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Colorado’s Equal Pay for Equal Work Act Could Present Challenges for Employers

Employers in Colorado and those with at least one Colorado employee are required to comply with the Equal Pay for Equal Work Act that prohibits discrimination of employee based on sex by paying less for work performed that is substantially similar.
A woman works at her computer. Colorado has a new law that prohibits discrimination against employees based on sex when it comes to pay for similar work.

The Colorado Equal Pay for Equal Work Act (EPEWA) prohibits all employers from discriminating against an employee because of sex by paying less for substantially similar work in terms of skill, effort, or responsibility. The law went into effect Jan. 1, 2021. Every employer in Colorado is required to comply with the law and it also applies to every employer with at least one Colorado employee.

Generally, the EPEWA prohibits an employer paying employees of one sex a wage rate that is less than the wage rate paid to employees of a different sex for substantially similar work. Employers should be aware that under the EPEWA, the following provisions apply to public and private employers with any employees working in Colorado:

  • Salary history ban: Employers are prohibited from seeking a prospective employee’s wage rate history, relying on a prospective employee’s wage history to determine a wage rate or discriminating against a prospective employee for failing to disclose their wage history.
  • Notice of promotional opportunities: Employers are required to provide notice to employees of opportunities for promotion or advancement.
  • Disclosure of compensation: Employers are required to disclose compensation and benefits for each posting or of a job that is to be performed in Colorado or jobs that can be performed remotely from anywhere.
  • Recordkeeping: Employers must maintain records of job descriptions and wage rate history for each employee for the duration of the individual’s employment.

The Colorado Department of Labor and Employment’s Interpretive Notice & Formal Opinion #9 (INFO #9), issued in December 2020, provided additional clarity regarding how the agency interprets the law and details employee rights and remedies for non-compliance.

Impact of Equal Pay for Equal Work Act on Businesses

Salary History Ban

Colorado joins a number of other states and localities that have enacted limitations on an employer’s ability to request salary history during its recruitment and hiring process. Under the EPEWA, employers are prohibited from seeking the wage history, or relying on the wage history of a prospective employee to determine a wage rate. Employers are also banned from requiring disclosure of wage rate as a condition of employment.

However, the EPEWA 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.

Employers also may not prevent current employees from discussing their own compensation information with other employees. Workplace policies that prohibit, discipline or otherwise interfere with an employee for inquiring about, disclosing or discussing an employee’s wage rate are not allowed.

Notice of Promotional Opportunities

Under the EPEWA, employers must announce “promotional opportunities” to all employees.

Notices of opportunities must include the job title of the position and how employees can apply for the position. Employers must make reasonable efforts to announce, post or otherwise make known all opportunities for promotion to all current Colorado employees on the same day and prior to making a promotion decision.

Under the EPEWA, a “promotional opportunity” exists when an employer has or anticipates a vacancy that could be considered a promotion to any employees in terms of compensation, benefits, status, duties or access to further advancement. Given this broad definition, many positions that would not traditionally be considered a “promotion” may be impacted and employers should carefully review their obligations to post all opportunities.

Employers must notify all employees of all promotional opportunities and cannot limit its notice to those employees it predetermines are qualified for the position. However, the employer may identify in the notice that applications are open only to those with certain qualifications, and may screen or reject candidates based on such qualifications.

Employers are not required to post promotional opportunities:

  • Where the promotion is to replace an incumbent employee who is unaware of their separation
  • When promotions automatically occur after a trial period of one year or less of being hired with a written memorialization to that effect
  • When positions are temporary for up to six months and not expected to be permanent.

Note: Multi-state employers are not required to notify non-Colorado employees of promotional opportunities in Colorado or elsewhere.

Disclosure of Compensation

For all job postings for jobs to be performed in Colorado or jobs that can be performed remotely from anywhere (including promotions), employers must include the compensation range for the position and a general description of all benefits and other incentive compensation.

Employers are not required to disclose compensation information for jobs to be performed entirely outside of Colorado. However, for jobs that can be performed remotely from anywhere, employers should treat these as they are required to with in-state jobs and include compensation information. 

Under the EPEWA, compensation information includes:

  • The rate of compensation including salary, hourly, piece or day rate (or a “good faith” range)
  • A general description of any bonuses, commissions, or other forms of compensation
  • A general description of all employment benefits, including:
    • Health care
    • Retirement
    • Paid time-off
    • Other benefits that must be reported for federal tax purposes.

A compensation range may extend from the lowest to the highest pay the employer in good faith believes it might pay for the particular job. In electronic postings, employers are not required to provide specific information about benefits if such information is hyperlinked or accessible via a URL provided within the electronic posting. For example, an employer may have a webpage dedicated to the health insurance benefits that it offers to employees.

Recordkeeping

For each employee, employers subject to the EPEWA must keep records of the employee’s job description and compensation, including salary or hourly wage, benefits, and all bonuses, commissions and other compensation received.

Records must include any changes to job description or compensation over time and must be kept by the employer for the duration of the employee’s employment plus two years thereafter.

Next Steps for Employers

An employer found to have violated the EPEWA is liable for economic damages, liquidated damages, legal and equitable relief, which includes relief such as reinstatement, promotion, pay increase, payment of lost wage rates and the employee’s reasonable litigation costs and attorneys’ fees.

How Paychex Can Help

Employers subject to this new law should review and confirm they are complying with their obligations. Working with Paychex HR Services can help employers develop effective strategies to comply with this new law and other federal and state laws and regulations.

Kate Hill
Kate Hill is a compliance analyst who concentrates on the impact of legislative and regulatory changes on employment law for Paychex, Inc.
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* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.

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