A federal judge in Colorado has upheld the enforceability of Colorado’s pay transparency law, despite vigorous challenges from the business community. As previously reported here, in November 2020, Colorado passed sweeping new regulations regarding equal pay transparency under the state’s Equal Pay for Equal Work Act. Under that law, employers in Colorado have to issue compensation ranges in all job postings, including internal promotions. Critically, out-of-state employers with employees in Colorado are subject to the law’s requirements. The Colorado Department of Labor can impose hefty fines for any violations. Those regulations took effect on January 1, 2021.
In December, the Rocky Mountain Association of Recruiters challenged the law on constitutional grounds, arguing it violated both the First Amendment and the Dormant Commerce Clause. As to the First Amendment, the Association argued the requirement to post compensation information amounted to compelled speech, which was unduly burdensome and not reasonably related to the public interest. The judge disagreed, finding the state of Colorado had made a sufficient showing that the law is reasonably related to the government’s interest in reducing the persistent gender-based pay gap, and that its requirements do not impose undue burdens on Colorado employers.
As to the Dormant Commerce Clause, the Association argued the pay transparency regulations conflicted with the laws of other states and therefore burdened interstate commerce. The judge once again disagreed, finding the Association failed to establish that the law’s burden on interstate commerce outweighed the law’s benefits, including the attainment of gender pay equity.
Any companies who are not already meeting the obligations of Colorado’s pay transparency law should promptly examine their practices and come into compliance.