Legal Alerts

Colorado 2019 Labor & Employment Law Updates

Denver, Colo. (February 10, 2020) - 2019 was an active year for Colorado labor law, with the legislature and courts making many changes that will impact employers in the state. Below is a brief summary of those changes along with some new items to watch for as we head into 2020, so that employers can start the new year off on the right foot.

New Colorado Overtime and Minimum Pay Standards Rule

On January 22, 2020, the Colorado Department of Labor and Employment (CDLE) adopted its proposed Colorado Overtime and Minimum Pay Standards Order (COMPS), which serves to update and replace all prior Colorado Minimum Wage Orders. Such prior orders had been widely viewed as unclear and confusing. The COMPS Order, which also covers more industries and employers than the prior Minimum Wage Orders, will become effective on March 16, 2020, and will not only cover minimum wage, but also will provide new rules regarding salary thresholds for exempt employees, rest periods, and other related wage and hour standards. For example, as of July 1, 2020, the minimum salary required to be exempt will be $684.00 per week ($35,568 per year). It will then increase to $778.85 per week ($40,500 per year) on January 1, 2021, and will continue to increase on January 1 of subsequent years.

Minimum Wage Increase

On January 1, 2020, Colorado’s minimum wage increased from $11.10 per hour to $12.00 per hour. For tipped employees, the minimum wage increased from $8.08 per hour to $8.98 per hour.

In addition to the state increase, the Colorado General Assembly repealed its prohibition on local governments establishing minimum wage laws, which allowed the Denver City Council to set its local minimum wage greater than the state minimum wage. As of January 1, 2020, employers in Denver must pay their employees a higher minimum wage of $12.85 per hour.

Equal Pay for Equal Work

On May 23, 2019, Governor Jared Polis signed Senate Bill 19-085, also known as the Colorado Equal Pay for Equal Work Act, into law. The Act, which will take effect on January 1, 2021, will impose new obligations on Colorado employers regarding hiring practices, promotion procedures, and recordkeeping requirements. Specifically, the Act prohibits employers from discriminating between employees on the basis of sex (which includes gender identity). It also provides that no employer may pay an employee of one sex a wage rate less than that of an employee of a different sex for substantially similar work (unless it is based on one of the very limited enumerated exceptions detailed in the Act).

The Act also prohibits employers from asking prospective employees about their wage rate histories and from discriminating or retaliating against prospective employees for not disclosing their wage rate history. In addition, it requires employers to disclose compensation in job postings, alert current employees about promotion opportunities, and more.

Although this law does not go into effect until next year, employers should start preparing to comply with this new law this year. Employers should consider performing pay audits of their workforce to determine whether any pay disparities may exist so that they can be remedied. They should also consider establishing records of employees’ job descriptions and wage rates.

For more information about this law, see our blog post “Colorado’s Equal Pay for Equal Work Act: What Employers Need to Know Before 2021” from June 2019.

Colorado Bans the Box

In May 2019, Governor Polis signed House Bill 1025, better known as the “Ban the Box” law, which has since been enacted as the Colorado Chance to Compete Act (C.R.S. § 8-2-130). In doing so, Colorado joined the growing number of states that have passed legislation aimed at removing the check box on job applications that asks if applicants have a criminal record. Private employers are specifically prohibited from (1) stating in an advertisement or on an application for a position of employment that a person with a criminal history may not apply for the position, (2) inquiring into an applicant’s criminal history on an initial application for a position of employment, and (3) requiring the disclosure of an applicant’s criminal history on an initial application for a position of employment.

This new law does not prevent an employer from conducting background checks. House Bill 1025 began to apply to Colorado private employers with 11 or more employees on September 1, 2019, and will apply to all Colorado private employers as of September 1, 2021.

For more information about how the new law changes what employers can and cannot ask applicants, see our blog post “Colorado Joins the Growing Number of States That ‘Ban The Box’” from April 2019.

