Colorado Employers Begin Preparing for the Equal Pay Act

Colorado’s Equal Pay for Equal Work Act is not scheduled to take effect until January 1, 2021, but prudent employers across the state are starting to prepare for the new law now. Beginning in 2021, employees in Colorado will be able to directly sue their employers for allegations of pay discrimination, and can recover liquidated damages in addition to back pay unless the employer can prove it acted in good faith. Organizations can no longer use an employee’s salary history to set their wage, and market factors cannot legally justify a pay disparity. Employers will also be required to post all opportunities for promotion internally with the position’s wage rate included, and must keep job descriptions for all positions.

While this will change how compensation is calculated and analyzed in Colorado, employ­ers can begin preparing for the new law now, and position themselves so that they are compliant with the law from day one. Employers Council recommends that Colorado employers take the following actions:

  • Begin reviewing and updating all job descriptions. The new law requires job descrip­tions for each of your positions, and the duties and requirements listed in a job description will play a crucial role for any court attempting to determine which posi­tions are legally engaged in equal work. Ensuring that job descriptions clearly and accurately describe the duties and qualifications of a position can help ensure that comparisons are only made between employees truly engaged in equal work.
  • Consider a Pay Equity Analysis. The new law has a clause stating that if an employer conducts a pay equity analysis with the goal of identifying and remedying pay dispar­ities, that will serve as evidence of their good faith. As this can prevent the employer from having to pay liquidated damages in addition to back pay, a Pay Equity Analy­sis has enormous value to an organization. Additionally, finding and correcting pay disparities proactively rather than allowing the courts to become involved can signifi­cantly limit your costs.
  • Review your compensation plan. The new law does allow certain practices such as merit or experience to justify a pay disparity, but those practices must meet a thresh­old of formality and consistency. Review how these practices are carried out, and how salaries are calculated overall to ensure that equal pay is built into your structure from the very beginning.

Employers Council can help you with each of these recommended activities. Contact us at 800.884.1328 today to see how we can help.