WORKSPAN DAILY |
Cutting Out Coloradans: Employers Are Finding Ways Around EPEWA
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The
legislation was aimed at prohibiting gender-based pay discrimination and making
pay practices more transparent. How? By requiring Colorado employers to
disclose pay rates or ranges in job postings for positions that will be or
could be based in Colorado, including remote opportunities.
Labor
and employment law firm Jackson Lewis described EPEWA as “one of the
toughest enhanced state pay equity laws to date.” Tauseef Rahman,
partner in Mercer’s career business, pointed out to Workspan that the
Act “went further” than California’s
similar pay transparency laws, and described EPEWA’s strict approach to
pay equity as unique.
But,
with the addition of just a few words to remote job postings, some companies
are already finding ways around the legislation’s pay transparency mandate.
The
Atlantic’s
Saahil Desai recently explained
just how they’re doing it.
“Squint
at the fine print on remote-job listings lately and you might see something
like this, for a senior sales manager at Samsung: ‘This role can be performed
remotely anywhere in the United States with the exception of Colorado.’
“Or
like this, for a job at Johnson & Johnson: ‘Work location is flexible if
approved by the Company except that the position may not be performed remotely
from Colorado.’”
Scores
of companies have adopted similar language in recent job postings, wrote Desai,
who found more than 700 job listings that included the phrase “except Colorado”
on the online job board indeed.com.
(Denver-based
software engineer Aaron Batilo went so far as to create a website, www.coloradoexcluded.com, that calls out
companies dodging EPEWA’s pay transparency requirements, and includes more than
400 job listings that exclude Colorado-based candidates.)
Colorado
State Senator Jessie Danielson co-sponsored the Equal Pay for Equal Work Act.
She pulled no punches when The Atlantic asked for her thoughts on
employers’ tactics to avoid including salary information in their job postings.
“What
these companies are doing is shameful. These bad-actor companies are working
very, very hard to continue to underpay women,” she told Desai, who
noted that Danielson referred to companies posting such job listings as “bad
actors” at least six times during their interview.
Optics
aside, navigating requirements like those included in the Equal Pay for Equal
Work Act is “not always as simple as the legislature may think and commentators
seem to suggest it should be,” said Christopher Patrick, a principal in the
Denver office of Jackson Lewis.
“Colorado’s
equal pay transparency rules moved quickly. The Colorado Department of Labor and
Employment (CDLE) published them in November 2020,” said Patrick, whose
practice focuses on equal employment opportunity including proactive pay equity
analyses. “And [the CDLE’s] initial guidance lacked clarity on disclosure
obligations for remote work.”
More
specifically, he said, remote jobs fall into three categories: roles for which
the employer knows the successful applicant will perform the work in Colorado,
jobs the employer knows will be performed elsewhere and positions for which the
employer might not know (or care) where the work is performed.
“Postings
for the first and third categories of remote roles clearly require pay and
benefit disclosure under the rules,” said Patrick. “As to the second category,
the CDLE’s initial guidance includes conflicting provisions.”
In
July 2021, however, the CDLE issued new
guidance
“that makes clear that employers must include pay and benefits in job postings
for all remote roles, no matter where the employee may ultimately perform the
work,” he said. “With that background, employers may not want to hire for a
specific job in a specific state for any number of reasons.”
For
example, simply taking down job postings for hundreds of open remote positions
might not be feasible for business reasons, added Patrick.
“So,
some employers have excluded Colorado applicants at first, while they work
through the administrative burdens of determining the anticipated pay range for
each opening, which may be more narrow than the full range for the role. Once
they determine these ranges, they plan to include them in their remote job
postings. This approach was in line with the pre-July 21 official guidance.”
Or,
in some cases, the employer might know that the job will not be carried out in
Colorado.
“Not
every remote role can truly be performed from anywhere,” said Patrick.
For
example, a primarily remote regional sales position might need to be based in a
specific set of states, or a customer service representative might need to operate
in a certain time zone to accommodate a business need.
“Some
employers with these roles have tried to comply with [EPEWA with] as small a
change to current practices as possible. Excluding Colorado work did just that,
before July 21 [of this year].”
Other
organizations might be concerned with messaging on pay to applicants in other
markets, added Patrick.
“Many
employers use a compensation system that applies market-based differences. So,
a pay range in Colorado may be less than the range for the same remote role
from the Bay Area. Disclosing the Colorado range may discourage the Bay Area
applicant from applying, [which means the company] risks losing qualified
talent.”
On
the other hand, the compensation range for Colorado candidates could be much
higher than in other markets. Sharing the Colorado range might set unreasonably
high salary expectations for applicants in other locations, said Patrick.
“Some
employers might balance these interests and decide that the easiest way to both
comply and reduce friction for the talent acquisition function is to exclude
Colorado applicants.”
All
that said, choosing to word job listings in a way that discounts certain
candidates still carries risks.
For
example, employers that fail to include pay and benefits disclosures in a job
posting for a remote position risk a violation, with each infringement
including a financial penalty anywhere between $500 and $10,000.
Thus
far, though, the CDLE has offered to waive all fines if employers quickly
comply, Patrick noted, adding that “I don’t know how long this will be its
approach.”
Ultimately,
the CDLE’s current interpretation of employers’ pay transparency obligations
“may go too far,” he said. “An employer ready to challenge the current
interpretation may well prevail, but I find it unlikely that many employers are
willing to endure the optics of challenging the pay equity law.”
About the Author
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Mark
McGraw is the managing
editor of Workspan.