Changing Times Creates a Minefield in Employment Law: Summary of Recent and Upcoming Changes in Employment Law | Fairfield and WoodsPC
The world has changed in the last few years, and Colorado is no different. A plethora of new labor laws have been enacted in Colorado that broaden the protections and rights of workers generally. Businesses need to stay abreast of these changes, as many of the new laws have significant penalties for employers who fail to comply.
This customer mailing is intended to remind customers of some of these changes and to provide an update on some changes planned over the next year. Below is a summary; The laws described are much more complex in practice and do not cover all the changes of recent years. Fairfield and Woods is ready to answer your questions about these changes and to help ensure your operations are up to date.
Laws recently amended or enacted in Colorado (last two years)
- Colorado’s Healthy Families and Workplaces Act (HFWA): From January 1, 2022, EVERYONE Private employers in Colorado, regardless of size, are subject to the HFWA. This law requires employers to grant one hour of vacation for every 30 hours worked by an employee. HFWA vacation is limited to 48 hours, with unused vacation being carried over to the next year. The HFWA applies to all employees, including temporary workers and part-time employees. Accrued HFWA leave may be taken for a variety of health reasons and domestic violence related leave (“Safe Leave”). Additionally, employers are required to provide Public Health Emergency (PHE) leave for a total of up to 80 hours per PHE (think pandemic-like situations), including the 48 hours required even in the absence of a public health emergency to work for specific PHE to be used related purposes. In addition, the HFWA restricts what documentation an employer can request in relation to the various leave requests. For violations of the HFWA, employers face back wage payments, penalties, legal fees and, in serious cases, fines. There is an exception for employers who have a PTO or similar policy that covers all or more than the requirements of the HFWA. HFWA leave is considered a form of “wage” and should be treated as such without further guidance upon separation.
- Colorado’s Protected Health/Safety Voice and Whistleblowing 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, or the threat of, potential workplace health and safety violations; (2) to object to labor practices that the worker believes to be unlawful under PHEW; or (3) participate, including filing a claim, in any investigation relating to any matter that the employee believes is unlawful under PHEW. While the law was originally linked to issues related to the COVID pandemic, it has expanded to include any health and safety concerns. PHEW also allows workers, under certain conditions, to use their own personal protective equipment (PPE) non-reactively. PHEW requires workers to file a complaint with the state before filing a lawsuit.
- “Ban the Box” A/K/A Colorado’s chance to enter the competition: Ban the Box applies to all private employers and prohibits them from (1) advertising that prospective applicants with a criminal record do not need (including such a statement in the application); (2) to ask an applicant about his/her criminal record at the time of the initial application; and (3) require an applicant to disclose their criminal history on an initial application. Employers can inquire about criminal records after the initial application process. The law does not prohibit background checks. There are limited exceptions provided by the law.
- Colorado’s Equal Pay for Equal Work Act (EPEW): EPEW applies to all employers who employ at least one person in Colorado. The law requires employers to provide a description of compensation and benefits in their job postings for positions that are located at a Colorado work location or for work that can be performed in Colorado (including remote work). Employers can book compensation within a reasonable framework within certain parameters. Employers must also make reasonable efforts to disclose all promotion opportunities with current employers before making a promotion decision. These promotions are considered job postings and must include the required description of compensation and benefits. Note that employers are not required to post vacancies or have job postings, but if they choose to do so, they must comply with the law. Notice of termination is not required for temporary or temporary positions of six months or less. While the law does not give employees a private right to sue, employees can lodge complaints with the state, which in turn can impose fines and penalties on employers.
- Individual liability for violations of the HFWA and the Colorado Wage Act: From January 1, 2020, individuals who are considered “employers” may be held personally liable for violations of the HFWA and the Colorado Wage Act (CWA) in addition to their business activities. Violations of these laws result in serious liability, including payment of arrears of wages, overtime, penalties, and payment of employee attorneys’ fees. This aligns Colorado law with federal law, which has allowed such liability for years using a complex multi-factor test. While the test requires fact-specific analysis, essentially senior 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 affirmed that accrued vacation time constitutes “wages” for purposes of the CWA and, as such, unused vacation time must be paid when a separation from employment occurs. The term “vacation” is broad and includes most types of employer-provided PTO. Any agreement or policy that lapses by this time is unenforceable and the method of separation does not matter. Note that employers are not required to provide leave or PTO time (although they must provide HFWA leave). Employers can limit this time to a certain number, set savings rates, and limit how much and when this time can be used. Employers cannot limit how much accumulated time can be carried over to a subsequent year, but they can set a cap on the maximum creditable time.
- Restrict covenant agreements (non-compete / non-solicitation): Colorado recently changed the law on restrictive agreements (think non-compete agreements (NCAs) and non-client agreements (NSAs)), making them significantly more difficult to enforce. This law applies ONLY to restrictive agreements entered into on or after August 10, 2022. Essentially, NCAs and NSAs are severely penalized and are now very difficult to enforce. NCAs are enforceable with respect to “highly compensated” individuals under the current Colorado PAY CALC Order (currently individuals earning $101,250 or more) to protect trade secrets, AND as long as they are reasonable. 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 special circumstances. The law provides certain notification requirements for both new and current “employees” and also limits jurisdiction and choice of law for restrictive agreements with Colorado for Colorado employees. Given the severe penalties now associated with the law, including potential criminal sanctions, as well as the possibility of individual liability, it is recommended that strict adherence to the new law be observed.
New laws in Colorado are scheduled to go into effect in the future
- Colorado’s Paid Family Health Insurance Program (FAMLI): FAMLI requires EVERYONE 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 effective January 1, 2024. FAMLI leave payments are paid either through private health insurance or through the government program. The program will be funded from employee and/or employer contributions from January 1, 2023 (depending on the size of the company). insured private plan that is as good as or better than required by law. Both private plans must be approved in advance by the state. FAMLI covers most major life events including but not limited to major health issues, caring for family members who have major health issues and caring for a new child (birth and adoption). Please note that no private plans have been approved and guidance on this subject is not expected until sometime in the first quarter of 2023. Workers and insured employers will begin paying premiums beginning January 1, 2023, with an opportunity to receive a refund if they receive approval for an approved private plan submitted to the state before October 31, 2023 became.
- Penalties for Wage Theft and Misclassification (SB 22-161): Beginning January 1, 2023, an employer’s failure to pay wages due and owed within 14 days of written notice will be subject not only to payment of the amount due, but also to a penalty of double the amount owed or $1,000, depending on: which amount is higher. If the non-payment is found to be intentional, the penalty increases to three times the amount owed or $3000, whichever is greater. Additional penalties are possible in certain circumstances, and the law changes allow for class action claims.
Proposed upcoming changes
- Change in U.S. Department of Labor regulations for independent contractors: The DOL recently issued a proposed rule that “clarifies” its position on the classification of independent contractors. Specifically, the proposed rule would overturn a 2021 ruling that made it easier for companies to classify an individual as an independent contractor. The new rule would replace the current two-core factor test with a more rigorous “all of the circumstances” analysis. Independent contractor misclassification carries serious liability at both the state and wage levels, including possible past overtime pay, employee compensation, missed benefits, double and treble penalties, and payment of employee attorney fees. When they go into effect, companies that work with many independent contractors, especially sole proprietors, should review those individuals and reclassify them as necessary.