Colorado employers should prepare to comply with the Equal Pay for Equal Work Act (EPEWA), which will become law in the state on January 1, 2021. The new law will prohibit employment discrimination on the basis of sex, which includes gender identity, or sex in combination with another protected status, by paying employees of different sexes differently for substantially similar work.

The EPEWA includes new employer notice and record-keeping requirements, along with prohibitions regarding applicant wage history. Among these new requirements and prohibitions, the EPEWA will:

• Prevent employers from seeking the wage rate history of job applicants or relying on a prior wage rate to determine a current wage rate
• Prohibit discriminating or retaliating against a job applicant for failing to disclose their wage rate history
• Make it illegal for employers to prohibit employees from disclosing their wage information
• Require employers to announce to all employees employment advancement opportunities and job openings and the pay range for the job openings
• Require employers to maintain records of job descriptions and wage rate histories for each employee while employed and for two years after employment ends

There are exceptions to the prohibition against a wage differential between sexes if the employer can show the wage differential is not based on wage history and is based on one or more of the following factors, so long as the factors are reasonably applied and account for the entire wage rate:

• A seniority system
• A merit system
• A system that measures earnings by production quantity or quality
• The geographic location where the work is performed
• Education, training or experience if they’re reasonably related to the work in question
• Travel, if the travel is a regular and necessary condition of the work performed

Employees alleging a violation of the EPEWA may file a complaint with the Colorado Department of Labor and Employment or file a private civil lawsuit. Employees can recover back wages, liquidated damages and attorneys’ fees, and penalties may be imposed against employers who fail to comply with the new law.

However, employers who can demonstrate that the act or omission giving rise to a violation of the EPEWA was in good faith and that they had reasonable grounds for believing they were in compliance with the law will not be subject to a liquidated damages award. Specifically, the EPEWA provides that “a thorough and comprehensive pay audit” of an employer’s workforce conducted within the two prior years, “with the specific goal of identifying and remedying unlawful pay disparities,” can be considered in determining whether an employer acted in good faith.

In order to ensure compliance with the new law when it takes effect on January 1, 2021, Colorado employers should, at a minimum:

• Conduct internal pay equity audits and remedy any discrepancies
• Review and revise job descriptions as necessary
• Review and ensure all employee pay records are in order
• Train supervisory and hiring personnel regarding the requirements and prohibitions of the EPEWA

The EPEWA can be read in its entirety here.