Ireland Stapleton employment law attorneys Michelle Ferguson and Jenn Kinkade recently presented a webinar, 2022 Colorado Employment Law Updates, discussing various changes to Colorado employment laws over the past year, along with a reminder of employer obligations under the Equal Pay for Equal Work Act and the Healthy Families and Workplaces Act. A summary of the updates is outlined below.
C.R.S. § 8-2-113 was amended earlier this year to further curtail employers’ abilities to restrict employees from competition by way of non-compete or non-solicitation agreements.
Non-compete and non-solicitation agreements may now be utilized under fewer circumstances. Specifically, employers may enforce a non-compete, non-solicit, or confidentiality agreement only if narrowly tailored to protect the employer’s legitimate interest in protecting their trade secrets, in addition to very few other limited circumstances.
Additionally, non-compete and non-solicit agreements may only be enforced against those employees who earn a certain minimum salary, defined as the Highly Compensated Employee (“HCE”) threshold established by the Colorado Department of Labor & Employment each year. Employers also must provide notice in a separate document to employees which points them to the specific provisions of an employment agreement containing a non-compete or non-solicit obligation.
A detailed analysis of these changes is outlined here.
The Family and Medical Leave Insurance Program (“FAMLI”) is a state-administered paid leave insurance fund into which employers and employees will contribute premiums, with some exceptions.
Beginning January 1, 2023, the FAMLI Division of the Colorado Department of Labor & Employment (“CDLE”) will begin collecting FAMLI premiums. In 2023-2024, the premium is equal to 0.9% of the employee’s average weekly wage. Employers with ten or more employees must contribute at least half the premium, or 0.45%, and they must deduct the other half from employees’ wages. Employers with nine or fewer employees are not required to contribute to the premium, but still must make appropriate deductions from employees’ wages to meet the 0.45% contribution requirement. Employers can choose to pay more than half of the premium, but employees can never be required to remit more than half the premium. Premium payments are also considered “fees” (not taxes).
The FAMLI Division will begin accepting claims or making payments to eligible employees on January 1, 2024. At that time, claims must be submitted by the employee to the State, which will then coordinate the determination and provision of FAMLI benefits. FAMLI leave may be taken for a variety of reasons, including where an employee, because of the birth, adoption or placement through foster care, is caring for a new child during the first year after the birth, adoption or placement of that child; is caring for a family member with a serious health condition; has a serious health condition; has a need for safe leave (i.e., leave related to domestic violence response and shelter); or because the employee experiences any qualifying exigency leave (i.e., leave related to military service).
Under FAMLI, eligible employees receive wage replacement at less than 100% their average weekly pay, up to a maximum wage replacement of $1,100 per week through January 1, 2025. FAMLI leave is available for a maximum of 12 weeks or, for those using FAMLI due to childbirth or pregnancy complications, 16 weeks. Eligible employees are those who have earned at least $2,500 in wages over the first four of the last five completed calendar quarters immediately preceding the first day of the individual’s benefit year, or the last four completed calendar quarters immediately preceding the benefit year.
Special districts and local government employers may opt out of FAMLI altogether, in which case they are not required to contribute to FAMLI premiums or make deductions from employees’ paychecks towards the premium. However, these employers must go through several processes with strict timelines in order to properly opt out, including holding a vote of the governing body prior to the start of January 1, 2023 and giving detailed notice to employees and the CDLE of the decision to decline participation. Local governments who have not yet held a public meeting to determine their participation in FAMLI should do so immediately while conferring with counsel to ensure the proper steps are taken. Private employers may substitute a private plan for FAMLI, so long as the private plan provides the same or greater benefits to employees and for the same duration.
More information on FAMLI can be found here.
Colorado Secure Savings Program
In addition to FAMLI, the State has taken on administration of retirement benefits for Colorado employees. The Colorado Secure Savings Program (“CSSP”) requires employers to offer a retirement savings plan or enroll their eligible workers in a state-sponsored Roth IRA plan. Those employers who already offer 401(k) plans or other qualified savings plans are not required to use the CSSP state plan. To be clear, employers are only required to offer a plan to their employees, but are not required to contribute to such plan.
Registration opens “in early 2023” according to CSSP’s website. Employers who use the State plan will be required to offer auto-enrollment and facilitate employee payroll deductions into the program. The default savings rate is 5% of the employee’s gross pay, but employees may change the contribution rate and/or opt-out entirely.
