Providing Developments & Insight on Trending Topics in Employment Law

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Providing Developments &amp; Insight on Trending Topics in Employment Law

In the next two months, significant changes are coming to Colorado’s Anti-Discrimination Act, otherwise known as <a href="https://ccrd.colorado.gov/ccrd-home/regulatory-information">CADA</a>. The <a href="https://leg.colorado.gov/bills/sb23-172">Protecting Opportunities and Workers’ Rights (POWR) Act</a> creates a new, lower standard for workplace harassment, in addition to limiting the enforceability of nondisclosure agreements and creating new recordkeeping obligations for employers. The POWR Act was signed by Gov. Polis on June 6, 2023, and will take effect Aug. 6, 2023.

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New Standards for Workplace Harassment

Workplace harassment based on an individual’s membership in a protected class is unlawful discrimination under both state and federal law, but only certain conduct met the requisite level of severity to be actionable. Courts previously analyzed workplace harassment claims brought under CADA using the standards applicable to Title VII cases<a href="#_ftn1" id="_ftnref1">[1]</a> but will now analyze such claims using the POWR Act’s statutory framework. The POWR Act redefines workplace harassment, codifies the factors courts use to decide what conduct constitutes harassment, and narrows the affirmative defense available to employers.

The new standards, described in detail below, lower the threshold for viable workplace harassment claims while making it more difficult for employers to prove an affirmative defense to such alleged harassment.

Colorado Workplace Harassment Law Pre- and Post-POWR Act

Workplace harassment was defined as the creation of a hostile work environment based on an individual’s membership in a protected class.

The POWR Act removes the hostile work environment requirement, instead defining workplace harassment as “engagement in any unwelcome physical or verbal conduct or any written, pictorial, or visual communication” based on the individual’s membership (or perceived membership) in a protected class. Conduct is only actionable under the Act if it is both offensive to the individual alleging harassment and objectively offensive to a reasonable person who is a member of the same protected class.

Standard used by courts to decide whether workplace harassment is unlawful:

Under the “severe or pervasive” standard, harassing conduct is unlawful when the workplace is permeated with conduct sufficiently severe or pervasive to alter the conditions of employment and create an abusive environment.<a href="#_ftn2" id="_ftnref2">[2]</a>

While the POWR Act removes the “severe or pervasive” standard in favor of a lower “unwelcome harassment” standard, conduct only constitutes unlawful harassment if submission to the conduct is a term of employment or is used as a basis for employment decisions, the conduct unreasonably interferes with the individual’s performance, or the conduct creates an intimidating, hostile, or offensive working environment. The Act specifically excludes petty slights, minor annoyances, and lack of good manners unless, under the totality of the circumstances, they meet the standard described above.

Factors courts consider in deciding whether, under the totality of the circumstances, conduct meets the standard for workplace harassment:

Courts consider the frequency and severity of the conduct, whether the conduct is physically threatening or humiliating, whether the conduct unreasonably interferes with the employee’s performance, and the social context in which the conduct occurs.<a href="#_ftn3" id="_ftnref3">[3]</a>

The Act codifies the factors courts can consider, adding to the list the number of individuals engaged in the conduct, the location of the conduct, power differentials, and the use of stereotypes and slurs. The Act also clarifies that a single incident may rise to the level of harassment, and conduct that was at one time welcome may become unwelcome.

Affirmative defenses available to employers:

An employer could assert an affirmative defense by proving it exercised reasonable care to prevent and correct harassment and the employee alleging harassment unreasonably failed to take advantage of preventive or corrective opportunities provided by the employer or to otherwise avoid the harm.<a href="#_ftn4" id="_ftnref4">[4]</a> &nbsp; &nbsp;

The Act preserves the essence of the employer’s affirmative defense, but adds more specificity, requiring an employer to show it set up a program designed to prevent harassment, deter future harassers, and protect employees from harassment. As a part of the program, the employer must take prompt, reasonable action to both investigate claims and take remedial action and the employer must communicate the existence of the program to supervisory and nonsupervisory employees. Finally, to establish the affirmative defense, the employer must prove the employee has unreasonably failed to take advantage of the program.

