With the pandemic and election dominating news headlines, Senate Bill 19-085 quietly went into law. Based on the conversations we’ve been having and the job postings we’ve seen out there so far in January, we estimate that 90% of Colorado employers don’t even realize they’re violating this new legislation with their normal recruiting practices.
Colorado’s Equal Pay for Equal Work Act was passed in 2019 and took effect on January 1st of 2021. In short, this means that all employers in the state have to disclose salary or hourly compensation on all job postings, both internal and external. There are fines ranging from $500 to $10,000 for each violation, which can add up quickly for companies hiring multiple positions.
The purpose of this new act is similar to the purpose of the “ban the box” laws that have been on the rise over the last few years: eliminate the gender pay gap. It’s long been illegal to pay differently based on gender, but the transparency this law provides makes a big difference. Thankfully, in Colorado, we’ve already been doing better than the rest of the country as women make 98% of what men make for the same job/qualifications. However, that 2% still needs correcting.
To help you determine what the Equal Pay for Equal Work Act means for your business, we reviewed the text of the law, checked with our state government, and spoke with ADP. Here’s what you need to know.
You Must Include Salary on External Job Postings
The first thing to note about the new law is that, in every job posting, employers must disclose the hourly or salary compensation, or a range of the hourly or salary compensation, and a general description of all benefits and other compensation offered.
For one reason or another, many companies haven’t formed sound practices for determining their compensation. They pay what they think is fair, but there may not be a formal process in place. This provision in the law is going to change that. If you’ve never thought about salary ranges or average compensation for your roles, it’s time to start. It’s not easy, but it’s what it takes to comply with the law and be a modern employer that talented technologists want to work for.
Logistically, you’ll want to think about how your job postings are created and where they go. For some businesses, the postings are housed right on your website and are easy to edit. For many others, you’re working with another company to disseminate your postings as far and wide as possible. Do your job postings automatically get emailed to candidate lists or shared to websites like Indeed and CareerBuilder? Are there job postings from late 2020 sitting on LinkedIn or shared in industry groups or other forums? It’s wise to take an audit of activities like these as soon as possible.
You Must Include Salary on Internal Job Postings
Colorado’s Equal Pay for Equal Work Act doesn’t just affect your new hire practices. The law is clear that companies must include salaries or compensation ranges on internal job postings as well. Also, employers must make reasonable efforts to announce, post, or make known all opportunities for promotion to all current employees on the same calendar day and provide an opportunity for all employees to apply to all promotions.
This portion of the law should quickly provide salary transparency in companies that did not have it before. In the past, some of your team members may have discussed their compensation with their coworkers to try to determine if they were being paid fairly. Now, employers will be held accountable for pay transparency because they have no choice.
The concept of pay transparency can feel scary or awkward at first, especially if there are discrepancies inside a company. However, it’s necessary to do the difficult work to level the playing field. Now is the time to review pay practices and define pay grades or job families in a proactive way. Otherwise, your team members could find out if they’re making an appropriate wage as soon as you post your next opening.
You Can’t Ask Someone About Salary History
A third, important provision in the new law is that employers are not allowed to ask what someone is currently making or what they made in the past. Wage history cannot be a factor in determining current compensation or a salary offer. Furthermore, the law states that a company cannot discriminate or retaliate against someone who fails to disclose their salary history and that employers cannot deny employees the ability to discuss their own compensation information with others.
We’ve previously written about salary history bans for other areas of the country, so this part of the law is no surprise. It is new for Colorado, however, and that means companies like yours need to quickly review and likely change interview processes. Any forms that ask for salary, whether they are online or in print, need immediate revisions. Hiring managers must be trained to be very careful when discussing compensation or benefits during a new-hire interview or a promotion conversation.
Additional Considerations
While the above is a straightforward summary of what you need to know most, there is much more to the Equal Pay for Equal Work act. For example, there are exceptions to the law if an employer demonstrates that a wage differential is not based on wage history and is instead based upon one or more of the following factors:
- 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
- Education, training, or experience to the extent that they are reasonably related to the work in question
- Travel, if the travel is a regular and necessary condition of the work performed
As you determine what this law means for your specific company, it’s a good idea to consider a pay audit with the help of a law firm. Many business leaders or managers could be too close to the action to see the big picture, and after all, this is a legal matter. That outside help may be what it takes to truly find out if your hiring practices are fair and in line with the new legislation.
In our correspondences with ADP, we learned that 20% of hiring managers have asked a question that they later found out was illegal. Times like these can be eye-opening. It may not be easy to change your current processes or habits, but it’s what’s necessary to achieve true equality, both for women and any minority groups that have experienced unfair pay practices.
