Complying with the Colorado Pay Transparency Law

Amendments to Colorado's law on pay transparency and pay data reporting took effect on Jan. 1, 2024. Here are three tasks to check off to help manage your compliance with the new requirements.

Colorado's Equal Pay for Equal Work Act took effect on January 1, 2021. In June 2023, the state's governor signed legislation that clarified the requirements related to pay transparency for internal and external job postings. These amendments took effect on January 1, 2024.

Let's explore Colorado's Transparency in Pay and Opportunities for Promotion and Advancement Act.

Requirements for Colorado pay transparency

The goal of the law is to encourage equitable pay. The key requirements provide that an employer, which the act defines broadly as any entity that employs at least one employee in the state, must disclose in good faith in each job posting:

The hourly or salary compensation, or range of the hourly or salary pay.
A general description of the benefits and other compensation associated with the position.
The date the application window is expected to close.

A covered employer must also:

Disclose all job opportunities to all employees, in addition to disclosing who was selected for the role.
Keep records of job descriptions and wage rate history for the duration of an employee's tenure plus two years past the end of their employment.

To clarify and amplify the act, the Colorado Department of Labor and Employment adopted the Interpretive Notice & Formal Opinion ("INFO") #9A. It also took effect on January 1, 2024, and provides the following additional guidance:

Pay ranges disclosed in a job posting comply with the law if they span the lowest to the highest compensation an employer actually believes it will offer for the role.
Pay ranges cannot lack a top or bottom compensation amount. For example, "$30,000 and up" or "up to $60,000" would not be compliant.
If offers vary by state, the pay or pay range must be for Colorado hires.
Major benefits, such as health care and retirement benefits, must be described. Minor benefits descriptions, including employee discounts, are not required.
How candidates apply and the application deadline must be disclosed. However, there are exceptions. For example, when an employer accepts ongoing applications, no deadline is required.
No external posting is required, but employers must provide internal notice of a job opportunity.
Postings for out-of-state jobs are not covered under the act.
Remote work performable in Colorado must comply with the act, even if Colorado residents are not considered for the position.
Every employee must receive notice of each job opportunity.
Employers can specify qualifications for a job opportunity and hire according to those requirements.
A job opportunity must be disclosed whenever an employer is considering filling an existing or anticipated vacancy.
Career progression and career development, which the opinion defines with several examples, are noncompetitive promotions and do not meet the act's definition of job opportunities.
Acting, interim or temporary (AINT) positions of up to nine months are not covered unless an AINT hire held the same position for seven months of the previous year.
Fines for noncompliance range from $500 to $10,000 for each violation.

3 ways to prepare your policies and practices for compliance

Compliance with the Colorado pay transparency law requires access to timely and accurate data and a willingness to evaluate your pay and hiring practices. These are some areas to review.

1. Look at Colorado pay transparency laws in detail

Colorado's Equal Pay for Equal Work Act and the Interpretive Notice & Formal Opinion ("INFO") #9A place significant compliance responsibility on employers that employ at least one person in Colorado. From the initial job posting to the final hiring decision, the Colorado Department of Labor and Employment has many requirements for employers to follow. Take time to understand the act and incorporate its requirements into your hiring process.

2. Review your hiring practices

Under Colorado law, employers must disclose the compensation offered, the benefits provided and how and when candidates can apply. While those are basic requirements, the Colorado Department of Labor and Employment has specific requirements related to pay ranges, other compensation and benefits. The state also has requirements for the application process, posting requirements and job notification.

3. Document compensation levels

Colorado's pay transparency law requires organizations to share compensation ranges for jobs when advertising for a position. Compliance requires disclosing the range of pay, from the lowest to highest pay your organization will offer a prospective candidate. An employer cannot post a pay range that lacks a minimum or a maximum amount, and they must believe that the posted range is what they would be willing to pay.

Advice going forward in a new era of pay transparency

Get ahead of the changes for all positions

As the number of pay transparency laws grows, you may want to assess compensation ranges and job descriptions for every position, even if you don't have immediate plans for a role to open up.

Be prepared to answer questions about methodology

Employers covered under Colorado state law should establish and maintain compensation information for every role using a credible and defensible methodology. It can be useful to have a public-facing version of this ready to share, especially if you have any third-party research for support. When a prospective employee, existing staff member or compliance regulator questions how you established the compensation for the position, having a prepared, detailed response can go a long way to satisfy their concerns.

Anticipate current employees' pay inequity claims

When you provide compensation information under the Colorado law or any pay transparency regulation, existing employees may question whether they're being fairly compensated, which may lead to claims of pay inequity. It's a good idea to be ready for this. Consider identifying current employees who are in similar roles and whose compensation is below what you plan to advertise and be prepared to discuss why the difference in pay exists and how you plan to address it.

Monitor and check on your practices regularly

As you establish processes to comply with Colorado's pay transparency law, it might be helpful to know if your pay practices reflect compensation that is commensurate with the role. It can be useful to track how long it takes to fill positions, as this can help show whether the compensation is attracting applicants. You may also want to track your employees' and applicants' feedback regarding your pay and job descriptions to gain insight into whether they're viewed as fair, accurate and competitive.

Let ADP help you stay on top of new developments and best practices in pay transparency. Visit our pay transparency hub to access checklists, resources and state-by-state laws and to check out our people analytics solutions.