On May 22, 2019, Governor Jared Polis signed into law the “Equal Pay for Equal Work Act.” The Act prohibits an employer from paying an employee of one sex less than an employee of a different sex for “substantially similar work,” regardless of the employees’ job titles. An employer may, however, pay employees differently if the difference is based on a limited number of approved factors listed in the statute. These factors include a merit system, a seniority system, or an employee’s education, training, or experience, among others. In addition, the Act:

• Prohibits an employer from seeking and/or relying on the wage rate history of a prospective employee to determine a wage rate;
• Prohibits discrimination or retaliation against a prospective employee for failing to disclose the employee’s wage rate history;
• Requires employers to make reasonable efforts to post all opportunities for promotion to all current employees, including posting the hourly pay rate or salary range that applies to the position, and to report if the anticipated hourly pay rate or salary rate changes; and
• Requires employers to keep records of job descriptions and wage rate history for its employees for the duration of the employment, plus two years.

An employee who brings a suit under the Act has a full range of remedies available, depending on the specific violation alleged. Available remedies include unpaid wages, liquidated damages, employment, reinstatement, promotion, or pay increase. Also, a successful employee is entitled to recover attorney’s fees and costs. An employer who fails to post properly or keep proper records is liable for fines ranging from $500 to $10,000 per violation.

Notably, the statute also has a built-in adverse inference instruction for poor recordkeeping. In other words, if an employer fails to comply with the Act’s recordkeeping requirements, the statute itself permits a judge to instruct a jury that the missing information would have been helpful to the employee, and the employer’s failure to keep proper records is evidence of a “willful” violation.

While the spirit of the law is widely appreciated, the execution leaves much to be desired for employers and employees alike. For example, employees do not need to exhaust administrative remedies prior to filing a lawsuit, potentially increasing costs for both parties. The Act contains broad definitions for what constitutes “substantially similar work,” making it difficult for employers to determine which employees should be paid similarly. Perhaps most significantly, the Act provides a limited list of reasons for acceptable wage differentials, which will inevitably fail to include all reasons that employers make legitimate wage determinations. This restriction differs markedly from the federal Equal Pay Act, which permits a wage differential to be based on “any other factor other than sex.”

Bottom line: Colorado’s new Act will change the way every employer looks at wage determinations, hirings, job postings, and record retention. In addition to the requirements discussed herein, the Act has numerous other requirements that employers need to be aware of.

Please contact a Sherman & Howard Labor and Employment Attorney to discuss the Act’s impact on your business.

©2019 Sherman & Howard L.L.C.                                                                                                             May 29, 2019