Colorado Equal Pay for Equal Work Act: Essential Requirements & Compliance

Colorado employers have a legal responsibility to ensure pay practices are fair and transparent. The Colorado Equal Pay for Equal Work Act (C.R.S. § 8-5-101 et seq.) was designed to address wage disparities and promote equity in the workplace. These requirements go beyond compliance—they help create a workplace where employees feel valued and fairly compensated.

For any organization with employees in Colorado, understanding the law's scope is not optional. The Act impacts job postings, wage determinations, and even internal promotions. Employers who fail to meet these standards risk penalties, reputational harm, and employee dissatisfaction.

This article lays out the key takeaways from the Equal Pay for Equal Work Act, including its pay equity and transparency requirements. It also explains how "substantially similar work" is defined under Colorado law and what wage differentials are legally allowed.

Understanding the Law and Its Scope

The Colorado Equal Pay for Equal Work Act went into effect on January 1, 2021, with a focus on eliminating gender-based wage disparities. It requires employers to pay employees equally for roles that require substantially similar skills, effort, and responsibilities. The law also prohibits employers from asking about salary history, retaliating against employees who discuss wages, or requiring employees to sign agreements preventing pay discussions.

The law applies to any employer with at least one employee in Colorado, regardless of the company's location. This includes remote jobs performed within the state. Public and private employers must adhere to the Act's provisions, ensuring compliance for all roles that fall under Colorado's jurisdiction.

The Act includes two key components. The first prohibits pay inequities for employees performing substantially similar work. The second mandates pay transparency in job postings, requiring employers to include salary ranges, benefits information, and details about application deadlines. Employers must also notify employees of internal job opportunities and provide information about career progression paths.

Defining "Substantially Similar Work"

Colorado law defines "substantially similar work" as roles requiring comparable levels of skill, effort, and responsibility, performed under similar working conditions. Skill refers to qualifications like education, experience, and training. Effort encompasses the physical and mental energy required for job tasks. Responsibility relates to the level of accountability and decision-making authority associated with the role.

Wage differentials are only allowed when based on specific, objective factors. Acceptable reasons include seniority systems, merit-based systems, geographic location of the position, education, training, or experience directly tied to the work, and measurable differences in production quality or quantity. Employers must ensure any pay variation is well-documented and tied to one of these permissible factors.

Pay Transparency Requirements

Colorado's pay transparency laws require employers to clearly outline compensation and benefits in job postings. This includes specifying a pay range with a minimum and maximum amount, as well as detailing benefits such as health insurance, bonuses, or retirement plans. Providing this information upfront ensures fairness and helps eliminate ambiguity for candidates and employees alike.

Employers are prohibited from asking about an applicant's previous salary or using past compensation to set wages for a new role. This measure is designed to prevent pay inequities from carrying over from one job to another. Transparency doesn't stop there—employers cannot retaliate against employees for discussing wages or sharing pay information with coworkers. Open conversations about pay are protected and encouraged under the law.

Job Posting Essentials

Every job opportunity must be announced to all current employees to ensure equal access to internal career growth. Employers must include key details in postings:

Salary Range: A defined range that accurately reflects what the employer intends to pay for the position.
Benefits Information: Details about benefits, including insurance options, bonuses, or other forms of compensation.
Application Deadlines: A clear end date for applications or a note specifying that applications are accepted on an ongoing basis. If deadlines change, updates must be made promptly and in good faith.

Certain temporary positions are exempt from these requirements. Acting, interim, or short-term roles expected to last nine months or less do not need to be posted if they are not intended to become permanent. However, if plans change and the role becomes permanent, the employer must follow standard posting rules.

Career Development and Progression

Career development and career progression play distinct roles in how employees grow within an organization, and Colorado pay transparency and pay equity laws treat them differently in terms of job posting obligations. Employers must understand the difference to comply effectively.

Career Development vs. Career Progression

Career development involves changes to an employee's role that recognize their past contributions or current responsibilities. Examples include updating job titles, increasing compensation, or modifying duties to reflect work already being performed. These adjustments do not require formal job postings.

Career progression, however, refers to structured, predictable advancements employees can achieve based on measurable criteria. This often involves movement from one position to another, such as progressing from an entry-level role to a mid-level position after meeting specific performance or tenure benchmarks. Unlike career development, career progression requires employers to clearly outline the path and criteria for advancement.

Disclosure Requirements for Career Progression

For roles that include career progression, employers must provide transparent guidelines to employees. Colorado law requires the following disclosures:

Eligibility Criteria: Define the qualifications employees must meet to advance, such as minimum time in a role, specific performance metrics, or required training.
Details of the Next Role: Include information about the responsibilities, salary range, and benefits of the position employees will move into.
Advancement Process: Clearly describe how employees can meet the outlined criteria and what steps are involved in the progression process.

