22 minute read
Employers Can’t Avoid Colorado’s Compensation-posting Rules
Employers Can’t Avoid Colorado’s
Compensation-Posting Rules
BY HEIDI K. WILBUR, J.D.
When Colorado’s Equal Pay for Equal Work Act (“EPEWA”) went into effect at the beginning of 2021, Colorado became the first state in the U.S. to require employers to disclose compensation (or a range of compensation) in its public job postings. The far-reaching job-posting requirements, intended to combat pay discrimination, have had some unintended consequences. Most notably, the law has made national headlines as some employers have attempted to avoid the compensation-posting requirements by excluding Colorado workers from applying to remote job listings with phrases like “the position may not be performed remotely from Colorado” or “role can be performed anywhere in the United States except Colorado.” On July 21, 2021, the Colorado Department of Labor and Employment (CDLE) issued a revised Interpretive Notice & Formal Opinion (“INFO #9”) to clarify its interpretation of the EPEWA (and to stop the trend of job postings excluding Colorado workers). Here are the key takeaways from INFO #9 for employers to consider when posting a job.
Who is required to comply with the EPEWA?
• Any entity that employs at least one person in Colorado.
What compensation information must be included in a job posting to be compliant with the EPEWA?
• The rate of compensation (or a range of compensation). If the posting includes a range, it must include both the lowest and highest pay the employer genuinely believes it might pay for the particular job. Ranges cannot be left open-ended, so an employer cannot post “$60,000 and up” or “up to $60,000.” • A general description of bonuses, commissions, or other compensation. • A general description of benefits being offered with the position, such as health care, retirement benefits, paid days off, and tax-reportable benefits. However, “minor perks” like on-site gyms, nap rooms, or free ice cream do not need to be included. • The compensation information can be included in a linked document or page rather than on the job posting itself as long as the posting clearly explains that the compensation can be found through the link.
Are there any exceptions to the compensation-posting requirement for out-of-state jobs?
• If a covered entity posts a job that will be performed entirely outside Colorado because the job is tied to non-Colorado worksites, the posting does not need to include compensation information. For example, if a restaurant posts a job for a server position in North Dakota, the posting does not need to include compensation information because the job would be performed entirely outside Colorado and is tied to a non-Colorado worksite.
Can an employer hiring for a remote position avoid the compensation-posting requirement by specifying that the job “cannot be performed in Colorado” or otherwise excluding Colorado applicants?
• No. If an employer posts a remote job (i.e., a job that could be performed anywhere), it must include compensation and benefits information. According to INFO #9, “a remote job posting, even if it states that the employer will not accept Colorado applicants, remains covered by the Act’s transparency requirements.” The CDLE has clarified that a remote job excluding Colorado applicants would not fall into the narrow exception for out-of-state worksites.
Does the EPEWA have any requirements about posting for promotional opportunities?
• Yes. Employers are required to make reasonable efforts to announce promotional opportunities to all Colorado employees prior to making a promotion decision. These announcements must include the job title, instructions for applying, and compensation (unless the position is tied to a non-Colorado worksite). • The term “promotional opportunity” is interpreted very broadly to include any job that is superior to another job in terms of compensation, benefits, status, duties, opportunities, or access to further career advancement. • There are a few exceptions to the notice requirement: - Employers do not have to provide notice of a promotional opportunity if the opportunity is to replace an incumbent employee who is unaware of his or her impending separation. - Employers do not have to provide notice of a promotion where consideration for the promotion automatically follows a trial period of less than one year as memorialized in writing (through offer letter, contract, or handbook). - No notice is required for temporary positions lasting less than six months. Heidi K. Wilbur, J.D., is a partner with Fox Rothschild LLP, Denver. Contact her at HWilbur@foxrothschild.com.
Busy, Busy, Busy:
Turning “Too Much Work” into New Opportunities
BY NATALIE ROONEY
Is there such a thing as too much work for accounting firms? That question may be like asking if a glass is half empty or half full. Learn how firms are finding new opportunities amidst an avalanche of new work.
