Effective January 1, 2021, Colorado employers must take steps to comply with the Equal Pay for Equal Work Act (“EPEWA” or the “Act). This new law prohibits all employers in the State from discriminating against employees on the basis of sex, to include gender identity, or sex in combination with another protected status (i.e., disability, race, creed, color, sexual orientation, religion, age, national origin, or ancestry) by paying employees of different sexes differently for substantially similar work. Colorado’s adoption of the EPEWA is just the latest example of states enacting legislation to better protect employees from discriminatory conduct.

Notably, the EPEWA:

  • Prevents employers from seeking the wage rate history of job applicants or relying on a prior wage rate to determine a current rate;
  • Prohibits discrimination or retaliation against a job applicant for failure to disclose their wage rate history;
  • Makes it unlawful for employers to prohibit employees from disclosing their wage information;
  • Requires employers to make reasonable efforts to announce, post, or make known all opportunities for promotion to all current employees on the same day, to include disclosing the hourly or salary compensation (or range thereof) along with a description of associated benefits and other compensation; and
  • Requires that employers maintain records of job descriptions and wage rate histories for each employee whole employed and for two years after their employment ends.

The Act’s “promotional opportunities” announcement/posting requirement is, perhaps, its most controversial component. In an effort to better define employers’ obligations under this provision, the Colorado Department of Labor and Employment engaged in rulemaking and has issued some guidance. In particular, so long as a new position could be considered a promotion for one or more employee(s) in terms of compensation, benefits, duties, status, or access to further advancement, the EPEWA’s posting requirements apply. This broad definition, without further refinement, will likely force employers to notify employees of any and all opportunities as they become available.

Despite prohibiting differing pay scales between the sexes, the Act recognizes several exceptions. An employer can avoid legal liability by showing the wage differential is not based on wage history and is, instead, based on one or more of the following, so long as the factors are reasonably applied and account for the entire wage rate:

  1. a seniority system;
  2. a merit system;
  3. a system that measures earnings by production quantity or quality;
  4. the geographic location where the work is performed;
  5. education, training or experience if they’re reasonably related to the work in question; and
  6. travel, if the travel is a regular and necessary condition of the work performed.

Employees alleging a violation of the EPEWA may file a complaint with the Colorado Department of Labor and Employment or file a private civil lawsuit. Employees can recover up to three years of back pay, liquidated (double) damages, and attorney fees. Penalties may also be imposed against employers who fail to comply with the new law.

Nonetheless, employers will not be subject to a liquidated damages award if they are able to demonstrate the act or omission giving rise to a violation of the EPEWA was in good faith and that they had reasonable grounds for believing they were in compliance with the law. Specifically, the EPEWA provides that “a thorough and comprehensive pay audit” of an employer’s workforce conducted within the two prior years, “with the specific goal of identifying and remedying unlawful pay disparities,” can be considered in determining whether an employer acted in good faith. This new legislation, along with the guidance that the State has issued interpreting it, raises a number of complex and nuanced compliance issues that employers must address heading into 2021 – particularly for national employers. 

The Act imposes significant obligations on employers to adopt a more transparent approach to inter-company employee advancement opportunities. It is, therefore, prudent to consult with a legal advisor to assist you with navigating this newly enacted law. Please feel free to reach out to Kathleen Alt (kta@bhgrlaw.com) or DJ Goldfarb (djg@bhgrlaw.com) with any questions you may have. 

Authors: Kathleen Alt and DJ Goldfarb

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