These requirements ensure that employees have equal access to advancement opportunities and understand what is needed to move forward.

Communicating Advancement Criteria

Objective, measurable criteria are the foundation of fair and transparent career progression. Employers should document every requirement and make the information easily accessible to eligible employees. Consistent communication ensures clarity and prevents misunderstandings about how to progress within the organization.

Post-Selection Notice

Employers must notify employees who will regularly interact with a newly selected candidate within 30 days of the decision. This requirement ensures transparency in hiring and promotes equitable communication about workplace changes.

How and When to Notify Employees

The notification must clearly outline details about the selected candidate's role, compensation, and benefits. Employers can choose to deliver this information individually or as part of a group announcement. Regardless of the method, the notice must reach employees no later than 30 days after the selection.

Regular interaction generally includes employees who communicate, collaborate, or maintain a reporting relationship with the chosen individual at least once a month. Ensuring timely notification to these individuals is non-negotiable and fosters open communication across teams.

Employers can consolidate multiple selection notices into a single announcement or issue separate ones for each hire. The structure is flexible, but the timeline and content requirements remain firm.

Addressing Safety and Confidentiality Concerns

If sharing the selected candidate's personal information creates a safety or health risk, employers may limit disclosure. Two specific scenarios allow for nondisclosure:

When legal restrictions, such as a restraining order, prevent the release of details like the candidate's name or previous job title.
When the candidate voluntarily provides written notice stating that disclosure could endanger their physical or mental well-being.

Even in cases where certain details are omitted, employers must still communicate all other required information about the position and its responsibilities.

Exemptions for Out-of-State Employees

Employees who are entirely based outside Colorado are not subject to post-selection notices. This exception applies to individuals who do not report to or work directly with Colorado-based employees. Employers should focus notification efforts on those within the state or directly connected to Colorado teams.

Recordkeeping Obligations

Colorado pay transparency and pay equity laws require employers to maintain specific documentation to ensure compliance. Precise and consistent recordkeeping is non-negotiable. Employers must retain detailed wage histories and up-to-date job descriptions for every employee. These records serve as key evidence of compliance and help clarify pay decisions when questions arise.

Wage Histories and Job Descriptions

The law mandates that employers document every aspect of an employee's wages and role. This includes:

Wage records: Capture starting salaries, promotions, raises, bonuses, and any other pay adjustments as they occur.
Job descriptions: Maintain accurate descriptions of job duties, responsibilities, qualifications, and required skills for every position.

Employers must ensure that these documents remain current and reflect any changes to roles or compensation over time. Clear and well-organized records help establish consistency and fairness across the organization.

Protecting and Organizing Records

Secure storage and easy access to records are just as important as keeping them. Employers should prioritize systems and processes that safeguard sensitive data while ensuring retrieval is efficient. Consider these practices:

Adopt centralized HR software: Use platforms designed to securely store and organize pay data and job descriptions. Look for encryption and customizable access permissions to protect confidentiality.
Minimize reliance on physical documents: Where paper records are unavoidable, store them in locked, access-controlled areas.
Conduct access reviews regularly: Periodically review who has permission to view or edit employee records and make updates as needed.
Set automated retention schedules: Establish clear timelines for how long to store records, and use automated reminders or systems to ensure compliance without manual oversight.

Employers who prioritize secure and organized storage create a foundation for consistent compliance while reducing the risk of misplaced or outdated records.

Why Strong Recordkeeping Matters

During audits or investigations, wage and job description records are often the first materials requested. Organized documentation helps employers quickly and confidently demonstrate compliance with Colorado's pay transparency and pay equity laws. Without clear records, employers may struggle to justify pay differences, opening the door to unnecessary risks.

Records that are timely, accurate, and thorough reduce the chance of fines and disputes. They also build trust with employees by showing a commitment to transparency and fairness. Proper recordkeeping isn't just a requirement—it's a practical safeguard for a compliant and equitable workplace.

Enforcement and Penalties

The Colorado Division of Labor actively enforces compliance with pay transparency and pay equity laws. Its approach includes responding to employee complaints and conducting audits to identify violations. Employers are expected to address issues quickly when notified, or they may face further scrutiny and penalties.

Complaint Handling and Compliance Actions

The Division reviews all complaints submitted through written forms or online platforms. Employees, applicants, and even third parties can report suspected violations. Complaints are often anonymous, creating a safer way for individuals to flag non-compliance.

