As Coloradans rang in 2015, new Colorado employment laws and regulations were also ushered into effect. These laws, all effective January 1, 2015, add protections and generally benefit employees while likely creating new compliance requirements (and, potentially, headaches) for Colorado employers.
Colorado Minimum Wage
Effective January 1, 2015, Colorado’s minimum wage rose $.23 — to $8.23. The minimum cash wage for tipped employees who are subject to the tip credit is now $5.21. This raise originates from a 2006 constitutional amendment that tied Colorado’s minimum wage to inflation. Although the raise should come as no surprise, employers who have minimum-wage employees must ensure that it is implemented for those employees and that employment-law-related posters are updated or re-posted.
Colorado Wage Protection Act of 2014
The Wage Protection Act of 2014 (the “2014 Act”) amends Colorado’s Wage Claim Act by establishing a procedure for the Colorado Division of Labor (“CDOL”) to investigate, hear, and decide complaints for unpaid wages or compensation of $7,500 or less per employee, increasing fines that can be imposed on employers, and providing for attorneys’ fees for employees paid less than the applicable minimum wage.
Before the 2014 Act, employees were forced to bring claims for unpaid wages within sixty (60) days of termination in order for penalties to apply. The 2014 Act eliminates that sixty-day deadline, so now only the two-year statute of limitations (three years in the case of willful conduct) applies.
The 2014 Act also streamlines the process for employees or the CDOL to file a complaint against an employer for unpaid wages and establishes a structure for hearing wage-related complaints. Although the CDOL already had a duty to investigate unpaid wages and institute enforcement actions at its discretion, the 2014 Act sets forth a detailed administrative procedure for claims of $7,500 or less (exclusive of penalties and fines), including hearings similar to those conducted in unemployment matters. Employees may opt in or out of this new administrative process, or they may instead simply file a wage complaint in court. Thus, there is no administrative exhaustion requirement for employees. There is also an appeals process from the original hearing, which could result in the matter ending up in Colorado state court. This procedure, then, creates more structure for wage complaints, which will be an added burden to employers. Note that the new administrative procedure applies only to wages and compensation earned on or after January 1, 2015.
In addition, the 2014 Act states that an employee who prevails on a minimum-wage claim is entitled to recover reasonable attorneys’ fees and court costs from the employer. This entitlement is different from the original law, which allowed discretion in awarding prevailing plaintiffs’ attorneys’ fees and costs.
The 2014 Act also permits the CDOL to issue fines to employers who fail to comply. For example, the CDOL or a hearing officer, after a hearing, may impose, on an employer who without good-faith legal justification fails to pay wages due, a fine of up to $50 per day per employee, commencing from the date the wages first become due and payable. Moreover, the CDOL or hearing officer is required to impose a fine of $250 on an employer who fails to respond to a notice of complaint or any other notice from the CDOL to which a response is required. This fine may be waived or reduced only upon a finding of good cause. In addition, the 2014 Act requires employers to retain records reflecting the information contained in an employee’s itemized pay statement for at least three years after the wages or compensation were due, and must make these records available to the CDOL upon request. The CDOL may fine an employer who violates this requirement up to $250 per employee per month, up to a maximum of $7,500.
Employers, then, are well served to respond promptly to and take seriously any complaint of unpaid wages, particularly from the CDOL, and consider involving legal counsel prior to submitting a response. Employers should ensure compliance with the process and analyze any alleged basis for denying payment of wages to ensure a good-faith legal reason. Employers should also ensure that their record retention policies and procedures comply with the 2014 Act, as well as with other state and federal record retention requirements. Employers who fail to comply will see increased scrutiny and penalties.
Colorado’s Job Protection and Civil Rights Enforcement Act of 2013
Effective January 1, 2015, the Job Protection and Civil Rights Enforcement Act of 2013 (the “2013 Act”), which amends the Colorado Anti-Discrimination Act (“CADA”), the state law prohibiting employment discrimination because of disability, race, creed, color, sex, sexual orientation, religion, age, national origin, or ancestry, adds significant remedies for Colorado employees pursuing discrimination-related claims against employers. Beginning with cases arising on or after January 1, 2015, employees pursuing claims under the CADA may now recover both economic and noneconomic damages from employers (defined as businesses that have one or more employees) who are found liable for engaging in workplace discrimination.
Previously, the CADA permitted employee-plaintiffs to collect economic damages (i.e., back and future wages) only when they succeeded on their discrimination claims. Although federal antidiscrimination laws permit the recovery of noneconomic damages (i.e., emotional distress, punitive damages, etc.) for discrimination claims, those laws did not apply to employers with fewer than 15 employees, so small businesses were subject to smaller potential damages, making the filing of a CADA-related complaint less appealing for employees and their attorneys. Now, however, under the 2013 Act, employee-plaintiffs may collect, if successful on their CADA-related complaint, noneconomic damages in addition to economic damages. The expanded remedies also include reinstatement, attorneys’ fees, and costs to prevailing employee-plaintiffs (but not to employers, unless the complaint was frivolous, groundless, or vexatious), and, in cases of age discrimination, liquidated damages. Although the 2013 Act adopts the federal damages caps for noneconomic damages, including punitive damages (and adds caps of $10,000 for employers with one to four employees and $25,000 for employers with five to fourteen employees), these caps do not apply to economic damages (although they also, generally, have limitations—for example, requiring mitigation of damages and limiting back-pay damages to two years).
Colorado employers with fewer than fifteen employees, then, are likely to see more CADA-related charges and employment discrimination lawsuits because of the significant increase in the plaintiff-employee’s potential recovery. These employers who manage small businesses will see the most negative impact from the 2013 Act, as they will see a rise in litigation costs related to an unfamiliar and little-used law. Moreover, given that the remedies available under Colorado law are now largely the same as under federal law, employers at businesses of every size should expect to see more claims filed solely under the CADA (particularly claims related to state-only protected categories, like sexual orientation). These complaints will be filed in state (as opposed to federal) court, and an employer may have no ability to remove the case to federal court. This is added settlement leverage for an employee-plaintiff, as it is commonly believed, particularly by employees and plaintiffs’ attorneys, that there are advantages to filing claims in state court, specifically that state courts are a more favorable venue for employee-plaintiffs than federal courts. In addition, the procedure is often more onerous in state courts, resulting in higher litigation costs.
To cope with and prepare for these new regulations and remedies, employers, particularly those working at small businesses, must ensure that they properly train all employees, including managers, to prohibit discrimination and retaliation in the workplace; update and/or create antidiscrimination handbooks and policies to prohibit discrimination protected under both state and federal law; and properly investigate claims of discrimination, harassment, and retaliation in the workplace.