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May 28, 2021

Colorado Court Rejects Challenge to Colorado Equal Pay for Equal Work Act

On May 27, 2021, Judge William Martínez of the U.S. District Court for the District of Colorado issued an order rejecting a legal challenge to the Colorado Equal Pay for Equal Work Act (CEPEWA) that had been brought by the Rocky Mountain Association of Recruiters (Rocky Mountain) at the end of last year.

Rocky Mountain filed a lawsuit against Scott Moss on December 29, 2020, in his official capacity as director of the Division of Labor Standards and Statistics of the Colorado Department of Labor and Employment. Rocky Mountain challenged two requirements under the CEPEWA: (1) the Promotion Posting requirement, which mandates that employers make reasonable efforts to announce, post or otherwise make known all opportunities for promotion to all current employees; and (2) the Compensation Posting requirement, which compels employers to disclose in each job posting the hourly or salary compensation and a general description of all benefits and other compensation being offered.

Rocky Mountain’s complaint asserted four causes of action: (1) a compelled speech First Amendment claim; (2) a Dormant Commerce Clause claim; (3) a claim under 42 U.S.C. § 1983 for violating the First Amendment and the Dormant Commerce Clause; and (4) a request for a declaration that the CEPEWA and its implementing regulations violate the First Amendment and the Dormant Commerce Clause, and are therefore unlawful.

On December 31, 2020, Rocky Mountain filed a motion for a preliminary injunction to prohibit the enforcement of the CEPEWA and its implementing regulations, the Equal Pay Transparency Rules. Moss filed responsive pleadings.

On April 21, 2021, the court heard oral argument on the motion for more than two hours. Following the hearing, Judge Martínez asked the parties to file supplemental briefing to address burdens under the Dormant Commerce Clause, the most burdensome aspects of the CEPEWA, and the legislative history of the CEPEWA.

On May 27, 2021, Judge Martínez issued an order denying Rocky Mountain’s motion, noting that Rocky Mountain had failed to establish a likelihood of success on the merits for either the Dormant Commerce claim or the First Amendment claim.

With respect to the Dormant Commerce claim, the court found that Rocky Mountain had failed to put forth the needed evidence regarding relative magnitude of the burdens on interstate commerce to local benefits. The court explained that Rocky Mountain had presented evidence in the form of declarations addressing the burden on intrastate commerce, but not interstate commerce writ large, or the burdens on employers in “extraordinarily broad terms” and “[w]ithout such specific evidence regarding the [CEPEWA’s] burdens on interstate commerce, the Court [could not] conclude that the burdens on interstate commerce are clearly excessive in relation to the putative local benefits.” Therefore, based on the record before it, the court concluded Rocky Mountain failed to establish a substantial likelihood of success.

As to the First Amendment-compelled speech claim, the court held that the CEPEWA was reasonably related to a substantial government interest in eliminating the gender wage gap. Although the plaintiff argued there was no evidence to support a finding that the CEPEWA posting requirements would actually address the gender wage gap, the court noted that legislative certainty was not required to justify restrictions on speech. In addition, the court stated that the legislature had heard testimony regarding statistics, personal anecdotes and testimony from the Women’s Lobby of Colorado that provided the basis for the court to conclude that "the Compensation Posting and Promotional Posting Requirements may help eliminate or at least reduce the gender wage pay gap in Colorado.” Further, the court stated: “It is also commonsensical to conclude that women may be able to better advocate for promotion opportunities and better pay if they are apprised of job openings and given an expected compensation range for each position.”

In addressing the burden imposed by the CEPEWA, the court noted that the law requires the disclosure of factual information, which may be more than employers are inclined to provide, but that such disclosure is not “an outright prohibition on speech.” In finding that the CEPEWA is reasonably related to a substantial government interest and does not impose an undue burden on employers, the court concluded that Rocky Mountain was unlikely to be successful on the merits of its First Amendment claim.

We will continue to monitor this case and provide updates.

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