When violations are suspected, the Division issues voluntary compliance letters. These letters outline specific concerns and request corrective action. Out of 526 compliance letters sent since 2021, 70.5% resulted in employers resolving the issues without further action.

Investigations and Financial Penalties

Employers who ignore compliance letters or fail to resolve flagged issues may face formal investigations. As of now, 188 investigations have been conducted, leading to enforcement measures such as citations and fines.

Citations Issued: 21 citations were handed out during investigations.
Fines Totaled: Seven citations carried financial penalties, amounting to $790,000 before adjustments. After settlements and waivers, fines were reduced to $684,950.
Pre-Citation Settlements: 32 cases were resolved early, with employers paying $139,000 in settlement fines.

Consequences of Non-Compliance

Ignoring pay transparency and pay equity laws results in more than financial penalties. Non-compliance puts an organization's reputation and employee trust at risk. Complaints and investigations can lead to heightened scrutiny, creating long-term challenges for employers.

To avoid enforcement actions, employers should adopt clear processes for job postings, maintain consistent wage records, and stay informed about compliance requirements. Taking proactive steps reduces the likelihood of complaints and fosters a workplace built on fairness and transparency.

Practical Steps to Achieve Compliance

Colorado pay transparency and pay equity laws demand a hands-on approach. Employers must actively monitor pay practices, address discrepancies, and ensure all processes align with state requirements. Clear policies and consistent action are the foundation for meeting these standards effectively.

Conduct Pay Equity Audits

Start with a detailed review of compensation data across roles requiring substantially similar skills, effort, and responsibility. Compare salaries within these groups to identify any unexplained gaps in pay. If differences exist, confirm they are based on permissible factors like seniority, geographic location, or performance metrics.

Document findings thoroughly, ensuring every decision is backed by clear reasoning. Use audits not as a one-time measure but as an ongoing practice. Scheduling audits annually or after significant organizational changes is a reliable way to stay on track.

Update Job Descriptions

Accurate job descriptions are more than a compliance requirement—they are a baseline for fair pay. Review each job description to confirm it reflects current duties, responsibilities, and qualifications. Ensure similar roles are described consistently to avoid discrepancies in expectations or compensation.

Include objective, measurable criteria for performance and advancement. For example, outline specific skills or achievements required for promotions within a department. Maintain these records in a secure, centralized system to keep them accessible and organized for updates.

Train HR and Management

Equip HR professionals and managers with the knowledge to navigate compliance confidently. Focus training on prohibited practices like asking for salary history or restricting discussions about pay. Provide guidelines for transparent communication with employees regarding wages and job opportunities.

Training should include examples of compliant practices, such as crafting internal job postings or conducting fair salary reviews. Revisit training sessions periodically to address updates to Colorado pay transparency and pay equity laws and reinforce consistent practices across the organization.

Tips for Streamlining Compliance

Efficiency matters when managing compliance requirements. Standardized processes and reliable benchmarks eliminate confusion and create consistency across pay practices.

Set Clear Pay Policies: Develop internal guidelines for setting, reviewing, and adjusting salaries. Include specific steps HR teams and managers must follow when determining pay ranges or approving raises.
Use Market Data for Pay Bands: Define salary ranges using up-to-date, third-party compensation data specific to your industry and location. Regularly review this data to ensure ranges remain competitive and compliant with state laws.
Implement Centralized HR Systems: Utilize software that integrates payroll, job postings, and employee records. Systems designed for HR management simplify recordkeeping, streamline wage history tracking, and automate routine compliance tasks like updating job descriptions.

Consistency in execution strengthens compliance efforts. By focusing on clear actions and reliable systems, employers can meet legal requirements while building a fair and transparent workplace.

Managing Complaints and Investigations

Addressing complaints under Colorado's pay transparency and pay equity laws requires a clear, actionable plan. Employees have the right to escalate concerns to the Colorado Division of Labor, but providing an effective internal resolution process can resolve issues quickly and reduce external scrutiny.

Inform Employees About Their Rights

Transparency starts with education. Employees need to clearly understand their rights around pay equity and how to report concerns. Employers should:

Outline Reporting Rights: Include detailed information about wage discussions, job posting requirements, and pay equity protections in employee handbooks and onboarding documents.
Train Regularly: Schedule yearly training sessions to explain reporting channels, protections against retaliation, and the processes for addressing complaints.
Centralize Resources: Provide quick access to policies or complaint forms through a dedicated HR portal or printed materials in accessible locations like break rooms.

When employees know how to report concerns and trust the process, they're more likely to engage with internal systems before seeking external involvement.

