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Legal Update

Jul 31, 2023

Legal Update: Colorado Peculiarities

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Seyfarth Synopsis: Seyfarth’s excellent publication “Cal-Peculiarities:  How California Employment Law Is Different,” which is updated annually, highlights the many unique aspects of the Golden State’s employment law.  Increasingly, other states have passed their own progressive employment statutes, warranting their own discussion.  Colorado is one of these states. Discussed below are two Colorado statutes that were passed in recent years.  Employers have been “caught by surprise” with respect to some of the ancillary provisions of these statutes, which are referenced in this article as the “fine print.”  

Colorado Protecting Opportunities and Workers’ Rights (POWR) Act

The POWR Act was signed into law by Governor Jared Polis on June 6, 2023, and will go into effect on August 7, 2023.  The legislation, which amends the Colorado Anti-Discrimination Act, is multifaceted.  Some of the main provisions include:

  • Lowers Burden of Proof For Harassment Claims.  The POWR Act lowers the bar to prove a claim of harassment by rejecting the long-standing “severe and pervasive” standard.  In its place, the Act adopts a standard that requires the conduct (either individually, or under the “totality of the circumstances”) be unwelcome and be subjectively offensive to the individual alleging harassment and objectively offensive to a reasonable individual who is a member of the same protected class.  The Act expressly sets forth multiple factors to be considered as part of a “totality of the circumstances” determination.
  • Supervisory Harassment.  Where an employee proves that a supervisor unlawfully harassed the employee, the POWR Act codifies what an employer must establish to assert an affirmative defense.  This includes the following:
    • The employer has established a program to prevent, deter, and protect employees from harassment.  To satisfy this this requirement, the employer must demonstrate that:  1) it “takes prompt, reasonable action to investigate or address alleged discriminatory or unfair employment practices;” and 2) it “takes prompt, reasonable remedial actions, when warranted, in response to complaints of discriminatory or unfair employment practices;”
    • The employer has communicated the existence and details of the program to both its supervisory and nonsupervisory employees; and
    • The employee has unreasonably failed to take advantage of the employer’s program.
  • Employer’s Use Of Non-Disclosure Provisions.  ThePOWR Act permits a plaintiff to present evidence that the employer against whom an action is filed entered into one or more agreements that included a nondisclosure provision involving the conduct of the same individual or individuals who are alleged in the action to have engaged in the discriminatory or unfair employment practice.  The evidence can then be considered in support of an award of punitive damages.
  • Disability Discrimination.  The POWR Act renders it more difficult for an employer to argue for application of the statutory exception to disability discrimination.
  • Previously, employers could refuse to hire, discharge, refuse to promote or demote an individual with a disability if there was no reasonable accommodation that the employer could make, the disability actually disqualifies the individual from the job, and the disability had “a significant impact on the job.”
  • The POWR Act replaces the language relating to whether “the disability has a significant impact on the job,” with language relating to whether there is a “reasonable accommodation that the employer can make with regard to the disability that would allow the individual to satisfy the essential functions of the job.”
  • Marital Status Discrimination.  The POWR Act adds “marital status” to the list of protected categories set forth in the Colorado Anti-Discrimination Act.  The Anti-Discrimination Act contains certain exceptions pertaining to couples who both work for the same employer.

The “Fine Print”

New Recordkeeping Requirements.

Pursuant to the POWR Act, Colorado employers must keep personnel or employment records for at least 5 years after the later of: 1) the date the employer made or received the record; or 2) the date of the personnel action about which the record pertains or of the final disposition of a charge of discrimination or related action.

The POWR Act also requires employers to maintain an accurate, designated repository of all written or oral complaints of “discriminatory or unfair” employment practices as defined by the Colorado Anti-Discrimination Act.  The employer’s records must include:  1) the date of the complaint; 2) the identity of the complaining party (unless the complaint was anonymous); 3) the identity of the alleged perpetrator; and 4) the substance of the complaint.

