Why the Colorado Pay Equity Law Hurts Small Businesses
By Laura Morgan, Managing Partner at MorganHR, discussing the implications of the Colorado Pay Equity Law.
When the Colorado Pay Equity Law took effect, it set a bold new standard for transparency—but at a cost that many small businesses simply cannot afford. This law requires every employer, even those with just one employee, to post detailed compensation and benefits ranges in any job listing. While the spirit of transparency is admirable, the operational burden placed on small businesses is significant and, in some cases, damaging.
Small Businesses Lack Access to Compensation Data
The core issue? Most small businesses—especially those with fewer than 300 employees—don’t purchase the expensive salary survey data used to define market-based compensation ranges required by the Colorado Pay Equity Law. As a result, they often determine pay ranges only when they’re ready to extend an offer. This approach, while informal, has historically allowed flexibility based on a candidate’s unique qualifications and the company’s financial ability.
But under this law, those employers must commit to a public salary range upfront. That can force them to either overshoot their budget or discourage highly qualified candidates who perceive the range as too low—even when the employer might have stretched their budget for the right fit. The very transparency intended to support job seekers may now limit opportunities for both sides.
Expert Help Isn’t Always Affordable
Creating a reliable compensation structure involves more than just selecting a number. It requires consideration of market data, business goals, profitability, geographic labor trends, and regulatory compliance. While large corporations employ compensation analysts or retain consultants, most small businesses lack that luxury and struggle to comply with the Colorado Pay Equity Law.
In fact, some large organizations have chosen to sidestep the issue entirely. Google, for example, reportedly avoids hiring remote employees in Colorado to bypass compliance with the pay equity law. This has led to a concerning trend of excluding Colorado residents from remote job postings, which undermines the goal of inclusion and equity.
An On-Demand Solution for Fair Pay
Recognizing this gap, MorganHR developed a solution specifically for small businesses. Our Auxin App connects employers with experienced compensation professionals in short, affordable blocks of time—15, 30, or 60 minutes. Whether it’s determining an initial pay range required by the new Colorado Pay Equity Law, reviewing offer strategies, or understanding how to comply with the new law, Auxin gives businesses the help they need, when they need it.
Bring your questions, book your time, and walk away with answers. If more support is needed, our advisors will guide you through the next steps—no pressure, just accessible expertise.