New Colorado Employment Laws Enacted, Other Statutes Modified

The 2024 Colorado legislative session has concluded and resulted in several new laws affecting Colorado employers. This article provides an overview of some significant changes.

Sweeping Protections for Delivery-Network Drivers

House Bill (HB) 24-1129 creates an entirely new statute, C.R.S. Section 8-4-126, that focuses on several different job-related protections for delivery drivers who work for delivery-network companies, including wage transparency, contract transparency, and account-deactivation transparency and challenge procedures. The new law also includes enforcement mechanisms.

The act applies to delivery-network companies (DNC), which are defined as, “any person that sells the delivery of goods or services, including delivery provided as part of the sale of goods, in the state and that engages or dispatches delivery drivers through a digital platform.” In turn, a digital platform is “an online application, internet site, or system that a delivery network company uses to facilitate, manage, or facilitate and manage delivery services.” Notably, the act applies only to drivers who are independent contractors. DNCs need not comply with respect to drivers who receive W-2s for all amounts earned.

Most of the act concerns wage-related protections for delivery drivers. For instance, Subsection (2) creates protections surrounding tips to drivers from consumers and bars DNCs from decreasing a delivery driver’s pay due to consumer tips for deliveries. Further, the act requires DNCs to pay delivery drivers all tips paid by consumers.

DNCs must also abide by the wage-transparency requirements. Regarding delivery drivers that are paid on a per-delivery basis, each time a DNC offers a delivery driver a delivery task, the DNC must disclose the estimated or actual amount that the delivery driver will earn for the delivery, in a disaggregated format such that the delivery driver can see the full and accurate amount of any tip or reimbursement. Further, within 24 hours after a driver completes a delivery task, a DNC must disclose to the driver the disaggregated, actual amount the driver was paid for the delivery. For drivers that are paid on a block basis or for multiple deliveries at once, the act provides similar wage-transparency protections where the DNC must inform the driver the estimated pay before the block and the actual pay within 24 hours of the block.

The act also creates transparency in contracting between DNCs and delivery drivers; namely, new requirements are intended to make contracts easier for delivery drivers to read and understand, and more accessible to delivery drivers before and after the contract is enforceable, or after any changes or amendments to the contract.

In the same vein, the act now requires DNCs to maintain a policy specific to driver account deactivation. The written account deactivation policy must: 1) specifically define what constitutes a violation that may result in an account deactivation in a way that drivers can reasonably understand; 2) be provided to drivers before the driver begins providing services through the DNC’s delivery platform; and 3) be available to drivers in English, Spanish, Arabic, and up to three other languages as determined by the state. The DNC must provide the account-deactivation policy in each language to the Colorado Division of Labor Standards and Statistics (“Division”), which the Division will post publicly to the Division’s website for at least 30 days before the deactivation policy becomes enforceable.

If a DNC chooses to deactivate a driver, it must do so in accordance with its deactivation policy and provide the driver with written notice of the deactivation. The notice must contain sufficient information for the driver to understand the reasons for account deactivation, including the provision of the deactivation policy that the driver violated, a description of any steps the driver can take to remedy the violation, the effective date of the deactivation, and the DNC’s process for challenging an account deactivation.

Relatedly, the law mandates that all DNCs create an internal process for delivery drivers to challenge account deactivation that is immediately available and in a readily accessible format to drivers upon notice of account deactivation. Further, DNCs must review and respond to a driver’s challenge within 14 days after receiving the challenge. The response must include a written statement providing any one of the following determinations: 1) a reaffirmation of the account deactivation with reasons for the reaffirmation and a description of any steps drivers can take to remedy the violation; 2) a reversal of the deactivation, in which the DNC determined that the driver did not violate the deactivation policy and ensuing reinstatement; or 3) an explanation of the circumstances that are causing a delay in the DNC’s response timeline and an anticipated date for a response. Any reinstatement of a driver’s account must occur as soon as possible, and always within 72 hours of the DNC’s written statement.

Finally, the act outlines various enforcement mechanisms and penalties if a DNC violates any section of the act, including statutory damages and fines on a per-driver or per-consumer basis, and injunctive relief. The Division will create a procedure for drivers to submit complaints to the Division and procedures for ensuing investigations.  And the act creates a right to private action, where an aggrieved person may sue the DNC for injunctive relief, actual damages, and statutory damages.

