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Is Your Organization Ready for the Equal Pay for Equal Work Act?

This article was originally written on November 2, 2020 and has been since updated for accuracy when the final rules were released.

If you have even one employee in Colorado, are you ready for the Equal Pay for Equal Work Act (the “Act”)? If you don’t have salary ranges ready to be posted for your open positions, you likely aren’t.

The Act requires employers to disclose compensation amounts or ranges for each internal and external job posting, along with a description of all benefits and other compensation being offered. It also requires that employers make reasonable efforts to tell all employees about internal job openings on the same day they are posted and prior to making a promotion decision. Although pay equity legislation is popular at state and local levels, Colorado is the only state requiring direct disclosure of this information with job postings.

This can be a challenge for employers who don’t have a defined compensation strategy, philosophy and salary ranges. Although the requirement is for posted jobs and internal promotion opportunities, employees will likely start asking questions about their own range when they discover the ranges for other positions. The time for pay transparency in Colorado is now – whether you are ready or not.

What should you do to prepare?

Conduct a market-based pay study.

A pay study based on reliable and valid third-party data will give you a strong foundation to recruit and retain talent. It will also allow you to create equitable pay ranges that can be shared transparently throughout your organization.

Complete a pay equity analysis.

Compare your current employees to your market-based salary structure and identify those furthest from the anticipated place in range based on their experience and contributions. Ensure disparities are not based any factors except:

  • Seniority system
  • Merit system
  • System which measures earnings by quantity or quality of production
  • Location
  • Relevant education, training or experience
  • Travel, if it is required by the work performed

Rectify any discrepancies through pay adjustments as soon as possible. Employers who have conducted a pay equity audit with the intention of identifying and correcting disparities within two years prior to a claim may be able to avoid paying liquidated damages.

Communicate, communicate, communicate.

Ensure your managers and entire organization understand your compensation philosophy, structure and budget. Without proper communication, even the best programs can fall short of expectations and decrease engagement and morale. Ensure interviewers do not request salary history information.

Equal Pay Transparency (EPT) Rules

The Colorado Department of Labor and Employment adopted rules stating that Colorado employers have to include compensation range and available benefits in job postings for positions that may be filled in Colorado.

The final rules require any employer with even one Colorado employee to:

  • Inform all Colorado employees of promotional opportunities worldwide (even if the employee is manifestly unqualified for the job).
  • If an employer posts a job to be performed in Colorado, or that can be performed remotely from anywhere, to include in the posting the compensation range for the position and descriptions of incentive compensation and benefits.

If you have one Colorado employee, this has a particularly broad impact with potential remote workers across the country. If you are an Indiana employer (with at least one Colorado employee) who opens a job opportunity that is potentially available to Colorado employees (“work from anywhere”), you must post the compensation range for the position and descriptions of incentive compensation and benefits. Jobs with a fixed location outside of Colorado do not need to contain compensation information.

The final rules were adopted on November 10 and take effect on January 1, 2021.

If you have any questions, feel free to send me an email or note on LinkedIn. Or drop us a line on LinkedIn or via tweet. We love this stuff and are glad to help!

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