August 17, 2021 Laura Morgan

The Colorado Pay Equity Law is Yet Another Jab to Small Businesses

By Laura Morgan, a Managing Partner at MorganHR 

While transparency is the goal, the Colorado Pay Equity Law of January 1 this year places an extreme undue hardship on small businesses.  This law requires companies with one or more employees to post the complete compensation range and benefits for any posted position.  This is not only salary but bonus targets, insurance, etc.   As a compensation consultant for more than 15 years, it is very uncommon for smaller businesses (under 300 employees) to purchase and have the available, expensive salary surveys to determine salary ranges.  As a common approach, these companies identify the salary range when they make an offer typically based on the candidate’s salary requirements.  If they can afford the salary of someone that feels would be a great addition to their team, they then work up an offer and work up what they can pay.  This law now forces small business employers to actually screen out higher-skilled, potential candidates by sharing a range that may not truly be the range. 

Then there is the most obvious issue.  Many employers can’t afford the deep-dive experts to help them shape these ranges.  Developing a salary range is more involved than just sharing what you are wanting to pay.  The affordability, market data, financial goals, local/state taxes, and business growth projections all factor into building compensation and benefits strategies.   The challenge now placed on these small business employers is hurtful.   

It is also known that the larger companies, i.e., Google, are reacting to this law by ensuring remote working employees living in Colorado are not eligible.  These transparency rules have an impact that extends beyond Colorado.  Recent remote worker job postings are actually excluding Colorado residents from being eligible to apply.  

MorganHR has created a solution to help smaller businesses have access to compensation expertise and data on-demand and in smaller, bite-sized options.  Our compensation community has posted their availability on our app to help anyone with compensation questions – modeled into 15, 30, and 60-minute intervals.  If you come equipped with your questions and schedule time on our Auxin App, you’ll have on-demand expertise ready to work through your challenge.  If the challenge does require additional time, our experts will guide you on how to move forward when and if you are ready.