Percolating since last year, Colorado’s Employment Opportunity Act has resurfaced in early 2013 and may be on the road to passage. Known as SB13-018, or Senate Bill 18, the Employment Opportunity Act recently passed its third reading in the Senate on February 12, 2013 (final vote, 20 in favor: 15 opposed) and now is before the House. Employers take note – if passed, the Employment Opportunity Act WILL affect the use of credit checks in employment decisions in Colorado, from hiring decisions to running background checks on existing employees.
As of January 1, 2013, Colorado’s minimum wage increased from $7.64 per hour to $7.78 per hour, with tipped employee’s minimum wage increasing from $4.62 per hour to $4.76 per hour. The Colorado Division of Labor adopted Colorado Minimum Wage Order Number 29 (PDF) to reflect the new state minimum wage. The Minimum Wage Order also provides important information about meal periods and rest breaks in Colorado.
Where employees are covered by federal and Colorado state minimum wage laws, the employer must pay the higher minimum wage. Currently, the federal minimum wage is $7.25 per hour, which is lower than Colorado’s minimum wage of $7.78 per hour. Thus, beginning January 1, 2013, employers in Colorado must ensure all employees receive at least $7.78 per hour for all hours worked (or $4.76 per hour for tipped employees).
Known as “Drive-By Litigation,” Colorado is getting hit by a rash of lawsuits alleging that businesses are violating Title III of the Americans With Disabilities Act (ADA). Since April of this year, 20 lawsuits (and counting) have been filed against Denver area businesses by the same Plaintiff who is represented by the same two attorneys from Florida, for alleged violations of Title III of the ADA, including things like lack of ramps, narrow doorways, missing signage, doorknobs that can’t be opened by a closed fist, and misplaced soap dispensers and coat racks.
Most of the businesses are in well-to-do areas of Denver, such as The Highlands, LoDo, LoHi, and SoBo, and include everything from popular restaurants, hair salons, day spas, tobacco shops, muffler shops, delis, and donut shops, to even a motel and a tile and linoleum shop. Channel 7 News recently ran a news story that is worth viewing called “Colorado Businesses Claim Identical ADA Lawsuits Filed By Florida Attorney ‘Extortion.’”
What Is “Drive-By Litigation”?
Although premised on the altruistic goal of fighting disability discrimination, these suits have become a profit-driven, litigation machine of high volume, boilerplate complaints, filed with the ultimate goal of squeezing business owners so that the plaintiffs and their attorneys can profit quickly from cash settlements in the tens of thousands of dollars.
The problem with these cases is that the vast majority are not situations where a disabled individual truly felt discriminated against and sought out an attorney to help redress an injury due to a lack of accommodation. Instead, it is the lawyers who hire investigators to identify local businesses that are not in technical compliance with the ADA, and then recruit plaintiffs from disability advocacy groups to serve as the front person. The investigators take pictures and build the case while the plaintiffs merely “drive by” the establishment, without any honest intentions of ever servicing the establishment.
Once the boilerplate suit is filed, questionable litigation tactics are then employed, such as serving immediate discovery in violation of the rules, asking the courts to order the parties to a settlement conference to force a quick settlement, and refusing to accept agreements or assurances of ADA compliance without monetary payments, even though the ADA itself does not allow damages to be awarded to plaintiffs (the ADA allows only injunctive relief and attorneys’ fees).
Earlier this year, the New York Times reported that “[i]n the last year, 3,000 [accessibility] suits, including more than 300 in New York, were brought under the Americans With Disabilities Act, more than double the number five years ago.” Other states hit hard have been Ohio, Florida, California and North Carolina. This is an unfortunate and lucrative cottage industry in the legal profession, preying on small businesses who often times opt for settlement over litigation to avoid legal costs since they don’t have resources like Wal-Mart. But, in some cases, where business owners decide to fight back, courts have dismissed the suits, sanctioned the plaintiff’s attorneys for unscrupulous litigation tactics, and/or awarded attorneys’ fees to prevailing business owners.
What Can Businesses Do Before They Get Sued?
If you have not done an audit lately, or ever, it is a good idea to conduct an ADA accessibility audit. Self-audits can be done with good checklists, or by a professional. Also, it is important for business owners to review their insurance coverage to see if they have, or can obtain, insurance coverage for accessibility lawsuits.
