Colorado's Pay Transparency Law and Equal Pay for Equal Work Act

Do you have to put a pay range on a job posting when you're only hiring one person? What about promoting someone from inside without posting the job at all? If you have even one person working in Colorado, both answers come from the Colorado pay transparency law, which is part of the state's Equal Pay for Equal Work Act.

I wrote this guide for owners and managers, based on the law and on guidance from the Colorado Department of Labor and Employment (CDLE). For the other hiring rules Colorado groups with this one, such as the limits on asking an applicant's age, see my Colorado employment law guide.

What the law requires

Colorado's Equal Pay for Equal Work Act covers every employer, public or private, that employs at least one person in Colorado, and it covers all of that employer's team members, with no general small-business exemption. CDLE splits the Act into two parts:

• Unequal pay: you can't pay someone less than a person of a different sex for substantially similar work unless the difference is for reasons the law allows. You also can't ask applicants about their pay history or set pay based on it, and you can't stop team members from discussing pay.
• Pay transparency: you disclose the pay, the benefits and how and when to apply in every job posting and notice, internal or public. You also tell your team about job opportunities and then who was selected, explain how to advance through any career progression, and keep records of wages and job descriptions.

The Act took effect at the start of 2021. A 2023 amendment rewrote the posting and promotion rules, effective January 1, 2024, and CDLE's Posting, Screening, and Transparency (POST) Rules fill in the detail.

Pay ranges in job postings

Every posting or notice for a specific job has to include three things: the compensation, the benefits and how and when to apply. That covers a public ad on a job board and an internal notice, like a company-wide email or a note on the break room board. A general "Help Wanted" sign that doesn't name a specific position isn't covered.

The pay

State the rate or a range, and say whether it's hourly, salary or piece rate. According to CDLE's guidance on pay transparency, a range is compliant when it spans the lowest to the highest pay you genuinely believe you may offer for that specific job, depending on qualifications, your finances or other considerations. A range needs both ends, so open-ended wording like "$30,000 and up" or "up to $60,000" doesn't work. You can still end up paying more or less than the posted range, as long as the range was what you genuinely believed you'd be willing to pay when you posted it. Whether the role is hourly or salaried usually follows from how it's classified, which I cover in my post on exempt vs. non-exempt roles in Colorado.

Bonuses, commissions and tips only need a general description. CDLE's example is a restaurant paying servers $18 an hour: "$18 per hour plus tips" complies, while "$23-$28 per hour with expected tips" doesn't, because blending the tips into one figure hides the hourly pay the employer itself provides.

If pay differs between your sites, post the pay for the site in question. For a job someone could do from anywhere in Colorado, either post pay at or above the highest local minimum wage in the state, or add a statement that pay won't be below any applicable local minimum wage.

The benefits and the deadline

Describe the benefits in general terms: health care, retirement benefits, paid days off and any tax-reportable benefits. You don't need premium costs or dollar values, so listing "health insurance" is enough for that benefit. Minor perks like an on-site gym or staff discounts can stay off the list, but a vague catch-all like "etc." or "and more" can't stand in for the benefits themselves.

Give an application deadline that's your good-faith estimate of when the application window will close, because "open until filled" isn't compliant. You can extend a good-faith deadline as long as you update the posting promptly, and if you're always accepting applications for a role to keep up with turnover, the posting can say applications are "accepted on an ongoing basis" instead of giving a date. An online posting can link to the pay and benefits details instead of listing them, as long as the link clearly says what it discloses, keeps working and is specific to that job.

CDLE can order you to fix a violation and fine you $500-$10,000 for each violation, with each job posted without the required information counting as a separate violation.

Promotion and career opportunity notices

You have a "job opportunity" whenever you're considering filling a current or anticipated vacancy, whether you're weighing many applicants or just one person for a promotion, and whether or not you run a formal process. A vacancy can be a role someone is leaving, a brand-new role, or an existing role whose authority, duties or opportunities change enough to make it a different position. Changing a title alone, or pay alone, doesn't create one.

Before you decide: tell your whole team

Make reasonable efforts to tell all of your team members about each job opportunity on the same calendar day, before you make the selection decision. The notice has to be in writing (an email or an intranet post counts), reach everyone, including anyone without internet access, and go out early enough for people to apply. You can't limit it to the people you think would be interested or qualified, although you can state the qualifications and screen applicants against them. You don't have to post the job publicly at all, as long as the internal notice carries the same disclosures.

