Colorado legislators have again signaled that 2021 is a banner year for policy approaches to issues such as diversity, pay equity, and inclusion (DEI). Employers within the state now face a deluge of new obligations which, if mishandled, could result in steep penalties. In an earlier post, Trusaic highlighted the Equal Pay for Equal Work Act (EPEWA), Colorado’s aggressive new equal pay law which took effect January 1, 2021. EPEWA prohibits pay disparities on the basis of sex (including gender identity) or sex plus another protected class, between employees performing substantially similar work. The law also incentivizes employers to perform a pay equity audit through the creation of a litigation “safe harbor,” whereby employers can avoid punitive and compensatory damages in court. Also effective January 1, 2021, are the Equal Pay Transparency Rules, which contain significant employer obligations with respect to disclosing salary and benefits information in job postings.

But lawmakers from the Centennial State are not finished creating new employer compliance risks. The “Protecting Opportunities And Workers’ Rights Act” (that’s right, the POWR Act) is currently working its way through the state legislature. It recently passed in the state senate and was introduced in the house on June 1, 2021. The POWR Act follows the EWEPA and the Equal Pay Transparency Rules in creating new worker protections and employer responsibilities. While the bill as proposed contains many important changes to Colorado law, several provisions stand out because of the extreme shifts in employer liabilities they contain. 

First, the Colorado POWR Act would expand the definition of “employee” to include individuals in domestic service; individuals who perform a service for a price, including independent contractors, subcontractors, and their employees; and individuals who offer services or labor without pay. What this means for Colorado employers is that liability would accrue for employment discrimination and harassment against a whole new class of individuals, including those working in the gig economy with limited connections to their organizations. California bore witness to a seismic shift of this nature in the wake of the Dynamex Supreme Court decision, AB 5, and the “ABC Test” for distinguishing independent contractors from employees. The aftermath was so extreme that a $200 million dollar ballot measure followed, rolling back some of the changes but leaving the employment landscape forever changed. 

Second, the Colorado POWR Act would significantly alter the concept of “exhaustion”, a legal term of art that requires litigants to do certain things to protect their rights prior to filing a lawsuit. In federal litigation, you must generally file a charge of discrimination with the EEOC prior to suing your employer. Colorado has a state-level equivalent, which the POWR Act would eliminate. A recent post by Lexology explains, “If the bill becomes law, employees would be able to file a civil action in state court 14 days after submitting a written demand for relief to the employer. Under current law, before filing such a suit, employees must first ask the [Colorado Civil Rights Division] to investigate their claims and wait at least six months for the Division to have the opportunity to do so.” Employees would thereby have quicker, easier access to Colorado courts, requiring employers to adapt to a potentially more litigious workforce.  

The Colorado POWR Act would also add new protections against discrimination for individuals based on their marital status or caregiver status and limit the use of non-disclosure agreements. 

As is clear from the extreme shifts in Colorado law that will follow if the POWR Act is passed, employers should take steps now to ensure they are in the best possible position if and when the new law’s requirements kick in. Overall, a comprehensive pay equity analysis is the best place to start to understand what your company is doing right, and where it can improve before employee complaints, lawsuits, or regulatory issues arise. Such an analysis can tell you, on an individual, department by department, or company-wide level where pay equity and DEI issues exist and how to proactively address them

As Colorado lawmakers continue to make clear, the state is getting increasingly progressive in its worker protections and employer responsibilities. Being proactive allows organizations to shift some of this momentum back into their favor. If your organization is new to pay equity, download the white paper Designing a Successful Pay Equity Policy for Your Organization to get started on your journey to authentic change in the workplace.

If your organization needs assistance achieving its DEI goals, check out our professional consulting services and DEI software, PayParitySM.