There are lots of changes ahead in Employment Law for 2021! One of those changes is Colorado’s new law, the Equal Pay for Equal Work Act effective January 1, 2021. Under the Act, employers are prohibited from paying an employee of one sex at a wage rate lower than the rate paid to an employee of a different sex for substantially similar work, regardless of job title, based on a composite of skill, effort (which may include consideration of shiftwork), and responsibility.
The Equal Pay for Equal Work Act prohibits employers from:
- Prohibiting employers from seeking prospective employees’ wage rate histories;
- Allowing employees subject to wage discrimination to file a civil action; and
- Providing for economic damages in the event of a violation, including liquidated damages.
The Act also contains other requirements to increase pay transparency, including:
- Requiring employers to announce opportunities for promotion or advancement;
- Requiring employers to disclose hourly or salary compensation and benefits for each posting or job opening; and
- Requiring employers to keep records of job descriptions and wage rate history for its employees for two years.
The law will require employers to include the hourly rate or salary compensation the employer is offering for the position. This range may extend from the lowest to the highest pay the employer, in good faith, believes it may pay for the particular job. Also, if any vacancy arises that could be considered a promotion for any person employed by the employer, the employer must make reasonable efforts to announce it to all Colorado-based employees. An employer can defend itself under the Act by showing a wage differential is justified by one or more of the following factors: (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 they are reasonably related to the work in question; or (6) travel, if it is a regular and necessary condition of the work performed.
This new law applies to employees who perform work in Colorado. If an employee performs work entirely outside the state, he/she is not covered by the Act.
An employee who brings a suit under the Act has a full range of remedies available which include unpaid wages, liquidated damages, employment, reinstatement, promotion, or pay increase. Also, a successful employee is entitled to recover attorney’s fees and costs. An employer who fails to post properly or keep proper records is liable for fines ranging from $500 to $10,000 per violation. The Act contains a “safe harbor” provision for employers who have performed a pay equity audit in a genuine effort to identify and correct pay disparities. Employers may avoid liquidated damages if they have performed a pay equity audit within the two years prior to a complaint.
If an employer fails to comply with the Act’s recordkeeping requirements, a judge must instruct a jury that the missing information would have been helpful to the employee, and the employer’s failure to keep proper records is evidence of a “willful” violation.
How Do You Prepare Your Business for Colorado’s New Equal Pay Law?
- Remove all statements prohibiting employees from discussing pay;
- Create job descriptions and wage histories for every employee; and
- Make certain job descriptions are updated regularly and that employees are agreeing to these descriptions as fair and equitable.