Willful Failure to Pay Wages Will Be a Criminal Offense

As of January 1, 2020, Colorado employers can now face criminal charges if they intentionally refuse to pay or underpay employees. Also, any employer that fails to pay an employee at least the minimum wage is subject to criminal liability and may face misdemeanor charges and/or fines. This means that employers and their agents must not intentionally deny wages to employees for the purpose of saving money or for other enumerated unlawful reasons, such as annoyance or harassment. Inability to pay is not a defense, meaning that even if an employer is unable to pay wages owed due to certain adverse financial conditions, criminal liability may nonetheless attach if a violation occurs.

For more information, see our client alert “Beginning in 2020, Willful Failure to Pay Wages Will Be a Criminal Offense in Colorado” from June 2019.

Colorado Employers Have Punitive Remedies When Employees Commit Theft

Last summer, the Colorado Supreme Court held that plaintiffs may pursue both civil theft and breach of contract claims in the same litigation, reasoning that the duties owed under a contract concerned markedly different conduct than what was proscribed by the civil theft statute. The Colorado civil theft statute (C.R.S. § 18-4-405) is a powerful tool for plaintiffs because it is both punitive and compensatory. A successful plaintiff proceeding under the statute is entitled to financial recovery of the greater of $200 or three times the loss suffered, in addition to the return of the stolen property and an award of attorney fees and litigation costs. The ruling has broad implications across the spectrum of employment litigation throughout Colorado because aggrieved employers now have powerful punitive remedies in the face of employee theft. The opinion is published as Bermel v. BlueRadios, Inc. (2019 CO 31).

To learn more about this decision, see our client alert “Colorado Supreme Court Rules Judge-Made Economic Loss Rule Does Not Bar Recovery for Concurrent Civil Theft, Breach of Contract Claims” from June 2019.

Colorado’s Department of Labor and Employment Adopted New Rule on Vacation Pay

In Colorado, employers must pay all “earned, vested, and determinable” wages upon separation of employment. C.R.S. § 8-4-101, et seq. Although Colorado’s wage and hour law does not require employers to offer paid vacation time, vacation pay that is “earned and determinable in accordance with the terms of any agreement between the employer and the employee” is considered wages. C.R.S. § 8-4-101(14)(a)(III).

Following the recent Colorado Court of Appeals decision, Nieto v. Clark’s Market, in which an employer was allowed to enforce its policy that employees who resign without providing two-weeks notice forfeit vacation pay, the CDLE adopted new regulations that provide guidance around the forfeiture of vacation pay.

Effective December 19, 2019, employers may not allow a forfeiture of any earned vacation pay, but may have agreements on (1) whether there is any vacation pay at all, (2) the amount of vacation pay per year or other period, (3) whether vacation pay accrues all at once, proportionally each week, month, or other period, and (4) whether there is a cap of one year’s worth (or more) of vacation pay.

Thus, employers may have policies that cap employees at a year’s worth of vacation pay, but that do not forfeit any of that year’s worth. Wage Protection Act Rules 7 CCR 1103-7, Rule 2.15.

What Changes Are Expected in 2020?

The Colorado legislature is expected to address legislation in 2020 that could further impact employers. Relevant bills include:

  • Senate Bill 093, regarding arbitration in consumer and employee disputes;
  • House Bill 1089, which clarifies employee protections for lawful off-duty activities;
  • House Bill 1048, concerning a prohibition against discrimination based on traits historically associated with race; and
  • a house bill regarding discriminatory employment practices related to sexual harassment.

As we begin 2020, it is an excellent time to have your handbook and company procedures reviewed by legal counsel. The Lewis Brisbois Labor & Employment Law team is available to review your employee handbook and audit your employment practices for compliance.

For more information, visit our Labor & Employment Practice page to find an attorney in your area. 

Authors:

Meryl Mills, Partner

Shawna Ruetz, Associate

Joshua D. Kohler, Associate

Amanda E. Bauer, Associate

Kayla D. Dreyer, Associate

Editor:

Ashleigh Reif Kasper, Partner

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