Complexity, uncertainty, and the pandemic have coalesced to create a significant impact on accounting firms and generating a lot of new work for them, but Susan Coffey, CPA, CGMA, CEO – Public Accounting at the Association of International Certified Professional Accountants, says rather than seeing it as problematic, it presents a great opportunity for firms to take a deep dive into their business models and prepare to transform. “Some people may look at the current situation and call it too much work,” Coffey says. “What’s happening though is firms are deliberately creating a level of agility that’s never existed before by examining their governance structures, deciding what clients they’ll accept and retain, studying fee structures, and planning for a transformation.” Every industry is feeling the pinch of the Great Resignation, but the pandemic created an avalanche of complex work in the wake of the Paycheck Protection Program and the Employee Retention Credit. The challenge to find qualified talent ties closely to firms’ ability to handle more complex client work. “Firms are asking how they’ll be the employer of choice based on their evolving business model,” Coffey continues. “They’re looking at whether the new business means a new culture, if the right levels of flexibility are in place for this new generation, and if they’re providing the appropriate advancement and leadership opportunities. There’s a host of things firms are doing to re-evaluate.” Retired national firm partner Jim Brendel, CPA, says staffing shortages have been on firms’ radar for years. “If you talk to firms, you’ll hear it’s not about too much work. It’s more about wishing we had more people.” He also says firm culture isn’t as “sticky” as it used to be. “It’s not only whether someone decides to change jobs but also
when they do it. It was always a given that you didn’t leave a firm during busy season, but in these past two years, that hasn’t been true. Iit can be problematic when your workload is especially heavy.”
Brendel describes the dramatic increase in work for accounting firms as somewhat like the 2003 post-Sarbanes Oxley environment. “Because of the increased regulations, firms had to decide which clients they could keep and which they weren’t able to serve,” he says. “It was incredibly frustrating not to take on a new client you felt would be great but couldn’t because you just didn’t have the resources.” Now, Brendel says he sees firms going through their client base and determining which ones are the best fit. “An emphasis on growth is healthy, but accountants are sometimes afraid to walk away from a client. Now, with work coming faster than you can staff up, it makes you more confident to tell a client that isn’t the best fit to find a new firm. In fact, we can help them find a firm better suited for them
– that’s ultimately better for the client and for us.” There’s always that reluctance to say no, but it’s important to strike a balance with the needs of a community member, explains Mike Lauer, CPA, Partner at Lauer, Szabo & Associates, P.C. in Sterling. The firm’s work is split nearly evenly between tax and governmental audit work. “For the most part, we are having to be more selective, but not accepting new work
can be damaging from a firm perspective. I hate to turn people away, but I’m honest with people that we may not have the ability to take them on because of our current workload,” Lauer says. Lauer always takes the time to meet with an individual or business to discuss their particular issues and has no problem referring work to other CPAs, “Frankly, they’re not rushing to take on new work either. That’s hard. Where do these people go?” he asks. Lauer says the firm steps through a process of evaluating new clients after meeting with them. The firm is more likely to take on a new client that is referred by or has a working relationship with a current client. “We evaluate our bandwidth to see if we can take on the work without sacrificing service to our current clients,” he says. “Our current clients are expanding and adding entities, so we try to recognize what level of service they’re going to need. We try to plan, but there are always unexpected events." Lauer adds that these days, work just seems to take longer to complete because of increasing regulation. “It may be just 15 minutes here or there, but those hours add up.” Lauer echoes Brendel’s sentiment that staffing has been a longtime challenge that is especially prevalent now as everyone looks to hire experienced staff. “That’s not unique to small firms, but the supervising and training takes a lot of time,” he says. “With the complexities of our government and agricultural clients, there is uniqueness to what we do that requires a certain experience level.”
STRATEGIES FOR GROWTH
As they look ahead, firms are being strategic about their use of technology and how they leverage it to handle workloads, Coffey says. “Technology enables firms to compete on a level playing field and frees people up to do higher level work,” she explains. Firms of all sizes also are more actively outsourcing and offshoring even though just a few years ago, smaller firms expressed discomfort with these concepts. “Many service providers offer a whole host of solutions for better managing the opportunities coming through the door,” Coffey says. What is being offshored and outsourced and where? Some firms are offshoring basic inputs for tax compliance that can’t be automated. “Any firm can outsource or offshore anything. It’s just a matter of finding the right provider or subsidiary,” Coffey says. With the CPA Examination now being offered in India, people living there are seeing the value proposition in obtaining the CPA designation. “Some of the talent doing this work is excellent, and now they have a career path,” Coffey says. Brendel says Global Capability Centers in India are allowing firms to transform. “These facilities have evolved from being a low-cost back office to being a strategy to add capabilities and resources, with cost being just an additional benefit.” Deloitte LLP has three offices in India operating with full-time employees rather than contractors. The time zone differences can actually be an asset. “We see projects where someone in the U.S. takes the work to a certain point, turns it over to someone in India and the Philippines, and then it gets turned back over to the U.S. in the morning. Projects move further ahead, and work is completed more quickly,” Coffey says.
