Employment Claims in Colorado – Wage, Unemployment Benefits, Discrimination

Employment claims in Colorado –  Wage, Unemployment Benefits, Discrimination

Often times, employers are faced with the reality of having to either fire an employee for substandard performance, terminate the employment due to a precarious financial situation, or replace an employee who left or quit.  While all of these scenarios ultimately result in the employee’s departure, how an employer terminates the employment of an employee can have significant financial consequences for the business.  Likewise, the circumstances of departure will dictate any potential financial recovery for the terminated employee.

This article briefly discusses the basics of Colorado law as it relates to various employment claims, including wage claims, unemployment benefits, and charges of discrimination, which often arise when the separation from employment is involuntary.

As an initial matter, under Wisehart v. Meganck, 66 P.3d 124, 126 (Colo. Ct. App. 2002):

In Colorado, an agreement of employment that is for an indefinite term is presumed to be at will. Either the employer or the employee may terminate at-will employment at any time with or without cause, and such termination generally does not give rise to a claim for relief. Martin Marietta Corp. v. Lorenz, 823 P.2d 100 (Colo.1992); Continental Air Lines, Inc. v. Keenan, 731 P.2d 708 (Colo.1987).  Accordingly, an employer is not liable for wrongful discharge unless of the following exceptions to the at-will doctrine is the basis for termination:

•  “wrongful discharge based on discrimination with respect to race, color, gender, national origin, ancestry, religious affiliation, disability, and age. State statutes also permit such claims in cases of termination resulting from an employee engaging in lawful activity off premises during nonworking hours, responding to a jury summons, and certain activities of “whistleblowing.” Wisehart. 66 P.3d at 127.  (Note:  This topic is discussed in further depth below)

• Colorado also recognizes a claim for relief for wrongful discharge in violation of public policy. This judicially crafted exception restricts an employer’s right to terminate when the termination contravenes accepted and substantial public policies as embodied by legislative declarations, professional codes of ethics, or other sources.  Wisehart v. Meganck, 66 P.3d 124, 127 (Colo. Ct. App. 2002)

• Colorado also recognizes that an employer’s failure to follow termination procedures contained in an employment manual can serve as the basis for a breach of contract or promissory estoppel claim. Wisehart v. Meganck, 66 P.3d 124, 127 (Colo. Ct. App. 2002) citing Continental Air Lines, Inc. v. Keenan, supra; see also Schoff v. Combined Insurance Co., 604 N.W.2d 43 (Iowa 1999); Mackenzie v. Miller Brewing Co., supra.

• In addition, Colorado recognizes the viability of certain other tort claims that arise around the employment relationship. Wisehart v. Meganck, 66 P.3d 124, 127 (Colo. Ct. App. 2002) discussing Jet Courier Service, Inc. v. Mulei, 771 P.2d 486 (Colo.1989)(employee owes duty of loyalty to employer that prohibits soliciting employer’s customers before terminating employment); Berger v. Security Pacific Information Systems, Inc., 795 P.2d 1380 (Colo.App.1990)(employee induced to enter into at-will employment by employer’s concealment may pursue fraud claim); Cronk v. Intermountain Rural Electric Ass’n, 765 P.2d 619 (Colo.App.1988)(tortious interference claim allowed against supervisor who induced employer to exercise its at-will termination power by presenting corrupt reason).

To summarize, employers operating under at-will employment principles are generally free to discharge employees for any reason as long as the reason asserted does not trigger a recognized exception to the at-will termination doctrine noted above. Moreover, the burden of proof is on the employee to plead and prove circumstances that would authorize application of one of the recognized exceptions to the doctrine. Wisehart v. Meganck, 66 P.3d 124, 127 (Colo. Ct. App. 2002) citing Schur v. Storage Technology Corp., 878 P.2d 51 (Colo.App.1994).

Wages

All employees are entitled to timely payment of wages, both before and after separation from employment.  It is important to note, however, who is considered an “employee” and what employers are covered by the Colorado Wage Act (“Act”).  First, the Act only applies to private sector employees.  The Act does not apply to the state, or its agencies or entities, counties, cities, municipal corporations, quasi-municipal corporations, school districts, or districts organized and existing under the laws of Colorado.  C.R.S. § 8-4-101(5).  Secondly, independent contractors are not covered by the Act.  C.R.S. § 8-4-101(4).  To recover under the Colorado Wage Act (“Act”), the claimant must show by a preponderance of the evidence that (1) the claimant was an “employee” within the meaning of the Act during the time period for which the wages are claimed; (2) the amount claimed constituted “wages” or “compensation” under the Act; and (3) the wages or compensation were “earned, vested, and determinable” at the time of separation from service.  Michael J. Guyerson and Christian C. Onsager, Colo. Law. 63, Vol. 46, No. 5 (May 2007).  The definition of “wages” or “compensation” can be found at C.R.S. § 8-4-101(8)(a).  Note, however, that severance pay is not included. C.R.S. § 8-4-101(8)(b).

However, the Act only requires employers to pay wages and compensation that is “earned” at the time of separation from employment.  Hofer v. Polly Little Realtors, Inc., 543 P.2d 114 (Colo. App. 1975) (emphasis added).  Moreover, the Act does not provide a substantive right to compensation; it is merely an enforcement mechanism for whatever terms the parties have agreed upon. Barns v. Van Schaack Mortgage, 787 P.2d 207, 210 (Colo. App. 1990).

