Colorado’s Equal Pay for Equal Work Act — What Employers Need to Know

Zev Eigen, Founder + Chief Data Scientist, January 11, 2021

Colorado’s “Equal Pay for Equal Work Act” went into effect on January 1. If you’re a business with employees in Colorado (at least one, actually), here’s what you need to know about the legislation. 

Note that the Colorado Department of Labor and Employment (“CDLE”) has issued guidelines for employers about this new Act that may be found HERE. The quotes and descriptions below come from the Act or Guidelines themselves.

Q. What is the minimum number of Colorado employees an employer needs to employ for this law to apply to it?

A. The law applies to any employer employing at least one employee in Colorado / based in Colorado.

Q. Which forms of compensation are covered?

A. Colorado’s Equal Pay for Equal Work Act covers an employee’s “wage rate” — the hourly compensation to the employee plus the value per hour of “all other compensation and benefits received by the employee from the employer.” 

Q. Does the law cover gender identity/gender expression?

A. Yes. By “sex,” the law expressly and unequivocally means an “employee’s gender identity.”

Q. Does the law cover other protected categories too?

A. 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.

Q. What are the requirements for Colorado employers about posting employment opportunities? 

A. Employers are required to make good faith reasonable efforts to “announce, post or otherwise make known” all opportunities for promotion to all current employees on the same day and prior to making a promotion decision. 

Specifically, employers must post the hourly or salary compensation, or at least the range of compensation, and a “general description of all the benefits and other compensation to be offered.”

Q. Do the posting requirements apply to jobs outside of Colorado or temporary positions? 

A. They do not apply to jobs performed entirely outside of Colorado; however, remote work that could be performed in Colorado is covered because “it cannot be determined until after a hiring decision whether the employee will be in Colorado, and even non-Coloradans hired for remote work may move to Colorado after being hired.” Temporary positions are not covered by this requirement, but other employees must be given notice and an opportunity to apply for positions for which the temporary hire is expected to turn into a permanent position.

Q. How long does an employee have to bring a claim?

A. An employee has two years from the date they learned of the violation to file a claim.

Q. What remedies are available to employees under the Act?

A. Three years of back pay and liquidated damages (double the damages). 

Q. Does Colorado’s Equal Pay for Equal Work Act include a safe harbor provision to help  an employer avoid liquidated (double) damages?

A. If an employer demonstrates that it acted in good faith and had reasonable grounds for believing that it did not violate the law, the law mandates that “the court shall not award liquidated damages.”

Q. What should an employer do to demonstrate that it is acting in good faith to avoid double damages?

A.  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 Massachusetts and Oregon.

Q. Is there a salary history ban?

A. 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 public and private 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.

Q. May employers ban employees in Colorado from talking about their compensation?

A.  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! The new Colorado law expressly prohibits employers from preventing their employees from discussing their compensation with others and requiring them to sign a waiver to that effect.

(This article discusses the NLRA and pay secrecy rules/compensation confidentiality rules commonly promulgated by employers.)

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:

  1. Run a pay equity analysis based on your current compensation data and create a remediation plan to address concerns flagged. 
  2. Review policies and employee resources (e.g. handbooks) to ensure you are not banning employees from discussing compensation.
  3. 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.
  4. Review practices relating to how you disseminate promotion opportunities.
  5. To significantly decrease time out of compliance and lower overall remediation fees, assess pay equity 2-4 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.
  6. Have updated analysis 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. 

For more detailed steps on finding, fixing, and preventing pay equity issues, read our recent blog, How to Analyze Pay Equity

To learn more about best practices related to Colorado’s Equal Pay for Equal Work Act or legislation in other U.S. states or countries in which your organization operates, reach out to our team at [email protected]

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