Physical Presence, the Test for Nexus, and Homerule Cities
Wayfair, LLC recently filed suit in Colorado’s Jefferson County Court against the City of Lakewood. The City assessed Wayfair roughly $600,000 in uncollected sales tax arguing the company has a filing obligation in Lakewood because Wayfair has economic presence in the city. In 2018, the U.S. Supreme Court held that states could require remote sellers to collect sales tax based on economic presence, specifically sales volume alone, either $100,000 in sales or 200 separate sales tax transactions
Volume 105, Number 5 August 1, 2022
A Step Too Far: Economic Nexus in Colorado
by Martin I. Eisenstein and Nathaniel A. Bessey
Reprinted from Tax Notes State, August 1, 2022, p. 487
of any amount. The key question before the Colorado court will be whether a remote seller with no physical presence in Lakewood must collect the city’s sales tax based on economic presence. The attorneys representing Wayfair, Martin Eisenstein and Nathaniel Bessey, published an excellent article in Tax Notes State discussing the issues. They argue that because of the complexity of Colorado’s home-rule cities and associated compliance, such cities are prohibited from asserting a filing obligation based on economic presence. See Martin I. Eisenstein and Nathaniel A. Bessey, “A Step Too Far: Economic Nexus in Colorado,” Tax Notes State, Volume 105, Number 5,August 1, 2022, cover and pp. 487-494, reprinted with permission, cocpa.org/A-Step-Too-Far. This case has enormous implications for Colorado. Watch for future updates.
CONTINUED FROM PAGE 19
BEING THE BEST AT WHAT YOU WANT TO BE
Factors like declining birth rates and changes to U.S. immigration policy mean entry-level talent will continue to be a challenge, not just for accounting but for most professions that require a college education. “When you have fewer students enrolling in higher education overall, that means fewer accounting grads and exam takers to eventually do the work,” Coffey says. “We need to think of a profession-wide multi-stakeholder solution we can get our arms around.” It will be important to reach out to students earlier than ever before via social media campaigns and to begin talking about the profession differently. “We have a good story to tell and the right words that resonate with young people,” Coffey asserts. “Entrepreneurship - every partner is an entrepreneur; job stability - as a profession, we are needed and do well in good times and bad; and professional growth - our model is based on it. We have these things; we just don't talk about them. We have to get the word out." It's also time to talk about the new, different, and exciting work accountants are doing. ESG is just one example. “Everything about this space is in our wheelhouse,” Coffey says. “Firms are asking how they can become attractive to young people. Look at your service deck. Think about how to incorporate services that excite the younger generation and provide them opportunities to develop and advance the firm.” Coffey encourages firms to ask themselves: How can you be the best at what you want to be? “That will lead to creating a culture which leads to talent attractiveness,” she says. “It’s this symbiotic rotation process.” Brendel suggests doing more to develop your firm’s younger people. “Get them to senior faster,” he advises. “That’s one big piece of the answer. Investing in them and moving them more quickly through training and giving them more on-the-job experiences are crucial. Grow from within. We don’t change as quickly as some other professions, although we’re making progress. But we’re just going to have to do it faster and not be wedded to whatever timetable used to exist for someone to get to senior manager or partner.” Coffey says what we’re experiencing now may feel like something that’s never happened before, but she thinks it has manifested itself in different ways and at different times. “What an amazing profession we are to have adapted so quickly during a pandemic, pivot, and support our clients and our nation’s economy, survive, and then thrive.” Coffey said. “We created so much trust and propelled our brand forward. Our agility as a profession really showed up. We did it for our clients. Now, we have to do it for our firms.” And, do it for sustainability of the profession, too.
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ESG: A New Opportunity for
Attracting and Retaining Young Professionals
BY BEN SOETER
Many organizations realize the importance of ESG (environmental, social, and governance) performance. Putting effort into ESG can improve organizations by making them more efficient and helping them manage risks. Organizations use ESG programs as a differentiator when telling their story to investors, customers, employees, and other stakeholders. However, some organizations have concerns about whether putting effort into ESG programs is worthwhile. Below are a few myths about ESG.
GEN Z, MILLENNIALS, AND THE IMPORTANCE OF FULFILLING WORK
One of the greatest challenges for business leaders — including those in the accounting profession - is attracting and retaining talent. By embracing the opportunities and challenges of ESG, firms and companies can attract and retain talented people who will be able to address client expectations around ESG. As the future of the profession, young professionals bring a unique set of expectations to the hiring pool. Employees are increasingly choosing employers with values that align with their own. Some entering the workforce have grown up learning about the importance of diversity, equity, and inclusion and the risk of climate change and may have very different expectations for their workplace and the goods they consume. The demand for talent provides new leverage to job seekers: Employers are providing flexible and fulfilling work along with training and expanding opportunities for their employees. Firms are embracing the changing needs of their clients and upskilling their professionals to keep up with the latest technology. Organizations should be cognizant of the needs and expectations of their employees. Offering opportunities in ESG is a tool for achieving these objectives, and companies that successfully develop and integrate ESG practices into the everyday can benefit. Firms that offer these opportunities will have a clear and competitive advantage in the hiring process.
