Colorado Pay Law Has Consequences Nationwide, Attorney Says

A Colorado law creates burdens nationwide by requiring businesses to post promotion and wage data publicly, and has had a chilling effect on job options for workers in the state, a lawyer attempting to halt the law told a Denver federal judge on Wednesday.

The Rocky Mountain Association of Recruiters is challenging the state’s law requiring compensation transparency as a way to close the persistent pay gap. But the business group asked U.S. District Judge William Martinez to issue a preliminary injunction to block the measure, which took effect in January.

The law requires employers in Colorado to post jobs with compensation ranges, including promotions. The state’s labor department can impose a fine between $500 and $10,000 per violation.

“The transparency part is totally unique, no one has anything like it,” said Joshua Kirkpatrick, a Littler Mendelson attorney, who represents the business group. He said his clients support equal pay but the law creates “an undue burden with no positive impact on the equal pay issue.”

Maryland and California have laws that require companies to provide compensation ranges to applicants upon request, and more efforts have been proposed. Democratic lawmakers in several states, including Connecticut, Indiana, Massachusetts, South Carolina, and Virginia, this year have filed measures to require companies to provide salary information for jobs in hiring and for current workers to access.

The Colorado recruiters sued in December, arguing that the law violates the First Amendment and the Dormant Commerce Clause, which governs interstate commerce.

The business group said the “forced disclosures” represent “compelled speech” prohibited by the First Amendment because they are unduly burdensome and aren’t reasonably related to the public interest. They also contended that the law burdens interstate commerce by creating conflicts with statutes and regulations in other states.

Evan Brennan with the Colorado Attorney General’s Office asked the judge to deny the injunction request, arguing that the likelihood of success on either claim is low. He also said it would be rare for a court to overturn a law in this way, after the legislature passed it.

“It’s true there will be a burden to companies, but not burdens that matter for the purposes of the constitution,” Brennan argued.

Kirkpatrick argued that the posting of pay ranges is burdensome and prevents applicants from negotiating for better wages. He also claimed that providing the information would be requiring an employer to reveal trade secrets, thus hurting state employers compared to competitors in other markets.

“There is a burden and it’s impacting interstate commerce and the labor market,” he said. He later continued arguing the state had no evidence that the measure would help the pay gap, “I think this was made up by a legislature after watching Mad Men and assuming we’re in the 1960’s and these shoulder-tap promotions happen in the real world. There were no studies, no evidence, as far as I can tell.”

He said the state only presented evidence of a pay gap itself. Nationwide, women make 80 cents on the dollar compared to men. The gap is wider for women of color.

Brennan countered that there is a “reasonable connection between means and ends” when it comes to the law. He said all the burdens imposed by the law are operational burdens.

Martinez said Kirkpatrick was asking him to substitute his judgment on the law as to the public interest on pay equity issues with the judgment of the legislature. He asked, however, about the nationwide impact of allowing the law to continue to take effect.

“This has nationwide impact,” Kirkpatrick said. “It would be much more appropriately handled by Congress, which I assume would have done more research in passing a law like this.”

Littler Mendelson represents the Rocky Mountain Association of Recruiters. The Colorado Attorney General’s office is defending the law.

The case is Rocky Mountain Ass’n of Recruiters v. Moss, D. Colo., No. 1:20-cv-03819, preliminary injunction hearing 4/21/21.