As discussed above, to establish an affirmative defense in a situation where a supervisor is the alleged harasser, the employer not only has to show that it has a program to prevent harassment, but that it actively administers its program so that issues of discriminatory or unfair employment practices are promptly addressed or remediated.  Accordingly, keeping records in this statutorily-mandated “repository” that reflect the employer’s response to each complaint is advisable.

Restrictions on Non-Disclosure Agreements.

The POWR Act severely restricts the employer’s ability to include non-disclosure provisions in employment-related agreements, including, but not limited to, settlement and severance agreements.  Here are some of the highlights of the new legislation:

  • A non-disclosure provision must be mutual, and must state that it does not restrain the employee or prospective employee from disclosing the underlying facts of any alleged discriminatory or unfair employment practice;
  • A non-disclosure provision must state that it does not prohibit disclosure of underlying facts, including the existence and terms of a settlement agreement, to the employee’s or prospective employee’s immediate family members, religious advisor, medical or mental health provider, mental or behavioral health therapeutic support group, legal counsel, financial advisor or tax preparer;
  • A non-disclosure provisions must state that it does not restrain the employee or prospective employee from disclosing underlying facts, including the existence and terms of a settlement agreement,to a local, state or federal agency for any reason, without first notifying the employer;
  • A non-disclosure provisions must state that it does not restrain the employee or prospective employee from disclosing underlying facts, including the existence and terms of a settlement agreement, in response to legal process, without first notifying the employer;
  • The agreement must state that if the employer disparages the employee or prospective employee to a third party, the employer may not seek to enforce a non-disparagement or non-disclosure provision;
  • A non-disclosure provision must state that the disclosure of any underlying facts of any alleged discriminatory or unfair employment practice does not constitute disparagement;
  • Significant parameters are placed around the use of liquidated damages provisions for violation of non-disclosure provisions;
  • An addendum, signed by all parties, must be attached to the agreement attesting compliance with these new non-disclosure restrictions; and
  • In the event that restrictions on the use of non-disclosure provisions are violated, a penalty of $5,000 per violation is available, in addition to the right to recover actual damages, and reasonable costs and attorney fees.

Colorado Equal Pay For Equal Work Act (“EPEWA”)

This legislation became effective on January 1, 2021.  Employers with employees in Colorado are required to comply with the EPEW, including those with remote employees working from Colorado.  The EPEWA prohibits employers from paying an employee of one sex (or sex in combination with another protected status) a wage rate less than the rate paid to an employee of a different sex for “substantially similar work.”  “Sex” is defined as “an employee’s gender identity.”   

The “Fine Print”

The EPEW contains a number of provisions intended to effectuate the purpose of the statute.  Unwary out-of-state employers have found themselves to be in violation of these ancillary provisions, which include, but are not limited to, provisions:

  • requiring that employers make reasonable efforts to announce, post, or otherwise make known all opportunities for promotion to all current employees on the same calendar day and prior to making a promotion decision.  (Thus, effectively prohibiting “tap on the shoulder” promotions);
  • requiring that each posting include the hourly or salary compensation (or the range of compensation), and a general description of all of the benefits and other compensation to be offered to the hired applicant.  (The Colorado Department of Labor and Employment has taken the position that the requirement does not apply to out-of-state employers that have no Colorado staff);
  • prohibiting employers from seeking, or relying on, wage rate history of prospective employees when determining a wage rate;
  • prohibiting employers from requiring that employees not disclose their wage rates;
  • prohibiting employers from discharging, disciplining, discriminating or retaliating against, threatening, or interfering with an employee or other person because they have inquired about, disclosed, compared, or otherwise discussed the employee’s wage rate; and
  • requiring that employers keep records of job descriptions and wage rate history for each employee during the duration of employment plus two years after the end of employment so that they can be used to determine if a pattern of wage discrepancy exists.

Conclusion 

Colorado has joined in the practice adopted by an increasing number of states to pass their own employee-protective statutes.  Employers with employees working in Colorado are best served by educating themselves regarding the growing number of Colorado peculiarities.