What Should Businesses Do If They Get Sued?
You are not alone, so don’t go it alone. Engage competent counsel to protect your rights as a business owner. Legal arguments can be made to dismiss certain claims or to dismiss the entire case at the onset of litigation or after discovery, which can save thousands of dollars in legal fees.
The Colorado Department of Labor and Employment is listing the names of individuals prosecuted for unemployment insurance fraud on its website in an attempt to help minimize unemployment fraud and abuse. According to the CDOL website, there were 18 prosecutions in the 1st quarter of 2012, resulting in judgments to recover $223,667.80 in fraudulently paid benefits.
This recovery, however, is just a drop in the bucket of the total amount of overpaid or fraudulent benefits paid out each year in Colorado. According to 9News, approximately $158 million, or 17%, of the total benefits paid in Colorado in 2010 were due to overpayments or fraud.
The numbers for 2011 do not appear better – the U.S. Department of Labor reports that through June 2011, Colorado’s improper payment rate was 17.5%, placing Colorado as the 7th worst state in the nation in terms of unemployment abuse:
- Indiana (43.57%)
- Louisana (43.55%)
- New Mexico (27.07%)
- Arizona (19.79%)
- South Carolina (17.90%)
- Virginia (17.77%)
- Colorado (17.50%)
As I understand, not all of the improper payments are due to fraud. Instead, much of the problem lies with overpayments and clerical errors. For example, claimants who report they have found employment may still get mailed a benefit check even though they no longer qualify for benefits. This is because the CDOL’s computer systems are old and outdated, and it takes a long time for the information to update across systems. As a result, often times, claimants may not even know or understand that they received an “extra” benefit check from the government.
I first found out about the the woeful state of Colorado’s unemployment insurance program and the publishing of names of individuals prosecuted for unemployment fraud and when I attended a Colorado Association of Commerce and Industry (CACI) meeting in October 2011 with guest speaker Ellen Golombek, Executive Director of the Colorado Department of Labor. To Ms. Golombek’s credit, she appears focused on transparency and implementing needed change to improve the CDOL.
With new and improved systems and efforts to crack down on fraud and erroneous payments, taxpayers in Colorado will hopefully see some relief from the millions and millions of dollars lost each year in improper payments. Certainly, the public identification of unemployment fraudsters is one step forward to attempt to curb abuse.
In addition, Colorado offered an Amnesty Program for individuals to come forward and avoid penalties and prosecution by agreeing to pay back unemployment benefits that they should not have received in the first instance, whether by overpayment or by fraud. The formal Amnesty Program was available only for a limited time, and as I understand, expired as of December 31, 2011. However, the Colorado Unemployment Insurance Benefits Payment Control Hotline (303.318.9035) remains open, and provides an avenue for individuals to contact the Colorado Department of Labor and, depending on the circumstances, enter into voluntary repayment agreements to pay back overpayments and avoid facing penalties, interest and/or other prosecution. More information can be found on the Colorado Department of Labor (Unemployment Insurance and Overpayments) website.
Effective January 1, 2012, Colorado’s minimum wage increased by $0.28, from $7.36 per hour to $7.64 per hour (for tipped employees, from $4.34 to $4.62). This is $0.39 more than the federal minimum wage of $7.25 per hour.
The new minimum wage requirement is set forth in Colorado Minimum Wage Order 28 (PDF) now in effect. Because employers in Colorado must comply with both federal (Fair Labor Standards Act) and state (Colorado Wage Act) laws, the higher prevailing wage must be paid to employees.
This $0.28 increase represents the 3.8% increase to the Denver-Boulder-Greeley Consumer Price Index (CPI) from 2010 to 2011. Colorado is one of eight states with a minimum wage tied to inflation. The other states include Arizona, Florida, Montana, Ohio, Oregon, Vermont, and Washington. Colorado’s inflationary adjustment requirement was passed by a relatively close vote on Amendment 42 to the Colorado Constitution in 2006 (823,526 in favor; 721,530 against).
More information about the 2012 Colorado minimum wage increase can be found on the Colorado Department of Labor website.
As of 11:50 p.m. on November 1, 2011, the City and County of Denver Coordinated Election results were in. By a margin of 66,719 votes (64.02%) against to 37,498 votes (35.98%) in favor, Ballot Initiative 300 – the Denver Paid Sick and Safe Time Ordinance, failed.
