The Basics of Termination of Employment in Colorado
Employees in Colorado should be brought to be aware that they are regarded, within the interpretation of The Colorado Employment Law, however, there are certain statutory exceptions to the presumption of "terminable-at-will" for example, where the employee does not possess the requisite training, skill, licenses and/or other qualifications required to hold the job in the first place. However, when an employee has the requisite skills and qualifications for a job but is deemed by the employer to and/or by conduct and/or knowledge to be egregiously irresponsible, an employee’s termination for even the most trivial action may be lawful.
Given the fundamental presumption that employees can be terminated for any reason, the Colorado Department of Labor and Employment ("CDLE") has created a directory and listing of the independent state laws that concern wrongful termination of employment. These independent state laws are specifically tailored to prohibit discriminatory, retaliatory, or other forms of wrongful termination. Discrimination and retaliation occur when an employee is discharged based on personal characteristics and/or behavior protected by law. Further, at common law, an employee can also be discharged in violation of a contract, public policy, good faith and fair dealing, and whistle-blowing/whistle-blower provisions. The CDLE provides these listings on its website, but the impact of the employment laws on the specific work circumstances and situations presented may vary. Therefore, an attorney versed in employment law in Colorado is recommended for any employment dispute that arises.
In Colorado, the termination of employment relationships is regulated to a limited extent by the C.R.S . Under statutory law, an employee may bring a civil action in district court against his or her former employer concluded that the employee was discriminated against because of race, color, religion, sex, national origin, ancestry, age, disability, or genetic characteristics in violation of a federal or state law. As mentioned above, through the Common Law, an employee may also bring, as outlined in the CDLE list linked subject to contractual obligations, civil actions for wrongful discharge, wrongful termination in violation of public policy, and/or retaliatory termination. Further, Colorado has adopted the "reasonable accommodation" doctrine for disabled employees, this prohibits discharge, harassment, or discrimination based on an incapacity to perform the usual and normal duties of work. The Colorado Wage Act, found at C.R.S. 8-4-101 et seq., restricts employers from discharging employees on the grounds of their filing or participating in a wage complaint or lawsuit (similar federal laws exist under the Fair Labor Standards Act).
First and foremost, Colorado, as a state, is an employment-at-will jurisdiction, meaning that employees can be terminated during or at the end of the employment relationship for any reason or no reason. Primary examples that demonstrate the "terminable-at-will" principle are further outlined below:
(A). Colorado courts have held that an employer in fact should have the right to terminate an employee for his/her positive attributes.
(B). Colorado District Courts have also held that an employer should have the right to terminate an employee for his/her personal action without lawful reasoning.
(C). This principle has been held to also extend to employers firing employees based on their sexual orientation or physical appearance.
Employment at Will in Colorado
In general terms, most employment relationships in Colorado are "at will" relationships. At-will employment means that the employer has the right to discharge the employee, or the employee has the right to quit, at any time, with or without cause or notice. Thus, the employer generally does not need to prove that it had a legal basis for terminating the relationship. Similarly, the employee does not need to provide the employer with advanced notice or be able to demonstrate "cause" when quitting.
Although at-will employment is the rule in Colorado, there are exceptions. For example, the termination may be subject to a written employment contract or implied contract between you and your employer. An employee handbook may contain language limiting the reasons for termination. A collective bargaining agreement may limit the reasons for termination of a union-represented employee. Further, an employee who experiences a termination in violation of federal or state anti-discrimination laws may successfully challenge that termination as violating public policy. Employers also should note that the termination may be subject to the FMLA, ADA, or Title VII, among other statutes.
