Three things employers need to know about Colorado’s new Equal Pay for Equal Work Act

On January 1, 2021, Colorado’s Equal Pay for Equal Work Act (the “Equal Pay Act”) came into effect for all employers in Colorado.

Aimed at closing the gender wage gap, the new law prohibits employers from discriminating against employees on the basis of sex by paying an employee of one sex at a lower rate than an employee of a different sex for substantially the same work.

To meet that end, the Equal Pay Act includes a number of new legal parameters Colorado employers must abide.

Employers Cannot Ask Job Applicants About Their Current Pay or Pay History, or Prohibit Employees from Discussing Their Pay

The Equal Pay Act prohibits Colorado employers from asking employment candidates about their current pay or their pay history during the application and hiring process. In addition, even if the pay history of a candidate is known to the employer – such as if an internal candidate is applying for a promotion within the firm – an employer cannot rely on that information in determining that candidate’s new wage rate. With this in mind, if your form employment application asks applicants about their pay history or current rate of pay, an update is likely required. Of course, during the hiring process, employers are free to ask candidates their desired rates of pay for the open position.

Beyond the hiring process, employers cannot prohibit employees from discussing their rates of pay with others. Importantly, employees’ right to discuss their pay cannot be waived; thus, employers cannot require that employees sign waivers giving up their right to discuss their pay. The purpose behind this requirement is to increase transparency in the workplace, which in turn may decrease the risk of pay discrimination.

Employers Must Notify Their Employees of All Opportunities for Promotion or Advancement

Under the new law, each Colorado employer is now required to make reasonable efforts to provide notice of all opportunities for promotion or advancement to the employer’s Colorado employees. An employer cannot limit its notice to only those employees it believes are qualified for the position; it must give notice to all employees, and may then screen the applicants based on the employer’s required or preferred qualifications.

If the job will be or could be performed in Colorado, the notice must include compensation information for the position. The notice must be in writing and must be given sufficiently in advance of the hiring decision so that all interested candidates may apply. In addition, the notice must be given using a method reaching all employees– for example, an electronic posting on a company intranet or a physical notice in an employee break room which all employees have access to would be sufficient to meet this notice requirement – and employers must inform their employees where such notices will be posted.

Employers Must Keep Records of Employees’ Job Description(s) and Compensation History

For the duration of each employee’s employment, and for two years thereafter, employers in Colorado must keep records of each employee’s job description and the compensation received by that employee. Compensation includes wages, benefits, and all bonuses or other compensation received by the employee. This requirement was instituted to permit the state to determine if there exists a pattern of wage discrepancy within an employer’s workforce. Failure to keep these required records is considered one violation of the law per employee, and an employer may be subject to substantial fines for noncompliance.

If you’re an employer with questions about how to comply with Colorado’s Equal Pay Law, please contact an attorney for guidance. Visit Polsinelli’s website to learn more about Polsinelli’s Labor & Employment practice.

 Gillian McKean Bidgood is a Shareholder at Polsinelli. As vice-chair of the firm’s Employment Advice and Investigations practice, she looks beyond the law and works with clients to understand the financial, practical, and personal motivations and implications of the employment issues and employment litigation she handles. She works closely with employers to develop comprehensive solutions for the complex and often sensitive workplace issues they face.

 Ellen M. Henrion is an Associate at Polsinelli. Working with seasoned attorneys, she assists clients with a wide variety of workplace related issues, including discrimination, retaliation, harassment, and wage claims.

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