Equal Pay for Equal Work Act: What Employers Need to Know
By: Dan Cummings & Amy Miller
Companies that employ Coloradans should be aware of a new law that affects the way they hire and promote from within. Among other measures, the Equal Pay for Equal Work Act requires all Colorado employers to immediately give notice to current employees of promotional opportunities, and, for any job posting, provide information on compensation and benefits.
The Equal Pay for Equal Work Act took effect on January 1, 2021. It's an effort by the Colorado Legislature to prevent pay disparities among men and women, and prohibit companies from relying on wage history to set salaries for individual prospective employees.
Employers who have yet to review their personnel listings should take time to familiarize themselves with the Act and determine how to comply, which may be relatively painless depending on your current job posting and hiring processes and record retention policies. Those who don’t face fines between $500 and $10,000 and could end up in costly and time-consuming litigation.
Here are some things employers should know about the Equal Pay for Equal Work Act:
What needs to be included in job postings?
All job postings, regardless if they’re posted internally or externally, must include three things:
- The hourly or salary pay – either an exact amount or a range – offered for the position.
- A general description of the bonuses or other compensation components tied to the job.
- A general description of the company’s benefits, including health care, retirement, and paid time off. The posting does not need to detail premium costs or coverage specifics, but should, at minimum, describe the nature of the benefits, i.e. this job comes with two weeks’ vacation time.
Hiring managers don’t need to list every employee perk, such as on-site child care or employee discounted gym memberships (although we know these offerings likely go far in helping attract top talent), just the benefits that are tax-reportable.
Employers aren’t required to specifically state the pay and can, instead, provide the compensation range. Colorado law requires that an employer list both the high-end and low-end of a compensation range that it in good faith believes it might pay for the particular job, depending on the circumstances.”
An employer may ultimately pay more or less than the posted range, as long as the posted range, at the time of the posting, was what the employer genuinely believed it would be willing to pay for the job,” according to the Colorado of Labor and Employment, which released an interpretive notice on the Act.
How can I make a “reasonable effort” to notify employees of promotions?
Any and all positions that would contribute to the advancement of current employees’ compensation, benefits, status, duties, or overall career trajectory must be posted internally when the job becomes available. These promotions are considered job postings and should include everything listed in the previous section, in addition to the job title and instructions for applying.
Promotional opportunities exist when the current job holder is leaving and the company intends to fill their position, when a new position is created, or when an employee is promoted or given a new job title and the employer decides to backfill the role.
Colorado law requires that notice of a promotional opportunity be made in writing, is available on the same day to all employees for whom it would be a promotion, and is posted with enough advance notice to allow employees a reasonable amount of time to apply for the position.
The law does not specify how job postings are distributed but states all employees must have access to the notices. If a team is working hybrid in-office and at-home, the notice could be posted on a bulletin board but also must be emailed to reach remote workers.
What if I have a remote team?
The law applies to positions that are performed in Colorado and remote positions that could be performed by an employee living in Colorado.
Multi-state employers are not required to provide the information for positions outside of Colorado but must do so for their Colorado employees.
What happens if I don’t follow this law?
Employees who believe their employer has violated the Equal Pay for Equal Work Act may file a complaint with the Colorado Department of Labor and Employment’s Division of Labor Standards and Statistics, which will warrant an investigation. Companies must turn over any documents and information the Division feels is relevant to the complaint.
If a violation is determined to have occurred, the Division may order the employer to take action in order to bring itself into compliance, and/or fine the employer $500 to $10,000 for each violation.
What else do I need to know about the Equal Pay for Equal Work Act?
Part of the Equal Pay for Equal Work Act requires employers to keep records of each employee’s job description and compensation, as well as all changes to their job description or compensation over time. Records must be maintained for the duration of their employment, plus two years.
There are also some exceptions to the promotional opportunities postings, including for temporary, acting, or interim positions that will be held for fewer than six months; for positions in which a promotion is automatically considered following a trial period of one year or less; or for job openings in which an incumbent employee is being terminated and the position needs to be filled before they’re aware of the separation.
While the law does not specifically address the implications for retainer-based executive search firms like EFL Associates that assist client organizations with securing top talent, we believe in the spirit and intended benefits of the Act. We also want to ensure our clients are in no way facing exposure for non-compliance.
Colorado’s Equal Pay for Equal Work Act is just one more reason to choose carefully when selecting a search provider to represent your organization in the talent marketplace. If you currently have or soon envision the need to engage a strategic partner to assist with your senior leadership needs, please contact us.