How Will the Equal Pay Law Affect Companies?

Pay day concept

How Will the Equal Pay Law Affect Companies?

Employers in Colorado need to review their company policies after the state passed a bill that would enforce better wage equality by Jan. 1, 2021.

Minimum-wage employees in the state current earn $11.10 per hour as of January this year. The rate will increase to $12 per hour next year. As early as now, companies should review the state’s provisions on mediation employment law in preparation for disputes that may arise after the new law takes effect. The Equal Pay for Equal Work Act will require all employers to be transparent about disclosing compensation details for each job vacancy.

Providing Equal Salaries

The state approved the bill primarily to avoid discrimination based on a person’s sex, gender identity, or “sex in combination with another protected status.” In other words, men and women should earn equal salaries when they hold the same jobs in terms of effort, skill, and responsibilities. There are, however, certain caveats to the new law that exempt companies from compliance.

If a company observes a seniority or merit system, then employees can have different pay grades. Corporate policies that determine salaries based on the quality or quantity of production also qualify as an exemption. Employees with relevant education, experience, and training can still earn more than their peers despite holding the same position within a company. Companies with multiple locations in the state can also justify the unequal pay based on the place of work.

Administrative Relief for Employees

The legislation may have certain exclusions for liability, but it still provides an administrative relief for employees who want to file a lawsuit. Plaintiffs may lodge a complaint and recover up to three years of back pay, upon providing valid proof of discrimination by their employer. The law requires an aggrieved party to file a legal case within two years after noticing the gap in compensation.

Job applicants will no longer have to provide their salary history under the regulation, which will prohibit companies to use previous salary information to decide a prospective employee’s compensation. A potential lawsuit awaits a company that discriminates or retaliates against applicants for not disclosing their salary history.

Other Labor Laws

Man hand receiving cash from woman

While the new law marks a step in the right direction for employees, most people are unaware of their rights as workers, especially on minimum wage conditions. If you are earning less than the current rate, you should recover the difference from tips worth up to $3.02 for each hour of work.

Employers must cover the difference when the value of tips can’t increase a worker’s hourly pay, according to the Fair Labor Standards Act. As an example, a company that pays $8 per hour for restaurant workers should pay an extra $2 if each employee only received $1.10 of tips.

Colorado became the 10th state in the country to enforce wage equality, although the new law might encourage workers to be more assertive with salary-related issues. Companies should consider employment mediation to settle grievances. This is better and cheaper than allowing a judge to decide on behalf of both parties.

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