I wrote about this proposed new legislation that would impact employers and workers in the City and County of Denver in my prior blog post: Proposed Denver Paid Sick and Safe Time Ordinance: Nothing to Sneeze At.
As pointed out by the National Restaurant Association in a recent Huffington Post article, businesses on the whole are not opposed to providing sick leave for their workers, but are opposed to the poorly worded legislation that had unintended consequences. It looks like Denver voters resoundingly agreed.
Promoting public health? Sounds good. Making sure working adults stay at home when they are sick? I’m on board. Flexible and supportive working environment? Of course, who doesn’t want that.
Voters in San Francisco, Washington D.C., Milwaukee, and Connecticut were motivated by these ideals when passing paid sick leave ordinances or bills in their cities or state (although Wisconsin Governor Scott Walker nullified Milwaukee’s bill after it was passed). You can bet voters in Denver, too, will be equally motivated by these ideals and the desire to help working families and low income wage earners when deciding Ballot Initiative 300 in November 2011.
But, what exactly is the proposed Denver Paid Sick and Safe Time Ordinance (PDF), and is it really a good idea for Denver?
Key Provisions of Denver’s Proposed Paid Sick and Safe Time Ordinance
- Provides paid sick and safe time leave for all employees within the geographic boundaries of the City and County of Denver, including part-time and temporary employees, who work at least 40 hours a year (federal and state government employees and union members are exempt).
- All Colorado employers who employ eligible workers in the City and County of Denver must comply, regardless of size, but new businesses are exempt during their first year of operation.
- Paid leave would accrue at the rate of 1 hour for every 30 hours worked.
- Large employers, defined as employers with 10 or more employees, must offer up to 72 hours, or 9 days, of paid leave each calendar year.
- Small employers, defined as those with less than 10 employees, must offer up to 40 hours, or 5 days, of paid leave each calendar year.
- Up to 72 hours, or 9 days, of paid leave may be carried over from year to year.
- Paid leave may be taken after 90 days of employment, and may be taken in as few as 1 hour increments.
- No advance notice is required for an employee to take leave.
- No documentation is required until the employee takes 3 or more consecutive days off.
- Employers cannot require employees to search for, or provide, a replacement worker to cover the hours missed.
- Employers cannot “take retaliatory personnel action or discriminate” against employees exercising their sick and safe time rights.
- Paid leave can be taken for:
- An employee’s own mental or physical illness, injury, health condition, need for medical care or treatment, or need for a medical procedure or preventative medical care;
- To care for an employee’s family member’s mental or physical illness, injury, health condition, need for medical care or treatment, or who needs a medical procedure or preventative medical care;
- The closure of the employee’s place of business, or to care for a child whose school or place of care has been closed, due to a public health emergency;
- To seek a civil protection order to prevent domestic abuse pursuant to Section 13-14-102, C.R.S.;
- To obtain medical care or mental health counseling, or both, for the employee or employee’s children to address physical or psychological injuries from domestic abuse, stalking, sexual assault, or other crime involving domestic violence;
- To make the employee’s home secure, or to seek new housing, due to domestic abuse, stalking, sexual assault, or other crime involving domestic violence; and
- To seek legal assistance to address issues arising from domestic abuse, stalking, sexual assault, or other crime involving domestic violence, and attend or prepare for court-related proceedings.
Unclear and Potentially Troublesome Provisions
1. Definition of “Family Member” Too Broad
Although seemingly modeled after the San Francisco and D.C. bills, Denver’s new paid leave ordinance includes a far broader definition of “family member” than any prior bill passed. It includes:
* A person related by blood, marriage or legal adoption, including a child, parent, spouse, sibling, grandparent, or grandchild of the employee;
* A foster child, parent, sibling, grandparent, or grandchild of the employee;
* A child to whom the employee stands in loco parentis or for whom the employee is the legal guardian;
* The employee’s domestic partner;
* The spouse of an employee’s child, parent, sibling, or grandparent;
* A legal guardian of the employee or a person who stood in loco parentis to the employee when he or she was a minor;
* A parent of the employee’s spouse; or
* Any other individual related by blood or affinity whose close relationship is equivalent to a family relationship.
