Several states and cities are passing laws to further bolster the federal Equal Pay Act.
The PayParitySM Post is featuring some of these laws to provide insight into trends in pay equity compliance requirements as more of these laws are considered by states, counties, and municipalities.
In this post, we look at Colorado’s Equal Pay for Equal Work Act.
Get to Know Colorado’s Equal Pay for Equal Work Act
On May 22, 2019, Colorado joined the wave of states passing aggressive equal pay laws. The Equal Pay for Equal Work Act (EPEW aims to “help close the pay gap in Colorado and ensure that employees with similar job duties are paid the same wage rate regardless of sex, or sex plus another protected status.” Key provisions of the EPEW include 1) a safe harbor for employers that conduct proactive pay equity audits, 2) a comprehensive salary history ban, 3) pay transparency mandates, and 4) a range of options for aggrieved employees to pursue claims, including administratively, through a mediation process, and through a private right of action. Employers have until January 1, 2021, to become compliant with the EPEW.
What Does the EPEW Require?
Colorado employers cannot pay an employee of one sex (which includes gender identity) less than the rate paid to an employee of a different sex for substantially similar work. Substantially similar work is defined as a composite of skill, effort (including shift differentials), and responsibility. Under the EPEW, job title is NOT indicative of substantially similar work.
In addition to prohibiting pay discrimination based on sex, the EPEW forbids pay inequities based on sex plus another protected status, including disability, race, creed, color, sex, sexual orientation, religion, age, national origin, or ancestry.
Employers cannot seek the salary history of a prospective employee or rely on their wage history for determining their new rate.
Employers may not retaliate against a prospective employee for failing to disclose their previous salary earnings or against employees for discussing wages.
In addition to non-discrimination practices, employers must also make reasonable efforts to announce job openings and promotions within the company. For said positions, employers must disclose the hourly/salary compensation as well as the benefits associated with the position.
Are there any exceptions to the Colorado Equal Pay for Equal Work Act for Legitimate Pay Differences?
The EPEW lays out a limited set of circumstances justifying pay differentials based on sex or sex plus another protected class. In legalese, these exceptions are called “bona fide factors” if they account for the entire pay difference. The exceptions are:
- 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 to the extent that they are reasonably related to the work in question; or
- Travel, if the travel is a regular and necessary condition of the work performed.
It’s important to note that pay systems should be documented in employment policies and used consistently in order to qualify as bona fide factors.
Which Employers Must Comply with Colorado’s Equal Pay for Equal Work Act?
All public and private employers within the state of Colorado.
What Are the Penalties for Non-Compliance?
Under the EPEW, aggrieved employees have a range of avenues to pursue their claims. They may file administrative complaints with the state Department of Labor Employment or pursue a private right of action in court. Additionally, the EPEW authorizes the Director of the state Department of Labor and Employment to create a program to mediate equal pay complaints. Violation of the law can result in back wages to affected employees in addition to liquidated damages and attorney fees and costs imposed by the court. Penalties for violating provisions of the act may range from $500 to $10,000 per violation.
What is the “Safe Harbor” for Employers that Perform a Proactive Pay Equity Audit?
The law incentivizes employers who perform a good faith pay equity audit. Employers may avoid liquidated damages if they can demonstrate with reason that they believed they were not in violation of the EPEW. The EPEW cites a comprehensive pay audit, conducted within the two prior years, and having the specific goal of identifying and remedying pay disparities as one factor employers can rely on to demonstrate good faith.
What Should I Do?
Organizations that are considering performing a pay equity audit should ensure that they are legally protected. They should consult with counsel and accountants about legally protecting the information documented and generated in an audit. Organizations that don’t feel they have the in-house capability to conduct a pay equity audit should consider the data quality management expertise of the experts retained to help conduct the audit. Working with outside vendors like First Capitol that have specific expertise in data cleansing and validation will ensure that the results of any pay audit will be accurate. As the saying goes, garbage in, garbage out (GIGO) – a meaningful review of pay practices depends on the integrity of your employment data.