Partner Stephanie Loughner recently spoke with Jessica Folker at Law Week Colorado about Colorado’s pay equity law and why employers should be preparing now ahead of the new law taking effect in January.
The article, ‘Not Too Late’ to Prepare for Colorado’s Equal Pay Law, was published in the August 3 edition of Law Week Colorado. An excerpt from the article is below.
With all the surprises 2020 has brought so far, it’s difficult for anyone to think ahead to next year. But while HR departments are preoccupied with navigating all the changes the pandemic has forced on the workplace, employment lawyers say now is the time for employers to prepare for Colorado’s new pay equity law, which takes effect Jan. 1.
Colorado’s Equal Pay for Equal Work Act (EPEWA) was signed into law in May 2019. It prohibits employers from paying one employee less than another for “substantially similar work” based on sex or on the basis of sex plus another protected characteristic such as race, disability or age. It allows a worker to sue an employer for alleged pay discrimination, and they don’t need to file an administrative claim first before taking the matter to court. A worker may recover up to three years in back pay plus liquidated damages. The law also requires major changes in the recruitment process.
There’s a lot employers can be doing now to make sure they’re in compliance and have minimized the risk of employees filing a claim once the law goes into effect.
Employers have a lot to gain from conducting internal pay audits. An employer may be able to avoid paying liquidated damages under the EPEWA if they have completed an internal pay audit in the two years prior to an employee filing a pay discrimination lawsuit. The audit must have been performed with the aim of identifying and remedying unlawful pay disparities.
Smaller companies and employers that don’t want to hire a third-party auditor can look to the compliance and audit system for the federal Equal Pay Act as guidance for their own internal pay reviews, said Stephanie Loughner, co-chair of the employment group at Moye White.
“I think a great place to start is to look at audit manuals and see the questions that are being asked under the federal act,” she said, “and to try to translate those and find categories for your own [audits], because Colorado hasn’t developed those yet.”
If pay audits do uncover areas of concern, employers will want to act quickly, and transparently, to remedy any disparities, Loughner said, because if employees don’t feel their employer is taking the EPEWA seriously, it could prompt complaints.
“I’m suggesting to employers that they should really look into being more transparent on their pay scales and their pay salary bands,” she said, as well as any salary adjustments or promotions given as a result of the audits.
The law prohibits employers from asking job applicants about pay history or relying on a prospective hire’s pay history to determine wages in the new position, so job listings and applications should be free of any requests to send salary history. External job postings must also disclose the hourly pay or salary range for open positions as well as a description of other benefits.
According to the law, employers should keep records of job descriptions and pay history for each employee for the duration of employment plus the law’s statute of limitations of two years after the employee has left the organization.
The law does allow employers to justify pay differences if the entire difference is based on the following factors: a seniority system; a merit system; a system that measures earnings by quantity or quality of production; geographic location; relevant education, training or experience; and required travel.
Quantifying and documenting these “bona fide factors” will be key to defending any pay differentials. “Numbers tell the story. They are best to tell the story when it comes to trying to comply,” Loughner said. “So any time there’s a system or measurements or metrics, those should be documented, and then they should be monitored and managed.”
Read the full article at Law Week Colorado.
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