[co-author: Alexis Opper]
In the next two months, significant changes are coming to Colorado’s Anti-Discrimination Act, otherwise known as CADA. The Protecting Opportunities and Workers’ Rights (POWR) Act 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.
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[1] 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.
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;
- 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.
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:
- Requests for accommodation;
- Written and oral employee complaints of discrimination, harassment, or unfair employment practices;
- Submitted job applications;
- 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 date of the complaint;
- The identity of the complaining party if the complaint was not made anonymously;
- The identity of the alleged perpetrator; and
- The substance of the complaint.
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.
[1] Clayton v. Dreamstyle Remodeling of Colorado, LLC, 20-CV-02096-KLM, 2022 WL 910957 at *18 (D. Colo. Mar. 28, 2022).
[2] Id. at *10.
[3] Id.
[4] Id. at *13.
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