Employment relationship

State-specific laws

What state-specific laws govern the employment relationship?

Colorado Revised Statutes – Title 8 – Labour and Industry contains the majority of the laws governing employer-employee relationships, including wages, workers’ compensation and employment security (unemployment compensation). Title 24 – Government-State contains the state’s anti-discrimination and fair employment practices laws.

Colorado’s Administrative Regulations (CCR) include rules governing employment-related matters. 3 CCR 708 contains rules related to Colorado’s Civil Rights Commission and enforcement of the state’s Anti-Discrimination Act. 7 CCR 1101 to 1103 includes regulations concerning wages, employment security (unemployment compensation), wages, employment verification, restrictions on the use of credit report and social media and worker’s compensation.

Who do these cover, including categories of workers?

Depending on the specific provision, these laws generally cover employees. Some provisions, including the anti-discrimination laws, also apply to applicants for employment.

Misclassification

Are there state-specific rules regarding employee/contractor misclassification?

Colorado has a misclassification statute related to misclassifying independent contractor status under the Employment Security Act (unemployment compensation) (C.R.S. §8-72-114). It provides for penalties of up to $5,000 per misclassified employee for the first misclassification with willful disregard, and up to $25,000 per misclassification for subsequent willful misclassifications. The employer will also be ordered to pay appropriate premiums for unemployment insurance, including back premiums, and interest. Colorado follows the control/supervision test for independent contractors, which is detailed in C.R.S. §§ 8-4-101; 8-40-202; and 8-70-115, and summarized by the Colorado Department of Labor and Employment here.

Contracts

Must an employment contract be in writing?

An express contract for employment may be made either orally or in writing and may also be created by conduct, which is said to be a contract implied in fact.

An implied contract can arise out of an employment manual, handbook, or other document reflecting company policy and practice.

The statute of frauds voids unwritten agreements that cannot be performed within one year, so an oral contract extending beyond one year must be in writing (see C.R.S. §38-10-112).

Are any terms implied into employment contracts?

Every contract in Colorado contains an implied covenant of good faith and fair dealing. However, in the employment context, the Colorado Court of Appeals has refused to extend the implied covenant of good faith and fair dealing to at-will employment contracts. The Colorado Supreme Court has declined to recognize a tort claim for breach of an express covenant of good faith and fair dealing, concluding that a breach of an express covenant may result in damages for breach of contract only, not as a tort.

Are mandatory arbitration agreements enforceable?

In Colorado, arbitration is a matter of contract and ordinary principles of contract interpretation apply. Arbitration is a favoured means of dispute resolution in Colorado courts. Without grounds based in a contract to find the arbitration agreement unenforceable, mandatory arbitration agreements may be enforced. Likewise, mandatory arbitration agreements may also include class and/or collective action waivers, generally speaking.

How can employers make changes to existing employment agreements?

Except as stated in any written agreement, parties may alter written or unwritten contracts orally. However, best practice would be to record any contractual changes in writing, signed by both parties.