Employers Struggling to Comply with Colorado’s New Equal Pay for Equal Work Act

Colorado’s New Equal Pay for Equal Work ActFive months after Colorado’s new Equal Pay for Equal Work Act became effective, employers are still struggling with understanding this law and related guidance, and how to comply. The promotional and compensation posting requirements are two particularly challenging areas to understand.

Promotional Posting Requirements

Generally, employers must internally post all promotional opportunities to current employees on the same day and sufficiently in advance of the promotion decision that employees may apply.  A promotional opportunity exists when an employer has or anticipates a vacancy in a new or existing position which could be considered a promotion for any employee in terms of compensation, benefits, status, duties, or access to advancement.  The promotional posting must be in writing, with the job title, compensation, benefits and how employees may apply.  The employer may not limit the posting to those the employer deems qualified, but may state that applications are only open to those with certain qualifications, and employers may screen or reject applicants based on such qualifications.

There are a few very limited exceptions to the promotional posting requirements which include: (1) for confidentiality reasons where the incumbent is not aware he or she is being separated; (2) there is an automatic promotion after a trial period within one year based on a written representation; (3) temporary positions of less than six months; and (4) employees outside Colorado need not be notified of promotional opportunities.

This has brought up some interesting scenarios regarding what constitutes “promotional opportunities” which must be posted under the current Colorado Department of Labor rules and guidance on the law.  For example, a posting available to all current Colorado employees at a university must be made before a professor is moved from a non-tenure to tenure track position, even though that professor will be the only qualified candidate for that job.  Also, all Colorado employees for a large multi-state corporation, including entry level employees, must be notified of a CFO position available in New York City.  Of course, it makes no sense for employers to have to internally post in these scenarios but this appears to be what the current guidance requires.

Compensation Posting Requirements

All job postings, both internal and external, must include the hourly or salary compensation (or pay range) and a general description of all compensation and benefits offered.  Employers must include the following compensation and benefits information in each posting: (1) hourly rate or salary (or range); (2) a general description of any bonuses, commissions, or other forms of compensation; and (3) a general description of employment benefits, including health care, retirement, paid days off (sick leave, parental leave, paid time off, vacation), and any other benefits that are reportable for federal tax purposes, but not minor perks.

A compensation range may extend from the lowest to the highest pay the employer in good faith believes it may pay for the particular job.  Employers may later deviate from the posted pay range as long as the range was a good faith, reasonable estimate of the range of possible compensation at the time of posting.

Importantly, employers are not required to post jobs externally before hiring.  But if an employer does decide to post a job externally, it must include compensation information.  Also, the compensation posting requirements do not apply to jobs performed entirely outside of Colorado or postings made entirely outside of Colorado. However, postings for remote jobs and online postings must include compensation.

Pending Case Challenging the Promotion and Compensation Posting Requirements

Rocky Mountain Association of Recruiters (“RMAR”) filed a lawsuit against the Colorado Department of Labor in the U.S. District Court for the District of Colorado in December 2020 seeking an injunction to prevent the enforcement of the promotion and compensation posting requirements.  RMAR argued that the promotion and compensation posting requirements violate the Commerce Clause, Dormant Commerce Clause, and the First Amendment of the U.S. Constitution. U.S. District Judge William J. Martinez is presiding over this case and heard oral arguments on April 21, 2021. On April 26, 2021, the judge asked the parties to submit supplemental briefing on several issues.  We are watching this case closely and will update our post with the outcome.

Sarah Benjes is an attorney in Williams Weese Pepple & Ferguson’s Employment group and specializes in compliance, advice, and counseling for employers.

Updated May 27, 2021:  Today, U.S. District Judge Martinez denied RMAR’s motion for preliminary injunction, finding that RMAR failed to demonstrate a likelihood of success on the merits of its Dormant Commerce Clause and First Amendment claims.  The Court stressed the importance and substantial government interest in eliminating the gender pay gap in Colorado.  The Court also highlighted that RMAR, at this early stage of litigation, had not established that the burdens on interstate commerce exceed the local benefits.  Further, the Court found the Department of Labor sufficiently showed that the promotion and compensation posting requirements are reasonably related to a substantial government interest and do not impose an undue burden on employers. With this current ruling, the promotion and compensation posting requirements under Colorado’s Equal Pay for Equal Work Act will continue to be enforced. However, RMAR may appeal the order or continue litigating the case.  We will continue to follow this case and update this blog with other significant developments.

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