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Two New Laws for Colorado Employers to Wrestle With As Work Place Antidiscrimination Bill and Credit Check Prohibition Bill Signed into Law

Colorado’s Governor has recently signed into law two bills that will impact Colorado employers in potentially significant ways. First, is the “Antidiscrimination Bill” or more officially known as the “Job Protection and Civil Rights Enforcement Act of 2013.” In a Spencer Fane HR Solutions blog entry of March 1, 2013 we reported on the bill as it was making its way through the legislature. The bill, and now the law, makes employers who have fewer than 15 employees subject to an increased scope of remedies from employees who allege discrimination.

Prior to the passage of the law, employers in Colorado with fewer than 15 employees were not subject to having to face claims for compensatory damages (such as emotional distress, mental anguish, lost opportunities) nor did they face potential awards of punitive damages in employment discrimination suits. With the passage of the law, small employers in Colorado are now subject to claims for such remedies, and many expect that as a result they will face an increase in discrimination lawsuits. Also significant to all employers in Colorado (regardless of the number of employees) is the fact that the law eliminates the age 70 cap that previously existed on age discrimination claims. This too is expected to increase the number of suits Colorado employers will face.

In attempting to allay some of the concerns of the business community, the sponsors of the bill did add certain amendments. Most significant is a cap on the total amount of compensatory and punitive damages that may be recovered, with such cap being based on the size of the employer (i.e. 1-4 employees the cap is $10,000; 5-14 employees the cap is $25,000). Other “softeners” include: allowing the court to consider the size and assets of the defendant employer before awarding punitive damages; requiring proof of intentional discrimination for compensatory damages and proof of conduct done with malice or recklessness for an award of punitive damages; and having the effective date of the law be January 1, 2015. It remains to be seen if these amendments will in fact minimize the impact of the law on small employers.

The second significant bill to be signed into law and which takes effect July 1, 2013 is the “Credit Check Prohibition Bill,” more formally called the “Employment Opportunity Act.” It prohibits employers from considering an applicant’s or employee’s credit history in making employment decisions. Under this law, an “employer” would include any private employer with four (4) or more persons regularly employed. The law prohibits such employers from using consumer credit information (a defined term that includes a credit score or any written or oral communication of information bearing on creditworthiness) for any employment purpose. There are, however, certain exceptions, including allowing use of such information if it is “substantially related to the employee’s current or potential job.” This phrase is defined in the new law in a manner that limits it to executive or management personnel, or employees who constitute professional staff to such personnel. And, while there are certain criteria listed that further limit the circumstances of use, the phrase and its definition will no doubt become the subject of litigation at some point in the future.

The law also prohibits an employer from requiring an applicant or employee to consent to a request for a credit report unless the employer is a bank or financial institution; the report is required by law; or the report is substantially related to the current or potential job and the employer has a bona fide purpose for making the request, which is disclosed in writing to the applicant or employee. Finally, the new law requires an employer who does in fact rely in whole or in part on consumer credit information in making its employment decision to disclose that fact to the applicant or employee. Employers in Colorado who use credit information in making employment decisions will need to reevaluate their practice before July 1, 2013 to determine if they can continue to do so under this new law.