Three fined for violating state’s new wage transparency law

As it grew last year, no one at Monigle Associates was paying close attention to emails from the Colorado Department of Labor and Employment. The letters started last July. This notice came in December:

NOTICE OF FINE FOR NON-COMPLIANCE WITH DIVISION ORDERS AND ORDER TO RESPOND

The Denver branding firm was out of compliance with a new state law requiring job listings to include salaries. Some listings shared no wages. Others didn’t have the top amount, only a + sign, as in “Salary Range: $70,000 – 95,000+.” And some openings offered “full benefits” but no description as to what those benefits were. All were violations.

Monigle paid the $8,000 fine and unwittingly became the first company to do so as part of the Colorado Equal Pay for Equal Work Act. The law, which went into effect Jan. 1, 2021, was intended to help close the gender pay gap where women earn less than men for the same job.

In the past year, the labor department has warned hundreds of employers that wages must be displayed in the job listing and Coloradans must not be excluded from remote work opportunities. But other less-publicized elements of the law created confusion or extra work for companies. The majority complied after a warning. Three, including Monigle, were fined.

Chalk Monigle’s fine up to a hiring frenzy, a new applicant tracking system and, like many small businesses, a small HR team that made it challenging to keep track of the intricacies of new employment laws, said Nichole Albertsmeier, the company’s chief financial and administrative officer.

“We’re very much aligned with the spirit of the act and the transparency. It directly aligns with our desire to continue to foster an equitable working environment,” Albertsmeier said. “It was just literally we had 67 internal jobs open. And we hired 61 people in (2021). And we have a staff of 1 ½ people in (human resources).”

There’s a form online to report wage transparency violators. The state labor department also hired a temp worker last year to investigate complaints against companies that had purposely excluded Colorado applicants. He’s still employed there, the labor department said. While the agency was more lenient last year as the law went into effect, the state has notified more than 200 companies about violations and is now issuing fines.

By numbers, those include:

129: Compliance assistance letters for remote jobs

122: Opportunity to Cure letters giving employers an opportunity to cure ostensible violations, sent in response to a complaint of any violation type (not limited to remote jobs)

3: Employers fined

Aaron Batilo, the Commerce City engineer who set up ColoradoExcluded.com to crowdsource violations, said he received 600 to 700 job listings across 200 companies, but there’s not much activity anymore.

While the state labor department says most companies comply after learning of a violation, the Equal Pay law is still creating confusion for employers statewide.

Sherman & Howard, one of Denver’s oldest law firms, has seen inquiries taper off, but “we’re still getting calls on a daily basis,” said Beth Ann Lennon, an attorney who advises multiple international and national employers on all aspects of labor issues.

And it’s not always questions about Colorado’s law, but similar legislation in other states.

“With the way that Colorado drafted the Equal Pay for Equal Work Act, they were on the forefront as it related to what is called the transparency part of the law, the posting requirements,” Lennon said. “Lots of states are following suit.”

Other states, such as California, had equal-pay laws, but Colorado’s is considered the most aggressive because of the requirement to post salaries publicly, according to the Society for Human Resource Management. Other states left it up to job applicants to request salaries so the information was not widely known. But even California is now working on revamping its law.

“Colorado’s law really kicked off a conversation among employers,” said Andrea Johnson, director of state policy and work initiatives at the National Women’s Law Center. “And a few years later, now we have a different labor market, a tighter labor market where employers are starting to provide value ranges voluntarily even if they aren’t in a state with a law because they know it helps attract candidates.”

Similar wage-transparency laws have passed in eight states, including Connecticut, Maryland, Nevada and New York. Rhode Island’s law goes into effect in January.

But the laws add extra concerns for employers who have operations – or at least one worker – in multiple states.

“Most employers want to make sure that they’re properly paying people and there’s no pay disparity,” Lennon said. “A real practical problem here is that unfortunately, in my opinion, a lot of these laws weren’t fully thought out or well written and there’s unintended consequences. Being the employer trying to navigate how you can be in compliance with what is expected of you has been a particularly burdensome challenge.”

