A Deeper Dive Into Colorado’s Pay Transparency Laws (with 10 FAQ’s)
In a December 2020 blog, we highlighted the general provisions of some of Colorado’s newest laws that have important implications for Colorado employers. One such law which went into effect on January 1, 2021, is the Equal Pay for Equal Work Act (EPEWA).
There are various pieces to this Act, but one component I’d like to bring deeper attention to is the Equal Pay Transparency Rules.
EPEWA creates significant compliance burdens for employers with even one employee in Colorado. In fact, the Act is the only law in the United States to require employers to:
- Post compensation/pay range and benefits information with each job posting for Colorado jobs, and
- Internally post promotional opportunities to current Colorado employees on the same day and sufficiently in advance of promotion decisions.
10 Important FAQ’s About Pay Transparency Requirements
1. If an employer elects to post a position externally (note: the Colorado law does not require employers to post jobs externally), what compensation information must the employer include in the posting?
Answer: If a job that could be performed in Colorado is posted externally, the law requires that the posting include the rate (or range) of compensation, a general description of bonuses, commissions, or other compensation; and a general description of all employment benefits offered for the position, including healthcare benefits, retirement benefits, any benefits permitting paid days off (i.e. sick leave, parental leave), PTO/vacation benefits, and any other benefits that must be reported for federal tax purposes (minor perks do not need to be included). The benefits may be listed in a linked document, as long as the link is clearly provided in the posting.
2. How much specificity is required for compensation?
Answer: According to the Equal Pay Transparency Rules, the “posted compensation range may extend from the lowest to the highest pay the employer in good faith believes it might pay for the particular job” at the time of the posting. Listing only the minimum rate of pay would not comply with the law. An employer may ultimately pay more or less than the posted range but, if they do, they should make that decision based on bona fide factors other than gender and the applicant’s prior salary history. Examples of other relevant factors might be experience, education, training, or geographic location. Importantly, employers can no longer seek salary history from job applicants and, if the employer learns of an applicant’s prior salary (for example, if the applicant voluntarily offers that information without being asked), the employer may not rely on that information to determine current pay.
3. Do the rules apply outside of Colorado?
Answer: It depends. Employers with at least one employee in Colorado are required to disclose compensation ranges for Colorado jobs, or jobs that could be performed in Colorado. To avoid ambiguity, employers may want to consider specifying in the posting whether a position can be performed in Colorado. However, the obligation to provide Colorado employees with advance notice of promotional opportunities extends companywide. For example, if there is a position available in Chicago, all Colorado employees (including employees without the required experience) must first be provided notice and given the opportunity to apply for the Chicago opportunity. Employees outside of Colorado do not need to be notified of promotional opportunities.
4. Does the law require an employer to post promotional opportunities internally?
Answer: Yes. “An employer is required to make ‘reasonable efforts’ to ‘announce, post, or otherwise make known all opportunities for promotion to all current employees (in Colorado) on the same calendar day and prior to making a promotion decision.’”
5. What is a “promotional opportunity”?
Answer: The Colorado Department of Labor and Employment (CDLE) defines it broadly as “a vacancy in an existing or new position that could be considered a promotion for one or more employees in terms of compensation, benefits, status, duties, or access to further advancement”. Again, every Colorado employee must receive notice, whether or not they may be qualified for the position.
6. What information about promotional opportunities must be included?
Answer: The posting must include at least the job title, compensation, and benefits (only if the promotional opportunity is a Colorado job or could be performed in Colorado) and the means by which employees may apply for the position. The EPEWA requires that notice be given in a way that allows Colorado employees to apply for, and be considered for, a position. Again, under the Act, there is not an obligation to give notice to the public at large, so posting exclusively internally is sufficient.
7. Does posting a promotional opportunity on an internal career site (that all employees have access to) comply with the law?
Answer: An employer must make “reasonable” efforts” to notify Colorado employees of promotional opportunities, which may include the “employer’s regular and customary method of communicating with its employees”. Employers can provide advanced written notice to its employees “of the location and/or means by which promotional opportunities will be announced”, which might include notifying employees of an internal career site.
8. Are there any exceptions to the promotional opportunity notification requirement?
Answer: Yes. The CDLE identifies three very narrow exceptions. 1) a need for confidentiality exists, such as it is to replace an incumbent employee who is not aware that he/she is being separated, 2) there is an automatic consideration for promotion after a trial period within one year based on a written representation, and 3) the position is temporary, acting, or interim, lasting less than six months.
9. Can employees or applicants sue for violations of the pay transparency rules?
Answer: The law doesn’t provide for a private right of action related to the posting or pay transparency requirements, so employees and applicants may not directly file lawsuits to enforce the law’s provisions. However, they may file complaints with the CDLE, which has full authority to investigate and institute enforcement actions.
10. What are the potential consequences of non-compliance with the Act’s provisions?
Answer: The law provides for fines of $500 to $10,000 per violation (i.e., per failure to disclose a compensation range for each covered job posting). In addition, the CDLE may issue an order to an employer to comply with the law.
Many of our Colorado clients are small-to-mid-size employers that don’t have in-house legal departments. Through various conversations, I find that some employers are not knowledgeable, and not compliant, with some of the new laws relevant to Colorado employers.
The cost to an employer for non-compliance with any of the Pay Transparency Rules of Colorado’s Equal Pay for Equal Work Act can be very high. It is an employer’s responsibility to ensure that they are following all laws. The CDLE will not accept ignorance as a valid excuse!
This article should not be considered legal advice. It is strongly recommended that all Colorado employers consult with legal experts to ensure they are complying with any federal or state employment laws.
The National Law Review, “Colorado’s Pay Transparency Law Survives Preliminary Injunction: Next Steps for Employers”, June 29, 2021, by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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