For additional information, please see C.R.S. § 8-4-101 et seq.

Unemployment Benefits 

An employee who believes (s)he was terminated through no fault of his/her own, will likely seek compensation from the employer in the form of unemployment benefits.  The administration of unemployment awards are handled by the Colorado Department of Labor and Employment.  Claims can be filed online at www.colorado.gov/cdle.  Under Colorado law and according to the Colorado Department of Labor and Employment, in order for a former employee to be eligible for unemployment benefits, (s)he must (1) have earned $2,500 during her “base” period (see CDLE website for assistance with this calculation); (2) be unemployed through no fault of her own; and (3) be able, available, and actively seeking work.  C.R.S. § 8-73-107 puts further requirements in place for individuals to continue receiving these benefits on a weekly basis.

In determining whether to grant a benefits award, the CLDE is guided by the following considerations:

1. Unemployment insurance is for the benefit of persons unemployed through no fault of their own
2. Each eligible individuals who is unemployed through no fault of their own is entitled to receive a full award of benefits
3. Every person has the right to leave any job for any reason, but that the circumstances of the separation shall be considered in making a determination of benefits
4. Certain acts of individuals are the direct and proximate cause of their unemployment, and such acts may result in such individuals receiving a disqualification

C.R.S. § 8-73-108(1)(a).

Benefits information is provided in C.R.S § 8-73-108(b).  A description of a “full award” of benefits can be found at C.R.S. § 8-73-108(4), while the factors that may lead to disqualification of an individual can be found at C.R.S. § 8-73-108(5).  Careful consideration must be given before an employee takes a distribution from a retirement account during the period of time (s)he is seeking unemployment benefits.  Such action may reduce the amount of weekly benefits considerably, and may postpone the receipt of benefits for a significant period of time.  Please review C.R.S. § 8-73-110 for further details.  Individuals who are considering supplementing their unemployment income from retirement assets should consult an attorney prior to doing so.

Discrimination

This section will provide a brief overview/summary of the Colorado Anti-Discrimination Act (“CADA”) only.  Individuals may be entitled to additional protection and remedies under applicable Federal Acts, such as FMLA or Title VII, for example.  Former employees of larger businesses (15 or more employees) or other “covered” business are encouraged to review the applicability of these protections, in addition to pursuing state law claims under CADA.  Discriminatory or unfair employment practices are regulated by the Colorado Department of Regulatory Agencies (“DORA”).  The DORA website offers a wealth of information to consumers and employers, and provides information on how to file a claim of discrimination: www.askdora.colorado.gov/.

CADA offers the same type of protection to employees as those offered by Title VII, but it applies to “employers” with two or more employees: “Employer” defined as the state of Colorado or any political subdivision, commission, department, institution, or school district thereof, and every other person employing persons within the state; but it does not mean religious organizations or associations, except such organizations or associations supported in whole or in part by money raised by taxation or public borrowing.  C.R.S. § 24-34-401.

Under CADA:

“(1) It shall be a discriminatory or unfair employment practice:

(a) For an employer to refuse to hire, to discharge, to promote or demote, to harass during the course of employment, or to discriminate in matters of compensation, terms, conditions, or privileges of employment against any person otherwise qualified because of disability, race, creed, color, sex, sexual orientation, religion, age, national origin, or ancestry…”

C.R.S. § 24-34-402

In order to prove intentional discrimination under section 24–34–402, a complainant must first establish, by a preponderance of the evidence, a “prima facie” case of discrimination:

(1) an employee must show that (s)he belongs to a protected class;

(2) the employee must prove that (s)he was qualified for the job at issue.;

(3) the employee must show that (s)he suffered an adverse employment decision despite his/her qualifications; and

(4) the employee must establish that all the evidence in the record supports or permits an inference of unlawful discrimination.

Bodaghi v. Department of Natural Resources, 995 P.2d 288, 297 citing Colorado Civil Rights Commission v. Big O Tires, Inc., 940 P.2d 397 (Colo. 1997).

If a complainant meets this burden, the burden of production shifts to the employer to articulate “some legitimate, non-discriminatory reason for the employment decision.”  Once employer meets this burden, Complainant must then demonstrate by “competent evidence” that the “presumptively valid” reasons for the employment decision were in fact pretext for discrimination.  Big O Tires, Inc., 940 P.2d 397; Bodaghi, 995 P.2d 288.  NOTE: the ultimate burden of persuading the trier of fact that the employer intentionally discriminated against the complainant remains squarely with the complainant.  Bodaghi v. Department of Natural Resources, 943 P.2d 1 (Colo. Ct. App. 1996).

If the determination is made that the employer engaged in discriminatory employment practices, Colorado law authorizes a variety of relief (which may be ordered singly or in any combination), including back pay, hiring, reinstatement, or upgrading of employees, with or without back pay; the referring of applicants for employment by any respondent employment agency; the restoration to membership by any respondent labor organization; the admission to or continuation in enrollment in an apprenticeship program, on-the-job training program, or a vocational school; the posting of notices; and the making of reports as to the manner of compliance.  C.R.S. § 24-34-405.

By Lindsay J. Miller, Esq.