Classes protected under CADA’s employment provisions:

Disability, race, creed, color, sex, sexual orientation, gender identity, gender expression, religion, age, national origin, and ancestry.

The Act adds marital status to the list of protected classes.

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Additionally, the Act requires the Colorado Civil Rights Division, the agency charged with enforcing CADA, to add harassment as a basis for discrimination on its intake forms.

Limitations on Nondisclosure Agreements

The POWR Act also adds a new section to CADA voiding confidentiality provisions and nondisclosure agreements entered into between employers and employees on or after the Act’s effective date, Aug. 6, 2023. Specifically, the Act classifies any employment-related nondisclosure agreement or confidentiality provision as an unfair employment practice unless the agreement:

Applies equally to both the employer and employee;

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Expressly states that it does not prohibit the individual from disclosing the underlying facts of any alleged discriminatory or unfair employment practice, including the existence and terms of a settlement agreement, (1) to the individual’s immediate family members; religious advisor; medical or mental health provider; mental or behavioral health therapeutic support group; legal counsel; financial advisor; tax preparer; or any local, state, or federal government agency, or (2) in response to a legal process;

Expressly states that disclosure of the underlying facts of any alleged discriminatory or unfair employment practice does not constitute disparagement;

Includes a condition that if the employer has disparaged the individual in violation of a non-disparagement provision, the employer may not try to enforce the non-disparagement or nondisclosure provisions of the agreement against the employee;

Expressly states that any liquidated damages provision included in the agreement may not constitute a penalty or punishment for breach, meaning that any liquidated damages provision must be reasonable and proportionate considering the expected actual economic loss for a breach; and

Includes an addendum, signed by all parties, attesting to the agreement’s compliance with the Act.

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The Act provides for significant penalties if employers’ nondisclosure agreements deviate from these requirements. Under the Act, employees presented with agreements in violation of the Act can bring an action against the employer and recover actual damages, attorney’s fees, and a penalty of $5,000 per violation. A court can reduce the penalty if the employer can show a good faith belief that their agreements were satisfactory, but a court can also award punitive damages in a workplace discrimination suit if the employee can show the employer entered into a nondisclosure agreement that covered the discriminatory conduct.

Requirements for Employer Recordkeeping late

The POWR Act also increases employers’ obligations to maintain personnel records and records of discrimination complaints. Under a new section of CADA, employers must preserve personnel and employment records for a period of five years from the latest of the date the employer created or received the employment record, the date of the personnel action the record relates to, or the final disposition of a charge of discrimination. The Act defines personnel and employment records as:

Written and oral employee complaints of discrimination, harassment, or unfair employment practices;

Hiring, promotion, demotion, transfer, layoff, and termination records;

Records relating to rates of pay or other terms of compensation;

Records relating to selection for training or apprenticeship; and

Records of training provided to employees.

In addition, the employer must keep a repository of all written and oral complaints of discriminatory or unfair employment practices, which must be preserved for five years from the latest of the date the employer created or received the complaint, the date of the personnel action the complaint relates to, or the final disposition of a charge of discrimination. The recorded complaints must include:

The identity of the complaining party if the complaint was not made anonymously;

The identity of the alleged perpetrator; and

While the Act does not implement a penalty for violating the recordkeeping requirements, such records will likely become the subject of discovery requests in future employment litigation.

If you have questions or require assistance in complying with the Act, the BakerHostetler Labor and Employment Practice Group is here to help.

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<a href="#_ftnref1" id="_ftn1">[1]</a> Clayton v. Dreamstyle Remodeling of Colorado, LLC, 20-CV-02096-KLM, 2022 WL 910957 at *18 (D. Colo. Mar. 28, 2022).

<a href="#_ftnref2" id="_ftn2">[2]</a> Id. at *10.

<a href="#_ftnref3" id="_ftn3">[3]</a> Id.

<a href="#_ftnref4" id="_ftn4">[4]</a> Id. at *13.

Under the POWR Act, Colorado Workplace Harassment Law Departs from Federal Standards