A federal judge has refused to halt enforcement of new wage and employment transparency measures that took effect this year, finding no evidence that the rules harm interstate commerce and instead address the legitimate goal of narrowing pay gaps between men and women.
U.S. District Court Judge William J. Martínez did not issue a preliminary injunction against two key parts of Senate Bill 85, the Equal Pay for Equal Work Act, despite arguments that the law placed unconstitutional burdens on companies operating in Colorado and shrunk job opportunities for the state’s residents.
“The parties agree, as does the Court, that as a public policy matter gender equity in pay is an important societal goal,” wrote Martínez in a May 27 order.
Scott Moss, director of the Division of Labor Standards and Statistics at the Colorado Department of Labor and Employment, said he was grateful for the judge's determination. His agency, which enforces the equal pay law, has been helping employers comply with its terms.
"Employers typically can comply with reasonable measures, such as just adding one sentence on compensation to job postings, and sharing promotion opportunities with their existing workforce by whatever print or electronic means are most feasible," Moss said. "And we definitely have been seeing pay listed in job postings from employers who hadn’t done so before, so we’re heartened that Coloradans are benefitting from the greater job transparency that can improve pay equity.”
The General Assembly passed the Equal Pay for Equal Work Act in 2019, outlawing a variety of employer practices related to compensation, such as calculating an employee’s wages based on their prior wage rate or requiring a prospective employee to disclose their pay history as a condition of hiring. The legislature’s intent was to ensure that workers with similar job duties were paid the same, asserting that women “still earn significantly less than their male counterparts for the same work.”
Then in December 2020, the Rocky Mountain Association of Recruiters filed a lawsuit against Moss, challenging a portion of the law. The organization, whose members are recruitment and executive search firms in Colorado, Wyoming and New Mexico, claimed the Equal Pay for Equal Work Act and its associated regulations gave rise to a First Amendment violation.
Specifically, the association challenged the requirement that an employer must make an effort to announce or publicize promotional opportunities to all current employees on the same day, and before making a decision on whom to promote. Employers “may not limit notice to those employees it deems qualified for the position,” but they can still screen candidates based on the stated qualifications. The requirement only applies to positions and employees in Colorado.
The other disputed provision mandates that employers disclose the salary or hourly wage — or a range of compensation — plus the benefits offered for each job posting for Colorado. The law took effect on Jan. 1, 2021.
The Rocky Mountain Association of Recruiters claimed that salary information is “proprietary, highly confidential, and trade secret.” A competitor company could see the advertised wage and gain a competitive advantage by offering higher compensation to “pick off” talent.
“[It] appears that the bill’s sponsors assume that the pay gap stubbornly persists because women are less aware of compensation and promotion information than men are,” the association’s lawyers wrote to the court. The association offered as evidence a series of online job postings that explicitly stated the remote positions were not available to Colorado residents, allegedly due to the salary disclosure rule.
The association also believed Colorado was placing businesses in the state at a competitive disadvantage to their competitors elsewhere by restricting their ability to recruit workers confidentially.
Martínez, however, was unconvinced the broad predictions of harm outweighed the legislature’s stated intent of minimizing gender pay disparities, especially in light of testimony legislators heard from women who earned less than their male counterparts because of a lack of salary transparency.
“Plaintiff has not provided evidence,” the judge explained, “from which the Court can draw specific conclusions regarding: how employers will be forced to change their human resources practices to comply with the Promotion Posting Requirement and the cost of such changes; how long worldwide promotions will be delayed so that Colorado residents can be notified of potential promotion opportunities; and, mostly importantly, how these administrative burdens will result in harms to the interstate labor market (e.g., creating fewer overall jobs or fewer overall job seekers).”
He added that it was “commonsensical to conclude that women may be able to better advocate for promotion opportunities and better pay if they are apprised of job openings and given an expected compensation range for each position.”
That finding mirrored the argument the Colorado Attorney General’s Office made in defense of the law, namely that transparency about positions “prevents the ‘old boys’ club’ problem, where women are excluded from opportunities without even realizing they existed in the first place.”
Attorneys for the Rocky Mountain Association of Recruiters declined to comment.
Other provisions of the law not at issue in the injunction prevent retaliation against employees who disclose their salary and explicitly prohibit sex-based pay discrimination. The National Partnership for Women & Families estimated, based on census data, that women in Colorado who work year-round and full-time earn 20% less in the aggregate than full-time, year-round male workers.
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.
The Colorado Springs Chamber & Economic Development Commission, which assists and advocates for businesses, was one of the organizations in opposition to the Equal Pay for Equal Work Act in 2019. Rachel Beck, the vice president for government affairs, told Colorado Politics the law not only erected administrative hurdles for companies internally, but, as yet another regulation on businesses, could serve as the tipping point for employers to look elsewhere.
"Certainly, as a female employee myself, I don't like that women are still paid less than men," she said. "When the bill was being considered, employers said things like, 'I have an employee who's doing really great work and I would just like to be able to reward them for that work with a promotion.'"
Her concerns echoed the argument of the Rocky Mountain Association of Recruiters against the promotion requirement, especially for companies with an international presence. "Quite literally, if employers were to comply, millions of women worldwide will have promotions delayed so that Colorado residents can be notified," the association told the court.
However, the legislative sponsors of the 2019 law maintain that it is functioning as they intended.
"Most employers welcomed the change and are easily complying with the new law," said Sen. Jessie Danielson, D-Wheat Ridge. "Pay transparency and the notice of advancement opportunity are two important tools for women to apply for better jobs and negotiate for the pay they deserve."
Added Sen. Brittany Pettersen, D-Lakewood: "I have also had many women reach out to tell me what a difference this law has made in their lives because of the raises they have received and the positive financial impact it has made for them and their families. I know there are hundreds of similar stories throughout our communities and this is just the first year the law has been in effect. Equal pay for equal work is a Colorado value, not an 'undue burden.'"
The case is Rocky Mountain Association of Recruiters v. Moss.