Colorado Discrimination Claims Soon To Be More Treacherous For Employers
Five years in the making (previously introduced without success in 2009, 2010, 2011, and 2012), the Job Protection and Civil Rights Enforcement Act of 2013 (HB 13-1136) (PDF) was introduced again this year in the House on January 18, 2013, and took less than five months to pass through both branches of the Colorado legislature and get signed into law by the Governor on May 6, 2013, despite considerable opposition from business groups.
Effective January 1, 2015, the Job Protection and Civil Rights Enforcement Act of 2013 significantly amends the Colorado Anti-Discrimination Act (CADA) to allow for the recovery of compensatory and punitive damages and prevailing plaintiff attorneys’ fees, among other changes, in employment discrimination cases brought under Colorado state law.
Regardless of size, small employers (defined as less than 15 employees) and large employers (more than 15 employees) should be aware of the changes to CADA and implement proactive steps to help minimize the increased exposure to future CADA claims.
What is CADA and What Are the Amendments?
The Colorado Anti-Discrimination Act (CADA) was enacted in 1957 and prohibits discrimination in the workplace based on race, color, disability, gender, sexual orientation (including transgender status), national origin, ancestry, religion, creed, and age. Where Title VII of the Civil Rights Act of 1964 applies to employers with 15 or more employees, CADA applies to Colorado employers of any size. CADA is also broader than Title VII because it prohibits discrimination based on age, disability and sexual orientation, which are not protected classes under Title VII (although age is protected under the Age Discrimination in Employment Act, and disability, under the Americans With Disabilities Act).
Prior to the enactment of the Job Protection and Civil Rights Enforcement Act of 2013, a successful CADA plaintiff could only be awarded the following equitable relief:
- Reinstatement;
- Back Pay;
- Front Pay; and
- Interest on Back Pay.
The recently passed CADA amendments will allow successful plaintiffs to recover the above remedies, plus the following enhanced remedies:
- Compensatory Damages (e.g., future pecuniary loss, emotional distress, suffering, inconvenience, mental anguish, loss of enjoyment of life);
- Punitive Damages; and
- Attorneys' Fees.
To recover compensatory damages, a CADA plaintiff must show that he or she was the victim of intentional discrimination in the workplace. To recover punitive damages, a CADA plaintiff must show with "clear and convincing evidence" that the discriminatory practice was done with “malice or reckless indifference to the rights of the plaintiff.” However, a court will take into consideration the size and assets of a company, as well as the egregiousness of the intentional discrimination. Moreover, similar to Title VII, the CADA amendments will allow prevailing plaintiffs to recover their attorneys’ fees and costs. As for prevailing defendant-employers, they may only recover their attorneys’ fees if the action by the plaintiff is proven to be frivolous, groundless or vexatious - a difficult bar to reach.
Fortunately, the CADA amendments will provide caps on compensatory and punitive damage awards (also similar to Title VII, and incorporating the limits of Title VII for employers with 15 or more employees):
- For employers who employ 1 to 4 employees, the total of both compensatory and punitive damages cannot exceed $10,000;
- For employers who employ 5 to 14 employees, the total of compensatory and punitive damages cannot exceed $25,000;
- For employers who employ 15 to 100 employees, the total of compensatory and punitive damages cannot exceed $50,000;
- For employers who employ 101 to 200 employees, the total of compensatory and punitive damages cannot exceed $100,000;
- For employers who employ 201 to 500 employees, the total of compensatory and punitive damages cannot exceed $200,000; and
- For employers who employ 501 or more employees, the total of compensatory and punitive damages cannot exceed $300,000.
Beyond expanding the remedies for CADA claims, the amendments also eliminate the age limit on age discrimination claims in Colorado. Previously, CADA only prohibited discrimination based on age if a plaintiff was older than 40, but less than 70 years of age.
What Are the Practical Impacts?
Because the amendments allow individuals to recover compensatory and punitive damages and attorneys’ fees (for example, against a small business owner in Colorado that employs 1 employee), the number of CADA claims are going to increase. Unfortunately, the cost of defending one CADA lawsuit, even if frivolous, could be enough to put a small business owner out of business.
In addition, the CADA amendments mean more state court employment litigation, which is more treacherous for employers. Traditionally, federal courts will weed out threadbare claims more readily than state courts and also tend to be more employer-friendly.
Also, when only equitable relief was available, CADA claims by themselves went before judges. Now, CADA claims will go before juries in Colorado, since compensatory and/or punitive damages will likely be sought in most, if not all, future CADA complaints.
Finally, as there is new exposure to punitive damages with respect to CADA claims, businesses (particularly, small businesses) have no guaranteed way to protect against such a loss through insurance. The public policy of Colorado prohibits an insurance carrier from providing insurance coverage for punitive damages. See Universal Indemnity Ins. Co. v. Tenery, 39 P.2d 776, 779 (Colo. 1934); Lira v. Shelter Ins. Co., 913 P.2d 514 (Colo. 1996). As a result, a small business accused of a CADA violation faces a dire situation with defense costs alone, let alone the potential risk of an uninsurable award of punitive damages.
What Should Colorado Employers Do?
As Colorado state law employment claims under CADA will be more lucrative for plaintiffs and plaintiff’s lawyers, and will very likely increase in number, employers of all sizes are wise to:
- Implement effective policies prohibiting discrimination, harassment and retaliation in the workplace;
- Conduct training for all managers and supervisors (at a minimum) to promote awareness and teach them how to take prompt, appropriate action when potential discrimination, harassment and/or retaliation arises;
- Audit employment practices to identify problem areas; and
- Evaluate whether it makes financial sense to purchase Employment Practices Liability Insurance (EPLI) to provide protections and cover defense costs should a claim arise.
Effective written policies, EEO and harassment training, and periodic self-audits are evidence of good faith compliance efforts that could successfully eliminate any risk for punitive damages.
Last but not least, the Job Protection and Civil Rights Enforcement Act of 2013 is not effective until January 1, 2015 -- so at least there is time to get ready.
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