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CDLE issues Equal Pay Transparency rules under Colorado’s Equal Pay for Equal Work Act

As noted in a prior blog post, the CDLE has finalized a crop of new rules on a variety of topics. This post addresses its Equal Pay Transparency Rules, effective January 1, 2021.  The Equal Pay Transparency Rules focus on issues related to Colorado’s new Equal Pay for Equal Work Act (CEPEWA), especially its requirements for postings related to job openings and promotional opportunities. Highlights of the rules include the following:

  • Job Postings: Rule 4.1 explains the obligation to include in “all job postings, including but not limited to promotions,” help-wanted ad’s and Internet job listings, whether for an hourly or salaried position, “a range of hourly or the salary compensation, and a general description of all of the benefits and other compensation to be offered to the hired applicant,” quoting CRS 8-5-201(2). The CDLE explains this requires including:
    • If “a range thereof” is posted, then it must be no broader than “the lowest to the highest pay the employer in good faith believes it might pay.” The CDLE confirms that an employer may “ultimately pay more or less,” so long as the posted ranges was at the time the employer’s good faith estimate (rule 4.1.2).
    • And, a “general description” of “any bonuses, commissions, or other forms of compensation.”
    • And, a “general description” of all benefits, except “minor perks.” The CDLE explains anything that is tax-reportable will not be considered a “minor perk.”
  • Promotional Opportunities: Rule 4.2 explains the obligation to make “reasonable efforts” to “announce, post or otherwise make known” all “promotional opportunities” to then-current current employees.
    • Content: The information that must be provided for promotional opportunities is the same as for job postings, plus job title and the “means by which employees may apply.”
      • Confidentiality: There is a limited exception for promotional opportunities where the employer can demonstrate a “compelling need to keep a particular opening confidential because the position is still held by an incumbent employee who, for reasons other than avoiding job posting requirements, the employer has not yet made aware they will be separated” (rule 4.2.5(A)). This exception seems oriented to a situation where a company has decided to begin a search to replace a high level employee, such as a C-level officer, who hasn’t yet been told they will be terminated. This exception does not excuse notice forever, it only delays the obligation to provide notice until “any employees are told” of the opportunity; at that point all employees must be told, at least who have the minimum qualifications to do the job or who do a “substantially similar” job. And, this exception is eventually extinguished in its entirety once “the need for confidentiality ends;” in other words, once the CEO is told or the rumor mill distributes the news informally, notice must be provided.
    • To Whom: That information must be provided to all employees. An employer may not limit disclosure to only qualified employees. However, an employer may, after individuals express interest, “screen or reject candidates based on (their) qualifications” (rule 4.2.4).
    • How: An employer satisfies this obligation to “announce, post or otherwise make known” if it discloses the required information in a way that employees can effectively access within the workplace, including on the company’s intranet or by posting a hard copy on a bulletin board, so long as employees are told where to find such information and, if not all employees have access to that location, it is made known to the remaining employees in some other way.
    • When: The deadline for an employer to provide this notice is “the same calendar day and prior to making a promotion decision,” quoting CRS 8-5-201.
    • “Promotional Opportunity”: What constitutes a “promotional opportunity”? This has been one of the chief areas of speculation as employers await CEPEWA’s effective date January 1, 2021. Rule 4.2.5 brings some clarity, though there will definitely be no shortage of litigation on the issue.
      • Rule 4.2.1 defines a “promotional opportunity” as any time “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.” Thus a promotion is in the eye of the employee(s), not the employer, and the employee’s reason may be nothing more than a perceived sense of enhanced “status.” A promotion can exist whether it involves a position that is “existing or new.”
        • However, note, the language in rule 4.2.1 includes as an apparent requirement that the opportunity involve a “vacancy.” The importance of that word is not clear. Is it intended to mean that an increase in grade does not constitute a “promotional opportunity”? For example, assume an employee is hired into the position, Technician, at entry level, grade I, then as her skills progress and/or as she acquires seniority, she gains higher pay as a Technician level II, is that a “promotional opportunity” because there was an increase in pay and title, or is it not because there was no “vacancy” involved?
      • Rule 4.2.5(B) discusses “automatic” promotions “after (a) trial period.” No notice is required when a worker’s promotion is due to completion of a “trial period” and where the employee is guaranteed at hire, in writing, that they will be so promoted “within one year” after being hired. That guaranty can be included in any writing, to include an offer letter, an employment agreement, or a policy. The only conditions that an employer can impose are the employee’s “own performance and/or employer needs.”
        • In its prefatory Statement explaining these rules, the CDLE confirmed this exception is very limited and does not include “in-line” or “elevator” promotions. As examples of “elevator” promotions it gives the examples of elevations “from junior to senior positions, or from training to full positions.”
        • Question: Again, consider the hypothetical increase in grade (above). As noted above, there is no vacancy involved in that hypothetical, so arguably under rule 4.2.1, it does not count as a “promotional opportunity,” but does rule 4.2.5 and the prefatory Statement explaining it suggest that, even despite the lack of a “vacancy,” such an enhancement is a “promotional opportunity” for which notice must be given? As noted the progression in grade does bring with it increased compensation and arguably an enhanced sense of “status.”
        • Likewise, consider the common hypothetical that law firms will face. Typically law school graduates are hired as “associate” attorneys. Eventually, as their careers progress, some become “shareholders,” aka “partners” (depending on the firm’s legal entity, corporation or partnership). Is that elevation from associate to shareholder, a “promotional opportunity”? If so, must all law firms disclose to all employees of the firm (shareholder, associate, staff) the compensation ranges for their shareholders?  Here too there is again generally no “vacancy” involved; most firms do not limit elevations to some discrete number of vacancies in their shareholder ranks; there is however an increase in compensation and status.
      • Rule 4.2.5(C) posits an exception for “temporary, acting, or interim hires.” No promotional-opportunity notice is required before hiring a temp, or filling a vacancy with an acting or interim worker. Again though, it is a limited exception available only for 6 months and only if the person is hired without expectation to become “permanent.” “If the hire may become permanent, the required promotion posting must be made in time for employees to apply for the permanent position.”
    • Job Openings and Promotional Opportunities, Extraterritoriality: Rule 4.3 has probably received the most attention from the media. In these final rules, the CDLE walked back its proposed language regarding extraterritoriality. Now, employers need not provide either the job opening or promotional opportunity notice for “(1) jobs to be performed entirely outside Colorado, or (2) postings entirely outside Colorado.” In its prefatory statement the CDLE explains that does not include — in other words, notice is required for — each of the following situations:
      • “remote jobs” that “could be performed in Colorado” (emphasis in original),
      • “and even for (situations involving) non-Coloradoans hired for remote work (who) may move to Colorado after being hired by Colorado employers,”
      • and any “Internet posting accessible in Colorado.”

Employers in Colorado should take time to familiarize themselves with these new rules.

Adjusting to Pay-History Bans

HR professionals trying to adjust to the growing number of pay-history bans may want to review this interesting article from SHRM. As SHRM notes 15 states have already adopted pay-history bans. One approach the article discusses could be “complete compensation transparency” where the employer posts not only the opening, but also the pay range, job qualifications, job description and any other hiring criteria. Many employers may find that not practical. And even employers for whom it might work will still need to train hiring personnel and managers on the new do’s-and-don’t’s of these laws, for example, what to do if the employee volunteers pay history. Still as employers are considering these new laws, this article may prove a good brainstorming tool for HR professionals.