This article was originally published on January 11, 2021. It was last updated on October 13, 2022.
Colorado’s “Equal Pay for Equal Work Act” went into effect on January 1, 2021. If you’re a business with employees in Colorado (at least one, actually), here’s what you need to know about the legislation.
The law has four core requirements:
- First, the law adds to stronger equal pay claim protections. The new law prohibits employers from paying an employee of one sex (or gender identity) less than an employee of a different sex (or gender identity) for “substantially similar work”, when viewed as a composite of skill, effort, work shift, and responsibility, except where the employer can show that the pay differences are based on legitimate reasons (e.g. a seniority system; a merit system; a production-based system; reasonably-related education, training or experience; geography, or travel).
- Second, the law bans employers from asking about or relying on a job applicant’s prior pay in making a compensation offer.
- Third, the law requires that employers post the base pay range and provide a general description of other compensation and benefits information in job postings for roles in Colorado and roles that could potentially be performed in Colorado (i.e., all remote jobs). Colorado was the very first jurisdiction in the country to adopt a pay scale posting requirement but now has been joined by other states (California and Washington) and several other jurisdictions (for example, NYC). Our U.S. Pay Scale Transparency Legislation Cheat Sheet gives all of the details.
- Fourth, the law requires that you notify all of your Colorado employees of promotional opportunities.
This was a substantial law with many other requirements, including record-keeping obligations, retaliation protection, a limited safe harbor, and other requirements.
The Colorado Department of Labor and Employment (“CDLE”) has issued guidelines for employers about this new Act. The quotes and descriptions below come from the Act or Guidelines themselves.
What is the minimum number of Colorado employees an employer needs to employ for this law to apply to it?
The law applies to any employer employing at least one employee in Colorado.
Which forms of compensation must be included in the job postings
Colorado’s Equal Pay for Equal Work Act requires that employers include in their job postings the base pay range (either hourly or salary) and a general description of all of the benefits and other compensation to be offered to the hired applicant in each posting for each job opening.
Does Colorado’s requirements to include compensation information in job postings cover remote roles?
Yes, the State of Colorado has taken a firm position that compensation information needs to be included in job postings for remote positions. This is because the law covers all job postings that will be physically performed in Colorado (e.g., hiring for an employee who will work out of a Denver or Grand Junction office) and jobs that could, potentially, be performed in Colorado. So, for example, if you are hiring for a remote role that could, potentially, be performed anywhere in the U.S, the Colorado law requires that compensation information be included.
Does the law cover gender identity/gender expression?
Yes. By “sex,” the law expressly and unequivocally means an “employee’s gender identity.”
Does the law cover other protected categories too?
Only indirectly. The law protects employees on the basis of “sex or on the basis of sex in combination with another protected status as described in Section 24-34-402.” That section lists disability, race, creed, color, sex, sexual orientation, religion, age, national origin, or ancestry as protected classes. So, ostensibly, on their own they are not covered, but the other categories are protected in tandem with an employee’s sex as defined by the law.
What are the requirements for Colorado employers about posting promotional opportunities?
Employers are required to make good faith reasonable efforts to “announce, post or otherwise make known” all opportunities for promotion to all employees in Colorado on the same day and prior to making a promotion decision. This includes job changes that would be a promotion to anyone, includes requirements to make Colorado employees aware of promotional opportunities even if they would not qualify or be interested, and it applies to most in-line promotions as well. If the promotional opportunity is in Colorado, or could potentially be performed there (i.e., all remote roles), this written notification also needs to include the compensation information. The State of Colorado issued guidance about what is and is not required. Note there are some exceptions for temporary roles, frequently posted roles, automatic promotions, and confidential postings.
How long does an employee have to bring a claim?
An employee has two years from the date they learned of the violation to file a claim.
What remedies are available to employees under the Act?
Three years of back pay, liquidated damages (double the damages), equitable relief, and attorneys’ fees.
Does Colorado’s Equal Pay for Equal Work Act include a safe harbor provision if you conduct a pay audit?
Yes! If an employer completed a thorough and comprehensive pay audits of its workforce with the goal of identifying and remedying unlawful pay disparities within two years, there is a limited safe harbor. This safe harbor, however, only applies to the pay equity claims (i.e., equal pay for substantially equal work) and is very limited in that it only limits the liquidated damages.
What should an employer do to demonstrate that it is acting in good faith to avoid double damages?
To demonstrate it is acting in good faith, an employer should complete a “thorough and comprehensive pay audit of its workforce with the specific goal of identifying and remedying unlawful pay disparities” within two years before the suit is filed. The Act says that a fact finder “may consider” this as evidence of good faith.
Some call this a partial safe harbor rule akin to the affirmative defenses available under pay equity laws of other states like Oregon.
Is there a salary history ban?
Like other states’ pay equity laws — such as California, Connecticut, and Massachusetts — Colorado’s Equal Pay for Equal Work Act includes a salary history ban that applies to employers. This means that employers may not ask prospective new hires about compensation history, rely on such information to determine how to pay new hires, or discriminate or retaliate against applicants for failing to disclose such information.
Can employers ban employees in Colorado from talking about their compensation?
There has been federal law on the books for decades that prohibits employers from banning employees from talking about their compensation — the National Labor Relations Act (NLRA), which was passed in 1935. But that prohibition does not apply to management-level employees. The Colorado law expressly prohibits employers from preventing all of their employees from discussing their compensation with others and requiring them to sign a waiver to that effect.
Best Practices to Comply with the Colorado Equal Pay for Equal Work Act
To help you get — and stay — in compliance with the Colorado Equal Pay for Equal Work Act, we recommend taking the following steps:
- Run a pay equity analysis based on your current compensation data and create a remediation plan to address any concerns that are flagged.
- Review policies and employee resources (e.g. handbooks) to ensure you are not banning employees from discussing compensation.
- Review hiring and recruiting policies and practices to ensure that no one is asking prospects about their wage history and that no compensation decisions are being made based on such information. Ensure that all starting compensation offers are made consistently and fairly based on the organization’s internal equity and policies and practices.
- Review practices relating to how you disseminate promotion opportunities.
- To significantly decrease time out of compliance and lower overall remediation fees, assess pay equity two to four times a year. Using pay equity analysis software (like Syndio’s PayEQ™) automates and accelerates the process. This allows you to make changes in a more continuous way as your organization evolves and changes, and makes it easier to identify and fix underlying root causes instead of merely addressing symptoms.
- Have updated analyses available to respond quickly and transparently if and when employees or prospects seek information about compensation ranges and related information. Again, pay equity software makes this a lot easier.
We’re here to help you fast track pay equity.
Expanding pay transparency laws are setting the bar for pay equity higher than ever before. To keep up and respond to what’s coming, more companies are upleveling their strategies and being more transparent on progress. Want to know if your approach stacks up? Read our guide The New Way to Fair Pay: How to Master Pay Equity in a Changing World linked below.
The information provided herein does not, and is not intended to, constitute legal advice. All information, content, and materials are provided for general informational purposes only. The links to third-party or government websites are offered for the convenience of the reader; Syndio is not responsible for the contents on linked pages.