Rules are still being developed by the CSSP Board, including default contribution amounts, the process for enforcement, and required disclosures to employees. The fines for non-compliance are $100 per employee, per year and can ratchet up to $5,000 annually.
HFWA and Equal Pay for Equal Work Act – Refreshers
The Healthy Families and Workplaces Act (“HFWA”) and the Equal Pay for Equal Work Act (“EPEWA”) have been in place for a couple of years, but contain significant requirements that continue to elude employers. As such, a reminder of those requirements is discussed below.
The HFWA applies to employers of all sizes and both public and private entities. Employers must provide at least 1 hour of paid sick leave for every 30 hours worked, which may be capped at 48 hours paid leave per year. For exempt employees (those who are not entitled to overtime under federal or state law, thus not required to track time worked, generally) they accrue paid leave based on a presumptive 40-hour week schedule. HFWA leave can be used to take care of oneself or one’s family member (defined broadly to include certain individuals not related to the employee) when ill, for reasons related to domestic abuse, sexual abuse, or harassment, or when closures require the employee to stay home.
The HFWA further requires employers to provide up to 80 hours or two weeks’ paid time off during a Public Health Emergency (“PHE”) and for four weeks beyond the expiration of a PHE. However, not all PHEs qualify under the HFWA; in guidance issued by the CDLE following the monkeypox outbreak in the United States, the CDLE clarified that PHEs are only those declared based on a “highly fatal infectious agent.” Because the monkeypox PHE was declared in the interests of increasing federal funding to states, but not because the illness was particularly widespread or deadly, the CDLE determined employers were not required to provide supplemental PHE leave for monkeypox.
In yet another turn of events, the CDLE released guidance on its website that it considers “flu, respiratory syncytial virus (‘RSV’), and similar respiratory illnesses” to be covered by the PHE declaration released by the State on November 11, 2022. However, the CDLE’s website clarifies that its decision “doesn’t give employees an extra 80 hours for those conditions, it just means they can use their 80 hours for a broader range of conditions.” The guidance is contrary to the plain language of the statute and its regulations—thus, employers should continue tracking CDLE updates to the PHE leave requirements.
The EPEWA requires employers disclose certain information to applicants and employees, while prohibiting practices that were once commonplace. The EPEWA prohibits employers from discriminating between employees on the basis of sex by paying an employee of one sex a wage rate less than the wage rate paid to an employee of a different sex for substantially similar work. Employers cannot rely on prior wage or salary history to justify disparate rates. Thus, employers cannot ask employees what they earned in prior jobs.
While there are several factors which can justify a pay disparity, these are all objective criteria and the employer cannot rely on a “catch-all” provision in justifying a disparity. The factors outlined in the statute to justify a pay disparity include:
- Seniority systems;
- Merit systems;
- A system that measures earnings by quantity or quality of production;
- Geographic location where work is performed;
- Education, training, or experience to the extent that they are reasonably related to work in question; and
- Travel, if the travel is a regular and necessary condition of the work performed.
In addition, employers must post internal job openings whenever the position being sought or filled would be considered a “promotional opportunity.” A promotional opportunity exists when the position would result in increased wages, benefits, title, or other “perks” to anyone employed by the employer, even if no employees in the organization are qualified for the position.
Job postings must include the wage or salary, or a wage or salary range, being offered for the position. Employers cannot evade this requirement with vague statements, such as an offer promising compensation anywhere “up to $100,000,” but must be based on the amount the employer reasonably expects to pay for the position. Employers are permitted to offer compensation to a qualified candidate outside of the range or amount included in the posting, but only if, at the time of posting the job, the employer genuinely believed it was willing to offer an amount within that range or equal to the amount selected. Likewise, employers must include a general description of benefits in the job posting, and cannot simply state that a “competitive benefits package” is offered. Including links to the benefits documents is acceptable, if employers wish to provide a more comprehensive review but with less specific language in the posting itself.
