Happy New Year 2023!
There are so many changes in the world of Colorado employment law and business law, some that went into effect in 2022 and some going into effect now at the start of 2023.
Below is a summary of changes and some new immediate compliance obligations. It may be long, but it’s important! For convenience we've included a "Jump to" feature below if there are particular updates you'd like to read first.
Want to read these updates as a PDF? Click below.
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As always, please remember that these informational updates are not legal advice about your specific circumstances and are not a substitute for obtaining legal counsel on any questions you have about your specific circumstances. Let us know if you have any questions!
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Colorado Business Law Updates: (as of January 2023)
Colo Business Fee Relief Act
July 1, 2022 – reduced fees for LLC formations and trade name registrations, to expire June 30, 2023 unless funds exhaust sooner.
Federal Corporate Transparency Act update
Enacted in 2021, this federal law is intended to combat criminal money laundering, and it will impact and require affirmative compliance by essentially every small business in the US. The regulations, rules, and mechanisms to actually run this program are not yet in place, and are significantly delayed. However, it is important to be aware of the requirements to actively prepare for future compliance. At risk of oversimplification, most companies will be required to report to the federal FinCEN (under the Department of Treasury) detailed personal information about beneficial owners of the company. “Beneficial owners” include any individual who exercises (directly or indirectly) substantial control of the company or owns or controls 25% or more of the company. There are exemptions and exclusions (such as for tax-exempt 501(c) nonprofit entities and large companies with at least 20 full time employees and more than $5,000,000 in gross receipts each year), but assume that your company is not exempt unless you obtain professional advice to the contrary. The personal information that must be provided for a beneficial owner includes: name, date of birth, street address, and a unique identifying number (passport, driver license, etc.) with a scanned copy of the source document. Once the rules are implemented, newly formed companies must file a report within 14 days of formation, and existing companies must file a report within one year of the effective date of the rule. There are criminal (jail and up to $10,000 fine) and civil ($500 per day) penalties for violations.
Colorado Privacy Act,
taking effect July 2023
This applies to your business/nonprofit if it conducts business in/delivers commercial products/services to Coloradoans and either (1) processes the personal data of more than 100,000 individuals in any calendar year, or (2) derives revenue or receive discounts on goods or services in exchange for the sale of personal data of 25,000 or more individuals.
In 2021, Colorado added data privacy to its laws regarding data security requirements and security breach notification requirements with regard to Coloradoans' personal identifying information. The 2021 Colorado Privacy Act gives Colorado consumers greater transparency and control over what personal data businesses collect, share, and sell, as well as how that personal data is used. The Colorado Attorney General’s office is in the midst of rulemakings ahead of the law’s effective date of July 1, 2023. The AG informational website explains the law well. As summarized there, the law applies to entities, including nonprofits, that both conduct business in Colorado or deliver commercial products or services targeted to residents of Colorado, and either (1) process the personal data of more than 100,000 individuals in any calendar year, or (2) derive revenue or receive discounts on goods or services in exchange for the sale of personal data of 25,000 or more individuals. For companies that meet this description, significant compliance planning and implementation is on the horizon.
Colorado Employment Law Updates
(as of January 2023)
2023 Increases to Colorado Minimum Wage: $13.65/hr
COMPS Order: The 2022 Colorado Overtime and Minimum Pay Standards Order ("COMPS Order") #38, remains in effect for 2023.
Colorado Paid Medical and Family Leave Insurance
Applies to ALL employers. Job protection if leave taken.
Employees who have been with an employer for at least six months prior to taking leave are entitled to return to their position or an equivalent after completing leave, and are entitled to continuation of any employer-provided health care benefits. Premium payments begin 1/1/23, and employees can start applying for leave benefits 1/1/24. Purposes for leave: caring for new child in first year after birth, adoption, or foster care placement; caring for family member with serious health condition; has a serious health condition; qualifying exigency leave; need for safe leave. Applies to any employee (not independent contractors) with wages earned of $2,500 in last base period. Provides for 12 weeks of paid leave in a 12-month period, need not be consecutively used leave. Benefits will be paid on a formula based on wage (90% of wage if make less than 50% of state average weekly wage; 50% of wage if make more than 50% of SAWW). Payable within 2 weeks of claim, and then every two weeks. Capped at $1,100/wk until 2025. Employer can be reimbursed if it issues funds prior to coverage beginning. Employer cannot force employee to exhaust accrued paid leave before taking FAMLI paid leave, but employee and employer can mutually agree to use such accrued leave unless total amount received would exceed average weekly wage. If a company has comparable private leave plan, then that plan can be used in place of this.
Action item: Ensure your payroll company has these deductions set up. Give required notice to employees, decide whether to pay up to 50% of employee’s premium (may only deduct up to 50%), be prepared to remit premiums deducted from wages to the fund (however, employers of 10 or fewer employees do not have to pay the other 50% of the premium)
Colorado Secure Savings Program
When this program begins in 2023, eligible employers (in business 2 years and 5 or more employees) will have to enroll their employees. Employers also should consider whether to provide their own alternative retirement plan. -- Employers with 5 or more employees in business for at least 2 years must register with state-run retirement savings program. Employees pay will have 5% deductions from paychecks unless they opt out (can also change % and w/d initial contributions without penalty), with those funds going to a Roth IRA. Does not require employers to provide their own plans, but they can. Instead, employer will have to enroll their employees in the state program. Enrollment begins 2023. Employees of employers not eligible/required to register but desiring to participate may self-enroll online.
