Colorado’s New Pay Equity Law Takes Effect in 2022

Our Thinking / Law and Policy Group /

Highlights of the Act

The law aims to increase pay equity and transparency, imposes new notice and recordkeeping requirements, and encourages companies to regularly self-audit their compensation practices.

Pay Equity, Transparency Protections
Employees are protected against sex-based pay discrimination for work requiring similar skill, effort and responsibility. However, the law permits pay differences arising from:

A seniority system
A merit system
A system that measures earnings by quantity or quality of production
The geographic location where the work is performed
Education, training, or experience reasonably related to the work
Travel that is a regular and necessary condition of the job

Employers can’t prevent employees from discussing their own compensation information with other employees or require employees to sign a waiver preventing them from discussing their compensation.

The law also prohibits employers from asking about job candidates’ wage history or relying on wage history to determine a wage rate. Employers can’t discriminate or retaliate against a prospective employee for failing to disclose wage history.

Job-Posting Notices and Recordkeeping
New notice requirements will help current and prospective employees learn about job opportunities:

Employers will have to make reasonable efforts to “announce, post, or make known all opportunities for promotion” to all current employees on the same calendar day.
Each job-vacancy posting will have to disclose the hourly wage or salary, or the hourly wage or salary range, along with a general description of all benefits and other compensation offered.

Employees can report posting violations to the Colorado Department of Labor and Employment within one year of learning of the violation.

Employers must keep records of job descriptions and wage history for each employee while employed and for two years after termination. Employers could face civil fines of US $500 to $10,000 per violation of the job-posting or recordkeeping requirements.

Enforcement
The Colorado Department of Labor and Employment will enforce the law, investigate complaints and establish a voluntary mediation service. Employees can also pursue private civil actions and recover up to three years of back pay and double damages.

Employers can limit liability for damages by showing the act or omission causing the pay violation was made in good faith. In particular, employers that proactively self-evaluate their compensation practices for disparities could use those audits as a partial defense against a pay equity claim.