Colorado Amends Equal Pay Law: Modifies Pay Transparency Requirements, Enforcement Mandates and Statute of Limitations for Wage Discrimination Claims

Seyfarth Synopsis:  Colorado has amended its Equal Pay for Equal Work Act to modify an employer’s pay transparency obligations for job postings and internal promotional opportunities.  The amended law will also extend the statute of limitations for wage discrimination claims from three years to six years and create new mandates for Colorado’s Department of Labor and Employment with respect to the investigation, mediation, and enforcement of wage discrimination claims.  The amendments to the law will take effect January 1, 2024.

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In 2019, Colorado became the first jurisdiction to pass a law requiring employers to provide pay range or rate information in job postings, starting a trend which many other jurisdictions have since followed.  Now, Colorado has amended its equal pay law, modifying the job opportunity posting and notification requirements, among other key changes to the law’s pay transparency and anti-wage discrimination provisions.

Colorado’s Initially Passed Law

As we previously reported here, Colorado’s Equal Pay For Equal Work Act (the “Equal Pay Act”) became effective January 1, 2021.  The Equal Pay Act strengthened Colorado’s equal pay law and added requirements for transparency in pay and opportunities for promotion and advancement.  On pay and opportunity transparency, the Equal Pay Act required that an employer:

• 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; and
• 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.

Following the law’s enactment, the Colorado Department of Labor and Employment (“CDLE”) enacted Equal Pay Transparency Rules (“EPT Rules”) and provided additional guidance that clarified and broadly interpreted the Equal Pay Act’s requirements on pay transparency.  

Amendments to the Equal Pay Act’s Pay Transparency Provisions

The newly enacted amendment makes several key changes to employers’ pay transparency obligations as outlined below.

Job Opportunity Notification

First, the amended law modifies the obligations employers have for providing notice of job opportunities to their Colorado employees, including redefining what constitutes a “job opportunity” and changing the requirements for when and what information must be disclosed.  Specifically, the law will now read:

An employer shall make reasonable efforts to announce, post, or otherwise make known each job opportunity to all employees on the same calendar day and prior to the date on which the employer makes a selection decision; except that, if an employer is only physically located outside of Colorado and has fewer than fifteen employees working in Colorado, all of whom work only remotely, then, through July 1, 2029, the employer is only required to provide notice of remote job opportunities.  The Department of Labor and Employment shall promulgate rules for temporary, interim, or acting job opportunities that necessitate immediate hire.

In some respects, the changes will be received as welcome news for employers as the obligations before the amendments required employers to post or otherwise notify Colorado employees of all job vacancies, whether such vacancies existed in Colorado or elsewhere, and whether or not any Colorado employee was qualified for the job.  The definition of promotion was broadly construed and with limited exceptions, applied to any opportunity that could be a promotion for any employee within the organization, and included in-line, career progression promotions. 

The amendment eliminates some of these requirements.  Specifically, under the amended  law, employers must make reasonable efforts to announce, post, or otherwise make known each “job opportunity” to employees.  However, the law now defines “job opportunity” to mean “a current or anticipated vacancy for which the employer is considering a candidate or candidates or interviewing a candidate or candidates or that the employer externally posts.”  In other words, the definition of promotion does not include “career development or career progression.”[1]  As such, employers will no longer be required to provide notice of in-line promotional opportunities.

In addition, the amendment provides that if an employer is only physically located outside of Colorado and has fewer than fifteen employees working in Colorado, all of whom work only remotely, then, through July 1, 2029, the employer is only required to provide notice of remote job opportunities.  Thus, while under the original requirements an employer with at least one employee in Colorado would have been required to provide notice of all promotional opportunities to its Colorado employee(s), such employers now need only provide notice of remote job opportunities to their Colorado employees.

The new law still contemplates exceptions for temporary, interim, or acting job opportunities that necessitate immediate hire, but it remains to be seen whether the CDLE will interpret these exceptions in the same way as it did under the initially passed law.

Information to Be Disclosed in Job Opportunity Notifications

Second, with respect to the information that employers must disclose in a job opportunity notification (including all external job postings), the amended law adds a requirement that employers disclose the date the application window is anticipated to close.  Thus employers will soon be required to disclose the following in every job opportunity notification:

1. 1. The hourly or salary compensation or the range of the hourly or salary compensation;
   2. A general description of the benefits and other compensation applicable to the job opportunity; and
   3. The date the application window is anticipated to close.

Notice to Current Employees Regarding Selected Candidate

Third, the law adds a requirement that employers provide transparency regarding the candidate selected for a job opportunity to those employees with whom the selected candidate will regularly be working in the new role.  Specifically, an employer must make reasonable efforts to announce, post, or otherwise make known the following information to, at a minimum, the employees with whom the employer intends the selected candidate to regularly work:

1. 1. The name of the candidate selected for the job opportunity;
   2. The selected candidate’s former job title if selected while already employed by the employer;
   3. The selected candidate's new job title; and
   4. Information on how employees may demonstrate interest in similar job opportunities in the future, including identifying individuals or departments to whom the employees can express interest in similar job opportunities.

Such notice is to be provided within thirty calendar days after the candidate who is selected to fill a job opportunity begins working in the position.  Given that this posting requirement is not limited to any type of position or level, this new requirement will essentially mean that all employers will need to implement practices to notify Colorado workers of all new hires and promoted employees selected through a competitive promotional process.

Notice of Requirements for Career Progression

Finally, the amended law adds a requirement that for positions with “career progression,” an employer must disclose and make available to all eligible employees the requirements for career progression, in addition to each position’s terms of compensation, benefits, full-time or part-time status, duties, and access to further advancement.  As noted above, the law defines “career progression” as “a regular or automatic movement from one position to another based on time in a specific role or other objective metrics.”  The law does not define who would be considered an “eligible employee.”

Amendments to the Equal Pay Act’s Wage Discrimination Provisions

The amended law also makes a couple key changes to the Equal Pay Act’s wage discrimination provisions.  One such major change is that it extends the statute of limitations for wage discrimination claims from three years to six years.  Under the amended law, a person who establishes a claim of discrimination in pay based on sex, or sex in combination with another protected status, may obtain six years of back pay.

In addition, Colorado’s prior law authorized the Director of the Division of Labor Standards and Statistics in the CDLE to create and administer a process to accept and mediate complaints of wage discrimination.  The amended law, however, mandates that the Director do so.   It additionally requires that the Director investigate complaints and order compliance and relief under the law upon finding a violation under the law’s wage discrimination provisions.  The Director must also promulgate rules for enforcement.

Next Steps for Employers

Employers with employees in Colorado should review their job posting and internal promotion notification practices and take steps to modify those practices before the January 1, 2024 effective date.  The good news is that the amendments will mean that certain in-line and/or non-remote promotional opportunities will no longer need to be disclosed to employees. However, some of the new notice requirements are onerous and will require advance planning to ensure timely implementation. 

As always, Seyfarth’s Pay Equity Group is available to assist employers navigate these new requirements and ensuring that they are ready for the ongoing trend toward greater pay transparency generally, including developing protocols for nationwide compliance.

 

[1] These terms are in turn defined.  “Career development” is defined as “a change to an employee’s terms of compensation, benefits, full-time or part-time status, duties, or access to further advancement in order to update the employee’s job title or compensate the employee to reflect work performed or contributions already made by the employee.  “Career progression” is defined as “a regular or automatic movement from one position to another based on time in a specific role or other objective metrics.”