Payments

How Colorado’s Equal Pay for Equal Work Act has affected HR teams

In 2021, Colorado’s first-of-its-kind pay transparency law went into effect. Nearly two years later, 99% of employers are in compliance.
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· 5 min read

When Colorado’s Equal Pay for Equal Work Act went into effect January 1, 2021, Andrea Johnson, director of state policy, workplace justice, and cross-cutting initiatives at National Women’s Law Center, said it was met with excitement from employees and employers alike.

The first-of its-kind law—which requires employers with Colorado-based employees to disclose salary or pay range for open positions—armed workers with information they needed to negotiate equitable salaries, and recruiters with a new way to quickly filter talent by, as Johnson said, “not having to waste time…interviewing candidates for a job where you ultimately won’t match” on compensation.

But the law was also met by some resistance from the business community. With New York City’s pay transparency law scheduled to go into effect in November and states including Washington and Rhode Island (and most likely California) set to follow soon after, HR Brew spoke with representatives of the agency in charge of enforcing the Colorado act about the challenges of achieving widespread compliance, and with vendors that helped HR comply, to glean lessons for HR teams tasked with preparing for similar laws.

The first year was hard. “Any new law has growing pains,” said Scott Moss, director of the division of labor standards and statistics for Colorado’s department of labor and employment, the agency tasked with enforcing the Equal Pay for Equal Work Act.

Moss said his team spent most of 2021 explaining to HR teams how—and how not—to disclose salary ranges. He recalled early job listings that advertised pay as “a penny up” and “60,000 up.” These struck him as being in bad faith.

“I was once asked, ‘Could I post “$30,000 to $300,000,”? Because what’s my highest- and lowest-paid employees get?’” Moss said. “And the answer was no, because a job posting isn’t, ‘I’m posting for either a janitor or the chief of neurosurgery at my hospital.’” The range has to be for a specific position, he emphasized.

Other companies attempted to find ways around the law. Nike, Cigna, and Oracle, for example, have added language to at least one job posting noting that remote applicants were welcome—unless they lived in Colorado. Moss said his division saw more than 900 such job postings from various companies in October 2021. The dodge tactic didn’t work.

“There’s a misconception that declaring intent not to hire someone in Colorado exempted you, but the law doesn’t care who you eventually hire,” Moss said, noting that the law covers whether a role could be performed in the state.

Because potential violations can hide in plain sight on websites like LinkedIn, Monster, and Indeed, he said his team was able to easily identify and reach out to companies. The efforts paid off: From the fall of 2021 to the summer of 2022, he said the number of job postings excluding Colorado residents dropped more than 90% to just 84. In total, Moss’s agency has only had to issue two fines for non-compliance, and “Nobody we’ve issued a violation against has appealed,” he said.

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But was it so hard? At the surface level, the law seems to only require that HR add a single line to each job posting, based on data they presumably already have. But Helane Seikaly, senior corporate employment counsel at Payscale, told HR Brew it’s a bit more complicated. She said HR teams at larger employers collaborate with compensation analysts, hiring managers, and the finance department to create salary ranges—oh, and they typically do this quarterly to ensure salaries adjust with the market.

“It’s not as simple as saying we have $50 to $85,000 allocated for this job,” Seikaly said. “That’s the dollars and cents that the organization has, but at the end of the day, organizations do have to look at market data. They have to look at what their competitors are paying, because they’re going to be pulling the talent from the same pool as their competitors.”

For HR teams at smaller companies, Seikaly acknowledged such an analysis can be difficult without outside support.

Still, no matter how intensive, Moss and Johnson said that Colorado’s relatively smooth rollout proved pay transparency can be adopted by companies of all sizes.

Indeed, many that aren’t legally obligated are hopping on the bandwagon. Some 62% of US employers are planning to or considering disclosing pay rate information in future job listings, even in states and municipalities where they are not required to do so, according to a recent Pay Clarity survey. 

No matter where they’re located, Johnson recommended that HR start to get ahead of potential new laws, adding that pay transparency isn’t something to be afraid of.

“This is a tool that they can use to help attract talent and also to help close gender wage gaps and really avoid them from arising to begin with,” she said.

Moss agrees. “Nobody’s gonna want to be the last employer that's posting a job and not telling you what to pay.”—SV

Do you work in HR or have information about your HR department we should know? Email [email protected] or DM @SusannaVogel1 on Twitter. For completely confidential conversations, ask Susanna for her number on Signal.

HR is challenging. HR news doesn’t have to be.

HR Brew keeps you effective in the fast-changing business environment.