Mark your calendars, because beginning January 1, 2021, several significant new employment laws will take effect in Colorado, including an increased minimum wage, permanent paid sick leave, and an assortment of pay equity restrictions and requirements.
The minimum hourly wage in Colorado will be $12.32 per hour. The minimum base wage for tipped employees will be $9.30 per hour.
PAID SICK LEAVE
Employers in Colorado with 16 or more employees will be required to provide employees with paid sick leave. Paid sick leave is part of Colorado’s Healthy Families and Workplaces Act (HFWA), which we previously alerted on in July. (The HFWA also requires COVID-specific paid sick leave, which ends on December 31, 2020.)
Under the HFWA, employees will be entitled to accrue 1 hour of paid sick leave for every 30 hours worked. Employers can limit each employee’s accrual, use, and carryover to 48 hours.
During a public health emergency (which we are currently in), employers are required to provide up to two additional weeks of paid leave if an employee needs more time off work for certain reasons similar to those covered by federal Emergency Paid Sick Leave.
Employers should add a sick leave policy to their handbooks or otherwise distribute one to employees and display the required poster by January 1, 2021. The poster is not yet available, but will be released by the state before the end of the year.
Additional information is available on the HR Support Center by searching for “Colorado PSL.”
PAY EQUITY PROHIBITIONS AND REQUIREMENTS
In the new year, Colorado will have one of the strictest and most expansive equal pay laws in the country. The Colorado Equal Pay for Equal Work Act prohibits employers from paying employees of one sex less than employees of a different sex for substantially similar work. It also prohibits paying employees differently when they are of a different sex and have another protected characteristic (that is, disability, race, religion, color, sexual orientation, age, national origin, or ancestry). To be clear, all employees have multiple protected characteristics (because, for example, everyone has a race).
Under the equal pay law, “equal work” means substantially similar work, regardless of job title, based on skill, effort, and responsibility.
Pay includes all forms of compensation, including but not limited to benefits, bonuses, and other perks. Pay differences for substantially similar work do not violate the equal pay law if the employer can prove that the entire difference is because of one or more of the following:
- A seniority system
- A merit system
- A system that measures earnings by quantity or quality of production
- Geographic location
- Education, training, or experience if they are reasonably related to the job duties
- Travel, if travel is a regular and necessary part of the job
- In addition, an employer must show that it applied the above factors reasonably and didn’t use an employee’s salary history to determine their compensation.
Transparency of Pay Rates and Promotional Opportunities
All job postings are required to state the hourly rate or salary and a general description of all benefits and other compensation offered with the job. If the employer does not have a set compensation level for the position, it may instead post the realistic range for position. This must be done in good faith; stating that a position pays between $12.32 per hour and $60,000 per year isn’t going to pass the sniff test. This compensation and benefits posting requirement does not apply to postings outside Colorado or jobs that will be performed entirely outside Colorado.
Employers must make “reasonable efforts” to inform all employees about all promotional opportunities available. Employees must be informed on the same day and before the employer decides whom to promote. The announcement must be in writing and include the job title, the compensation and benefits (see above), and how employees can apply. “Reasonable efforts” means using a method to communicate that is accessible to all employees. If one method reaches some but not all employees, the employer has to use another method (or several) that reaches the remaining employees. Although all employees must be informed of promotional opportunities, the employer doesn’t need to promote someone who isn’t qualified.
Some exceptions apply, such as for temporary positions and employees who work completely outside Colorado.
Ban on Salary History Inquiries
Employers may not ask applicants about their current or previous salary or hourly rate of pay, whether on an employment application or during the interview process. Even if the employer finds out the applicant’s salary or hourly wage history, they can’t use it to set their pay.
Employers are prohibited from retaliating against an applicant for refusing to disclose their wage or salary history. Current employees are also protected from retaliation for asserting these rights on someone else’s behalf or for helping enforce the salary history ban. For instance, if an HR Coordinator is trying to get the HR Director to follow the law and refuses to ask applicants about past salary, disciplining her for insubordination would also be a violation of the law.
In addition, employers may not prohibit employees from disclosing their wages or require them to sign a document that waives their right to do so. Federal law (the National Labor Relations Act) already entitled non-supervisory employees to discuss their wages; Colorado law expands this protection to include supervisors as well.
Audit Your Pay Scales
Employers may limit their liability under the equal pay law by conducting regular audits of their employees’ compensation specifically to identify and fix unlawful pay differences. The analysis should focus on whether differences in pay can be fully and reasonably explained by bona fide job-related factors (the bullet points above).
Standardize Your Offers
While offering a generous bonus schedule and fringe benefits to an applicant for a one-of-a-kind position might be acceptable, wages and benefits for employees whose functions are similar should be the same, unless the difference can by justified by a bona fide job-related factor. Over-the-top offers made because a position needs to be filled quickly or because there are few qualified applicants for the role may prove problematic. Bringing in new employees at a rate higher than their colleagues doing similar work would also pose significant risk.