Some Employers Are Excluding Colorado Applicants for Remote Work

A Colorado law requires employers to disclose their targeted pay range in job postings. Rather than revealing such information, however, some employers are excluding workers in the state from their talent search.

Why would employers exclude remote workers in Colorado in a tight market for talent? "Employers in competitive industries may feel concerned that their competitors could use salary information to entice employees to leave the company with offers of higher pay and benefits," observed Emily Hobbs, an attorney with Michael Best in Denver. "Other employers may feel reluctant to limit salary ranges because they want to reserve discretion in setting a salary in order to attract top candidates."

Stephanie Rawitt, an attorney with Clark Hill in Philadelphia, noted that lawmakers in many states are trying to figure out how to best combat pay equity issues, and they're examining whether pay transparency at the start of employment will create more balance.

The specific information that employers must include in job postings could be different depending on which state or local law applies. "Be aware of those rules if you're going to open a job search nationwide for remote workers," Rawitt said.

Balancing Pay Equity

Colorado's Equal Pay for Equal Work Act took effect on Jan. 1. The law requires employers to take a number of steps to help achieve gender pay equity.

"Despite policies outlawing pay discrimination and creating avenues for women to bring a civil action for lost wages, women still earn significantly less than their male counterparts for the same work," according to the act.

Among other rules, the law requires employers to inform all current employees about opportunities for advancement, new positions and pay ranges for available jobs. The act applies to businesses with at least one employee in Colorado. Significantly, employers that are located anywhere in the country must disclose salary and benefits information in job postings for positions that will be or can be performed in Colorado. That includes remote jobs, but the requirement doesn't apply to jobs that will be performed entirely outside of Colorado.

"Employers may have varying reasons for preferring not to disclose a targeted salary range when posting a job opportunity," said J.T. Holt, an attorney with Reed Smith in Pittsburgh. For example, employers may be concerned about missing out on prospective candidates solely because of a posted salary range before they have an opportunity to meet with the candidate.

Job interviews can provide an opportunity for employers to promote the benefits and other non-salary compensation that might be available and to negotiate the compensation package, he said.

Employers that are required or simply prefer to advertise a targeted salary range in a job posting should include a clear statement letting potential applicants know that the advertised salary range is negotiable, Holt suggested.

Hobbs noted that the trend to enact pay equity laws may cause job applicants and employees to expect greater pay transparency overall. "As a result, employers should be prepared to address and explain wage differentials."

She said conducting regular internal wage audits is an effective way for an organization to spot and correct pay discrepancies that may not be justifiable under governing law.

Tips for Employers

Under federal law, covered employers are prohibited from excluding employees from hire based on specific protected categories, such as age, disability, gender, national origin, race and religion. State and local laws may provide workers with more protections.

So can employers legally exclude workers in a particular state if they don't want to disclose their salary range? The practice is a novel response to a new law, so the answer isn't clear.

Rawitt noted that Colorado's pay equity act includes a way for employees and job applicants to file a complaint if they feel a business has violated the law.

The Colorado Department of Labor and Employment is investigating at least one complaint about a job posting that excludes Colorado applicants, according to The Wall Street Journal. But the ultimate outcome of that investigation has yet to be determined.

Sara Jodka, an attorney with Dickinson Wright in Columbus, Ohio, said multistate employers should ensure they understand and are following differing state and local rules, rather than focusing on trying to avoid them. "That being said, complying with the state and local patchwork of employment laws has long been an issue for multistate employers that will only continue to grow."

An employer's best option for tracking and complying with state and local requirements is to work closely with legal counsel, which can provide recommendations that enable the employer to efficiently make any necessary updates to policies, Holt said.

[Want to learn more about pay equity? Join us at the SHRM Annual Conference & Exp 2021, taking place Sept. 9-12 in Las Vegas and virtually.]

Hobbs explained that salary bands should be broad enough to encompass wage rates that the employer believes, in good faith, it will be willing to pay top candidates. Employers may want to consider including in job postings the criteria that the company will evaluate when setting the successful candidate's wage rate, she said, such as:

• Prior work or industry experience.
• Education level to the extent education is relevant to the position.
• Unique skills.

"Pay transparency laws, such as Colorado's law, recognize that sex-based pay disparities tend to compound over time," Hobbs noted. As a result, she said, even if a particular jurisdiction had not adopted a pay transparency law, it is a good idea to avoid asking job candidates about their pay history during the application and interview process.

"Employees should be paid fairly for the work they perform," Jodka said. "Employee compensation should be based on the specific job to be performed and the skill and experience of the particular employee coming into that role."