Permissible Reasons for Termination
As a "right to work" state, there are limited legal grounds upon which an employer can terminate an employee in Colorado. While the state grants employers broad authority on such grounds, the reasons for termination still generally must fall within accepted legal parameters. The clearly acceptable legal grounds for termination include:
- Failure of an employee to perform assigned duties
- Breach of contracts, either written or implied
- Violation of company policies and procedures
- Dishonesty
- Negligent behavior
In terms of unlawful reasons for termination, the list in Colorado is also limited. For an unlawful reason, the wrongful termination claim typically must involve one of the following:
- Discrimination based on race, color, disability, religion, sex, sexual orientation and age
- Retaliation for filing a lawsuit in good faith
- Disclosure of private information to outside parties for unlawful reasons (defamation)
- Filing a workers’ compensation claim
- Refusing to engage in unlawful practices (such as discrimination)
- Filing a whistleblower complaint
A termination that does not fall into one of the categories above is generally considered to be at-will. In other words, an employer could voluntarily terminate an employee without a specific reason at any time, or they could choose to retain employment if they have not committed any clear violations of policies and procedures.
Illegal Reasons for Termination
In Colorado, employers are prohibited from terminating employees for several reasons. The most common of which are discriminatory reasons, in retaliation for engaging in protected activity, or as a violation of public policy.
Colorado labor laws prohibit workplace discrimination on the bases of race, color, national origin, ancestry, religion, sex, sexual orientation, gender identity, and disability. C.R.S. § 24-34-402.4 (2023). Employers who fire or refuse to hire an employee for any one of these reasons may be liable for unlawful discrimination. Equally important are prohibitions of retaliation for protected activity. Colorado law prohibits employers from firing or refusing to hire employees for engaging in certain protected activities, including filing a charge of discrimination, or complaining about discrimination or harassment in the workplace. C.R.S. § 24-34-402.5, 24-34-402.9 (2023).
Lastly, Colorado law prohibits employers from firing employees if that firing is in violation of public policy. Typically, violations of public policy include situations where the firing is for: refusing to perform an illegal act, terminating an employee who is on military leave, terminating an employee for seeking workers’ compensation benefits, or terminating an employee who reports illegal or unsafe working conditions to law enforcement. C.R.S. § 29-5-101 (2023).
Requirements for Termination Procedure
Once an at-will employee has been selected for termination, there are few procedural requirements an employer must follow. In fact, Colorado law is silent as to what procedural step regarding notice of termination is required. Assuming the employment agreement does not specify, it is advisable to give employees as much advanced notice of their termination as is reasonable under the business circumstances. Because the failure to provide notice of termination extends the employment relationship, this could entitle an employee to severance benefits.
In addition to notice, many employers also attempt to provide terminated employees with a termination letter summarizing the reasons for termination (particularly if severance is being offered). Such letters could be construed as being defamatory (regardless of their truth) if the letter is overly critical of the employee. Similarly , termination letters can also give rise to claims for negligent misrepresentation depending on the nature of the letter and representations made in the letter. For example, representations made in the letter for which there is no factual basis could be considered negligent even if the statement made in the letter were not clearly false. Again, assume the employment agreement does not specify, and employers should exercise caution when providing terminated employees a termination letter.
There are no special administrative procedures the employer must fulfill when terminating an at-will employee: it is not necessary to give a reason or obtain the employee’s signature. However, the employer must comply with the Fair Employment Practices requirements described below.
Final Pay and Severance Pay
In the event of termination, Colorado law does not require employers to offer former employees severance pay. However, if a severance package is offered by the employer, the Colorado Wage Act requires that the terms of such compensation be defined in writing. An employer’s failure to provide such writing is likely to subject the employer to a lawsuit for unpaid wages. Although required in writing, the Colorado Wage Act does not require an employer to distribute severance pay until the employee has returned all property it may have provided to the employee during his or her employment. However, even if an employer gives an employee a period of time to return property through termination paperwork, Colorado courts have deemed such paperwork inadequate, since the employer still receives value from the property once it is returned to the employer, thus, rendering it as compensation for the employee.