THE GROWING IMPORTANCE OF ESG
ESG is not only a challenge to navigate but also an opportunity to unlock value. Companies should look beyond the costs of ESG to the potential for profitable growth. A study from the KPMG Board Leadership Center shows that nearly 90 percent of directors report their companies are reassessing how the interests of customers, employees, and investors are addressed. Two-thirds identify ESG as important to long-term performance and value creation, and 99 percent believe it’s important to align strategy and business practices with the interests of these key stakeholders. A baseline global standard for ESG reporting is gaining momentum, driven by standard setters and government regulators. The SEC regulatory agenda includes multiple ESG items, while the SEC Enforcement Task Force Focused on Climate and ESG will review ESG-related disclosures, presenting new regulatory risks. Meanwhile, the recently formed International Sustainability Standards Board is working toward a comprehensive global baseline of sustainability-related disclosure standards. Firms are also seeing trends toward integrated reporting, where companies report on both financial and sustainability information, building a report around the preparer’s unique circumstances without the benefit of a standardized template.
This increased demand for transparency comes from all directions and affects every department and level of an organization. Reacting to this demand, companies are searching for better ways to report on employee diversity, supply chain social responsibility, greenhouse gas emissions, and a host of other ESG topics. They should prepare to enhance sustainability reporting today to stay competitive and keep up with changing regulations.
NEW OPPORTUNITIES FOR CPAS
CPAs are on each client’s unique ESG journey with them. We recognize all companies face different demands with unique stakeholders, challenges, and experience with ESG matters in the context of a rapidly evolving landscape. A CPA's role is to help clients navigate this landscape, mitigate risk, and find opportunity. We have an opportunity to work proactively with clients, help them interpret regulations, and present appropriate data. My firm is on its own ESG journey, and our approach is to embed ESG capabilities throughout the firm, in every practice, with every partner and professional. It underlies everything we do. Consultants can collaborate with clients to develop and implement an effective ESG strategy, ultimately developing a plan to measure and report relevant metrics.
Accountants play an essential role in accounting for climate risk in financial statements as scrutiny from investors increases. Auditors can assess the completeness and accuracy of reported ESG data, evaluate whether data is prepared in accordance with relevant frameworks, and highlight gaps, allowing companies to improve their ESG reporting policies and procedures. By providing assurance to your clients, you can help them demonstrate a new level of ESG commitment to their stakeholders. Audit committees must understand the implications for data collection processes and controls and reporting choices to best deliver rigorous reporting for stakeholders. Tax specialists have a role, too. Companies that deploy a holistic, data-driven approach to embed a thoughtful ESG tax strategy throughout their entire operating model will be best positioned for business success. An organization’s approach to tax is increasingly being viewed by boards and investors as a measure of corporate responsibility and sustainability. Gone are the days of greenwashing. Companies want to present accurate data, and investors are demanding it. Accountants are well-positioned based on their experience in understanding the flow of data and ensuring information is presented in a clear and concise manner. Looking ahead, the potential for ESG work in the accounting profession is limitless. There’s room at the ESG table for business advisers, auditors, and tax consultants alike, and that’s great news for both experienced accountants looking for new opportunities and college students entering the pipeline. Young professionals want to learn and grow with companies that have a positive social impact. Proactive accounting firms are recognizing the potential for ESG to grow their practices and develop their employees. Firms must communicate these opportunities to their job candidates. Beyond learning a new skill set, the reward comes in helping clients grow in ESG and become more transparent and socially responsible.
WE ALL HAVE A BRIGHTER FUTURE WHEN WE EMBRACE ESG
With ESG, clients can meet the evolving expectations of their shareholders, and employees can learn, grow, and engage in fulfilling and rewarding work. Young professionals realize that long-term value has expanded into areas such as environmental and social responsibility. After all, it’s rewarding to spend time on work that has a meaningful impact. It’s exciting to work with clients who believe in these concepts, and it’s an easy choice to stick with employers who believe in them, too.
Ben Soeter is a senior associate in Accounting Advisory Services for KPMG LLP in Kansas City. Contact him at bsoeter@kpmg.com. This article is reprinted with permission of the Missouri Society of CPAs, all rights reserved.
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