The spouse of an employee’s sibling? Call me crazy, but I think it is a real problem to obligate a small business owner to provide paid time off for an employee to take his or her sister’s husband to a routine doctor’s appointment. Or, to leave open all the possible individuals covered under the vague phrase “any other individual related by blood or affinity whose close relationship is equivalent to a family relationship.” I wonder when we would see the first complaint involving a worker claiming that his or her college roommate is “like family.”
2. Unclear How to Count Number of Employees or Who May Be Eligible
It is unclear how employers will be required to count their number of employees to determine the amount of leave benefits that must be offered. The definition of employer includes all businesses in the State of Colorado. But, the definition of an eligible employee is anyone employed within the geographic boundaries of the City and County of Denver. So, for purposes of determining the amount of leave benefits, are employers required to count all employees in Colorado, or only those employed within the City and County of Denver?
Likewise, if employees need only be employed in the City of County of Denver for 40 hours a year to be eligible, is a worker whose main office is located elsewhere in Colorado, but who travels to Denver frequently throughout the year for deliveries or to conduct business, eligible for the mandated leave benefits?
3. No Advance Notice Required
Where other paid sick leave bills expressly authorize employers to require reasonable notice to be given where practicable when an employee’s need for leave arises, Denver’s new proposed ordinance vaguely says that employers “may not impose unreasonable barriers to use of paid sick and safe time.” What does that mean? An “unreasonable barrier” in one instance could be reasonable under different circumstances. The use of such vague language, rather than clear language allowing employers to require advance notice where practicable, in my view, tips the scale of this legislation away from fair and balanced.
4. Employers Prohibited From Requesting Documentation
Additionally, where other sick leave bills allow employers to require appropriate documentation to support the leave to prevent abuse, Denver’s proposed ordinance prohibits employers from requesting any documentation, until after 3 consecutive days of absence.
5. Employers Already Offering Generous Leave Benefits Not Necessarily Exempt
Finally, even though the new ordinance attempts to exempt employers who already provide vacation or personal time off (PTO) in an amount equivalent or greater than the mandated 9 (or 5) days of leave benefits, the rub is that employers must allow the vacation or PTO “under the same conditions as paid sick and safe time” – meaning that if the other leave benefits require prior notice and/or documentation, this new leave bank must be provided in addition. This is another major difference between Denver’s proposed sick leave ordinance than those passed in San Francisco, D.C. and Connecticut. At least in those ordinances or bills, employers who offered more leave days than that legislatively mandated, were deemed in compliance, without all the other restrictions.
Food for Thought
The Agency for Human Rights and Community Relations (staffed currently by 10 people) in Denver would be responsible for implementing and administering this new law, taking complaints, conducting investigations, holding hearings, providing conciliation, issuing orders, and imposing fines. With only 10 individuals currently in the Agency, the implementation of this new ordinance along with a potential influx of complaints may likely require expansion, using already-tight taxpayer dollars.
Everyone knows that successful, long-term and mutually beneficial employment relationships require employees and employers to work together, and there are a multitude of good employers in Denver and throughout Colorado who strive to keep their workforce happy with generous benefit packages. I am certainly not advocating that employees come to work sick or face losing their job if their child is sent home from school sick. But, is imposing overly broad, vague legislation with unusually restrictive obligations on large and small employers alike, however good in principal, what Denver needs in this economic climate? Governor John Hickenlooper and Mayor Michael Hancock say no, and it is now up to Denver voters to decide in November.
UPDATE: Since first publishing this blog post, Seattle passed its version of paid sick leave legislation in September 2011. Seattle’s 50-page ordinance was approved by the City Council on September 12, 2011 and signed into law by the Mayor on September 23, 2011. Although I have not done a complete side-by-side comparison with Denver’s proposed ordinance, one primary difference is that Seattle’s ordinance provides that employees must work at least 240 hours per year in Seattle to be eligible, while Denver’s proposed ordinance provides leave benefits for eligible employees who work only 40 hours each calendar year.
I am pleased to announce that Colorado Employer’s Law Blog has been nominated as a candidate for the LexisNexis Top 25 Labor and Employment Law Blogs of 2011! To support Colorado Employer’s Law Blog’s nomination, please vote by commenting on the announcement post on LexisNexis’ Labor and Employment Law Community Page.
