New Employment Laws Go Into Effect August 10, 2022
August 9, 2022
By: Colin A. Walker
The Colorado Legislature passed a number of important new employment laws in the 2022 legislative session. These laws are discussed in a previous blog post (May 25, 2022). Some of the new laws went into effect immediately. Others will become effective in 2023. However, several of the most significant ones will become effective this Wednesday, August 10, 2022.
Amendments to the Colorado law governing covenants-not-to-compete is one of them. Beginning August 10, to be bound by an enforceable covenant not to compete, the employee will have to earn at least the threshold amount for highly-compensated workers under the Colorado PAY CALC Order. In 2022 that is $101,250. For a non-solicitation of customers agreement to be enforceable, the employee will have to earn more than 60% of the threshold amount for highly-compensated workers under the Colorado PAY CALC Order. In 2022, that is $60,750. They will go up each year.
Covenants not to compete will no longer be enforceable simply because an employee is an executive or manager (they may still qualify if they qualify for the other requirements of the new law).
Covenants not to compete may not prohibit employees from using or disclosing information that arises from their general training, knowledge, skill, or experience or information that the employee otherwise has a right to disclose.
In addition, employers will have to give employees notice prior to signing the covenant not to compete. For current employees, the employer must give written notice at least 14 days before the earlier of:
- The effective date of the covenant, or
- The effective date of any additional compensation or change in the terms or conditions of employment that provides consideration for the covenant.
For prospective employees, notice must be give before the employee accepts the offer of employment.The notice must be:
- In a separate document from the agreement (e.g., a cover letter);
- In clear and conspicuous terms;
- In the language in which the employee and the employer communicate;
- Signed by the employee.
The law provides that the notice is sufficient if:
- It is provided with a copy of the agreement;
- Identifies the agreement by name an states that the agreement contains a covenant not to compete that could restrict the employee’s options for subsequent employment following separation; and
- Directs the employee to the specific sections or paragraphs of the agreement that contains the covenant.
Choice of law and venue provisions which require application of law other than Colorado’s or venue in other states for employees working primarily in Colorado are void under the new law.
These are very significant changes. Any employers who have covenants not to compete (including non-solicitation agreements) should take immediate action and consult with employment counsel to make they are in compliance. If they are not, their non-compete and non-solicitation agreements may be unenforceable and they may be subject to harsh penalties and law suits by employees.
The amendments to the Colorado Anti-Discrimination Act become effective August 10. The amendments expand the definition of “employee” to include individuals in domestic service. They extend the time limit to file a charge of discrimination from 180 days to 300 days after the alleged discrimination, which is consistent with the federal employment discrimination statutes. In addition, they expand the remedies for age discrimination claims to make them more consistent with other forms of discrimination.
Certain amendments to the Colorado Wage Claim Act also go into effect August 10. They include:
- Changes penalties for failing to provide information to the CDLE from a misdemeanor to a penalty of $50 per day;
- Expands CDLE enforcement power including ability to investigate a wage complaint on behalf of a group of similarly-situated workers;
- Expands scope of retaliation protection and increases penalties for retaliation;
- Increases enforcement authority of Attorney General.
Amendments which go into effect January 1, 2023 include: requiring written notice to employee that deductions will be made from wages; changing penalties for failure to pay wages; changes employer’s right to recover attorneys’ fees if it prevails in wage claim case.
Colorado continues to change and expand its employment laws. Prudent employers will pay careful attention to the activity of the Colorado Legislature and consult competent employment counsel to make sure they are in compliance.