The road to hell is paved with good intentions. It should come as no shock, therefore, that Colorado’s new “Equal Pay for Equal Work Act,” (EPEWA) leads directly to the land of boiling brimstone. The act took effect in January of this year and is aimed at reducing the gender wage gap by forcing companies to conform to new regulations surrounding salary and promotion disclosure. In reality, the EPEWA has forced businesses to expose themselves to great risk at great personal effort—resulting in many outright refusing to hire Colorodans.
The EPEWA requires all companies with Colorado employees to disclose to those employees the hourly wage rate (or appropriate salary compensation) and all potential benefits on all job postings. Employers are also no longer allowed to use prior wage rate in compensation decisions, and are expressly prohibited from inquiring about prior compensation.
Yet contrary to what Scott Moss (director of the Division of Labor Standards and Statistics at the Colorado Department of Labor and Employment) might say, complying with many of the regulations is not as simple as “just adding one sentence on compensation to job postings.”
The law not only requires such postings, but also forces employers to expand their record keeping beyond the scope of normalcy. According to a review of the law done by the Rodman Law Group (RLG), employers are now required to “keep records of job descriptions and the wage rate history of every employee for the duration of employment plus two years after.”
This extensive addition to the records department will most certainly be an unneeded burden, especially when they are forced to continually keep records of former employees. With businesses still reeling from the effects of the pandemic, to expect them to overhaul their recordkeeping and train new employees on these procedures is ludicrous. No large-scale business can reasonably be expected to overhaul their practices to adhere to the whims of one of 50 states.
The RLG also suggests that businesses undertake costly, comprehensive pay audits in case a complaint is filed against them for unfair practices. Such complaints (if valid) can carry a fine of between $500-$10,000 per offense, and could require costly and time-consuming mediation. Mediation does not preclude civil litigation—meaning that a company could be sued in addition to the previous fines and mediation—and they would likely be liable for several years of back pay.
Furthermore, the EPEWA requires companies to inform all employees of any promotional opportunities. In a recent alert to their clients, BHGR Law—a law firm based out of Boulder—stated that the promotion provision “will likely force employers to notify employees of any and all opportunities as they become available.” Companies employing Coloradans and employees from other states would therefore benefit from the creation of a separate site and network for Colorado employees, should they desire to continue operating the rest of their organization in the same manner as before. Again, rather than finding a solution that would incentivize businesses to operate within the state, the EPEWA puts the onus on businesses to find complex solutions to the new requirements.
Further requirements, such as the mandatory allowance of open salary discussion, pose dangers to effective business operations. Should a company want to do business in Colorado, they would be forced to contend with discussions that have been shown to decrease worker morale, productivity, and could even increase employee turnover.
All told, the EPEWA imposes an undue burden on any businesses that wish to employ Coloradans. The law is yet another example of the Colorado legislature’s shortsighted approach to regulation—one that threatens to further undermine the economic stability of the state.
Nathaniel DeMelis is part of the Future Leaders program at the Independence Institute, a free market think tank in Denver, and a junior at Tulane University studying English and Political Economy.
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