A Guide to Colorado’s Equal Pay for Equal Work Act

Several states and cities are passing laws to further bolster the federal Equal Pay Act. Trusaic 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.

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 (“EPEWA”) 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 EPEWA 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, as well as via a private right of action. The law went into effect January 1, 2021 and employers are now expected to comply.

What does the EPEWA 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 EPEWA, job title is not indicative of substantially similar work.

In addition to prohibiting pay discrimination based on sex, the EPEWA bans pay inequities based on other protected status, including disability, race, creed, color, sex, sexual orientation, religion, age, national origin, or ancestry. In this way, the Colorado legislature adopted a more expansive view of pay equity enforcement than the federal Equal Pay Act, which specifically focuses on gender.

Employers cannot seek the salary history of a prospective employee or rely on their wage history for determining their new rate.

The EPEWA has broad anti-retaliation provisions. Employers may not retaliate against a prospective employee for failing to disclose their previous salary earnings or against employees—or third parties—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 EPEWA 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:

1. A seniority system
2. A merit system
3. A system that measures earnings by quantity or quality of production
4. The geographic location where the work is performed
5. Education, training, or experience to the extent that they are reasonably related to the work in question; or
6. 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 employers, public and private, within the state of Colorado must comply with Colorado’s EPEWA.

What are the penalties for non-compliance?

Under the EPEWA, 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 EPEWA authorizes the Director of the 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 can also be assessed and can range as high as $10,000 per violation of the act’s requirements.

What is the “safe harbor” for employers who 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 EPEWA. The EPEWA contemplates 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 should consider performing a pay equity audit prior to the effective date of the EPEWA. There are three fundamental elements of a pay equity audit to consider before starting the process: trust in data, trust in the regulatory expertise of your vendor, and trust in the analytics provided by the pay equity solution.  Our team is excited to offer you a full demonstration of PayParity to show you how to address pay equity challenges within your organization.