Each comment is counted as a vote. To submit a comment:
1. Log on to your LexisNexis Communities account on the right side of the Labor and Employment Law Community Page, then vote by making a comment at the bottom of the blog nomination page while logged in; or
2. If you haven’t previously registered, you can register on the Labor and Employment Law Community Registration Page for free. Then, vote by making a comment in the comment box at the very bottom of the blog nomination page after registering.
Please vote early and often! The comment period closes on September 12, 2011. Thanks for your support!
On May 31, 2011, in a decision critical to non-compete law in Colorado, the Colorado Supreme Court issued its holding in Lucht’s Concrete Pumping Inc. v. Horner (PDF). I previously blogged about the fluctuating state of Colorado’s non-compete law given the decisions below in the Lucht’s case — Colorado Non-Compete Law in Flux (October 7, 2010). For many who have been watching and waiting, The Decision (my sport’s reference for the day…go Heat) has arrived, and it’s favorable for employers.
- The trial court granted summary judgment in favor of the employee (Horner) concluding that his noncompetition agreement was unenforceable due to lack of consideration, as he was not offered any additional monetary payment, raise, benefits, etc. in exchange for the non-compete covenant that his employer (Lucht’s) wanted him to sign after he was hired.
- The employer (Lucht’s) appealed.
- The court of appeals agreed with the trial court and concluded that continued employment of an at-will employee cannot, by itself, constitute consideration for a non-competition covenant if the employee had already begun working.
The employer (Lucht’s) appealed again.
Colorado Supreme Court Reverses
In an en banc decision, the Colorado Supreme Court reversed the court of appeals:
“We hold that an employer that forbears from terminating an existing at-will employee forbears from exercising a legal right, and that therefore such forbearance constitutes adequate consideration for a noncompetition agreement. We have recognized that continuation of at-will employment is adequate consideration in the context of an employee’s receipt of a benefit, Continental Air Lines [v. Keenan], 731 P.2d [708,] 711 [(Colo. 1987)], and now apply that reasoning to the context of consideration for a noncompetition agreement.”
The Court reasoned that because employment in Colorado is at-will, meaning that an employer may terminate an at-will employee at any time during the employment relationship as a matter of right, the forbearance from terminating an employee presented with a non-compete agreement after hire is sufficient consideration for such an agreement. The Court further reiterated that there appears to be no question that sufficient consideration for a non-compete agreement exists when entered into at the commencement of at-will employment.
So, there you have it. The Colorado Supreme Court says continued at-will employment is sufficient consideration for non-compete covenants. Employers may rejoice – there is no need to go back and offer more money or benefits to employees who have signed noncompetition agreements after hire.
See related entry: Colorado Non-Compete Law in Flux – October 7, 2010
I previously blogged in March 2011 on the 1-year anniversary of health care reform. At that time, the 5 principal cases challenging the constitutionality of the Affordable Care Act had moved from the district courts to the federal Courts of Appeals. Currently, these cases are almost fully briefed, and 2 of them have been argued.
As we await these important decisions, I had an opportunity to talk about the cases with one of my colleagues, Tom Christina, who spoke about them in a conference in Chicago earlier this month.
Tom also filed an Amicus Brief in State of Florida v. United States Department of Health & Human Services (PDF), which is pending before the Eleventh Circuit. Here are some quick facts about the Florida case (PDF of decision below), which is very significant for the future of U.S. health care reform:
- The case challenges the Constitutionality of the Affordable Care Act and was filed minutes after President Obama signed the new law.
- It was brought by the Attorneys General and/or Governors of 26 states (Alabama, Alaska, Arizona, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Ohio, Pennsylvania, South Carolina, South Dakota, Texas, Utah, Washington, Wisconsin, and Wyoming), 2 private citizens, and the National Federation of Independent Business.
- The defendants are the United States Department of Health and Human Services, the Department of Treasury, the Department of Labor, and their secretaries.
- In granting summary judgment in favor of the states and other plaintiffs, the U.S. District Court for the Northern District of Florida (Judge Vinson) held that Congress exceeded its powers under the Commerce Clause by requiring most individuals to have health insurance coverage beginning in 2014.
- The District Court also ruled that this “individual mandate” provision could not be severed from the remainder of the statute, causing the entire Affordable Care Act to be void.
