The world has changed over the past few years, and Colorado is no different. A plethora of new employment laws have been enacted in Colorado, generally expanding employee protections and rights. Companies need to stay abreast of these changes, as many of the new laws create significant penalties for non-compliant employers.
This customer broadcast is intended to remind customers of some of these changes and to provide an update on some of the changes planned over the next year. Below is a summary; the laws described are significantly more complex in practice and do not cover all the changes that have taken place in recent years. Fairfield and Woods is more than willing to answer any questions you have about these changes, as well as help you ensure your operations are up to date.
Colorado Laws Recently Amended or Enacted (Last Two Years)
- Colorado Healthy Families and Workplaces Act (HFWA): As of January 1, 2022, EVERYTHING Private employers in Colorado, regardless of size, are subject to the HFWA. This law requires employers to grant one hour of accumulated leave for every 30 hours worked by an employee. HFWA leave is capped at 48 hours, with unused accrued leave carried over to the following year. The HFWA applies to all employees, including temporary and part-time employees. HFWA accrued leave can be used for a number of health-related reasons and domestic violence-related leave (“safety leave”). Additionally, employers must schedule “public health emergency” (PHE) leave for a total of up to 80 hours per PHE (think pandemic-type situations), including the 48 hours required even without a public health emergency. public health, to be used for certain PHE related purposes. In addition, the HFWA limits the documents an employer can request with respect to various leave requests. Violations of the HFWA expose employers to the potential payment of back wages, penalties, employee attorney fees and, in serious cases, fines. There is an exception for employers who have a PTO or similar policy in place that covers all or more than is required under the HFWA. HFWA leave is considered a form of “salary” and should be treated as such upon separation, in the absence of other guidelines.
- Colorado Protected Expression Health/Safety and Whistleblower Act (PHEW): Passed in July 2020 and recently amended, this law protects “workers” (including independent contractors) from retaliation and interference for: (1) raising concerns about possible violations of health and safety rules in the workplace, or threats thereof; (2) object to workplace practices that the worker believes are unlawful under the PHEW; or (3) participate, including making a claim, in any investigation of any matter that the worker believes is unlawful under the PHEW. Although originally related to issues related to the COVID pandemic, the law has expanded to include all health and safety concerns. The PHEW also allows workers to use their own personal protective equipment (PPE) without repercussions under certain conditions. PHEW requires workers to file a complaint with the state before filing a complaint.
- “Ban the Box” A/K/A Colorado’s Chance to Compete Act: The box ban applies to all private employers, prohibiting them (1) from advertising that potential applicants with criminal backgrounds need not apply (including such a statement in the application ); (2) ask the applicant about their criminal history in the original application; and (3) requiring an applicant to disclose their criminal history on a first application. Employers can inquire about criminal history after the initial application process. The law does not prohibit background checks. Limited exceptions are provided by law.
- Colorado’s Equal Pay for Equal Work (EPEW) Act: EPEW applies to all employers who employ at least one person in Colorado. Employers are required by law to provide a description of compensation and benefits in job postings for jobs located at a Colorado job site or for work likely to be performed in Colorado (including remote work ). Employers can post compensation within a reasonable range within certain parameters. Employers should also make reasonable efforts to post all promotion opportunities to current employers, before making a promotion decision. These promotion postings are considered job offers and must contain the required description of compensation and benefits. Note that employers are not required to post jobs or post job offers, but if they choose to do so, they must comply with the law. No advance notice is required for temporary or acting positions of six months or less. Although the law does not grant employees a private right of action, employees can file complaints with the state, which in turn can impose fines and penalties on employers.
- Individual Liability for Violations of the HFWA and Colorado Wage Law: As of January 1, 2020, people who qualify as “employers” may be held personally liable for violations of the HFWA and Colorado Wage Law (CWA) alongside their business. Violations of these laws result in serious liability, including payment of back wages, overtime, penalties, and payment of employee attorney fees. This aligns Colorado law with federal law, which for years has allowed such liability using a complex multifactor test. Although the test requires a specific analysis of the facts, essentially managers and executives with direct control over an employee’s work parameters should be concerned about personal liability.
- Payment of vacation acquired: In June 2021, the Colorado Supreme Court upheld that accrued vacation constitutes “wages” under the CWA and as such, unused vacation must be paid upon termination of employment. The term “holiday” time is broad and includes most types of employer-provided PTO. Any agreement or policy that wastes this time is unenforceable, and the method of separation does not matter. Note that employers are not required to provide vacation or PTO time (however, they are required to provide HFWA leave). Employers can cap this time at a certain number, can set accrual rates, and can limit how much and when this time can be used. Employers cannot cap the time already accumulated carried over to a later year, but can cap the maximum amount of cumulative time.
- Restrictive Covenant Agreements (Non-Compete/Non-Solicitation): Colorado recently changed the law on restrictive covenants (think non-competition (NCA) and non-solicitation of customers (NSA) agreements), making them much more difficult to enforce. This law applies ONLY covenants entered into on or after August 10, 2022. Essentially, ANCs and ANS are heavily disadvantaged and are now very difficult to enforce. NCAs are enforceable for “highly paid” individuals under the current Colorado PAY CALC order (currently individuals earning $101,250 or more), for the protection of trade secrets, AND as long as they have a reasonable range. Client NSAs have similar requirements, but the income threshold is 60% of the heavily indemnified amount. Note that this law applies to both employees and independent contractors. Some exceptions still exist for unique circumstances. The law contains certain notification requirements for new and current “employees,” and also limits the forum and choice of law for Colorado covenants for Colorado employees. Given the severe penalties now attached to the law, including potential criminal penalties, as well as the risk of individual liability, it is advisable to strictly adhere to the new law.
New Colorado laws expected to go into effect in future
- Colorado Paid Family and Medical Leave Insurance Program (FAMLI): FAMLI requires EVERYTHING Private Colorado employers (and out-of-state private employers with 10 or more Colorado employees) will provide Colorado employees with paid family and medical leave for twelve (12) to sixteen (16) weeks, beginning January 1, 2024. FAMLI leave payments will be paid either through a private insurance plan or through the state program. The program will be funded by contributions from employees and/or employers (depending on the size of the company) from January 1, 2023. Employers will have the option to opt out of the state program if they obtain a plan private or create self-insurance. privately insured plan, which is as good as, or better than, what is required by law. Both private plans must be pre-approved by the state. FAMLI covers most major life events, including but not limited to serious health conditions, caring for family members with serious health conditions, and caring for a new child (birth and adoption). Please note that no private plans have been approved and advice on this matter is not expected until the first quarter of 2023. Covered employees and employers will begin paying premiums on January 1, 2023, with the possibility of get a refund if they receive approval for an approved private plan submitted to the state before October 31, 2023.
- Penalties for wage theft and misclassification (SB 22-161): As of January 1, 2023, non-payment of wages due and payable within 14 days of written notice exposes the employer not only to payment of the amount due, but also to a penalty twice the amount due, or 1 $000, whichever is greater. If the failure to pay is shown to be willful, the penalty increases to three times the amount owed, or $3,000, whichever is greater. Additional penalties are possible in certain circumstances, and changes to the law allow class action lawsuits.
Proposed future changes
- US Department of Labor rule change on independent contractors: The DOL recently issued a proposed rule “clarifying” its position on the classification of independent contractors. Specifically, the proposed rule would reverse a 2021 ruling that made it easier for businesses to classify an individual as an independent contractor. The new rule would replace the current basic two-factor test with a more rigorous “totality of the circumstances” analysis. With the misclassification of independent contractors comes serious liability both at the state level and with wages, including potentially past overtime payments, worker compensation payments, missed benefits, double and triple penalties and payment of employee attorney fees. If enacted, companies that work with many independent contractors, especially sole proprietors, should review and, if necessary, reclassify those individuals.