Pay Transparency and Immigration

Pay transparency laws have proliferated across the United States, creating a complex patchwork for employers to navigate. This article discusses employer considerations in Colorado and how the state is surpassing the national trend. State versus federal jurisdiction is examined, specifically how pay transparency laws may intersect with immigration laws, and enforcement and compliance efforts in states and internally within companies.

Steps employers can take to handle pay transparency-related complaints and align their policies and procedures, recruitment, training, and pay with their talent strategy while ensuring compliance with state and federal laws and regulations are also discussed.

In addition, the impact of the proliferation of remote and “hybrid” work on employer compliance with labour certification rules, including determining job location for prevailing wage determinations, are considered.

Colorado Law

In 2019, Colorado lived up to its reputation as a pioneer state by becoming the first jurisdiction in the USA to pass an Equal Pay Transparency Law (EPTL). This required employers to provide a pay range or salary information in job postings. This Equal Pay for Equal Work Act (EPEWA) came into force on 1 January 2021 and caused multiple states to follow suit. This trend is still ongoing.

Initially, Colorado employers scrambled to comply with the law and the Colorado Department of Labor and Employment rules that required employers to:

(1) make reasonable efforts to announce, post, or otherwise make known all opportunities for promotion to all current employees on the same calendar day and before making a promotion decision; and

(2) disclose in each posting for each job opening the hourly or salary compensation or range, and a general description of all of the benefits and other compensation to be offered to the hired applicant.

An amendment was passed in 2023 and came into force on 1 January 2024. In some respects, it simplifies the framework and in others adds more complexity. For example, the amendment requires employers to make reasonable efforts to announce, post, or otherwise make known each “job opportunity”, which is defined as “a current or anticipated vacancy for which the employer is considering a candidate or candidates or interviewing a candidate or candidates or that the employer externally posts”.

Employers will no longer be required to provide notice of in-line promotions unless the promotion is a discretionary decision. If an employer is located outside of Colorado and has fewer than 15 employees working remotely in Colorado, it only needs to post job opportunities that are remote inside Colorado. There are also posting requirements for post-selection to employees working with the selected employee.

To comply, employers must include the following information in internal and external postings:

• the compensation to be offered, which can be the offered wage or a range;
• the benefits to be offered; and
• dates applications will be accepted.

If the employer will accept ongoing applications, no deadline is required.

Enforcement actions emerging under the EPEWA are implemented through codified procedures for complaints, investigations, and remedies. An aggrieved person must file a complaint on a Division of Labour Standards and Statistics form within one year of learning about the violation.

The Division may request information, and the complaint may be dismissed if the complainant does not respond in a timely way. The Division will initiate an investigation upon receiving a complaint and may also initiate investigations based on information received without a formal complaint. The Division notifies the employer of an investigation, and the employer must preserve all relevant evidence for the duration of the investigation.

The employer’s response must be submitted in a timely way and contain all requested documents or information. Enforcement includes ordering the employer to comply, remedy violations, and/or provide additional information.

Fines ranging from USD500 to USD10,000 for each violation may be assessed for non-compliance. Practitioners have reported that the Division sends a letter to an allegedly non-compliant employer and provides a 14-day window to respond. If the employer is later deemed non-compliant, penalties will be assessed. In addition, an employee may sue their employer directly for up to six years of back pay for unlawful pay disparities and claim liquidated damages.

Pay Transparency – A National Trend

Nine states have followed Colorado in passing EPTLs. They are California, Connecticut, Hawaii, Illinois, Maryland, Nevada, New York, Rhode Island, and Washington. Some municipalities also have their own EPTLs that are not entirely consistent with the state law. As of October 2023, 17 jurisdictions nationwide had EPTLs.

More states are likely to follow. Emerging state frameworks have caused multi-state employers challenges in keeping up with compliance. Specifically, employers must consider how to align business needs with state requirements and whether to implement a one-size-fits-all approach or carve out state-specific processes for posting and recruiting.

In addition, employers that sponsor workers under the permanent labour certification programme (Programme Electronic Review Management, or PERM) have the additional challenge of aligning state EPTLs with federal PERM regulations.

