Equal pay provisions
The Equal Pay for Equal Work Act consists of two parts. The first part prohibits employers from paying employees differently for substantially similar work on the basis of their sex (or their sex in combination with other protected categories) unless the pay differential falls into one of the six statutory exceptions.
Employers can avoid liability by demonstrating each of the following:
- That the disparity is based on (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, if reasonably related to the job; or (6) travel, if travel is a necessary part of the job.
- That any factors relied upon were applied reasonably.
- That any factors relied upon account for the entire wage rate disparity.
- And that prior wage rate history was not used to justify the pay disparity.
Employers who are found to have violated the law will be liable for up to three years of back pay, representing the difference between what the employer actually paid the employee and what the employee would have earned absent discrimination. If the employer can establish that it acted in good faith and with a reasonable belief that it was not violating the law, the employer can avoid paying liquidated damages, which would otherwise double the back pay owed to the employee.
The second part of the Equal Pay law relates to transparency in pay and opportunities for promotion. In November, the Department of Labor and Employment issued rules relating to this portion of the law.
Under the rules, an employer must notify its Colorado employees of every opportunity for promotion throughout the entire company if that opportunity would represent a promotion for any employee. Indeed, notice of the promotional opportunity must be provided to Colorado employees even if the job or promotional opportunity at issue is one that could not be performed by an employee in Colorado. If the job can be performed by an employee in Colorado (either at a Colorado worksite or remotely from Colorado), then the employer must also provide the salary and benefits information for the position. The employer may provide a salary range if the range represents the employer’s good-faith estimate at the time that the job posting is issued. If the job cannot be performed in or from Colorado, the employer must still provide notice of the position but is not required to provide salary or benefits information. In addition,
- The employer must make reasonable efforts to ensure that notice of the promotion opportunity is provided to all employees on the same date, and before the position is filled.
- The notice must include information about how to apply for the position.
The employer may use its existing website or intranet site to post this information, as long as all employees have access and the notice tells employees how to access the job postings.
The Department appears to be construing even “in-line promotions,” or “progressions,” as subject to the Act’s notice requirements -- for example, when an employee is promoted from Customer Service Representative I to Customer Service Representative II. In the Statement of Basis and Purposes which the Department issued with the Transparency Rules, the Department said that employers had requested a blanket exception for in-line promotions. But the Department did not make such an exception, saying that Colorado employees would benefit from knowing that they too could seek in-line promotions. Consistent with the analysis detailed above, it appears that employers must provide salary and benefits information for the in-line promotion only if a Colorado employee was promoted.
Employers are not required to provide notice of promotions if one of the following exceptions applies:
- The employer needs to keep the opening confidential because the position is still held by an incumbent employee, and the employer has not yet notified the incumbent that he or she will be separated.
- The employer intends to promote a recently hired employee pursuant to an express agreement, entered into at the time of hire, that the employer would automatically consider the employee for promotion to the position within one year of hire based solely on the employee’s performance or employer needs.
- The employer intends to fill the position for only six months or less.
Individuals who believe that their employer has violated the transparency provisions of the Equal Pay for Equal Work Act may either file a complaint with the Department, or proceed directly to court. Where an individual has filed a complaint with the Department, the Act authorizes (but does not require) the imposition of fines of no less than $500 and no more than $10,000 for each violation pertaining to notice and job postings.
Given both the expansiveness and the unsettled nature of many of the Act’s requirements, we would recommend that employers consult with their legal counsel regarding any questions they may have pertaining to the Act and its notice requirements.