Colorado has been at the forefront of the pay transparency and equity movement in the United States. The state was among the first to pass a pay transparency law and the first to mandate pay scale posting. Several other states and jurisdictions have since followed suit by adopting laws that require employers to disclose salary ranges in job postings or upon request by job candidates.
Colorado’s pay transparency law is also known as SB19-085 or the Equal Pay For Equal Work Act (EPEWA). It aims to promote transparency and fairness in the hiring process and reduce pay disparities based on sex or other protected characteristics. Enacted in 2019 and effective January 1, 2021, it is widely regarded as one of the most comprehensive in the country.
What employers does it apply to?
The Act applies to any entity employing at least one employee working in Colorado.
There are five main components to Colorado’s pay transparency law: equal pay for equal work, pay scale transparency, salary history ban, freedom to discuss wages with others without fear of retaliation, and recordkeeping obligations.
We discuss the key requirements below.
Equal pay for equal work
Employers may not discriminate 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. However, wage differentials are permitted if based on one or more of the following factors:
- 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 that they are reasonably related to the work in question; or
- Travel, if the travel is a regular and necessary condition of the work performed.
Pay scale transparency
- Employers must include a pay range and benefits in job postings for new positions and promotion opportunities. Postings must include the rate of compensation or a compensation range; 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, paid time off, and any tax reportable benefits.
- Employers must make reasonable efforts to announce promotional opportunities, job openings and pay ranges for the openings, to all Colorado employees prior to making a promotion decision.
- Employers are required to disclose compensation ranges for (1) Colorado jobs or (2) jobs that could be performed in Colorado, including remote jobs. For example, if an employer is hiring for a remote role that could be performed anywhere in the US, Colorado law requires compensation information to be included in the posting.
Employers cannot ask for salary history or rely on it to determine pay.
- Employers are not allowed to seek the wage rate history of a prospective employee or to require disclosure of wage rate as a condition of employment.
- Employers are not allowed to rely on a prior wage rate to determine a wage rate.
- Employers are not allowed to discriminate or retaliate against a prospective employee for failing to disclose their wage rate history.
Employees can discuss their wages with others without fear of retaliation.
- Employers are not allowed to discharge, discipline, discriminate against, or interfere with an employee for inquiring about, disclosing, or discussing their wage rate.
Record keeping obligations
- Employers are required to maintain records of job descriptions and wage rate history for each employee for the duration of their employment and for two years after the employment ends.
What are the enforcement mechanisms in place and the penalties for non-compliance?
Employees alleging a violation of the EPEWA may file a complaint with the Colorado Department of Labor and Employment, file a charge with the Colorado Civil Rights Division, or file a private civil lawsuit. Employers may be required to pay the employee up to three years of back pay, liquidated damages equal to the amount of back pay, and attorney fees.
Records of job descriptions and wage rate history violation
Failure to maintain records of job descriptions and wage rate history opens the employer to risk in any lawsuit over sex-based wage discrimination. This failure creates a rebuttable presumption that the missing records contained information favorable to the employee's claim.
Pay transparency violation
Employers who fail to provide the required notice of promotional opportunities or the pay range for open positions may be required to pay a fine. This fine is between $500 and $10,000 for each violation.
The Department will waive all fines if an employer brings its postings into compliance after the first violation.
How can PayAnalytics help Colorado employers meet EPEWA’s requirements?
PayAnalytics supports companies all over the world in their pay equity journey, whether they are just getting started or have been conducting pay equity audits for years. It’s a global solution that is adaptable to all primary regulatory environments, including Colorado’s EPEWA.
With PayAnalytics Colorado employers can easily:
- Get a comprehensive overview and in-depth understanding of their current salary structure.
- Conduct a pay equity analysis and measure and monitor pay gaps by any demographic variable.
- Address any identified pay disparities, correct pay discrepancies and close pay gaps by making the appropriate changes suggested by the software and understanding the associated costs.
- Gain valuable insights into pay practices and policies that may be contributing to pay disparities.
- Formalize and document pay policies, which helps employers be ready to respond transparently to candidates’ or employees’ requests for information about compensation.
- Prevent pay disparities and sustain fair pay with ongoing decision support.
- Proactively reduce the risk of non-compliance and minimize the cost of remediation by conducting pay equity assessments on a regular basis.
- Report and share pay equity information with a user-friendly, flexible reporting feature.
Please feel free to reach out to us at any time for additional information or a software demo. You can find more information about PayAnalytics here.
The information on this page is not intended to serve and does not serve as legal advice. All of the content, information, and material in this article are only for general informational use. Readers are advised that this information, legal or otherwise, may not be up-to-date.