Pay Transparency Laws and Immigration Laws

Immigration compliance adds another layer of complexity. State laws governing immigration rarely prevail over time because immigration law is a federal matter.

While the states are not attempting to pass immigration legislation here, EPTL laws are consequential to immigration processes and add compliance concerns. Like state EPTLs, federal immigration regulations already require employers to post notices including wage ranges in connection with PERM labour certification and H visa programmes to comply with US Department of Labor (DOL) requirements.

In this regard, state EPTLs and federal immigration regulations are aligned in the goal of protecting workers.

The complexity of complying with EPTL in immigration programme management manifests itself in employers implementing practices to reconcile EPTL with immigration requirements. In 2021, the Colorado Department of Labor and Employment (CDLE) indicated that it would not enforce CDLE rules in PERM recruitment and confirmed that approach in March 2024 after the related amendment had come into force.

However, if PERM recruitment looks like a typical external job posting, the CDLE could still investigate a complaint and find the employer non-compliant if the PERM recruitment was also being used to actually recruit for a non-PERM job opportunity. It remains unclear how Colorado’s EPTL may affect employers attempting to steer clear of EPTL posting requirements in Colorado PERM cases because the rules are so new.

On the other hand, DOL’s commitment to enforce PERM regulations is unwavering. The goal of these laws is the same across the board: to protect US workers. While EPTLs are focused on equal pay among groups, PERM regulations require that employers pay at least the prevailing wage rate to foreign national workers and advertise wages no lower than the prevailing wage.

Specifically, DOL must certify to US Citizenship and Immigration Services that there are not sufficient US workers able, willing, qualified, and available to accept the job opportunity in the intended employment area and that the employment of the foreign worker will not adversely affect the wages and working conditions of similarly employed US workers.

Employers pursuing PERM programmes in locations with EPTL must review both sets of laws and regulations to ensure PERM advertisements are compliant unless the state department of labor has expressly indicated otherwise, as in Colorado. In practice, this means that a lower wage range posted for a PERM role cannot be lower than the prevailing wage, even if the company’s “current” wage range would normally fall below the prevailing wage at the time of recruitment.

It is worth noting that because PERM is forward-looking, the company’s offered wage could potentially be higher than the employee’s “current” wage once the green card is generated, which may ameliorate the issue for PERM purposes but not necessarily for EPTL compliance.

In both EPTLs and PERM prevailing wage rules, job location is the deciding factor. Prevailing wage data is published annually on 1 July for each Metropolitan Statistical Area (MSA). Some municipalities have also enacted their own EPTLs. Employers must therefore ensure the bottom range of the wage offered in the job location is at least the prevailing wage when advertising for PERM positions, if required by the state department of labor to post a range in advertisements.

Job locations have become more diverse since the COVID-19 pandemic, with many employers using hybrid and telecommuting/remote models. Employment may be within the realm of a regional office within commuting distance from home or may be reporting to headquarters. Determining the prevailing wage for the worksite location has become trickier as a result, but generally fully remote workers reporting to headquarters must be paid at least the prevailing wage of the headquarters MSA.

Workers reporting and living within commuting distance of a regional office meanwhile are connected to the regional office MSA and prevailing wage.

Employers must be cognizant of the location of employment when the green card is issued and under what model, ie, fully remote, hybrid, or on-site because the PERM process certifies a future position. If the residual models from the pandemic for fully remote work were truly temporary, employers would not use headquarters as a basis for the prevailing wage or recruitment.

Employers should consider if their long-term location model will be adjusted for return to work or, if the PERM sponsored position truly lends itself to remote work duties. For example, if it can be done 100% virtually. In the past, remote workers were typically field service engineers or technicians travelling to unanticipated worksites, which differs greatly from how we think about remote workers today, using technology to work online from their home offices or their global adventures.

EPTLs also cover remote work. For example, in Colorado, employers must comply with CDLE rules unless the employer has no physical office in Colorado and fewer than 15 staff members working remotely in Colorado. However, imagine a Colorado employer that is headquartered in New York (and has not confirmed whether its EPTL must be applied in PERM recruitment) and its largest campuses and workforce reside in Texas. Although this employer probably has a robust EPTL compliance programme, it does not have to use EPTL compliance in Texas.

