Pay Equity Law Goes Into Effect January 1, 2021

By Colin A. Walker, Fairfield and Woods, P.C.

On January 1, 2021, Colorado’s new pay equity law, the “Equal Pay for Equal Work Act,” will become effective. Regulations by the Colorado Department of Labor and Employment (CDLE) providing additional detail will also go into effect on January 1, 2021. The new law has the following primary provisions:

• Amends existing law to limit the defenses for a sex-based pay discrimination claim.
• Prohibits inquiring about compensation history during recruiting. This has been a point of concern for some recruiters. However, employers may ask about a candidate’s compensation requirements and can inform candidates of the range of compensation that the employer will pay. And, there is a good reason: inquiring about compensation history helps perpetuate pay disparities between similarly situated men and women, which have existed for many years.
• Employers must make reasonable efforts to announce or post all “opportunities for promotion” to all employees before making a promotion decision. A “promotional opportunity” means the employer has or anticipates a “vacancy” in an existing or new position that could be considered a promotion for one or more employees in terms of compensation, benefits, status, duties, or opportunities for advancement. The announcement must be to all employees, not just qualified employees. However, employers may state that applications are open to only those with certain qualifications and may screen or reject candidates based on such qualifications. Employers need not announce to employees entirely outside of Colorado or for positions entirely outside of Colorado. The announcement must include:
  • The wage of salary rate or a compensataion range;
  • A general description of bonuses, commissions and other compensation; and
  • A general description of all benefits, other than “minor perks” not reportable to taxing authorities.  

A compensation range may be from the lowest to the highest compensation the employer in good faith believes it may pay. The employer can deviate from this range as long as it has acted in good faith. There is a narrow exemption for situations in which there is a compelling need for confidentiality (other than avoiding posting requirements), such as when the employer has not informed an incumbent employee of a planned separation and is searching for a replacement.  There are also special rules for temporary employees.

This could be a big change for many employers. Employers will need to think carefully on how they work through succession planning processes. Before making the decision, the employer will have to announce the position, compensation, and benefits as described above. Since the employer must announce compensation and benefits, all employees will be aware of the compensation  

The new law is complicated, and employers should review it carefully, consulting with competent employment law counsel, to ensure compliance.

Questions? Contact COSHRM's Legislative Director, Colin Walker.