Colorado Employers Should Prepare Themselves for Wide Range of Equal Pay Obligations
Colorado’s “Equal Pay for Equal Work Act,” (the “Act”) FN1 prohibits discriminatory pay practices between men and women, but also greatly increases employers’ exposure to lawsuits and penalties for alleged pay violations, which, at times, may be explained by a variety of legitimate business reasons.FN2
The Act also requires Colorado employers to: (1) make reasonable efforts to announce, post, or make known opportunities for promotion to all current employees; (2) describe in each job positing the hourly compensation or a compensation range, and the benefits offered with the job; and (3) maintain records of job descriptions and wage rate histories for up to two years after the end of an employee’s employment. The impetus for the new law stems from claims that employers hold down the salaries of primarily female applicants by asking them their past salary and paying at or close to that amount. Asking for wage history is prohibited by the Act.FN3
Employees may sue their employers for disparate pay and, if successful, may recover up to three years of back pay and liquidated (double) damages, unless the employer can show the pay violation was made in good faith based on one of the following:
a seniority system;
a merit-based system;
a system that measures earning by quantity or quality of production;
the geographic location where the work is performed;
education, training, or experience to the extent that they are reasonably related to the work in question; or
travel, if travel is a regular and necessary condition of the work performed.FN4
Unlike the federal Equal Pay Act, the Colorado law does not permit pay differentials based on legitimate “factors other than sex” other than the specific factors listed above,FN5 meaning even well-intentioned business decisions that result in different pay (for example, hiring a male employee at a higher salary because the company had a critical need based on understaffing at a particular time) may expose an employer to liability.FN6
The new law takes effect on January 1, 2021. In preparation, employers should audit compensation practices, posting of job openings, and communication of promotions available to employees, which may permit employers to avoid liquidated damage awards in the event of a lawsuit.FN7 Campbell Litigation’s attorneys are available to answer questions and address concerns as employers prepare to comply with the new compensation requirements.
Footnotes:
FN1: SB 19-085 https://leg.colorado.gov/sites/default/files/2019a_085_signed.pdf.
FN2: Colorado's “Equal Pay for Equal Work” Bill Moves Forward, Rocky Mountain Employer Blog (Feb. 21, 2019), https://www.rockymountainemployersblog.com/blog/2019/2/21/coloradosnbsp-equal-pay-for-equal-work-bill-moves-forward; Colorado Enacts Comprehensive Equal Pay Law, JD Supra (May 29, 2019), https://www.jdsupra.com/legalnews/colorado-enacts-comprehensive-equal-pay-62426/
FN3: See C.R.S. §§ 8-5-201 (posting requirements), 8-5-202 (record keeping requirements), 8-5-102(2) (prohibition on inquiries into wage histories).
FN4: C.R.S. § 8-5-102(1)
FN5: 29 U.S.C. § 206(d)(1).
FN6: See Kalu v. Florida Dep’t of Children and Families, 681 F. App’x 730, 734 (11th Cir. Feb. 27, 2017) (finding no liability under federal Equal Pay Act when employer showed that hiring a male employee at a higher salary resulted from a critical need for more employees combined with a shortage of applicants).
FN7:C.R.S. § 8-5-104(1)(b).