If most of its PERM sponsored positions are in Colorado and Texas, it would have very few PERM cases that require EPT compliance. The cases in Texas should align with EPTL rules there. However, companies should remember that the Department of Justice recently announced settlements with large employers requiring PERM recruitment to align with standard recruitment practices.

Implementing a policy of “standard” recruitment practices whether it is one-size-fits-all (eg, always advertise wage ranges in advertisements even when not required) versus jurisdiction specific (advertise wage ranges only in pertinent states) would be important for PERM compliance.

We must plan for states to enforce their own EPTLs in PERM advertising. However, states do not enforce PERM rules. Could the DOL play a part in enforcing state EPTLs? The answer is maybe. PERM regulations require employers to certify, under penalty of perjury, that a job opportunity’s terms, conditions, and occupational environment are not contrary to federal, state, or local law.

A fastidious certifying officer, familiar with state EPTL laws and who finds PERM recruitment non-EPTL compliant, could deny the application. Whether or not the Board of Alien Labor Certification Appeals would uphold a denial on appeal is an open question.

Enforcement of Pay Transparency Laws

State agency enforcement and lawsuits

EPTLs are state/local laws. Enforcement of these laws therefore does not rest with the federal government or the DOL, in the context of PERM. There are three aspects to compliance: agency enforcement, employee lawsuits, and internal compliance by companies.

Since these laws started coming into force in 2021, throughout the country, there have been various reports on how the laws are being enforced. In New York, recent complaints and enforcement actions send a message that wage ranges, as posted, must not be too broad. The New York Commission on Human Rights has filed complaints against a number of employers for posting wage ranges that they allege were not in good faith, for example, USD50,000 to USD180,000.

In states like New York, the state labor agency sends first-time violators warning letters and gives them 30 days to remedy the problem. Colorado has published its claim data and has started to send letters to employers who do not put enough information in their job postings. The letter indicates that the employer must respond to CDLE within 14 days and resolve the situation.

After receiving one of these letters, if an employer is still non-compliant, it could be fined between USD500 and USD10,000 per violation. In the state of Washington, there are reports of class action lawsuits from aggrieved employees against employers claiming violations of its EPTL. The EPTL came into force there on 1 January 2023, and between June and November of that year, one law firm had filed 31 EPTL lawsuits against employers.

As these laws are so new, we are likely to see enforcement actions increase as time passes. State agencies may also consider more proactive approaches like pay audits and increased transparency to identify and address pay disparities.

Internal compliance

Employers should carefully consider developing and implementing internal policies and practices to comply with EPTLs. At the outset, it is advisable that the employer map out an internal process for handling EPTL complaints. The process may include measures such as a hotline for submitting complaints internally, designating responsible in-house counsel to respond to complaints, and implementing response timeframes.

Training is another important aspect for compliance, and training supervisors and managers to facilitate compliance should be prioritised.

Employers should also develop a pay policy that aligns with talent strategy but is also objective, consistent, and demonstrates good faith compliance. Developing a pay philosophy that aligns with talent strategy and culture is a step in the right direction. In addition, employers should be transparent with employees regarding the company’s EPTL policies and procedures.

Employers should also consider periodic EPTL compliance checks across departments and business units. This would include reviewing job postings, regularly reviewing recruitment practices and third-party recruiter policies and practices, and ensuring these practices align with EPTL policies.

Conclusion

EPTL laws have already swept the nation, so in the next few years we will probably see additional states enact their own versions. Colorado was an EPTL leader both in enacting the framework first and also in announcing that it does not apply to PERM.

No other state has formally commented on whether they will enforce EPTL in PERM recruitment advertisements. Complaints may be submitted in connection with PERM recruitment in any jurisdiction with an EPTL regardless, and aggrieved parties could file lawsuits against employers using EPTL frameworks. The cautious approach is to use EPTL-compliant PERM advertising.

However, the one-size-fits-all approach may not be practical or economical for large employers. This is especially true for companies that have large workforces in non-EPTL states like Texas and Florida. Interestingly enough, those states have passed their own immigration laws.

In the meantime, DOL will continue to scrutinise PERM recruitment and theoretically, might cite non-compliance with local laws, among other things, as a reason for denial. There are a lot of unanswered questions.