In Colorado, there’s also a rule that companies must share promotion opportunities with existing employees even if few are qualified. This level of transparency creates awkwardness for companies that, for example, wish to move a senior partner to a specific role, something that has been done for years to reward top workers. Now they must disclose the promotion to all workers.

“All of those opportunities need to be posted. You need to have the pay and benefits information in there,” Lennon said. “We have a whole team of managers and executives who’ve been running their companies (like this) for decades, saying, ‘This person’s been doing really great. Let’s promote them and give them more responsibility’ … and making that decision without ever posting it. … That is now a violation of the law.”

From the worker’s perspective though, having extra knowledge of what a job actually will pay creates a starting point that helps workers in the long run, even if it’s not an instant fix for the wage gap, said Michelle Jones, president of BPT Staffing in Centennial, which places IT workers of color.

“It at least helps you determine which roles to apply for,” Jones said. “It gives you a floor and I think for the most part, people are shooting in the middle, or if they feel super competent and know that we’re having a tech-talent shortage, they’re going to be like, it’s got to be in the top range or I’m not even interested.”

Companies need to go beyond wage transparency if they really want to address pay equity. Jones suggests auditing their own wages. If they notice in their pay audits that a Hispanic female business analyst at one level is paid less than a male business analyst at a lower level, that should trigger an alert that something’s not quite right, she said.

“They need to look at where the really big gaps are and ask why is that there? Because if the gap is that big they probably don’t need to employ that person. Maybe they’re not performing. Maybe they’re not hitting the skills that they need and that’s why the gap is there,” she said. “It’s almost better to give that person a shot to go somewhere else to make a higher salary than to knowingly keep them on staff and pay other people 30% more for the same exact work.”

David Seligman, who supported the new law as executive director of toward Justice, said there’s evidence that wage transparency is working in Colorado. Workers have increased bargaining power as employers are desperate to fill openings. Some of that has to do with the competition for workers as businesses reopened in the pandemic. But the state’s average wage has grown faster than the rest of the nation.

According to state and U.S. data from the Bureau of Labor Statistics, Colorado’s average hourly wages grew 11.5% between January 2021 and May 2022, while U.S. wages grew 6.7%. Dollarwise, that’s $34.62 an hour in Colorado as of May, compared with $31.95 in the U.S.

“How we know that the law is working is that there was some initial employer resistance to disclosing salary,” Seligman said. “That resistance comes from a desire not to undermine women or people of color who might otherwise not take as aggressive a position when it comes to bargaining for higher pay, but rather because when you start to disclose salary, employers lose some of their competitive advantage.”

In other words, he added, employers already have a sense of what they’re willing to pay and how much their competitors do. But they are trying to figure out how much the prospective worker will accept.

“They lose the advantage of an asymmetry of information that employers often have, meaning we have a sense of what we’re going to pay and what our competitors are paying but we’re not going to disclose that to workers in the hopes that you can bargain down their wages or that they’ll be able to sign someone up with a lowball offer,” Seligman said.

Women still are paid less than men even though gains have been made over the years. And not having knowledge of the true top hurts women and people of color who haven’t been in the room before and prevents them from getting to pay equity in the first place, Jones said. And if pay ranges aren’t honest, that doesn’t truly help pay equity.

“I had a company tell me, ‘Put $56 to $100 per hour, but if it’s a really good candidate, we’re willing to go up to $150.’ So I said, ‘Let’s put $150 because the very first question (companies) ask is where do you want to be salarywise?’ If you shoot for $70, you’re never going to see that $150,” Jones said. “They almost make you pick where you’re going to go and you’re afraid to overshoot it and lose the job.”

Johnson, with the National Women’s Law Center, said ideally, a federal law would help employers nationwide set uniform policies for all workers instead of changing depending on the state. And that equips job seekers with information going in – instead of learning later on that a less-experienced colleague is making much more.

“This isn’t a complicated regulatory regime or complex benefit,” Johnson said. “It’s just saying to employers, you know what you’ve budgeted for a position. Now be transparent about that. There are so many bottom line benefits to transparency, especially in terms of attracting candidates and retaining talent. … We know that when salary ranges are available to applicants, that helps close gender wage gaps.”

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