The Equal Pay for Equal Work Act (EPEW) went into effect in Colorado at the beginning of the year, prohibiting wage discrimination because of sex and creating new obligations for employers to promote pay transparency.  

On May 27, EPEW survived its first legal challenge in a decision by Judge William Martinez in the federal court for the District of Colorado.

I still receive inquiries from employers unfamiliar with EPEW, so it’s worth going over the basics.

EPEW is split into two parts. The first part prohibits employers from paying different wages on the basis of sex or sex plus another protected status to employees who perform “substantially similar” work.  Wages may differ between employees performing substantially similar work if the disparity is justified by one or more of the following factors:

Seniority or merit systems.

A system that measures earnings by quantity or quality of production.

The geographic location where work is performed.

Education, training or experience to the extent they’re reasonably related to the work in question.

Travel if the travel is a regular and necessary condition of the work performed.

The key here is the factor must entirely explain the disparity. An employer with a seniority system that includes raises at certain anniversaries for all employees complies with EPEW. Asserting only that Bob the Builder has been with the company longer than Caitlyn the Carpenter won’t justify the disparity.

The second part of EPEW prohibits employers from:

Seeking the wage rate histories of prospective employees.

Relying on prior wage rates to determine wage rates.

Discriminating or retaliating against prospective employees for failing to disclose their wage rate histories.

Retaliating against or interfering with employees who disclose, compare or discuss employee wage rates.

The second part of EPEW also imposes new requirements on employers to promote pay transparency, including posting and promotion requirements. EPEW requires every job posting to include:

The hourly rate or salary compensation (or range thereof) the employer offers for the position.

A general description of any bonuses, commissions or other forms of compensation offered for the job.

A general description of all employment benefits the employer offers for the position, including health care benefits, retirement benefits and any benefits permitting paid days off. 

The law is silent on whether an employer can list benefits on a single webpage rather than repeating them in every online job posting. The Colorado Department of Labor and Employement takes the position that an employer may do so only if the reader may access the benefit description with a single click without exiting the general postings.

EPEW also requires employers to make reasonable efforts to post promotional opportunities with the applicable pay and benefits to all employees at the same time, not only to employees who qualify for the promotion. A promotional opportunity broadly exists any time an employer has or anticipates a vacancy in an existing or new position that could be considered a promotion for one or more employees in terms of compensation, benefits, status, duties or access to further advancement.  

In the case of Rocky Mountain Association of Recruiters v. Scott Moss, a non-profit trade organization whose membership consists of recruitment and executive search firms asserted the second part of EPEW and its regulations violated the U.S. Constitution by compelling speech and enacting legislation affecting interstate commerce. The trade organization requested injunctive relief preventing enforcement of EPEW while the civil action wound through litigation.  The court found the Rocky Mountain Association of Recruiters didn’t demonstrate a likelihood of success on the merits and denied the request for an injunction, leaving EPEW intact for now and likely after the litigation is resolved.

So, what steps should employers take to comply with EPEW? 

Check job postings to make sure proper information is included. Every day I see incomplete job postings that don’t comply with EPEW. 

Write job descriptions for all positions and appropriate pay ranges. This is critical to avoid pay disparities for organizations that might have previously relied on candidates’ salary history to set wages in a new position. 

Examine application and interview processes. Eliminate any inquiries on salaries paid by previous employers.

EPEW provides a “good faith” defense limiting damages to employers who conduct a pay equity analysis.  Employers should:

Gather raw compensation data.

Break the work force into smaller groups for comparison.

Conduct a reasonable comparison of jobs and job groups (EPEW requires employers with 50 or more employees to run a regression analysis).

Review disparities to see if they’re explained by one of the six allowable factors.

Make equity adjustments for any pay disparities not explained by an allowable factor.

The Employers Council offers pay equity analyses. For employers that wish to strike out on their own, the Employers Council provides resources on conducting pay equity analyses.  

A final reminder: Employers Council members and non-members still have time to register for the Employment Law Update set for June 17 and 18. The update will address employment topics and recent developments in employment law. To register or obtain more information, visit https://info.employerscouncil.org/elu-2021.