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UPDATED | FAQs: Colorado's Equal Pay Rules for Job Posting and Pay Transparency

 

Published:

December 21, 2020

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Labor & Employment
 
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Colorado’s Equal Pay for Equal Work Act (EPEWA) goes into effect January 1, 2021, and the Division of Labor Standards and Statistics within the Colorado Department of Labor and Employment adopted final regulations on November 10, 2020, regarding equal pay transparency. Since our last update, on December 18, 2020, the Division issued its Interpretive Notice and Formal Opinion #9 (INFO #9) in yet another effort to provide clarity around the job posting and pay transparency provisions of EPEWA. These provisions have generated the most questions from human resource and internal legal teams. Below we have revised and updated our earlier FAQs to provide the most up-to-date guidance in a single resource.

EPEWA is a far-reaching law that, subject to six narrow exceptions, prohibits employment discrimination by paying an employee of one sex a wage rate less than the rate paid to employees of a different sex performing substantially similar work. Part 1 of EPEWA provides a private right of action, administrative enforcement, limited defenses and liquidated damages and attorneys’ fees for employees who prevail in their claims against employers. Husch Blackwell’s previous Thought Leadership on Part 1 is linked.

The Division’s final regulations and INFO #9 have focused less on Part 1 and instead attempt to provide clarity on Part 2 of the law, which mandates unique and strict requirements on job postings and equal pay transparency. You can read the full text of the final regulations here. You can read the full text of INFO #9 here.

EPEWA Part 2 identified these posting and transparency requirements in two short paragraphs that raise more questions than answers:

  1. An employer shall make reasonable efforts to announce, post, or otherwise make known all opportunities for promotion to all current employees on the same calendar day and prior to making a promotion decision.
  2. An employer shall disclose in each posting for each job opening the hourly or salary compensation, or a range of the hourly or salary compensation, and a general description of all of the benefits and other compensation to be offered to the hired applicant.

C.R.S. § 8-5-201.

Even with the final regulations in place and the additional guidance from INFO #9, Employers still face some unanswered questions.

14 FAQs regarding EPEWA equal pay transparency and posting

1. What job postings and job announcements do the equal pay transparency rules cover?

The rules require written job postings or announcements for opportunities for promotion. It does not require job postings for positions that are not considered opportunities for promotion. INFO #9 makes clear that employers are not required to post jobs unless needed to announce promotional opportunities. However, if an employer chooses to utilize job postings to advertise for external candidates, the employer must comply with the law. See Question #13 below for 2020 postings that continue into 2021.

2. What constitutes an opportunity for promotion?

This simple question has created the most uncertainty for employers. Under 4.2.1 of the final pay transparency rules, a “promotional opportunity” is defined as a “vacancy” in an existing or new position that could be considered a promotion for any current employee in terms of compensation, benefits, status, duties or access to further advancement. 

The final rules identify a number of exceptions to the requirement to announce promotional opportunities: (1) when the employer has a compelling need to keep an opening confidential because the position is still held by the incumbent employee; (2) when the promotion is automatic after a trial period according to a written agreement; or (3) where someone is hired into a temporary, acting or interim role. If the hire may become permanent, the promotional opportunity must be made in time for other employees to apply for the permanent position. Rule 4.2.5.

The Division explained its decision not to create a blanket exception for “in-line” or “elevator” promotions, stating that providing notice of these types of career advancement opportunities to all current employees lets others know that they too can seek the same advancement. Since these types of promotions are not always into a vacant position, the Division’s stated intention may turn out to be different than the rule itself. You can read the full text of the Division’s Statement of Basis, Purpose, Specific Statutory Authority, and Findings here.

INFO #9 attempts to provide further clarity around what constitutes a “vacancy.” A vacancy in an “existing position” occurs when an existing position that the employer intends to fill is open or is held by a departing employee. 

A vacancy in a “new position” occurs when an employer: (1) adds a position; or (2) gives an existing employee a new position, including by changing their title, and/or materially changing their authorities, duties or opportunities. A vacancy does not occur if the employer is merely changing pay or adding a title to reflect an externally obtained degree or certification (e.g. “CPA” or “LCSW”). According to the Division, a vacancy in a new position does include a lateral job change, or a promotion along a fixed, in-line career trajectory, for which a current employee is eligible.

The Division provides several examples in INFO #9 of circumstances in which it would consider a vacancy to be a promotional opportunity. In one example, restructuring a team to give an employee a supervisory role without any compensation increase, but with a higher title and authority, would be considered to be a promotional opportunity. In another example, even an entry-level position could be considered a promotional opportunity if it is an entry-level position into a department with more growth opportunities than other entry-level positions in the company.

The Division’s expansive interpretations of the statutory language “opportunities for promotion” and regulation’s term “vacancy” to include in-line advancement and restructured roles are vulnerable to challenge and appear inconsistent with the common, everyday use of those terms. The Division will defend its broad interpretation as being consistent with the pay transparency principles underlying Part 2. It remains unclear what level of vigor the Division will attempt to enforce its broad understanding of Part 2. Part 2’s enforcement mechanism is limited to the fines described in FAQ #12 below.

3. What does it mean to “announce, post or otherwise make known” all opportunities for promotion to all current employees?

Under 4.2.2 of the equal pay transparency rules, the communication must be in writing and must include: (A) job title, (B) compensation and benefits, and (C) means by which employees may apply for the position.

