Gibson Dunn | Colorado Equal Pay for Equal Work Act transparency rules survive preliminary injunction petition challenging their constitutionality
June 1, 2021
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Colorado’s Equal Pay for Equal Work Act (EPEW), along with its accompanying rules and guidelines, came into effect on January 1, 2021. Before the new year, however, the Rocky Mountain Association of Recruiters (RMAR) sued the Colorado Department of Labor and Employment (CDLE) in the United States District Court for the District of Colorado, challenging the constitutionality of the law’s requirements for compensation and promotion. On May 27, 2021, after previously ordering additional briefs on the burden of publication requirements on interstate commerce, Judge William J. Martinez denied RMAR’s request for a preliminary injunction to suspend the application of the publication provisions. in question.
Colorado Equal Pay for Equal Work Act Disclosure Requirements
With a stated goal of helping achieve pay equity in Colorado, EPEW has a broad reach, covering all public and private employers who employ at least one person in Colorado. The law includes extensive compensation and promotional posting requirements, which employers, especially multi-jurisdictional employers, have struggled to implement. In fact, the posting provisions have proven to be so cumbersome in practice that some employers have chosen to cut some Colorado employment opportunities altogether rather than navigate the difficulties of compliance. See https://www.9news.com/article/news/investigations/job-posting-labor-laws/73-7f2ac237-06fe-4353-8318-00a4b52d80bc.
Under EPEW’s compensation posting requirements, employers are required to “disclose in each posting for each job the hourly or wage compensation, or a range of hourly or wage compensation, and a general description of all benefits and other compensation to be offered to the hired candidate. CRS § 8-5-201 (2) (2021). In addition to job postings in Colorado, the requirement also extends to job postings for all remote positions that may be held in Colorado. 7 RCC 1103-13 (4.3) (B).
In addition, EPEW requires that employers “make reasonable efforts to advertise, publish or make known all promotion opportunities to all current employees on the same calendar day and before making a promotion decision.” CRS § 8-5-201 (1) (2021). Under the Rules, a “promotion opportunity” is broadly defined as “when an employer has or anticipates a vacant position in an existing or new position which could be considered a promotion for one or more employees in terms of remuneration, benefits, status, functions or access to other advancements. 7 RCC 1103-13 (4.2.1). Posts are required even if no one in Colorado is qualified for the promotional opportunities. The promotion requirement applies broadly and allows only a few narrow exceptions, such as when employees are unaware that they will be separated from their employers.
Background on Rocky Mountain Recruiters Association v. Moss
In its original complaint, RMAR argued that: (1) EPEW’s posting requirements unlawfully constitute “compelled speech” in violation of the First Amendment; and (2) the requirements violate the dormant trade clause because of their excessive burden on interstate commerce and conflict with the statutory regimes of other states. The RMAR asked the court for a declaration of unconstitutionality of the conditions of secondment, as well as a permanent injunction prohibiting the execution by the CDLE of the provisions of secondment. In addition, the RMAR filed for a preliminary injunction on December 31, 2020, which would prevent the application of the posting provisions until a decision on their legality is rendered.
On April 21, 2021, Judge William J. Martinez held a hearing on the RMAR’s motion for a preliminary injunction. Court ordered CDLE and RMAR for additional briefings on the burdens that EPEW’s publication requirements place on interstate commerce, implying that the court was potentially sensitive to the dormant trade clause argument of the RMAR. The supplementary briefs were filed on May 6, 2021 and the response briefs were filed on May 17, 2021.
For RMAR’s supplementary brief, the court asked him to identify the two most burdensome aspects of the pay and promotion display requirements. For the pay posting requirements, the RMAR identified as the most onerous: (1) the requirement to post pay for remote jobs or other jobs that “might” be performed in Colorado ; and (2) forced disclosure of confidential information and trade secrets. For the more onerous aspects of promotion posting requirements, the RMAR identified: (1) the obligation to notify Colorado employees of “promotion opportunities” anywhere in the world and to suspend all hiring or promotion until ‘such notice is provided; and (2) the absence of exceptions for trade secret disclosures, confidential searches, and corporate mergers and reorganizations. In its response brief, the CDLE argued that the charges identified by the RMAR were “merely operational or logistical charges” for individual businesses, which do not constitute knowable charges for interstate commerce under the commerce clause. sleeping.
From the CDLE, the court requested a further brief on why operational compliance costs incurred by employers are irrelevant for the analysis of the dormant trade clause. In its brief, the CDLE argued that the RMAR had failed to demonstrate that interstate commerce would be unduly hampered, as increased operating or compliance costs for individual businesses do not amount to harm to the market. national. He also argued that since the effects of EPEW are mostly felt in Colorado (or also inside and outside Colorado), case law dictates that the court should not at all engage in a balancing analysis of the dormant trade clause. Finally, the CDLE argued that, even if the court conducts a balancing test, the RMAR’s claims are too broad and general to be used as evidence in such a test. In response, the RMAR reiterated that display requirements weigh on interstate commerce by interfering with “a fundamental part of the process of nationally (and globally) talent acquisition and mobility” and that the burdens weighing on on its members are representative of the charges weighing on interstate commerce.
Detention of injunction and keys to remember
On Thursday, May 27, 2021, Judge William J. Martinez dismissed the RMAR’s preliminary injunction motion, finding that the RMAR had not demonstrated a substantial likelihood of success on the merits of its dormant trade clause claims or first amendment. Notably, the court characterized the RMAR’s request as a disadvantaged preliminary injunction and applied a stricter standard, with the RMAR bearing a heavier burden to demonstrate the likelihood of success on the merits of its claims.
For the claim of the dormant trade clause of the RMAR, the court ruled that the RMAR “had not presented the necessary evidence concerning the relative magnitude of the local advantages, compared to the charges weighing on interstate commerce”. That is, given the absence of specific evidence on the record regarding the harm caused by EPEW to interstate commerce, the tribunal could not effectively engage in the necessary balancing test. . As such, the RMAR failed to establish a substantial probability of success on its request for a dormant trade clause.
For the RMAR First Amendment claim, the tribunal found that the EPEW had a reasonable connection to a substantial government interest and that at this stage, the RMAR had not demonstrated that the posting provisions created a burden. undue for employers. Specifically, the court noted that, based on testimony and common sense, the posting requirements were rationally linked to the law’s goal of reducing the wage gap. In addition, the court concluded that the requirements did not drown out individual messages from employers in job postings, as they can be met “in brief statements and by disclosing promotion opportunities available to certain employees to current employees of the company. Colorado”. The court was also not convinced by the RMAR’s argument that the provisions chill commercial discourse, because “employers are always able to recruit candidates with pay rates for positions of their choice.” Thus, the RMAR did not demonstrate a substantial probability of success on its request for the First Amendment.
It should be noted that the RMAR’s dormant trade clause claim failed due to lack of evidence on the record at this initial stage of the litigation prior to discovery. This leaves the door open for the case to be adequately developed, as the prosecution progresses, with the specific types of evidence that the court identified as necessary to determine whether the claim of the clause of claim. dormant trade is founded. (The court seemed less receptive to the First Amendment’s request, as its order tended to focus on the substantive flaws of the RMAR’s arguments.) Thus, although the court dismissed the RMAR’s motion for a preliminary injunction, the RMAR could still ultimately succeed in the lawsuit. and, if so, potentially obtain a permanent injunction that would prevent the application of EPEW’s signage provisions. It will be important for employers to continue to comply with the EPEW posting requirements in the interim.
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