Inside the Colorado Salary History Ban
More states are putting limits on inquiring about a potential employee’s salary history. This article details the Colorado salary history ban.
Colorado joins several other states in instituting a salary history ban. Newly signed legislation prohibits employers from asking about prior wage history was signed into law by the Centennial State’s governor.
The “Equal Pay for Equal Work Act” aims to eliminate the wage gap between men and women and minorities.
Despite policies outlawing pay discrimination, women still earn significantly less than their male counterparts for the same work, lawmakers noted. The legislators cited the results of a report released in March 2018 by the Institute for Women’s Policy Research and The Women’s Foundation of Colorado which found that women in the state earn just 86 cents for every dollar men earn, Latinas earn 53.5 cents and black women earn 63.1 cents for every dollar earned by white men.
If the wage gap were eliminated, Colorado’s lawmakers estimated that a working woman in Colorado would earn $7,000 more on average per year. Over a woman’s lifetime those effects would compound by $400,000 to $1 million in lost earnings.
“It is the intent of the general assembly to pass legislation that helps to close the pay gap in Colorado and ensure that employees with similar job duties are paid the same wage rate regardless of sex, or sex plus another protected status,” according to the text of the law.
Governor Jared Polis signed the bill into law on May 22. It goes into effect on January 1, 2021, unless a referendum petition is filed.
What’s included in the law
The new law forbids wage discrimination. Both private and public employers, regardless of size, must comply. Employers cannot discriminate between employees based on sex or on the basis of sex in combination with another protected status such as disability, race, creed, color, sex, sexual orientation, religion, age, national origin, or ancestry by paying an employee of one sex a wage less than the wage paid to an employee of a different sex for work that is substantially similar, regardless of the job title.
The law also puts into place a fairly stringent salary history ban. Employers cannot seek the salary history of a prospective employee or rely on a prior wage rate to determine a wage rate for a position. While many states forbid seeking prior salary history, Colorado and several other jurisdictions, such as Cincinnati, forbid relying on previous salary in determining compensation.
After the law’s January 2021 effective date, employers must provide the pay range of job openings to all employees and maintain records of job descriptions and wage rate history for each employee for the duration of their employment, plus two years.
If an employer fails to keep required wage records and is later sued, the law allows the court to impose a rebuttable presumption that the records not kept by the employer contained information favorable to the employee’s wage claim and the jury may be instructed that the failure to keep records is evidence that the violation was not in good faith.
Retaliation is not allowed. Discriminating or retaliating against those who refuse to disclose prior salary history is not allowed.
Employers cannot forbid employees from discussing salary history.
Exceptions to the law
Employers are allowed to pay different wages if the difference is based on:
- a seniority system;
- a merit system;
- a system that measures earnings by quantity or quality of production;
- the geographic location where the work is performed;
- education, training, or experience to the extent that they are reasonably related to the work in question; or
- travel, if the travel is a regular and necessary condition of the work performed.
Remedies for violation
Employees can sue in district court without having to first file an administrative wage discrimination complaint with Colorado’s Department of Labor and Employment. The statute of limitations is two years.
Employees can recover both economic damages — the difference between the amount the employer paid and what the employee would have received had there been no violation — plus liquidated damages. Liquidated damages will equal the amount of the economic damages and are intended to compensate the employee for the delay in receiving equal pay. Employees may also recover attorneys’ fees and costs and could be entitled to reinstatement, promotion, and a pay increase.
Actions are enforced by the Director of the state Department of Labor and Employment. Fines will range from $500 and $10,000 per violation.
The role of a pay audit
An employer can avoid liquidated damages for a violation if it can establish that it had reasonable grounds for believing it was not in violation of the law. In determining good faith, one factor that will be considered is whether the employer had completed a “thorough and comprehensive pay audit of its workforce, with the specific goal of identifying and remedying unlawful pay disparities” in the two years before the alleged violation.
Growing number of salary history bans
Salary history bans are becoming increasing common and are now in place in some form in 18 states, including Utah, Washington state, Oregon and California, as well as 16 local jurisdictions. Some of the bans only apply to government employers. The bans generally prohibit employers from requesting salary history information from job applicants.
Some bans go even further and forbid employers from relying on prior pay history when determining compensation even if the information has been volunteered or discovered during the hiring process.
So far this year, several states and localities have banned salary history inquiries by employers. The Cincinnati City Council voted on March 13 to forbid employers from asking job applicants for their salary history as of March 2020. Maine’s legislature passed a salary history ban in April. In May, Washington state’s governor signed a bill forbidding employer inquiries about previous salary history that goes into effect on July 28, 2019. In June, Kansas City, Missouri passed a salary history ban.
Salary history bans are also under consideration in several other states.
Capitol Hill lawmakers are considering a bill that would create a nationwide prohibition on employer inquiries into previous salary history. But while “The Paycheck Fairness Act” was quickly approved by the U.S. House of Representatives, a companion bill is stalled in the U.S. Senate.
Ban on local minimum wage ordinances lifted
Gov. Polis also signed a bill that eliminated a ban on local minimum wage ordinances on May 28.
The new law allows local governments to enact laws establishing a minimum wage within their jurisdiction. The text of the bill notes that the cost of living can vary significantly from one Colorado community to another and that state minimum wage laws can set a useful floor. The repeal of the local minimum wage preemption law means that Colorado is going against the trend of several states that have prohibited local governments from creating their own minimum wage laws.
This article is intended only for informational purposes. It is not a substitute for legal consultation. While we attempt to keep the information covered timely and accurate, laws and regulations are subject to change.
