In an expansive reading of Colorado’s Equal Pay for Equal Work Act (Equal Pay Act), the Colorado Department of Labor and Employment (CDLE) issued proposed Equal Pay Transparency Rules (EPT Rules) that contain broad, first-in-the-nation requirements. Under the proposed rules, Colorado employers would have to include compensation range and available benefits in job postings, even for positions that will not or may not be filled in Colorado.  Moreover, the rules, as currently proposed, would apply to any employer with one or more employees in Colorado, regardless of where the employer is headquartered or incorporated, or where the rest of its workforce is located. To be clear, as currently proposed, these regulations would, for example, require a New York employer with one or two remote employees in Colorado to post a vacancy in New York for the CFO position—if applicants could apply from Colorado—and to disclose the salary range for the position.

The proposed regulations were issued on September 29, 2020, and are subject to a notice-and-comment rulemaking proceeding.  If adopted, these regulations will take effect along with the Equal Pay Act on January 1, 2021.

Equal Pay Act Transparency Requirements

In a section entitled Transparency in Pay and Opportunities for Advancement, the Equal Pay Act requires Colorado employers to list, for both internal and external job postings, the salary range for the position and a general description of the benefits and other compensation being offered.  Neither the Equal Pay Act nor the proposed EPT Rules draws a distinction between internal job openings and normal career progression steps.  As such, it remains unclear whether an employer would need to post an “opening” when, for instance, an employee progresses from Engineer I to Engineer II.  The better argument is that normal career progression would not require posting if there is no job opening or promotional opportunity available to others. 

For internal openings that could constitute promotions for existing employees, employers must make reasonable efforts to tell all employees about the opening on the same day, and prior to making a promotion decision.  The proposed EPT Rules explain that the hourly or salary 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.

The proposed EPT Rules also would require that the following compensation and benefits information be included in the posting: (1) the hourly rate or salary compensation (or a range thereof) that the employer is offering for the position, including any bonuses, commissions, or other forms of compensation that are being offered for the job; and (2) a general description of all employment benefits the employer is offering for the position, including health care benefits; retirement benefits; any benefits permitting paid days off, including sick leave, parental leave, and paid time off or vacation benefits; as well as any other benefits that must be reported for federal tax purposes; but not benefits in the form of minor perks.

The text of the Equal Pay Act does not address whether its posting requirements apply to remote jobs that could, but are not required, to be filled in Colorado—a particularly common occurrence during the continuing pandemic.  The proposed EPT Rules address this situation, stating that for such positions, (1) the employer must notify all of its Colorado employees for whom the job would be a promotion; and (2) if the employer posts the job in Colorado or by electronic means accessible in Colorado (e.g., on a website), it must include compensation and benefits in such job postings.

The proposed EPT Rules also impose posting and notice requirements on Colorado employers with a job opening that expressly would not be filled in Colorado.  For such a position, “if the employer accepts applicants from locales at least as distant as Colorado,” (1) the employer must notify all of its Colorado employees for whom the job would be a promotion; and (2) if the employer posts the job in Colorado or by electronic means accessible in Colorado (e.g., on a website), it must include compensation and benefits in such job postings.  This section of the proposed EPT rules appears to be designed to discourage the obvious result of the regulation—that multi-state employers will refuse to accept applicants from Colorado in order to avoid having to comply with the Equal Pay Act’s posting requirements.  The Colorado DOL does not provide any basis for asserting jurisdiction over jobs not to be filled in Colorado, particularly jobs for which Colorado applicants are not accepted, and there is significant doubt about whether this attempt at extraterritorial regulation would pass Constitutional muster.  The regulations specify that they do not apply to employers with no employees in Colorado.

With respect to the requirement that Colorado employers announce, post, or otherwise make known opportunities for promotion, the proposed regulations require notice to go to all employees of all promotional opportunities; employers may not limit notice to those employees who are qualified for the position.  However, the posting may state that applications are open only to those with certain qualifications.  The proposed EPT Rules specify that a communication announcing, posting, or otherwise making a promotional opportunity known must be in writing and include at least (A) job title, (B) compensation and benefits, and (C) means by which employees may apply for the position.  The employer’s obligation to make “reasonable efforts” to announce or post is met if the employer uses its regular and customary method of communication with its employees and an effective alternative method to notify any employees not reachable through the regular method.  Or, employers may provide advance written notice to employees of the means by which promotional opportunities will be announced, posted, or made known.  If an employer uses the physical posting method to inform employees about internal promotional opportunities, the posting must be displayed in each establishment where employees work, in a conspicuous location frequented by employees where it may be easily read during the workday—such as in break rooms, on employee bulletin boards, and/or adjacent to time clocks, department entrances, and facility entrances.

As noted in our previous article on the Equal Pay for Equal Work Act:

For the job-posting portion of the bill, aggrieved employees may file a written complaint with the Director of the Colorado DOL within one year of learning of the violation.  If the Director determines, after investigation, that that a violation occurred, the employer may be fined between $500 and $10,000 per violation.

Under the proposed EPT Rules, it is easy to imagine a large employer—even one with operations primarily outside of Colorado and few local jobs—that was unaware of these rules committing thousands of violations per year and incurring millions of dollars in potential fines.

The CDLE is holding a remote public hearing on these proposed rules on November 2, 2020 and is accepting written comments through November 5, 2020.  The final rules will be adopted on November 10, 2020 and take effect January 1, 2021.