- The Eleventh Circuit appeal was filed by the defendants (Department of Health & Human Services, Department of Treasury, Department of Labor, and their secretaries), seeking to overturn the district court ruling in favor of the states and other plaintiffs.
Below is a summary of my conversation with Tom about the issues in the Florida case and the oral arguments before the Fourth Circuit on May 10, 2011, in two other “Obamacare” cases — Liberty University v. Geithner and Commonwealth of Virginia v. Sebelius.
JLG: Tom, the Fourth Circuit heard oral argument in Liberty University v. Geithner and Commonwealth of Virginia v. Sebelius on May 10, 2011. Having reviewed the audio files of the arguments, what issues seemed to interest the Fourth Circuit Judges most?
TMC: In Commonwealth of Virginia, the panel seemed to zero in on whether a state can bring a lawsuit to declare that its citizens’ rights are violated by a federal statute.
In Liberty University, there were two questions that I think were equally important to the Fourth Circuit panel. First, they wanted the plaintiffs to clarify that their lawsuit was challenging only the individual mandate provision of the Affordable Care Act. Second, they questioned whether Congress could regulate individuals’ decisions to purchase insurance coverage, even if that decision is not an activity affecting interstate commerce, as long as the individual mandate is part of a much larger regulatory statute aimed at regulating how Americans pay for health care.
JLG: What’s your read on how the argument went for each side?
TMC: The Judges seemed troubled by the idea that a state could bring a lawsuit challenging the individual mandate because the individual mandate falls on the state’s citizens, not on the state itself. They also seemed receptive to the government’s argument regarding the scope of Congress’ power. Neal Katyal, the Acting Solicitor General of the United States, argued both cases for the government, which is very unusual. The SG ordinarily argues cases only before the U.S. Supreme Court. He is a very polished advocate.
JLG: What is the focus of your Amicus Brief in State of Florida v. United States Department of Health & Human Services (PDF)? Does it address the same questions that the Fourth Circuit focused on?
TMC: Our brief in the Florida case primarily addresses the “severability” issue. We ask the Eleventh Circuit to affirm Judge Vinson’s ruling that the entire Act is void if any provision is unconstitutional, and we suggest a legal basis for that ruling that the courts might otherwise overlook.
Specifically, the Act was passed under a very unusual rule adopted by the House of Representatives that required considering it only on an “all or nothing” basis, with no severability provision and no possibility of amendments. The Senate version of healthcare was adopted on December 24, 2009, when the Democrats still had a filibuster-proof majority. However, before the majority leadership of the House and Senate could reconcile their differences on healthcare reform, the Massachusetts special Senate election gave Republicans enough votes in the Senate to filibuster. House leaders knew that if there were any amendments to the Senate version of the bill by the House, the entire bill would then have to go back to the Senate, where a filibuster would prevent it from being enacted. To avoid that result, the House leadership brought the Senate version to the floor under a special rule that prohibited any amendments, so each Representative was required to vote for or against the Act as a “package deal,” with no severability clause.
JLG: Does that argument help the states and other plaintiffs in the Florida case on the merits of their Constitutional claims?
TMC: We think so. If the Eleventh Circuit accepts the principle that the entire Act is void if any provision is void, the states and the private plaintiffs in the Florida case can broaden their attack. For example, they can explain that the individual mandate is an integral part of forcing the states to establish and pay for “Exchanges” where required coverage will be sold, which in turn dovetails with various other tax provisions in the Act, and so on.
JLG: What happens next?
TMC: In the Florida case, the states will file a reply brief on May 25, 2011, and oral argument is scheduled for June 8, 2011. Eventually, everyone expects these issues will make their way to the U.S. Supreme Court later this year.
UPDATE – On August 11, 2011, the Eleventh Circuit Court of Appeals issued its 207-page decision and 84-page dissent (PDF), affirming the district court’s (Judge Vinson’s) ruling that the health insurance mandate is unconstitutional. However, the Court held that the other provisions of the law are “severable” from the individual mandate, and therefore, may be upheld. Because the 11th Circuit decision is in contrast to the recent 6th Circuit decision upholding the constitutionality of the Act on June 29, 2011, all signs point to the U.S. Supreme Court as the next stop.