• The Death Knell of Employment at Will in Colorado?
  • September 18, 2008 | Authors: Sarah E. Benjes; Elizabeth A. MacDonald
  • Law Firm: Faegre & Benson LLP - Denver Office
  • Colorado voters are being urged to approve a constitutional amendment this fall that would drastically change the at-will rule of employment in the state.

    Amendment 55—recently approved by the Colorado secretary of state for addition to the November 4 ballot—would require employers to establish just cause prior to discharging or suspending an employee. Proponents of this initiative submitted over 130,000 signatures with the petition, well above the minimum number of signatures required.

    If this amendment is approved, employers seeking to suspend or discharge employees or planning a reduction in force will need to prepare and retain a significant amount of documentation that is not currently required. Further, employers could be subject to civil actions by employees who believe they were suspended or discharged without just cause.

    Changes Under Proposed Amendment

    Under the current at-will rule, an employer or employee may terminate the employment relationship at any time, with or without notice, and for any reason not otherwise prohibited by law. Under the proposed amendment, an employer could discharge or suspend an employee only after establishing and documenting "just cause" for the discharge or suspension. The definition of "just cause" includes incompetence, poor performance, insubordination, conviction of a crime involving moral turpitude, filing of bankruptcy by the employer, or discharge or suspension due to specific economic circumstances that directly and adversely affect the employer. The employer would be required to provide each employee with written documentation of the just cause used to justify the discharge or suspension.

    Covered employees would include full-time employees who have worked for at least six consecutive months and who are not covered by a collective bargaining agreement which contains a requirement for just cause for discharge or suspension. Covered employers would include any business entity that employs at least twenty full-time employees in Colorado and non-profit organizations with more than 1,000 employees. Governmental entities and non-profits with less than 1,000 employees are expressly excluded from the definition of employer.

    Under the proposed amendment, employees who believe they were discharged without just cause may file a civil action in state district court if they do so within 180 days after notification of the discharge or suspension. The court may award reinstatement, back wages, and/or damages for violations. Further, the court may award attorney fees to the prevailing party.

    How Employers Should Prepare

    If approved by voters in November, this amendment will become effective immediately, although the Legislature may enact additional legislation related to this amendment.

    In anticipation of possible approval of this amendment, employers should prepare and retain written documentation of any issues with an employee's performance, absences or tardiness, insubordination, policy violations, or misconduct. In addition, employers planning a reduction in force, should prepare and retain written documentation related to the specific economic circumstances that are directly and adversely affecting the employer to justify such a reduction.