How an Equal Pay Law in Colorado Is Backfiring
Major companies tell Colorado workers they need not apply.
A new employee compensation bill in Colorado was supposed to help close gender gaps in worker pay. But the so-called Equal Pay for Equal Work Act could be making it harder for Colorado residents—regardless of gender—to find jobs.
The law—which was passed in 2019 and took effect at the start of this year—ushered in a range of rules regarding employee compensation, including new procedures for adjudicating sex-based wage discrimination complaints and new record-keeping, notice, and transparency requirements. Among these are a stipulation that employers must directly state a position's pay (or a realistic pay range), benefits, and "any bonuses, commissions, or other compensation" as part of every job listing. Furthermore, companies are barred from asking prospective hires about their salary histories.
Thus, not only does the law open companies with Colorado workers up to new legal liabilities and administrative burdens, it also takes away some employer flexibility when it comes to attracting and setting pay for new hires. Many companies would prefer to keep compensation talk more private and, in such private discussions, to use previous salary as a guide to negotiations.
Understandably, some employers who can help it are opting out.
"This is a remote job except that it is not eligible to be performed in Colorado," says an Airbnb listing for an accounting manager.
"This work is to be performed entirely outside of Colorado," says an Ally Financial posting about a developer position.
"Work location is flexible if approved by the Company except that position may not be performed remotely from Colorado," says one managerial job listing at Johnson & Johnson.
Century 21, Cigna, Drizly, Eventbrite, GoDaddy, Hilton, IBM, Nike, the PETA Foundation, Samsung, and a number of other big companies have posted similar notices.
Colorado resident Aaron Batilo compiled a list of them at the website ColoradoExcluded.com. So far, it includes job postings by 98 companies.
"While labor and legal experts say there is nothing technically stopping Coloradans from still applying and being eligible for such jobs, the disclaimers are likely to discourage people wanting to work remotely from the state from pursuing such opportunities," The Wall Street Journal says.
The situation provides a perfect example of how government meddling can backfire. Measures sold as easy fixes to social problems, economic discrepancies, or other situations where central planners think it would be better if they—not employers—get to call the shots can end up leading to unintended consequences that set back the very folks they sought to help.
In May, a federal judge rejected a lawsuit (Rocky Mountain Association of Recruiters v. Moss) challenging two provisions of the Equal Pay for Equal Work Act. "Although the judge found a lack of evidence that the state's equal pay law unduly burdened free speech or interstate commerce—and, conversely, a lack of evidence that it had closed any gender pay gap—prior reports suggest that businesses have altered their hiring practices in ways that are at odds with the spirit of the legislation," reports Colorado Politics.
The lawsuit, brought by the Rocky Mountain Association of Recruiters, specifically objected to the requirement that employers notify all employees about promotional opportunities and new job postings and the requirement that they post salary or wage information in all job listings. Compensation information is "proprietary, highly confidential, and trade secret," the group argued, suggesting that making companies publicly post such information could give a hiring advantage to competitors.