Pay Transparency Laws In Colorado And Hawaii Become Effective January 1, 2024

Gender pay disparities persist, with women, especially women of color, facing substantial wage gaps. In 2021, women working full-time earned 83 cents for every dollar men earned, while all women working earned 77 cents for every dollar earned by men. Latinas and Black women made 61 and 67 cents, respectively, for every dollar earned by white, non-Hispanic men. Pay equity and salary transparency laws have emerged to address these disparities, aiming to empower employees by providing access to salary data and requiring employers to disclose salary ranges.

Numerous states have enacted legislation to tackle pay inequities. These laws empower employees by promoting salary transparency, enabling them to negotiate fair compensation and contributing to closing the gender pay gap. Colorado recently expanded its first-in-the-nation pay transparency law, and Hawaii is the newest state to enact pay transparency legislation. Both laws differ from other states’ pay transparency laws.

Colorado’s Expanded Pay Transparency Law

Colorado’s Equal Pay for Equal Work Act requires employers to announce, post, or make known all job opportunities, effective January 1, 2024. The finalized Equal Pay Transparency Rules clarify various provisions in Colorado’s unique Act, defining terms like “career development” and “career progression” that are excluded from notice obligations. They address application deadlines, post-selection notices to employees, opt-out procedures for non-disclosure, geographic limits, and more.

For compliance in Colorado, employers must:

• Ensure all job opportunities are announced or posted, including pay range, general description of all benefits, and date the application window is expected to close, if relevant. Employees must be notified of promotion opportunities on the same day that the opportunity becomes available and before making a promotion decision.
• Understand nuanced definitions like career development and progression and their relationship to notice requirements. Career development is defined as a “change to an employee’s terms of compensation, benefits, full-time or part-time status, duties, or access to further advancement to update the employee’s job title or compensate the employee to reflect work performed or contributions already made by the employee.” While compensation or benefits changes stemming from career development are not subject to Colorado’s notice requirement, those resulting from career progressions require employers to disclose to “eligible employees” the criteria for career progression, including compensation, benefits, full or part-time status, responsibilities, and advancement opportunities.
• Comply with application deadlines or exceptions as outlined. Employers must note that evergreen job postings do not have application deadlines. Job requisitions with application deadlines can be extended in good faith if the posting is updated when the deadline is extended.
• Adhere to post-selection notice distribution and opt-out procedures. Employees in Colorado who regularly communicate or collaborate with a new hire or who maintain a reporting relationship must be provided notice identifying the new, promoted, or transferred employee within 30 days of starting the role. The notice must also include the employee’s former job title if already working for the employer, their new job title, and information on how employees may demonstrate interest in similar opportunities. Employers may provide notice of the employee more broadly at their discretion. Employees may voluntarily opt from being identified if they believe their health or safety is at risk. Similarly, employers must adhere to laws that prohibit the identification of the employee, such as a restraining order.
• Consider geographic limitations and disclosure requirements. Notice requirements do not apply to employees outside of Colorado. Disclosure of compensation and benefits do not apply to job postings for jobs performed outside Colorado or whose physical work location is outside Colorado.

Hawaii’s New Pay Transparency Law

Starting January 1, 2024, Hawaii’s Senate Bill 1057 mandates employers with 50 or more employees to disclose hourly rates or salary ranges in job listings reflecting expected compensation. The law exempts certain job listings, including public employee positions, compensation under collective bargaining, or employers with fewer than 50 employees. Hawaii’s law also excludes internal transfers or promotions, a departure from most pay transparency laws. It also prohibits discrimination based on any protected category and emphasizes equal pay for substantially similar work.

For compliance in Hawaii, employers should:

• Conduct training sessions on new requirements for hiring managers, talent acquisition, and HR.
• Consider conducting privileged pay audits to ensure equal pay compliance.
• Stay updated for further guidance on unclear points in the law, particularly if the 50-employee threshold includes employees outside of Hawaii and how substantially similar work is defined.

Implementation and Employer Responsibilities

Employers may face challenges in implementing these laws, primarily concerning compliance with complex requirements, adapting internal processes, and ensuring thorough communication with employees. That said, lawmakers see pay transparency laws as instrumental in narrowing gender and racial wage gaps, empowering job applicants, and facilitating fair workplaces. Investing in understanding the nuances of these laws, conducting internal audits, and ensuring ongoing staff training are crucial steps toward compliance.