Updated – On December 18, 2020 the Colorado Department of Labor and Employment issued its Interpretive Notice and Formal Opinion #9 on the Equal Pay Transparency Rules.
Updated – On November 10, 2020 , the Colorado Department of Labor and Employment released final Equal Pay Transparency Rules (“Final Rules”) implementing the Equal Pay for Equal Work Act. This article has been updated to reflect what we have learned from the Final Rules.
On May 22, 2019, Colorado governor Jared Polis signed the Equal Pay for Equal Work Act (“Equal Pay Act” or the “Act”) which takes effect January 1, 2021. The Act applies to any employee in the state of Colorado and prohibits employers from discriminating because of sex by paying less for substantially similar work in terms of skill, and responsibility. The goal of the Act is aimed at tackling the gender pay gap in Colorado and works to ensure that employees with similar job duties are paid the same wage rate, regardless of sex or another protected status.
- Employers may not seek the wage history of a prospective employee or rely on their wage history to determine a wage rate;
- Employers may not discriminate or retaliate against a prospective employee for failing to disclose wage history;
- The Act requires providing notice of job openings and promotional opportunities;
- Employers must maintain records of job descriptions and wage rate history for each employee for the duration of their employment.
Who is a Covered Employer?
The Act applies to both private and public employers with any employees in Colorado. It is not clear whether the Act applies to employers with no current employees in the state but may be looking to hire employees in Colorado.
What does the Act Prohibit?
The Equal Pay Act prohibits the following:
- Wage discrimination – the Act prohibits an employer from discriminating between employees on the basis of sex, or on the basis of sex in combination with another protected status, by paying an employee of one sex a wage rate less than the rate paid to an employee of a different sex for substantially similar work, regardless of job title. A wage rate differential is permissible if at least one of the following factors accounts for the entire wage rate differential:
- 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 they are reasonably related to the work in question; or
- regular travel that is a necessary condition of work performed.
- Prohibition on the use and reliance on salary history for prospective employees – employers are prohibited from seeking the wage history, or relying on the wage history, of a prospective employee to determine a wage rate. However, the Act does not prohibit employers from inquiring about salary expectations for the position. Discrimination or retaliation against a prospective employee for failing to disclose wage history is prohibited.
What are the Penalties for Noncompliance?
An employer found to have violated the Equal Pay Act is liable for economic damages, liquidated damages, legal and equitable relief, including reinstatement, promotion, pay increase, payment of lost wage rates, and the employee’s reasonable litigation costs and attorneys’ fees.
What are the Job-Posting Notice Requirements?
The Equal Pay Act creates two new notice requirements for Colorado employers:
- Employers must make reasonable efforts to announce, post, or make known all opportunities for promotion to all current employees on the same calendar day; and
Update: The Final Rules clarify that employers do not have an obligation to provide notices on opportunities to employees outside Colorado, but must ensure that their Colorado employees are informed of promotional opportunities anywhere (nationwide or even worldwide).
2. Employers must disclose in each posting for each job opening the hourly or salary compensation, or a range of the hourly or salary compensation, and a general description of all benefits and other compensation offered.
Update: The Final Rules clarify that employers do not have an obligation to disclose compensation for a job posting that is to be performed entirely outside of Colorado but employers must ensure that Colorado employees are nonetheless informed of the opportunity. Remote jobs that may be performed in Colorado must still contain the required compensation information.
Are they any additional Prohibitions?
The Act prohibits retaliation against an employee for asserting their rights or engaging in protected activity under the law. It also provides protection from retaliation against an employee for discussing their pay with other employees or refusing to disclose wage information to the employer.
What are the Employer Recordkeeping Requirements?
The Equal Pay Act requires the employer to keep records of job descriptions and wage rate history for each employee for the duration of employment plus two years after the end of employment. This includes hourly or salary rate or range, and a general description of all benefits and other compensation offered to the hired applicant. Failure to maintain these records creates a rebuttable presumption that the records not maintained contained information favorable to the employee’s claim in a lawsuit.
Colorado employers still have time to prepare if they have not done so already. Colorado employers should consider reviewing their existing pay policies and practices with counsel as it relates to:
- Practices regarding posting new job openings and communicating promotional opportunities;
- Hiring practices and questions about compensation history of an applicant.
- Policies on employee discussion of compensation information.
- Equal Pay for Equal Work Act
- Equal Pay for Equal Work Act Final Rules
- Equal Pay for Equal Work Rules – Statement of Purpose
- Interpretive Notice and Formal Opinion #9
- Sequoia Blog: New Jersey’s Salary History Inquiry Ban Effective January 2020
- Sequoia Blog: New York State’s Salary History Ban Effective January 2020
- Sequoia Blog: New California Legislation Prohibits Salary History Inquiries
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