Colorado's Equal Pay for Equal Work Act Becomes Effective January 1

November 6, 2020

The Equal Pay for Equal Work Act (signed by Governor Polis last year) becomes effective January 1, 2021. The new law applies to all Colorado employers and creates more responsibilities and legal risks for employers. In addition to pay equity, the statute includes new requirements pertaining to pay history, pay transparency, and notices regarding opportunities for promotion. This article describes some the law’s main provisions.

Pay Discrimination

The statute prohibits discriminating between employees on the basis of sex (defined as an employee’s gender identity), or on the basis of sex in combination with any other protected status described in the Colorado Anti-Discrimination Act, 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, based on a composite of skill, effort, and responsibility. However, an employer can avoid liability by first demonstrating that the wage rate differential is based on:

1. A seniority system;

2. A merit system;

3. A system that measures earnings by quantity or quality of production;

4. The geographic location where the work is performed;

5. Education, training, or experience to the extent that they are reasonably related to the work in question; or

6. Travel, if the travel is a regular and necessary condition of the work performed.

In addition, the employer must show (1) that each factor above that was relied on was applied reasonably, (2) that each factor relied on accounts for the entire wage rate differential, and (3) that prior wage rate history was not relied on to justify a disparity in current wage rates.

A plaintiff who prevails on a wage discrimination claim can potentially recover up to three years of back pay, plus an equal amount as liquidated damages. However, liquidated damages will not be awarded if the employer can show that the “act or omission giving rise to the violation was in good faith” and the employer had a reasonable basis for believing it did not violate the statute.

In determining the issue of good faith, the court (or jury) may consider evidence that, within two years prior to the civil action, “the employer completed a thorough and comprehensive pay audit of its workforce, with the specific goal of identifying and remedying unlawful pay disparities.”

Pay History

The new law prohibits employers from asking the compensation history of an applicant or relying on the applicant’s compensation history to set that person’s compensation. The law also prohibits employers from discriminating or retaliating against prospective employees for failing to disclose their compensation history.

It is also illegal to “discharge, discipline, discriminate against, coerce, intimidate, threaten, or interfere with an employee or other person” for disclosing, comparing, or otherwise discussing compensation. (Savvy employers know this is also a violation of the National Labor Relations Act.)

New Notice Requirements

Employers must make “reasonable efforts to announce, post, or make known all opportunities for promotion to all current employees on the same calendar day and prior to making a promotion decision.” Employers are also required to “disclose in each posting for each job opening the hourly or salary compensation, or a range of the hourly or salary compensation, and a general description of all benefits and other compensation to be offered” to the successful applicant.

The CDLE’s Implementing Rules

The Colorado Department of Labor and Employment has adopted rules captioned Equal Pay Transparency Rules (“EPT Rules”) for the purpose of implementing and enforcing that part of the Equal Pay for Equal Work Act that addresses transparency in pay and promotion opportunities. Like the statute, the EPT Rules become effective January 1, 2021.

The EPT Rules give guidance on the law’s job posting requirements and more detailed requirements concerning the posting of opportunities for promotion, including when the posting requirements are triggered, the required contents, and the methods of posting.

The EPT Rules also describe three exceptions to the requirement to post opportunities for promotion: (1) when there is a compelling need to keep a promotion opportunity confidential because the person occupying that job does not yet know they are about to lose that position; (2) an automatic promotion after a trial period and; (3) temporary, acting or interim hires.

There are also geographic limits to the posting requirements. Posting requirements pertaining to promotion opportunities “do not apply to employees entirely outside Colorado.” Compensation posting requirements “do not apply to either (1) jobs to be performed entirely outside Colorado, or (2) postings entirely outside Colorado.”

The EPT Rules also include definitions of certain terms and rules pertaining to investigating and adjudicating complaints.