Colorado adopts pay and promotion transparency rules

Colorado has adopted final rules that implement the state's Equal Pay for Equal Work Act (EPEWA). The final rules take effect January 1, 2021.

Background:

In 2019, Colorado enacted the EPEWA, which expands the state's equal pay protections and prohibits inquiries about applicants' pay history. The law also requires employers to disclose in all job postings the pay rate or pay range and a general description of benefits and other compensation for the position. Under the law, employers must also make reasonable efforts to announce, post, or otherwise make known all opportunities for promotion to all current employees on the same day. The EPEWA takes effect January 1, 2021.

The purpose of the final rules is to clarify and implement the pay and promotion transparency provisions of the EPEWA. They apply to all employers with at least one employee in the state.

Pay Transparency Rules:

Under the final rules, employers must include the following compensation and benefits information in each job posting:

• Pay rate: The hourly rate or salary (or a range thereof) that the employer is offering for the position. An employer may ultimately pay more or less than the posted range, if the posted range was the employer's good-faith and reasonable estimate of the range of possible compensation at the time of the posting;
• Incentive pay: A general description of any bonuses, commissions, or other forms of compensation that are being offered for the job; and
• Benefits: A general description of all employment benefits the employer is offering for the position, including healthcare benefits, retirement benefits, paid days off (including sick leave, parental leave, and paid time off or vacation benefits), and any other benefits that must be reported for federal tax purposes, but not benefits in the form of minor perks.

These requirements don't apply to either jobs to be performed entirely outside Colorado or postings entirely outside Colorado.

Promotion Transparency Rules:

A communication announcing, posting, or otherwise making a promotional opportunity known must be in writing and include at least:

• Job title;
• Compensation and benefits as described above; and
• The means by which employees may apply for the position.

The final rules clarify that a "promotional opportunity" exists when an employer has or anticipates a vacancy in an existing or new position that could be considered a promotion for one or more employee(s) in terms of compensation, benefits, status, duties, or access to further advancement.

Under the final rules, an employer makes "reasonable efforts" if all covered employees:

• Can access the communication within their regular workplace, either online or in hard copy, and
• Are told where to find required postings or announcements.

Note: If a particular method reaches some but not all employees, such as an online posting not accessible to those lacking internet access, an alternative method must be used for such employees.

Employers must generally notify all employees of all promotional opportunities, and are prohibited from limiting notice to those employees it deems qualified for the position, but may state that applications are open to only those with certain qualifications, and may screen or reject candidates based on such qualifications.

Exceptions:

Under the final rules, the promotion posting requirements don't apply to the following circumstances:

• If the employer has a compelling need to keep a particular opening confidential because the position is still held by an employee who, for reasons other than avoiding job posting requirements, the employer has not yet made aware they will be separated. If any employees are told of the opportunity, all employees must be told who either (1) meet the minimum qualifications; or (2) have a job "substantially similar" to any employees being told. If the need for confidentiality ends before any deadline to apply for the job, the employer must then promptly comply with the law's applicable posting requirements;
• For a promotion within one year of an employee being hired with a written statement (whether in an offer letter; in an agreement; or in a policy the employer publishes to employees) that the employer will automatically consider the employee for promotion to a specific position after one year based solely on their own performance and/or employer needs; or
• To fill a position on a temporary basis for up to six months where the hiring isn't expected to be permanent. If the hire may become permanent, the required promotion posting must be made in time for employees to apply for the permanent position.

The promotion posting requirements also don't apply to employees entirely outside Colorado.

Compliance Recommendations: