Changing Times Creates Employment Law Minefield: Summary on Recent and Upcoming Changes to Employment Law
November 2, 2022
By: Adrian P. Castro
Happy Halloween everyone! Colorado law has provided a lot of tricks for employers recently, but not many treats. In this post, Adrian Castro of our employment law department tells us about some recent and upcoming employment laws about which all Colorado lawyers should be aware.
Changing Times Creates Employment Law Minefield: Summary on Recent and Upcoming Changes to Employment Law
The world has changed over the last few years, and Colorado is no different. A plethora of new employment laws have been enacted in Colorado generally expanding employee protections and rights. Businesses must keep on top of these changes, as many of the new laws create significant penalties for non-compliant employers.
This client broadcast is meant to remind clients of some of these changes, and provide an update on some changes scheduled within the next year. Below is a summary; the laws described are significantly more complex in practice, and it does not cover every change in the last few years. Fairfield and Woods is more than willing to answer any questions you may have on these changes, as well as assist in making sure your operations are update.
Colorado Laws Recently Changed or Enacted (Past Two Years)
- Colorado’s Healthy Families and Workplaces Act (HFWA): As of January 1, 2022, ALL Colorado private employers, regardless of size, are subject to the HFWA. This law requires employers to provide one hour of accrued leave for every 30 hours worked by an employee. HFWA leave caps out at 48 hours, with unused accrued leave rolling over into the next year. The HFWA applies to all employees, including temporary and part-time employees. HFWA accrued leave can be utilized for a number of health related reasons and leave related to domestic violence (“Safe Leave”). In addition, employers must provide “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, to be used for certain PHE related purposes. Furthermore, HFWA restricts what documentation an employer can request with respect to the different leave requests. Violations of the HFWA subject employers to possible payment of back pay, penalties, employee attorney fees, and in serious cases fines. There is an exception for employers that have a PTO or similar policy in place that covers all or greater than what is required under the HFWA. HFWA leave is considered a form of “wages,” and should be treated as such at separation absent further guidance.
- Colorado’s Protected Health/Safety Expression and Whistleblowing Law (PHEW): Passed in July 2020 and recently amended, this law protects “workers” (including independent contractors) from retaliation and interference for: (1) raising concerns about potential workplace violations of health and safety rules, or threats thereof; (2) opposing workplace practices the worker believes is unlawful under PHEW; or (3) participating, including making a claim, in any investigation as to any matter the worker believes is unlawful under PHEW. While originally tied to COVID pandemic related issues, the law expanded to include all health and safety concerns. PHEW also allows workers to use their own personal protective equipment (PPE) without repercussion under certain conditions. PHEW requires workers to file a complaint with the state prior to filing a lawsuit.
- “Ban the Box” A/K/A Colorado’s Chance to Compete Act: Ban the Box applies to all private employers, prohibiting them from (1) advertising that potential applicants with criminal histories need not apply (including such a statement in the application); (2) asking an applicant about their criminal history on the initial application; and (3) requiring an applicant to disclose their criminal history on an initial application. Employers can inquire about criminal history after the initial application process. The law does not prohibit background checks. There are limited exceptions provided for by the statute.
- Colorado’s Equal Pay for Equal Work Act (EPEW): EPEW applies to all employers that employ at least one person in Colorado. The act requires the employer to provide a description of compensation and benefits in its job postings for jobs located at a Colorado work site or for work capable of being performed in Colorado (includes remote work). Employers may post compensation within a reasonable range within certain parameters. Employers must also make reasonable efforts to post all opportunities for promotion to current employers, prior to making a promotion decision. These promotion postings are considered job postings and must contain the required description of compensation and benefits. Note that employers are not required to post jobs or have job postings, but if they elect to do so they must comply with the statute. Notice is not required for temporary or interim positions of six months or less. While the act does not provide employees with a private right of action, employees can file complaints with the State, who in turn can levy fines and penalties on employers.
- Individual Liability for Violations of the HFWA and the Colorado Wage Act: As of January 1, 2020, individuals that qualify as “employers” may be held personally liable for violations of the HFWA and the Colorado Wage Act (CWA) alongside their business. Violations of these statutes carry 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 permitted such liability utilizing a complex multi factor test. While the test requires a fact specific analysis, essentially managerial and executive individuals with direct control over an employee’s work parameters should be concerned about personal liability.
- Payment of Earned Vacation Time: In June 2021, the Colorado Supreme Court confirmed that accrued vacation time constitutes “wages” under the CWA, and as such unused vacation time must be paid when a separation of employment occurs. The term “vacation” time is broad, and includes most types of employer provided PTO. Any agreement or policy that forfeits this time is unenforceable, and the method of separation does not matter. Note employers are not obligated to provide vacation or PTO time (however they are required to provide HFWA leave). Employers can cap such time at a certain number, can set the rates of accrual, and can limit how much and when such time can be used. Employers cannot cap how much already accrued time carries over to a subsequent year, but can place a cap on the maximum amount of accruable time.
- Restrict Covenant Agreements (Non-Compete / Non-Solicitation): Colorado recently changed the law on restrictive covenants (think non-competes (NCA) and customer non-solicitation (NSA) agreements) making them much harder to enforce. This law applies ONLY to restrictive covenants entered into on or after August 10, 2022. Essentially, NCAs and NSAs are strongly disfavored and are now very difficult to enforce. NCAs are enforceable as to “highly compensated” individuals under the current Colorado PAY CALC Order (currently individuals making $101,250 or more), for the protection of trade secrets, AND so long as they are reasonable in scope. Customer NSAs have similar requirements, but the income threshold is 60% of the highly compensated amount. Note that this law applies to both employees and independent contractors. Certain exceptions still exist for unique circumstances. The statute contains certain notice requirements for both new and present “employees”, and also limits the forum and choice of law for restrictive covenants to Colorado for Colorado employees. Given the serious penalties now tied to the statute, including potential criminal penalties, as well as the potential for individual liability, strict adherence to the new law is advised.
New Colorado Laws Scheduled to Take Effect in the Future
- Colorado’s Paid Family and Medical Leave Insurance Program (FAMLI): FAMLI requires ALL Colorado private employers (and out of state private employers with 10 or more Colorado employees) to offer Colorado employees paid family and medical leave of twelve (12) to sixteen (16) weeks, starting January 1, 2024. FAMLI leave payments will be paid either through a private insurance plan or through the state’s program. The program will be funded by employee and/or employer contributions (depending on the size of the business) starting January 1, 2023. Employers will have the option of opting out of the state program if they obtain a private plan or create a self-insured private plan, which is as good, or better, than what is required under the law. Both private plans must be approved in advance by the State. FAMLI covers most major life events, including but not limited to serious health conditions, caring for family member’s suffering from serious health conditions, and to care for a new child (birth and adoption). Please note no private plans have been approved, and guidance on this issue is not expected until sometime in the first quarter of 2023. Employees and covered employers will begin making premium payments in January 1, 2023, with the ability to obtain a refund if they receive approval for an approved private plan submitted to the State prior to October 31, 2023.
- Wage Theft and Misclassification Penalties (SB 22-161): Starting January 1, 2023, failure to pay wages due and owing within 14 days of written notice subjects an employer to not only payment of the amount due, but also a penalty two times the amount owed, 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 $3000, whichever is greater. Additional penalties are possible under certain circumstances, and the changes to the law permit for class action based claims.
Proposed Upcoming Changes
- US Department of Labor Change 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 rescind a 2021 ruling that made it easier for businesses to classify an individual as an independent contractor. The new rule would replace the current two core factor test with a more stringent “totality-of-the-circumstances” analysis. Independent contractor misclassification comes with serious liability at both the state and wage levels, including potentially past overtime payments, workers comp payments, missed benefits, double and triple penalties, and the payment of the employee’s attorney fees. If enacted, businesses that work with many independent contractors, especially solo contractors, should review and if necessary reclassify such individuals.