The CDLE recently updated its EPEWA guidance, providing additional clarity to the requirements. Employers with no employees in Colorado at the time of hiring or promotion decisions, even if it considers Colorado applicants, need not comply with the EPEWA. Parties that are simply sharing or re-posting a description also are not liable for any EPEWA violations in the original posting. Similarly, there is no liability if a non-employer third-party, such as Indeed or similar job posting sites, reposts information without the required information from the original post. As for remote work, work that is tied to a Colorado site at a covered employer must be posted in accordance with EPEWA. Even where work is fully remote, if the work performed is capable of being performed in Colorado, it must be posted in compliance with the EPEWA. More general job posts, such as “always hiring” communications, need not comply with the EPEWA.
Amendments to C.R.S. § 8-74-101 clarify the information an employer is required to provide its employees upon their separation for any reason, including voluntary resignation or involuntary terminations. The amendments appear to have been made in order to provide employees with all necessary information that they will need to apply for benefits from the CDLE Unemployment Insurance Division. Specifically, employers must provide all of the following information to employees who are departing:
- Employer’s name and address;
- Employee’s name and address;
- Employee’s identification number or last four of employee’s SSN;
- Employee’s start date, date of last day worked, YTD earnings, and wages for the last week worked; and
- The reason for separation
This information should be provided in writing to employees upon separation by electronic mail or sent to their last known mailing address.
Colorado Anti-Discrimination Act and Workers’ Compensationo Act
Amendments to the Colorado Anti-Discrimination Act (“CADA”) now include domestic workers (i.e., nannies, gardeners, elderly care workers) in the definition of employees subject to the protections of CADA. Under CADA, employers are prohibited from discriminating against employees on the basis of race, color, sex, creed, sexual orientation, gender identity, gender expression, ancestry, national origin, disability, age or marital status. Further, the amendments to CADA expand the remedies available for age discrimination claims to include punitive damages, a remedy not available under the federal Age Discrimination in Employment Act (“ADEA”). Further, the Colorado Governmental Immunity Act (“CGIA”) does not apply to claims of this nature, thus local governments and special districts may also face punitive damages awards for ADEA and other CADA claims.
The workers’ compensation amendments were less wieldy than the other changes discussed here, but contain important changes to timelines and employer requirements. Employees now have ten days from the date of a work incident to report the injury to employers, increased from the previous requirement of four days. Further, the amendments include revised notice language which must be posted in every worksite.
Wage Deductions and Notices
In addition, there were amendments under Senate Bill 22-161. This act updates and modifies laws regarding payment of wages and employee misclassification, and the enforcement procedures and remedies for violations of such laws.
The amendments require employers to provide notice to employees within ten days after separation from employment if deductions will be made from wages to compensate for any money or property the employee failed to return or repay on termination of employment. Should the employee repay these amounts, the employer must pay the employee the deducted amount within 14 days of return of the money or property.
If employers are found to have improperly failed to pay wages by the Division of Labor Standards and Statistics (“DLSS”), DLSS may notify similarly situated employees that the employer may be engaging in a pattern or practice of nonpayment. The penalties for failure to pay also have increased dramatically. Aside from attorneys’ fees being available to prevailing claimants (a provision from the prior statute), employers may be liable for three times the unpaid wages on the first failure to pay, the greater of three times the unpaid wages or $1,000 for the second failure within five years preceding the present claim, and the greater of four times the amount of unpaid wages or $3,000 for the third and subsequent failure to pay within the five years immediately preceding the claim. Willful failures or refusals to pay will result in a 50% penalty.
The DLSS’s adjudication powers are expanded by allowing claims of up to $15,000 to be adjudicated by the agency, whereas the statute previously granted jurisdiction for claims of only $7,500 or less. In addition, the employee may request that DLSS file a certified copy of the wage citation or order with the clerk of court, after which the clerk will enter the certified document and the judgment will become a lien against the employer’s property. This lien will be superior to all others, except property tax liens. DLSS also can enter an administrative lien against the employer.
These changes to Colorado employment and labor laws carry major implications for employers of all sizes and in all sectors. While many of the obligations under these laws have been in place since before 2022, the CDLE continues issuing guidance to employers and employees clarifying these statutes and their regulations—particularly with respect to FAMLI and CSSP, which programs have not yet taken full effect. As such, it is important to stay up to date on such guidance and regulations.
Please feel free to contact Michelle Ferguson at firstname.lastname@example.org or Jenn Kinkade at email@example.com with any questions.
What is written here is for general information only and should not be taken as legal advice. If legal advice is needed, please consult an attorney.