Promotions that don't need a notice

As of January 1, 2024, a few kinds of moves are excluded:

• Career progression: a regular or automatic promotion based on time in a role or other objective metrics, like an offer letter promising a promotion in 12 months if there are no disciplinary actions. If a manager decides whether it happens, it isn't automatic, and it needs a notice.
• Career development: a new title or a raise that reflects work someone is already doing, as long as that work doesn't belong to another existing position. Moving someone into a role another person just left is filling a vacancy.
• Acting, interim or temporary roles: notice isn't required for positions of up to nine months, unless the same position was held by an acting, interim or temporary hire for seven months of the previous year.
• Confidential replacements: replacing a team member who isn't yet aware they're leaving, until the need for confidentiality ends.

After you decide: the selection notice

Within 30 days of the hire, tell the people the selected person will regularly work with: anyone who communicates or collaborates with them about work at least monthly, plus anyone in a reporting relationship with them. The notice gives the person's name, their former job title if they already worked for you, their new job title, and how others can express interest in similar opportunities.

If some roles move up automatically, the team members in those roles also need a career progression notice: the requirements to progress and, for each position, its compensation, benefits, full-time or part-time status, duties and access to further advancement. A new-hire packet or an intranet page works for this.

Equal pay and pay audits

The equal pay half of the law bans pay gaps between team members of a different sex doing substantially similar work, whether the gap is intentional or not. CDLE's equal pay guidance explains that "substantially similar" is based on skill, effort and responsibility, not just job title, and the work doesn't have to be identical. Under the Act, "sex" means gender identity.

A difference in pay for substantially similar work is allowed only if you can prove it's based on one or more of these:

• a seniority system
• a merit system
• a system that measures earnings by quantity or quality of production
• the geographic location of the work
• education, training or experience, to the extent reasonably related to the work
• travel that's regular and necessary for the work

You also have to show that you applied those factors reasonably, that they account for the entire pay gap, and that you didn't rely on prior wage history to justify it. When a violation is found, CDLE's guidance says relief can include back pay for up to six years, double the back pay if the employer fails to show it acted in good faith, and the team member's reasonable costs, including attorney fees.

Why a pay audit is worth doing

A pay audit isn't on the list of things the Act requires of employers, but it can matter if a claim is ever made. When a court decides whether an employer's violation was in good faith, the Act's text in the Colorado Revised Statutes lets it consider evidence that the employer completed a thorough and comprehensive pay audit of its workforce within two years before the lawsuit, with the specific goal of identifying and remedying unlawful pay disparities. A court that finds good faith and reasonable grounds can't award the extra damages that double what the team member was underpaid.

I offer pay equity reviews as a standalone service, including the formal audit. A review typically takes one to two weeks, possibly longer depending on how available the information is. Afterwards I usually provide a report that shows the results and flags any gaps or compliance issues, and I can help you plan and put the fixes in place.

Records to keep

Keep each team member's job description and compensation records (salary or hourly wage, benefits, bonuses, commissions and other compensation), including any changes over time, for the length of employment plus two years after. CDLE treats a failure to keep these records as a separate violation for each team member, and the legislature's summary of the 2019 Act adds that, in a lawsuit alleging wage discrimination based on sex, records you didn't keep are presumed, unless shown otherwise, to have contained information favorable to the team member's claim. My Record Retention Toolkit lists the general federal and state requirements by type of record, along with my own recommendation for each.

Using salary surveys to set ranges

A posted range has to be one you genuinely believe you'd pay, and you can't ask candidates about their pay history or set their pay based on it. That leaves market data and your own pay structure as the basis for the numbers.

For Colorado, the state's own data is a sensible starting point. CDLE's Occupational Employment and Wage Statistics (OEWS) program produces employment and wage estimates for over 800 occupations, for the state and for metropolitan and nonmetropolitan areas, and CDLE lists adjusting an existing pay structure as one of its uses. Beyond that, which survey or tool fits best depends on the business and the industry, because different sources pull data better from different places.

However you gather the data, compare the work the role actually involves rather than the job title, the way the equal pay test does. Compare the range with what you pay people already doing substantially similar work, so a new hire's offer doesn't open a gap you'd have to explain. Write down the data you used and how you chose the low and high ends, so you can show the range was a genuine estimate when you posted it.

One client of mine was struggling to get qualified applicants. I completed a wage analysis and found their pay wasn't competitive for the market, and they had no way for pay to grow after someone was hired. I helped them create competitive pay ranges for all of their positions and a clear, measurable annual review process that made pay increases fair and consistent for everyone. It led to easier hiring and better retention.

Compensation benchmarking and salary band creation are part of my Workforce Strategy work. If you'd like to talk through your own postings or pay ranges, contact me to book a consultation.