By Alex Morgan, Operations Manager at MorganHR
Effective January 1, 2021, employers with employees in Colorado have new disclosure requirements for their job postings. This new Act is currently the most significant of its kind in the United States. Colorado requires that all employers with jobs in Colorado post positions with specific compensation and benefits information specified in their postings. The employer must include the pay range they genuinely believe it would be willing to pay for the job; a general description of any bonuses, commissions, or other compensation; and a general description of all benefits (health care, retirement, PTO, and any other tax-reportable benefits) the employer is offering for the position. With the significant shift to remote work following the lockdowns and social distancing restrictions brought forth to slow the spread of COVID-19, these requirements impact companies that even have only one employee who lives in Colorado.
If a company has at least one employee in Colorado and is posting a job opening on the internet for a position that could be filled by someone who lives in Colorado, they must disclose the abovementioned pay and benefits information. The disclosure requirement has profound implications related to pay practice privacy and can easily damage small businesses that cannot afford the same level of pay as mega-corporations. Additionally, it reveals information that has historically been kept close to the chest to prevent competitors from using the information nefariously. Most compensation salary surveys require that at least five companies submit pay data for a particular job for the ranges to be included in the survey results. Colorado is overreaching here and should lead companies to take measures to protect themselves and their pay practices.
Johnson & Johnson, DigitalOcean, and Drizly are a few of the companies posting remote positions and excluding Colorado residents from the possible hiring pool. Interestingly, state and local governments feel the need to create laws for something already illegal based on the Equal Pay Act of 1963. Disclosing pay practices can lead to employee dissatisfaction because many workers do not understand the differences in pay caused by seniority, merit, productivity, geographic differential, background, etc. This act is already having a negative impact on the hiring process for Colorado employees. We encourage you to stay informed and protect your policies and practices. Sharing the details of comp without all the facts can cause confusion and misinterpretation surrounding how you value your employees.