Important Updates on Colorado’s Equal Pay Transparency Rules
By: Kayla D. Dreyer
Colorado’s Equal Pay for Equal Work (EPEW) Act went into effect on January 1, 2021, prohibiting any employer from discriminating between employees on the basis of sex by paying an employee of one sex less than the rate paid to an employee of a different sex for substantially similar work. The general prohibitions under the EPEW are detailed in our prior legal alert and blog post on the Act. The Colorado Department of Labor and Employment (CDLE) recently adopted Equal Pay Transparency Rules, clarifying the internal and external job posting requirements of the EPEW Act for Colorado employers. A high-level summary of what every Colorado employer should know follows.
The Transparency Rules and Job Postings
Recently, numerous national news outlets covered stories of employers reluctant to comply with Colorado’s new transparency rules. Some employers have even reportedly tried to get around the Colorado transparency rules by explicitly excluding from consideration Colorado applicants. However, this strategy is not a failsafe. The bottom line is that compliance with the transparency rules is required in a job posting as long as the employer has at least one Colorado employee at the time of publication, and the job is tied to a location in Colorado or is advertised as being remote.
The CDLE has also clarified the requisite content of job postings:
- Job title;
- The rate of compensation (or range thereof), including salary and hourly pay, or day rate compensation;
- A general description of any bonuses, commission, or other compensation;
- A general description of all benefits including healthcare, retirement, and paid days off and any benefits that must be reported for tax purposes; and
- The means by which employees may apply for the position.
The compensation range should be a reasonable estimate of the lowest to the highest pay that the employer in good faith believes it might pay for a job, depending on the circumstances of the position. Further, for multi-state or remote position postings, only the Colorado range is required, and the posting may specify a different range for different localities throughout the state.
The CDLE further confirmed that employers may elect to remain anonymous in their job postings if they are concerned about their competitiveness in the market, as long as they otherwise comply with the posting requirements. Last, and importantly, there is no requirement that a Colorado employer (i.e. an employer with at least one employee located in Colorado) publish a job posting advertising the availability of a new position. Publishing information about a job to the public is entirely voluntary.
The Transparency Rules and Promotional Opportunities
The other major impact of the EPEW Act is to mandate transparency in connection with internal promotional opportunities. A Colorado employer must announce, post, or otherwise make known all opportunities for promotion to all current employees prior to making a promotion decision. The rules define a “promotional opportunity” as when an employer has or anticipates a “vacancy in an existing or new position that could be considered a promotion for one or more employee(s) in terms of compensation, benefits, status, duties, or access to further advancement.” The contents of the internal posting or announcement should be made to all employees for whom the position would be a “promotional opportunity,” and must include:
- Job title;
- Means by which employees may apply; and
- Compensation and benefits.
Interestingly, a demotion for one employee may be a promotional opportunity for another, and therefore an internal announcement would be required.
The rules carve out several exceptions to the transparency requirements as follows:
- Promotions to replace incumbent employees who are unaware of their separation for compelling, confidentiality reasons;
- Automatic consideration for promotion within one year (must be in writing and must be based solely on employee performance and/or employer needs); and
- Temporary, acting, or interim positions of no more than six months.
The EPEW Act, and its interpreting rules, contain a great deal of minutia, and therefore Colorado employers should be mindful and knowledgeable of the strictures when making hiring decisions and succession planning. Moreover, these rules are the CDLE’s interpretation of the EPEW Act, and are subject to change as a result of further interpretation by the CDLE or the courts.
For more information on these rules, contact the author of this post or visit our Labor & Employment Practice page to find an attorney in your area. You can also subscribe to this blog to receive email alerts when new posts go up.