4. What are the reasonable efforts employers must take to announce a job posting?

Under 4.2.3 an employer makes “reasonable efforts” using any method by which all covered employees can access the posting information at work either online or in hard copy and after they have been told where to find the required postings or announcements. If a particular method does not reach all employees, then an alternative method must be used for those employees.

INFO #9 clarifies that if the information is posted it must be posted for long enough that employees can reasonably access it. In certain circumstances, such as an automatic promotion of employees in an in-line job progression upon completing set requirements (e.g. a move from a junior to a senior role), the notice can be included in a fixed location such as an employee handbook, so long as that notice includes the requisite compensation and benefits information and information about how to apply for the promotion to the senior role (e.g. completion of a sufficient number of in-service hours).

5. Do the rules regarding job postings apply to internal and external job postings?

Yes. While the requirements for posting opportunities for promotion are focused on internal announcements, the equal pay transparency rules make no distinction between internal and external job postings.

6. Do the requirements apply to staffing firms and headhunters?

The equal pay transparency rules do not address third parties engaged to assist in the hiring process. Arguably, employers may be responsible for the job postings and announcements made by third parties to the same extent as if they had made the posting or announcement themselves.

INFO #9 does not specifically address this question either, but it does clarify that entities that are merely sharing or re-posting the jobs of other employers (e.g. a business operating a website that posts jobs from employers) are not liable for non-compliant postings under the equal pay transparency rules.

7. Which employees must receive notice of the job posting?

Employers must notify all employees of all promotional opportunities, regardless of the employee’s qualifications for the open position. However, employers may state that applications are open only to those with certain qualifications.

8. What compensation and benefits information must the job posting include?

A posted compensation range may extend from the lowest to the highest pay the employer in “good faith” believes it might pay for the particular job. An employer may ultimately pay more or less than the posted range, if the posted range was the employer’s good faith and reasonable estimate of the range of possible compensation at the time of the posting. INFO #9 further explains that the range an employer may pay for a particular job may depend on circumstances including employee qualifications, employer finances and other operational considerations.

Employers reluctant to disclose compensation ranges should proceed with caution as the Division has provided clear direction to post a range reflecting the lowest and highest amounts that the employer “actually believes” will be paid. A good faith belief likely does not include stating a minimum amount only (e.g. stating the range is “$55,000+”).

Employers must also post a general description of any bonuses, commissions or other forms of compensation being offered for the job, as well as a general description of all the employment benefits the employer is offering for the position. INFO #9 clarifies that employers must describe only the general nature of the benefits (e.g. job comes with health insurance), not specific details or dollar values.

See Question #14 below for more guidance about the logistics of publishing this compensation and benefits information.

9. Does this apply to all employers in Colorado?

Yes, the equal pay transparency rules apply to all Colorado employers. The only exempt employers are those that are non-Colorado employers. An employer with no current employees in Colorado has no obligations under C.R.S. § 8-5-201(1)-(2) until it employs an employee in the state of Colorado. Out-of-state employers with employees in Colorado are subject to the law’s requirements.

10. Does the law apply to positions outside of Colorado?

Under 4.3 (A), the promotion posting requirements do not apply to employees who are entirely outside of Colorado. However, if a Colorado employer has a promotion opportunity available anywhere in the company, even outside of Colorado, its Colorado employees must be notified. Under 4.3(B), job postings and promotional opportunities do not need to include compensation information if the job will be performed entirely outside of Colorado or if the job is posted entirely outside Colorado (i.e. not on the internet). INFO #9 clarifies that a non-Colorado job that may include “modest” travel to Colorado is still an out-of-state job.

The Division clarified in its Statement of Basis, Purpose, Specific Statutory Authority, and Findings that because remote jobs could be performed in Colorado, it cannot be determined until after a hiring decision is made whether the employee will be in Colorado, and even non-Coloradans hired for remote work might move to Colorado after being hired by a Colorado employer, all remote jobs must comply with the compensation posting requirements.

11. Does this apply to employers of all sizes?

Yes. The law does not exclude small employers.

12. How will the law be enforced?

The equal pay transparency rules provide no guidance beyond what is in the text of the EPEWA regarding how the Division will enforce the law. EPEWA provides for fines between $500 and $10,000 per violation of the posting and equal pay transparency provisions. INFO #9 asserts that failure to provide compensation and benefit information is one violation regardless of the number of postings listing the job. Similarly, a failure to notify employees of one promotional opportunity is one violation regardless of how many employees were not notified. The Division has the authority to waive fines for the as yet undefined “good cause shown.”

Under 3.2.4, the Division will not accept complaints of violations that occurred before January 1, 2021.

13. What happens to 2020 postings that are still up after January 1, 2021?

According to INFO #9, a 2020 job posting that extends past January 1, 2021, will need to be taken down or made compliant if it remains posted on or after February 1, 2021.

14. Can employers include the required compensation and benefits information in a link accessible from the job posting rather than including the information in the job posting itself?

INFO #9 provides limited relief to employers who may be concerned about making their compensation information “public.” In electronic postings (e.g. webpages or e-mails), employers do not need to include all of the required compensation and/or benefits information in the posting itself provided that the information is hyperlinked or accessible via a URL provided with the electronic posting, with a clear indication in the posting to the reader that the hyperlink or URL provides access to the required information for that position. Employers have the responsibility of ensuring continuous compliance with the functionality of links and keeping the information up to date.

Contact us

If you have questions about your obligations regarding the EPEWA, contact Barbara Grandjean, Chris Ottele, Ashley Jordaan, Sonia Ramirez Anderson or your Husch Blackwell attorney.

 

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