Update on Equal Pay for Equal Work Act
Applies to ALL employers. Remember your new job posting requirements and evaluate your employees’ salaries for pay parity. -- This law has now been on the books for a little while. Remember that, to protect against claims and liability, employers should conduct an internal employment audit to evaluate whether similarly situated employees are being paid different wages and whether the reasons for the difference in pay do or do not comply with one of the six exceptions under the statute. If they do not, employers may be in violation of the law. Also, remember the job postings/pay transparency and promotion requirements: any time an employer is posting for a job, even if just internally inside the company, the posting must state the hourly rate or salary compensation or good faith range of salary, along with a general description of benefits offered and employers must 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.
Reminder on paid sick leave
Effective Jan. 1, 2021, and applies to ALL employers. Reminder that employees are now entitled to up to 6 days (48 hours) of paid sick leave each year (employer can choose to provide more). This must accrue at a rate of 1 hour of paid sick leave per 30 hours worked. Paid sick leave for part time employees accrues on a pro rata basis. If not used in a given year, that accrued 48 hours of paid sick leave carries forward to the next year, but an employer need not allow the employee to use more than 48 hours of paid sick leave in a given year. An existing paid leave policy may serve as a substitute for the statutory requirement if (1) it provides minimum amount of statutorily required leave at the rate of accrual required by law; and (2) it allows use of that leave for the same purposes and under same conditions as required by the law (includes, among other things, injury or illness of employee OR employee needs to care for a family member with injury or illness).
Reminder of paid sick leave during public health emergency
Applies to ALL employers. This is in addition to regular paid sick leave. Must supplement accrued paid sick leave to ensure employee can take the following sick leave (1) for 40hr/wk employees, at least 80 hours of leave (i.e. 10 days) OR (2) for <40hr/wk employees, at least the greater of: 14 days-worth of scheduled work or amount actually worked in a 14-day period. Can apply unused accrued regular paid sick leave toward the supplemental paid leave that is required here. Can be used until 4 weeks after public health emergency officially ends. Purposes for which it can be used: among other things, self-isolate/seek medical care due to diagnosis or symptoms of communicable illness that is causing the public health emergency or caring for a family member under same circumstances. Currently (as of Dec. 31, 2022) there is an official public health emergency in place for COVID, flu, and RSV, thus allowing employees to utilize this supplemental leave for each of those diseases. Paid Sick Leave under the Colorado Healthy Families and Workplaces Act (HFWA) | Department of Labor & Employment.
Paid sick leave notice and record keeping requirement
Applies to ALL employers. Must provide notice of leave entitlement; a poster is available. For each employee, must keep for a 2 year period records of hours worked, paid sick leave accrued, and paid sick leave used. There are other special record keeping requirements for confidential information. NOTE: There are many, many posters on a variety of topics that employers are required to post for employees, some required by federal law and some by state law. Tip: your payroll processing company may provide a service in which you can quickly download the bundle of posters applicable federally and to your specific state.
Whistleblower Protection Health and Safety, in effect May 31, 2022
Protection of workers from retaliation for making good faith reasonable concerns about health or safety as to any health or safety threat. This applies to businesses with employees as well as businesses with 5 or more independent contractors. Employer not required to address the concern to the worker’s satisfaction, but may not retaliate. As it relates to COVID, employers cannot reject employee’s choice of protective personal equipment.
Restrictive Covenant Agreements,
effective August 10, 2022:
This law essentially prohibits non-competition/non-solicitation agreements except in limited circumstances. To be enforceable, a noncompete must be for the protection of a trade secret, and is only applicable to highly paid workers, roughly a $102,000 salary (this amount changes year to year). Agreements for non-solicitation of clients and customers can be applied to workers paid at 60% that amount. Even if viable, there must be a separate signed notice given to the employee to be enforceable. This law does not apply retroactively to contracts signed before August 10, 2022, but does apply if the contract is amended or updated with a new signature date after August 10, 2022. Employers outside of Colorado must follow this Colorado law as to Colorado employees, and the law prohibits employers from forcing Colorado employees to litigate in another state. There are criminal and civil penalties for failing to comply.
Colorado False Claims Act, effective August 10, 2022:
Protects against retaliation a whistleblower who reports fraud against the state or a political subdivision, and grants them the right to sue and to recover statutory damages and trebled damages, and requires the state Attorney General or local prosecutor to investigate false claims. Example, if an employee or contractor raises concerns about an employer’s government contract, be aware.
Employment Discrimination Law,
effective August 10, 2022:
“Employee” definition now includes domestic workers. Age discrimination is now elevated in status under state law such that an age discrimination plaintiff can now recover compensatory and punitive damages.
Wage Theft Employee Misclassification Enforcement,
Effective August 10, 2022:
Creates a new Worker and Employee Unit in the Colorado Department of Labor to investigate and enforce laws regarding wage theft, misclassification of employees, unemployment insurance, and workplace safety. If employer will be making deductions from final wages and compensation, must notify the employee within 10 days before making the deductions.
Workers’ Compensation Injury Notices
There is a new poster from the Workers Compensation Division, it is large. Changes injury notification period to an employer from 4 to 10 days.
Unemployment
Don’t recycle and re-use an old employee termination/separation letter. You need a new one to comply with the new law. – At time of separation the employer must provide written notification employee: (1) employer name and address, (2) employee name and address, (3) employee ID number or last four digits of SSN, (4) employee start date, end date, year-to-date earnings, and wages for the final week of work, and (5) reason for separation. The state has provided a form that may be used.
As always, please remember that these informational updates are not legal advice about your specific circumstances and are not a substitute for obtaining legal counsel on any questions you have about your specific circumstances. Let us know if you have any questions!
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