If your company has even one employee in Colorado, as of January 1, 2021, Colorado’s Equal Pay for Equal Work Act (EPEW) requires employers to notify employees within Colorado of all job postings and promotional opportunities, including those outside of Colorado. In some circumstances, the EPEW requires employers to provide compensation information relating to those postings and promotional opportunities. The law also imposes other requirements that are outlined briefly below.

Job posting notifications

Colorado employers must notify their Colorado employees of any job postings, even if the posting is for a job that could not be performed in Colorado. Additionally, if the job could be performed in Colorado (even remotely), the posting must include compensation information. This includes compensation (or a reasonable, good faith range), a general description of bonuses, commissions, or other forms of compensation offered, and benefits such as healthcare, retirement, paid time off, and other benefits required to be reported for federal tax purposes. However, where the job could only be performed outside of Colorado entirely, an employer need not include compensation information in the postings.

Promotional opportunity notifications

The EPEW also requires employers to inform all current, Colorado-based employees of all company promotional opportunities, with limited exceptions discussed below. Relevant regulations define a promotional opportunity as “when an employer has or anticipates a vacancy in an existing or new position that could be considered a promotion for one or more employees in terms of compensation, benefits, status, duties, or access to further advancement.” Promotional opportunities must be announced simultaneously to all Colorado employees (to prevent advance notice given to select employees) and prior to making any job decision. Significantly, Colorado employees must be notified of promotional opportunities even if the job is located outside of Colorado and could not be performed by an employee in Colorado.

The regulations clarify that employers are not required to notify employees located outside of Colorado of promotions, although employers must notify Colorado employees of jobs outside of Colorado. The notification requirement applies even if the job could not be performed by an employee in Colorado (however, for jobs that could not be performed in Colorado, there is no requirement to provide compensation information). The notification requirement applies even where no Colorado employee would be qualified for, or interested in, a promotional opportunity.

All promotional opportunity notifications must be made in writing by a method that reaches all Colorado employees. If the job pertinent to the promotional opportunity could be performed in Colorado (either physically or remotely), the employer must include the compensation information identified above.

The EPEW provides limited exceptions for when employers are not required to announce promotional opportunities. These include promotions to replace incumbent employees who are unaware of their separation and in situations where consideration of a promotion automatically follows a trial period that is memorialized in writing. In situations where a company continuously accepts applications for positions that would be considered a promotion to some of its employees, employers must still notify Colorado employees, but may do this through a monthly notice that gives employees time to apply, or through a static notice (such as through an intranet) that is accessible to all employees.

Additional requirements of the law

In addition to the requirements identified above, the EPEW also imposes certain other obligations on employers, including the following:

  • Employers must maintain records of job descriptions and wage rate history for each employee for the duration of the employment plus two years;
  • Employers cannot pay employees of different sexes performing substantially similar work different compensation, except where certain limited factors are present: 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; relevant education, training, or experience; or travel;
  • Employers must not seek compensation history of prospective employees; and
  • Employers may not prohibit employees from discussing compensation information.

Notably, the law prescribes a defense to liquidated damages in a wage discrimination claim if a company has performed a pay equity review in the two years prior to a violation of the EPEW.

Nationwide trend

Although Colorado’s requirement is among the most stringent, Colorado is only one of many states to take a stand on pay transparency issues. States such as Maryland, Massachusetts, Washington, California, Connecticut and Virginia have enacted pay transparency laws, and other states have proposed legislation on this subject, such as Indiana and South Carolina. In August, we saw Maryland amend its Equal Pay for Equal Work Act to add a requirement that employers disclose a pay range to applicants. We expect to see more states passing similar laws as part of this trend. The federal government may also pursue efforts to expand pay transparency, given that the Biden administration has identified pay equity as an area of priority.