Colorado’s Protecting Opportunities and Workers’ Rights Act (POWR Act) went into effect earlier this month.

The POWR Act applies to all Colorado employers. It prohibits discrimination based on marital status, rejects the federal standard for harassment claims, adds new recordkeeping requirements for employers, and restricts the use of nondisclosure provisions.

This article provides a practical to-do list for employers trying to comply with the new law.

Update EEO Statement to Include Marital Status

Colorado’s Antidiscrimination Act (CADA) prohibits employers from discriminating or harassing individuals based on protected categories such as disability, race, national origin, sex, sexual orientation, gender identity, gender expression, religion, and age. The POWR Act adds marital status to the list of protected categories in Colorado. Employers should update their EEO statements, policies, and trainings to ensure that no adverse actions are taken against an employee based on marital status.

Audit Harassment Policies and Training

The POWR Act encourages employers to establish a program to prevent harassment, protect employees, and promptly investigate and address discrimination and harassment. For employers, now is a great time to review EEO, harassment, and complaint policies to ensure they are meeting these goals. Employers should also make sure that employees are aware of the program.

With the enactment of the POWR Act, Colorado will join New York, California, Washington, D.C., and Maryland in rejecting the longstanding federal “severe or pervasive” standard for determining whether conduct constitutes unlawful harassment. With the new lower standard under state law, more conduct will qualify as unlawful harassment. Because of this, if an employer’s policies only prohibit or address conduct that is “severe or pervasive,” they will need to be amended. Due to the new lower standard, addressing issues early — before conduct becomes “severe or pervasive” — is a key ingredient in preventing harassment.

Implement New Recordkeeping Procedures

The POWR Act imposes new recordkeeping requirements relating to complaints of discrimination and harassment and requests for accommodation. Colorado employers must set up and maintain a repository of all written or oral complaints of discrimination or harassment. The employer must include in the repository the date of the complaint, the identity of the complaining party (if the complaint was not anonymous), the identity of the alleged perpetrator, and the substance of the complaint. Employers can satisfy this requirement with a spreadsheet, a physical or electronic folder, or HRIS software as long as the records are accurately maintained in a designated location.

The POWR Act also requires employers to keep the following personnel records for five years: requests for accommodation; complaints of discrimination or harassment; applications for employment; records related to hiring, promotion, demotion, transfer, layoff, termination, rates of pay or other terms of compensation, selection for training or apprenticeship, and records of training provided to employees. These personnel records must be kept for at least five years from the latest date of the following events: the date the record was made, the date the personnel action at issue was taken, or the date of the final resolution of a charge of discrimination or lawsuit. Employers should make sure that any existing record retention policies are updated to comply with this new law.

Revise Nondisclosure Agreements and Nondisparagement Provisions

The POWR Act restricts the use of nondisclosure provisions, requiring employers to revise the same or face a penalty of $5,000 per violation and the potential for actual damages, reasonable costs, and attorney fees. The POWR Act defines nondisclosure provisions (NDAs) as a provision that limits the employee or prospective employee’s ability to disclose or discuss “any alleged discriminatory or unfair employment practice,” i.e., discrimination or harassment based on a protected category. Under the new law, NDAs are void unless they meet the following requirements:

1. The NDA must be mutual.
2. The NDA must state that it does not restrain the employee or prospective employee from disclosing underlying facts of any alleged discriminatory or unfair employment practice, including the existence and terms of a settlement agreement, to: (1) certain individuals (immediate family members, religious advisor, medical or mental health provider, mental or behavioral health therapeutic support group, legal counsel, financial advisor, or tax preparer), (2) any government agency for any reason without first notifying the employer, (3) in response to legal process without first notifying the employer, and (4) for all other purposes required by law. In other words, an NDA must expressly permit disclosure of certain information to certain people or entities.
3. The NDA must state that disclosure of the underlying facts of any alleged discriminatory or unfair employment practice consistent with the statute (as stated in Paragraph 2 above) is not disparagement.
4. If the agreement contains a nondisparagement provision, it must state that if the employer disparages the employee or prospective employee, the employer cannot seek to enforce the nondisparagement or NDA or seek damages related to any other party’s violations of these provisions.
5. If the NDA contains a liquidated damages provision, such liquidated damages must be reasonable and proportionate based on actual anticipated economic loss, tailored to the nature of the breach, and not punitive.
6. The NDA must attach an addendum, signed by the employer and employee or prospective employee, attesting compliance with the requirements detailed above.

If employers wish to continue using NDAs and nondisclosure agreements, such provisions will need to be revised to comply with the POWR Act.

Employers should also be aware that previous NDAs can support an award of punitive damages in lawsuits involving claims of discrimination or an unfair employment practice. Specifically, a plaintiff can present evidence that the employer had previously entered into one or more NDAs involving conduct of the same individual(s) who are alleged to have engaged in discrimination or an unfair employment practice in the plaintiff’s lawsuit. Such evidence will be considered in support of a punitive damages award. Because of this, employers should exercise caution in deciding when to use NDAs.

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