Establish a Clear Internal Process

A structured process for handling employee concerns is essential for resolving complaints efficiently. Outlining the steps employees can follow reduces confusion and builds trust in the organization's commitment to fairness.

Designate a Contact Person: Assign an HR representative or manager to handle pay-related concerns. Ensure they're trained to manage complaints impartially and professionally.
Set a Reporting Procedure: Use specific methods like written forms, email submissions, or scheduled meetings to collect complaints. Make the process straightforward and consistent.
Create Resolution Timelines: Commit to investigating and resolving concerns within a defined timeframe, such as 10 business days, to show employees that their feedback matters.
Maintain Detailed Records: Document every step, including the complaint, the investigation process, and the resolution. These records can protect the organization if complaints escalate.

A transparent and well-communicated internal process encourages employees to speak up while minimizing the risk of formal complaints.

Respond Quickly to Notices of Violations

A notice from the Colorado Division of Labor requires immediate attention. Delays or incomplete responses can escalate the issue and result in higher penalties.

Contact an Attorney Immediately: Work with legal counsel experienced in employment law. They can guide your response, help with internal reviews, and ensure compliance with Colorado's pay transparency requirements.
Review Evidence Thoroughly: Collect all relevant documentation, such as job postings, salary ranges, and internal communications, to verify compliance or identify gaps.
Implement Fixes Without Delay: Address confirmed violations quickly. Update job postings, resolve wage discrepancies, or revise internal processes as needed to align with the law.
Communicate Actions Clearly: Inform the Division of corrective measures taken. Provide specific evidence, such as updated job postings or revised policies, to demonstrate compliance.

A prompt and organized response doesn't just mitigate penalties; it also signals a commitment to transparency and equity.

Managing complaints and investigations effectively isn't only about avoiding fines. It's an opportunity to reinforce trust and demonstrate fairness to employees, creating a more equitable workplace for everyone.

FAQs

Colorado pay transparency and pay equity laws can feel complex at first, but understanding key requirements helps employers stay compliant and support fair workplace practices. Below are straightforward answers to common questions about these laws.

What are the pay transparency rules in Colorado?

Colorado's pay transparency rules require employers to share specific details about compensation and job opportunities. Every job posting must include:

A salary range: Employers must provide a minimum and maximum pay range that reflects the actual compensation they intend to offer.
Benefit details: Information about health insurance, retirement plans, bonuses, and any other perks must be clearly listed.
Internal promotion notifications: Employees must be informed of all promotional opportunities to ensure fair access, unless the role is short-term or interim, lasting under nine months.

Employers cannot inquire about or use a candidate's past salary to determine pay, ensuring decisions are based on role requirements and qualifications instead of previous compensation.

What is the difference between pay equity and pay transparency?

Pay equity and pay transparency aim to address workplace fairness but target different aspects of compensation practices.

Pay equity ensures employees performing substantially similar work receive equal pay regardless of characteristics like gender or race. Objective factors such as seniority, location, or measurable performance metrics can justify wage differences.
Pay transparency focuses on visibility. Employers must openly communicate salary ranges, benefits, and advancement criteria, preventing hidden biases in hiring and pay practices.

Together, both ensure fairness is not only achieved but also visible to employees and candidates.

What is the Equal Opportunity Act in Colorado?

The Equal Opportunity Act in Colorado is designed to prevent discriminatory employment practices. It prohibits employers from disadvantaging individuals based on protected characteristics like age, gender, race, disability, or sexual orientation. While broader in scope, the Equal Opportunity Act aligns with Colorado's pay transparency laws by promoting fairness in hiring, promotions, and workplace treatment.

Employers must ensure policies and practices reflect compliance with both laws to avoid penalties and foster inclusivity.

What is the new salary law in Colorado?

Updates to Colorado's pay transparency laws, effective January 1, 2024, added new requirements to existing rules. These changes include:

Application deadlines: Job postings must specify a deadline for applications or indicate if applications will be accepted indefinitely.
Post-selection notifications: Employers must notify employees who interact regularly with a newly hired candidate within 30 days of the hire.
Temporary role exemptions: Interim or short-term positions lasting less than nine months are not subject to certain posting requirements unless they become permanent.
Stricter enforcement: State oversight now includes more formal investigations and increased financial penalties for violations.

These updates strengthen accountability and ensure pay practices remain transparent and equitable across organizations.

Navigating Colorado's pay transparency and pay equity laws can feel daunting, but with the right tools and guidance, you can create a workplace that thrives on fairness and trust. We're here to help you every step of the way, from managing compliance to building a culture of transparency. Book a demo with us today to see how our platform can simplify your HR processes and support your commitment to equity.