Equal pay for equal work has long been a hot-button topic, prompting various states to enact legislation aimed at closing gender-based wage gaps. One notable example is the Equal Pay for Equal Work Act in Colorado, which represents a significant step towards addressing pay disparities by prohibiting employers from paying different wages to employees on the basis of sex (or gender identity), along with other protected categories.
Enacted in 2021, the Colorado Equal Pay for Equal Work Act (“Act”) builds on the foundational principles of the federal Equal Pay Act of 1963 by requiring employers to openly disclose compensation ranges and promotional opportunities to both current employees and prospective hires.
This transparency mandate aims to foster accountability and equity in compensation practices across diverse industries. The act likewise prohibits employers from inquiring about a candidate’s prior compensation history under the theory that use of this information perpetuates below-market compensation for women and minorities. Additionally, the Act prohibits employers from retaliating against employees who discuss or inquire about wage differentials, thereby promoting an environment that allows open dialogue and discourages discriminatory practices.
Does the act work? According to a recent Women’s Foundation of Colorado article, since implementation, Colorado has reduced its gender wage gap more than three times faster than the rest of the U.S. since 2021. [1] Specifically, pay for women working full-time in Colorado increased from 78 cents to 85 cents for every dollar paid to similarly qualified men. This progress boosted Colorado’s pay equity ranking from the 21st smallest gender wage gap to the 6th smallest gender wage gap in the U.S., and results in full-time working women earning an average of an additional $2,952 per year.
Similar legislative measures have been either enacted or proposed in other states across the country. For instance, California has long been at the forefront of equal pay legislation, implementing the California Equal Pay Act that not only prohibits an employer from paying its employees less than employees of the opposite sex for substantially similar work, but also imposes stringent reporting requirements on employers to disclose pay differentials based on gender, race, and ethnicity. [2]
Since implementing pay transparency, which requires employers to disclose pay ranges and provide pay scale information to employees, California has reduced its gender pay gap by three cents. [3] Washington, which also instituted pay and benefits transparency in 2023, has since reduced its wage gap by five cents. [4] Massachusetts [5] and Oregon [6], among others, have also adopted comprehensive equal pay laws that include provisions prohibiting salary history inquiries and enhancing transparency in pay practices.
Despite these state-level efforts, the question of whether there should be federal regulation to standardize and enforce equal pay laws nationwide remains a topic of debate. Proponents argue federal intervention is necessary to ensure consistency and provide a robust framework for combating wage discrimination across all states and territories. Some argue a federal approach could streamline compliance for multi-state employers and strengthen protections for workers who may fall through the gaps of varying state laws.
In furtherance of a federal approach, the Office of Personnel Management announced a new regulation and a proposed rule earlier this year to prohibit the use of salary history for federal employees and federal contractors. The Biden Administration has also asked Congress to pass the Paycheck Fairness Act in an effort to increase pay transparency and reduce pay discrimination based on sex.
On the other hand, opponents of federal regulation often cite concerns about government overreach, including over-regulation and burdensome reporting requirements, as well as the potential for one-size-fits-all policies that may not adequately or effectively address the unique economic and social dynamics of individual states and employees. Some suggest the Paycheck Fairness Act, if passed, would chill or end salary negotiations.
Critics also argue wage disparities are not necessarily the result of sex-based discrimination but instead the result of the decisions and priorities of individual workers. As such, the requirements of bills like the Paycheck Fairness Act could be an unnecessary burden on employers and could lead to increased litigation and bureaucracy. Instead, some argue states should retain autonomy to tailor their own laws to local employment conditions and preferences.
The issue of whether federal regulation is warranted also intersects with broader debate about the role of the government in labor relations and the effectiveness of existing federal anti-discrimination laws. Those in support of federal regulation point to ongoing wage differentials between men and women and the positive impact pay transparency laws have had in individual states, arguing that stronger enforcement mechanisms are needed at the federal level to hold employers accountable for discriminatory pay practices.
In conclusion, while states like Colorado and others have taken proactive steps to address pay disparities through legislation like the Equal Pay for Equal Work Act, whether federal regulation will follow remains unknown. Ultimately, the pursuit of equal pay will likely require a multifaceted approach that combines legislative action, enforcement measures, and societal shifts toward greater transparency and fairness in compensation practices.
Unless and until federal regulations are enacted to address the issue of equal pay, employers should strive to remain informed and in compliance with all necessary state and local laws, with the assistance of competent legal counsel.
Notes
[1] Women's Foundation of Colorado. (2024). Equal Pay Day News Release 2024. Retrieved from https://www.wfco.org/file/Equal-Pay-Day-News-Release-2024-updated.pdf
[2] California Equal Pay Act, Cal. Labor Code § 1197.5 (1949), amended by the California Fair Pay Act, S.B. 358, 2015.
[3] See note 1, supra.
[4] PayAnalytics. (2023, January 17). Washington pay transparency law requires employers to post pay ranges in job listings. Retrieved from https://www.payanalytics.com/resources/articles/new-pay-transparency-law-washington
[5] Massachusetts Act to Establish Pay Equity, Mass. Gen. Laws c. 149 § 105A.
[6] Oregon Equal Pay Act of 2017, Or. Rev. Stat. § 210, et seq.
Authors’ Bios
| Robert B. Hinckley Jr. is a Managing Shareholder at Buchalter. |
| Sarah Andrzejczak is an Attorney at Buchalter. |
