Key Points

  • Effective January 1, 2021, Colorado’s Equal Pay for Equal Work Act will prohibit employers from discriminating on the basis of sex (including gender identity), alone or with another protected status, by paying less for substantially similar work in terms of skill, effort, or responsibility
    • The Act is one of the most comprehensive in the nation
    • Imposes notice requirements, limits acceptable reasons for pay discrepancies, and includes a salary history ban, among other provisions
    • Employers can be subject to civil fines for noncompliance
  • Private and public employers with any employees in the state are subject to the Act
    • Includes government and religious entities
    • No carveout for small businesses or domestic employers
  • Employers can reduce their liability by completing a pay audit to identify any pay disparities
Potential Risk Factors
  • The Act prohibits wage-based discrimination and details factors that may be used to explain discrepancies:
    • Seniority system
    • Merit system
    • A system which measures earnings by quantity/quality of production
    • Location
    • Relevant education, training, or experience.
    • Travel, if it is required by the work performed
  • Recent legislation from New York, California, and others include similar provisions
    • Designed to clarify acceptable explanations for pay discrepancies
    • Closes loopholes previously allowed under ambiguous regulations
How To Prepare Pay Equity Audit
  • The Act incentivizes proactive identification/prevention of issues
    • Steep penalties (potentially twice the amount of three years of back pay)
    • Employers can potentially avoid double damages by conducting a pay equity study
  • At a minimum, employers should consider conducting a pay audit prior to 1/1/2021
    • Pay audits conducted within two years prior to a violation can be used as evidence of “good faith”
    • Pay audit must be “thorough and comprehensive” and conducted “with the specific goal of identifying and remedying unlawful pay disparities”
    • These audits can be conducted in-house or with the assistance of a consultant or compensation attorney
Record-Keeping Requirements
  • The Act imposes new requirements around job postings
    • Employers will be required to disclose compensation amount/range for each posting
    • Posting must also include a description of benefits/other compensation
    • An employer must make a reasonable effort to announce internal promotion opportunities to all employees on the same day as well as prior to making a decision
  • Employers must maintain employee records for two years
    • Includes job descriptions and wage history
    • Corresponds to the timeframe for employees to file a lawsuit after a violation
  • These provisions are more stringent than those in other state laws