Is Your Business in Compliance with Colorado’s New Equal Pay Act?
July 26th, 2021
The Colorado Equal Pay for Equal Work Act, commonly referred to as the Equal Pay Act, took effect on January 1, 2021. We briefly discussed this new law after the Colorado Legislature passed the Equal Pay Act in 2019. The law has now been in effect for six months, and we want to take a deeper look into its provisions to ensure you understand how these requirements impact your business. The Act imposes widespread requirements related to record keeping, disclosure and transparency. It’s important that you are in compliance with the new rules.
What Is the Equal Pay Act?
In May 2019, Colorado Governor Jared Polis signed the Equal Pay for Equal Work Act into law. It was enacted to address pay disparities affecting women and minorities. The law includes several provisions intended to prevent wage discrimination. These include:
- Allowing employees subject to wage discrimination to file a civil lawsuit
- Providing for economic damages in the event of a violation, including liquidated damages
- Requiring employers to announce opportunities for promotion or advancement
- Requiring employers to disclose hourly or salary compensation and benefits for each posting or job opening
- Requiring employers to keep records of job descriptions and wage rate history for its employees
In addition, the Equal Pay Act prevents employers from:
- Paying one employee a wage rate less than the rate paid to an employee of a different gender (or gender plus another protected status) for substantially similar work
- Asking about or relying on an applicant’s salary history
- Restricting employees from discussing their compensation with other employees
- Requiring an employee to sign a waiver or other document that prohibits the employee from disclosing their wage rate
- Discriminating or retaliating against an applicant who fails to disclose salary history
Employer Responsibilities to Existing Employees
Colorado’s Equal Pay Act requires employers to announce any employment advancement opportunities and job openings to all employees. The pay range for these job openings must be communicated to employees. In addition, employers must maintain records of job descriptions and wage rate history for current employees, as well as former employees for two years after their employment ends.
Employers that violate these provisions of the Equal Pay Act may be liable for:
- Economic damages
- Equitable relief
- The employee’s reasonable attorney’s fees
In addition, any violations of the job posting requirements may result in a fine ranging from $500-$10,000 per violation.
Disputing an Equal Pay Act Claim
Employers may be able to dispute a claim under Colorado’s Equal Pay Act if they can establish that the wage differential is justified by one or more of the following factors:
- A seniority system
- A merit system
- A system that measures earnings by quantity or quality of production
- The geographic location where the work is performed
- Education, training or experience to the extent that they are reasonably related to the employee’s job responsibilities
- Travel, if it is a regular and necessary condition of the employee’s job responsibilities
Department of Labor Equal Pay Transparency Rules
The Colorado Department of Labor recently issued proposed Equal Pay Transparency Rules related to the Equal Pay Act. These proposed rules define the complaint, investigation and appeal process for all complaints filed within the Department of Labor. The rules also discuss job posting requirements, stating that all job postings, including but not limited to promotions, must disclose:
- The hourly or salary compensation or range of hourly or salary compensation
- A general description of all the benefits and other compensation offered to the applicant
The hourly or salary compensation disclosed by the employer must include:
- Other forms of compensation associated with the position
The posted compensation range may extend form the lowest to highest pay the employer in good faith believes it might pay for the job. Employers may be entitled to pay a salary that is above or below this posted range as long as the range was established in good faith and represented a reasonable estimate at the time of the job posting.
The general description of benefits must include all employment benefits the employer is offering for the position. This may include:
- Healthcare benefits
- Retirement benefits
- Paid days off, including sick leave, parental leave and vacation time
- Other benefits that must be reported for federal tax purposes
Minor perks do not need to be disclosed.
Announcing Promotional Opportunities to Current Employees
Under the Equal Pay Act, employers have an obligation to make reasonable efforts to announce, post or otherwise make known all promotional opportunities to current employees. The announcement of a promotional opportunity must be in writing and include the:
- Job title
- Process involved in applying for the position
The employer is considered to have made “reasonable efforts” to announce the promotion if it uses the regular and customary method of communication with its employees. If any employees aren’t reachable by the customary method, the employer must use an effective alternative method to notify these individuals.
If the employer decides to post promotional opportunities rather than providing direct notice to each employee, the posting must be displayed:
- In each establishment where employees work
- In a conspicuous location frequented by employees where it may be easily read during the work day
In addition, all employees must be notified of all promotional opportunities. Employers cannot limit notice to specific employees deemed qualified for the position. However, employers may state that applications are only open to individuals who meet certain qualifications.
The rules regarding how notification must be provided varies based on the specifics of the job location:
- Colorado employer with a Colorado job – If an employer accepts applicants from outside Colorado, it must notify all of its employees in any state for whom the job would be considered a promotion.
- Colorado employer with a remote job – If an employer has a job that can be performed remotely by an employee living in Colorado, the employer must notify all of its Colorado employees for whom the job would be a promotion.
- Colorado employer with a job outside of Colorado – If an employer has a job that must be performed outside Colorado and the employer accepts Colorado applicants, it must notify all Colorado employees for whom the job would be a promotion.
Premier Employer Services Can Help Ensure You Remain Compliant with Equal Pay Act Regulations
As the leading PEO company in Colorado, Premier Employer Services can provide the guidance you need to successfully navigate the terms of the new Equal Pay Act. We provide comprehensive HR consulting services that includes an emphasis on HR compliance. Our team has studied the details of the Equal Pay Act in depth, and we can review your practices to ensure you’re fulfilling all requirements set forth by the state.
Since this law is still very new, we encourage you to review your hiring practices as they pertain to the Equal Pay Act. If you have any questions or are unsure whether you’re in compliance with the Act, please contact us for assistance.