hawaii’s employment practices statute, HRS Chapter 378, employers are prohibited from discriminating against applicants and employees alike on the basis of marital status. Discrimination prohibited by Hawaii law includes a refusal to hire, demotion, termination or disparate terms or conditions of employment, because an individual is a spouse of an employee.

Anti-nepotism policies serve to address potential problems that could arise if spouses or relatives work at or seek employment with the same company. Spouses or relatives working with the same employer often lead to complaints by other employees of favoritism, morale issues, or conflicts of interest. Employers, therefore, have an interest in avoiding these problems by reserving the right to not hire on the basis of relationship status, to transfer employees to another department or site, or to even terminate an employee where a conflict/perceived conflict arises.

Conversely, Hawaii employers often welcome relatives or spouses of existing employees into their workforce as the company might benefit overall from a more family-type environment. The urge to hire family members might also be more pronounced in small or neighbor-island communities, where the labor pool is limited.

Accordingly, Hawaii employers must carefully consider the company’s needs, the environment, and most importantly, the legal landscape, in determining to what extent an anti-nepotism policy is appropriate for the workplace.

Under Hawaii’s employment practices statute, HRS Chapter 378, employers are prohibited from discriminating against applicants and employees alike on the basis of marital status. Discrimination prohibited by Hawaii law includes a refusal to hire, demotion, termination or disparate terms or conditions of employment, because an individual is a spouse of an employee.

In Ross v. Stouffer Hotel Co., a case decided by the Hawaii Supreme Court in 1994, the Court ruled that an employer’s policy of terminating employees who married other employees working in the same department violated Hawaii’s marital status discrimination statute, unless the termination falls within one of the statutory exceptions set forth in HRS § 378-3. Specifically, the employer enforced a “no-relatives” policy after two massage therapists, Ross and Treffry, married. It asked that one of the employees either apply for a transfer to another department or resign. When neither one complied with the employer’s request, the employer terminated Ross.

In ruling that the terminated violated Hawaii’s prohibition against discrimination on the basis of marital status, the Court acknowledged that statutory exceptions to such prohibition exist under the law. One of the exceptions includes action as a bona fide occupational qualification necessary to the normal operations of a business, i.e., a “BFOQ” defense.

Accordingly, while it is clear that the Ross decision prohibits an employer from taking adverse action against an employee or applicant simply because their spouse is/will be a coworker the Court made clear such prohibition is not absolute. It is up to the employer with assistance of counsel to determine to what extent circumstances exist that would warrant asserting the BFOQ defense.