Key Takeaways of Colorado’s New Employment Law, the POWR Act

Summer Associate Stephanie Wise contributed to this advisory.

The Protecting Opportunities and Workers’ Rights (POWR) Act will take effect in Colorado on Aug. 7, 2023, and will apply to employment practices that occur on or after Aug. 7, 2023, subject to referendum petition.

For Colorado employers, the key takeaway from the POWR Act is that the harassment standard is no longer “severe or pervasive.” As a result, employees can bring harassment claims more easily—and even from a single occurrence. To help protect their business and potentially mitigate their risk of such claims, employers must implement a program to prevent harassment.

Under the POWR Act, a harassment prevention, deterrence and protection program is an employer’s only available affirmative defense against a harassment claim.

If an employee brings a claim for harassment, an employer’s ability to fight back and defend itself has become more challenging. Based on this new law, an affirmative defense to a harassment claim is only available if the employer demonstrates they have a program in place that is “reasonably designed to prevent harassment, deter future harassers, and protect employees from harassment.” The following criteria for the program must be met:

1. Includes prompt and reasonable actions to investigate, address and remedy allegations of discriminatory or unfair employment practices.
2. The employer has communicated the existence and details of this program to employees.
3. The employee has unreasonably failed to take advantage of the employer's program.

The program outlined above is especially important because harassment claims are no longer subject to a “severe or pervasive” standard.

New Harassment Definition. For purposes of discriminatory or unfair employment practices, Colorado employment law previously defined “harass” as creating a hostile work environment based on an individual’s race, national origin, sex, sexual orientation, gender identity, gender expression, disability, age, or religion. The POWR Act expands that definition to “any unwelcome physical or verbal conduct” or communication directed at an individual or group because of their actual or perceived membership in a protected class—disability, race, creed, color, sex, sexual orientation, gender identity, gender expression, marital status, religion, age, national origin, or ancestry.

The definition changed in a few important ways:

1. Conduct or communication is no longer required to rise to the level of creating a hostile work environment.
2. An individual does not have to be a member of a protected class.
3. “Marital status” has been added as a protected class.

New subjectively and objectively offensive standard. The conduct or communication does not need to be severe or pervasive. Instead, the conduct or communication—even if only a single occurrence—must be subjectively and objectively offensive.

Violations. The conduct or communication constitutes a discriminatory or unfair employment practice if:

• submission to the conduct or communication is a term or condition of employment;
• submission/objection/rejection of the conduct or communication is a basis for employment decisions; or
• the purpose or effect is unreasonably interfering with work performance or creating an intimidating, hostile or offensive working environment.

Additionally, the new law looks at the totality of the circumstances. “Petty slights, minor annoyances, and lack of good manners” may constitute harassment depending on the totality of the circumstances.

Three other notable changes under the POWR Act include:

1. A new standard exists for determining whether an accommodation the employer is offering is reasonable. The POWR Act narrows the affirmative defense related to “no reasonable accommodation” for a disability. A disability that “has a significant impact on the job” is no longer sufficient. Instead, the defense requires that no reasonable accommodation “would allow the individual to satisfy the essential functions of the job.”
2. Nondisclosure agreement (NDA) requirements have changed. An NDA provision or agreement that restricts communication about alleged discriminatory or unfair employment practices is void unless certain criteria of the NDA are met:
   • Nondisclosure equally applies to all parties.
   • Disclosure of an allegation’s underlying facts is not restricted as it relates to certain individuals, government agencies, the legal process and other purposes required by law.
   • It expressly states the above disclosure does not constitute disparagement.
   • It includes a condition that a nondisparagement provision is unenforceable against the employee if the employer disparages the employee to a third party.
   • A liquidated damages provision is only enforceable if it is reasonable and proportionate, varied based on breach and not punitive.
   • An addendum attesting compliance with this subsection of the POWR Act addressing nondisclosure provisions is attached and signed by all parties.
3. Recordkeeping requirements have changed. Employers must preserve an accurate, designated repository of complaints of discriminatory or unfair employment practices for at least five years after the record was made/received or five years after the personnel action or final disposition of a charge took place—whichever is later. Required data includes date of the complaint, non-anonymous identities of complaining parties, alleged perpetrator and substance of the complaint. Such records are personnel records, not public records, and are generally not open to public inspection.

Additional new requirements for Colorado employers include:

• Employers cannot ask about age on applications. The Job Application Fairness Act (SB23-058) prohibits employers from asking about age on an initial employment application. An employer may request verification of compliance with age requirements related to federal, state, or local laws/regulations. This goes into effect on July 1, 2023.

• Employees are entitled to three new uses of paid sick leave (SB23-017):
  • To grieve, attend services or deal with financial/legal matters resulting from death of a family member.
  • To care for a family member whose school or place of care has unexpectedly closed.
  • To unexpectedly evacuate residence due to weather, loss of power/heat/water, etc.

These additional qualifying uses of paid sick leave will go into effect on Aug. 7, 2023, subject to a referendum petition.

• Changes have been made to the Equal Pay for Equal Work Act (CEPEWA).
  • Added a requirement for the state to create and administer a mediation process for wage discrimination complaints by July 1, 2024, investigate complaints or leads, order compliance and relief, and put enforcement rules into effect.
  • Clarified timing requirements to notify all employees about job opportunities and requirements for disclosing hourly or salary compensation, benefits, application window, selected candidate, demonstration of future interest and career progression information.
  • Added definitions for career development, career progression, job opportunity and vacancy.

These changes to CEPEWA (SB23-105) will go into effect on Jan. 1, 2024, subject to a referendum petition.

Next Steps: Colorado employers should ensure that they have a program in place that will help mitigate  exposure to harassment claims. Additionally, employers are encouraged to proactively consult with an employment lawyer to confirm that they have made the proper adjustments for the other pro-employee changes.