Additionally, when a company terminates an employee, Colorado law requires the employer to pay all final compensation no later than the next regular payday. In the case that mining companies terminate employees upon their discharge, quit, absence from work, or suspension from work, the Colorado Mine Safety and Health Act mandates that the employer pay all final compensation no later than 72 hours after such termination, unless the affected employees request payment at an earlier date. The Colorado Wage Act stipulates that the employer may pay wages by cash, check or credit card. An employer’s failure to timely pay final compensation could constitute a class action claim by each affected employee against the employer. Colorado state courts may extend a Plaintiff’s recovery to include attorneys’ fees and interest at 12% annually.
Being Sued for Wrongful Termination
If an employee believes they are the victim of wrongful termination, they may file a complaint with the Colorado Department of Labor and Employment (CDLE) Division of Labor Standards & Statistics. Under the C.R.S. § 8-2-124, employees can file a complaint alleging wrongful termination in a Colorado state court against a party for violating public policy. In Colorado, however, few exceptions of employment are expressly created by legislative statutes or regulations. The wrongfully terminated employee has the burden to establish that the private employment relates to a state interest sufficient to justify the termination of the public policy. Most states continue to presume employment to be "at-will" where there will be no recovery unless an exception applies. Colorado is one of those states.
If an employee believes he or she has been the victim of wrongful discharge, the first step of the process is to file a claim with the CDLE. This will begin the process for receiving the proper remedy for the conduct in question. The employee or agent must file a written complaint form with the Division of Labor Standards & Statistics. The filing must be completed within when the employee becomes aware or should have become aware that the wrongful termination occurred or after involuntary separation from employment. A complaint form can be downloaded from the CDLE website and must be submitted to the division or mailed to the division and provide the following information:
•Employee’s name
•Social security number
•Address
•Daytime telephone number
•Name of the former employer
•Employer’s address
•Address of business where the violation occurred
•Telephone Number of the employer
•The name and contact information of the employer’s human resources director
•Information about the nature of the violation
•A check for $10 made out to the CDLE for processing of the complaint
•Sign and date the form.
The complaint must be completed in its entirety, along with the $10 filing fee made to the CDLE. Failure to submit a properly completed complaint could result in an automatic dismissal of the complaint. Once the complaint has been made, the CDLE has the authority to investigate the complaint. The CDLE may also require the employer to answer the complaint and respond to the charges made in the complaint. A determination by the division will be made in 60 days, or upon completion of the investigation, whichever occurs first. If the CDLE determines that a violation has occurred, it will seek to resolve the matter via voluntary compliance. The division will then issue a "preliminary determination" letter. Granting employees to recover all back wages and any other damages as the division deems appropriate, including attorney’s fees. This becomes a final agency decision unless either party requests a hearing.
Recent Changes & Law
Several recent updates to Colorado labor laws related to termination could have implications for current and future employment practices. In Woolley v. Southwest States Telephone Inc., 92 P.3d 27, 30 (Colo. 2004), the Colorado Supreme Court, held for the first time that an implied covenant of good faith and fair dealing could be recognized in a contract of employment that otherwise contained a disclaimer that it was terminable at will. That case opened the door for the possibility of a "wrongful termination claim" based in part on the employer’s violation of the implied covenant of good faith and fair dealing, which an employer can now potentially be held liable for if the employer fires based on a bad faith motive.
Since government and municipal employees are already covered by the Colorado Whistleblower Statute , and employees have a statutory right to be free from retaliation for reporting domes violence, which applies to most employers, the only real significance of Woolley is that it may allow private sector employees that are not protected by either of those statutes or are likely to face defenses under those statutes an opportunity to bring a wrongful termination claim even though their employment is governed by an employment at will agreement.
Recently Governor Jared Polis signed into law Colorado House Bill 23-1221, making clarifications to the state’s "Pay Equity Act," which makes it unlawful for employers to make compensation decisions based on a candidate’s salary history. The bill adds protections for employees who disclose their current compensation as part of an interview process and makes it an unfair labor practice for an employer to retaliate against an employee who makes such a disclosure.