Any Colorado DNCs will need to perform an extensive review of existing policies and procedures to be in compliance with this new law.

Modest Changes to Colorado’s Noncompete Law

Though not as impactful as the 2022 amendments, the General Assembly also modified one of the exceptions to Colorado’s noncompete statute. C.R.S. Section 8-2-113(2)(a) bars any covenant not to compete that restricts any person’s right to receive compensation for labor performed for an employer. But the statute also delineates several exceptions to this rule, including Subsection 3(a), which allows employers to contract with employees to recover the expense of training and educating the employee, where the training is different from typical, on-the-job training. Section 3(a) limits an employer’s recovery to the “reasonable costs of the training.” The employer’s recovery must decrease over the two years following the training, proportionately based on how many months have passed since the completion of the training, and any recovery must comply with the Fair Labor Standards Act.

Recently enacted HB 24-1324 adds language to Section 3(a) that allows the Colorado Attorney General to establish rules regarding the training’s transferability or the credentialing that is available to the employee because of the training. The act also adds enforcement language to Section 8(b), which now allows the attorney general to recover three times the amount of any employer recovery or attempted recovery when an employer’s training-repayment provision is void under Section 3(a) specifically, in addition to the penalties already provided for.

The significance of these changes lies in the potential for the attorney general to promulgate rules regarding transferability and credentialing. Employers will likely now have to weigh those characteristics in determining whether to include training-repayment provisions in employment contracts.

Two Acts Create Two More Protected Characteristics

Under two new laws, hair length will be recognized under the Colorado Anti-Discrimination Act as a protected characteristic and organ donors have a new private right of action under a new statute.

With regard to organ donors, HB 24-1132 created an entirely new section, C.R.S. Section 8-2-132, that prohibits an employer from intimidating, threatening, coercing, discriminating, or retaliating against, or taking any adverse action against an employee who is or becomes a living organ donor. Importantly, the act creates a rebuttable presumption that an employer has engaged in any of the prohibited actions if the action is taken against an employee during the period that begins 30 days before the organ donor operation and ends 90 days after the operation. Employers may overcome the presumption by clear and convincing evidence that they engaged in the prohibited act for a lawful reason. Employees who allege a violation of the act may be entitled to back pay, reinstatement, wage repayment, monetary penalties, injunctive relief, and attorney fees, and costs.

HB 24-1451 amended existing anti-discrimination law, adding hair length as a characteristic commonly or historically associated with race as part of Colorado’s CROWN protections. Hair length joins hair texture, hair type, and protective hairstyles commonly associated with race, such as braids, locs, twists, tight coils or curls, cornrows, bantu knots, and headwraps.

Requirements to Obtain a Civil Protection Order Eased

Colorado also enacted HB 24-1122, expanding safeguards related to civil protection orders and temporary restraining orders. In the employment context, when an employee or former employee makes a threat of violence, a civil protection order can be a powerful judicial tool to protect staff and property.

Most notably, the bill revises C.R.S. Section 13-14-104.5 by clarifying that a business may obtain a civil protection order in Colorado by showing “a risk or threat of physical harm or the threat of psychological or emotional harm exists.” The amended statute further states that a court can grant a protective order “regardless of when an incident occurred,” notably replacing the previous standard that a petitioner had to prove “imminent danger.” Colorado courts are also now empowered to continue a temporary protection order for a period of one year after the date the permanent protection hearing is ordered.

The bill clarifies that venue is proper for a civil protection order in any county where any act or behavior that is the subject of the motion occurred. The bill requires that Colorado courts grant additional continuances for service of process if the petitioner is able to show reasonable efforts to serve the civil restraining order on the respondent. Additionally, the bill prohibits a court from awarding any costs or assessing any fees—including attorney fees—against a petitioner seeking a civil protection order.

Courts in Colorado are also now prohibited from serving the respondent with a notice of civil protection order unless the protection order was granted. This improves overall employee safety as it prevents a potentially dangerous employee from knowing that a business is seeking judicial protection unless and until the protective order is already in effect. The legislation also directs civil judges to make a temporary protection order permanent without requiring additional evidence or testimony from the requesting party in the event the restrained party fails to appear at the hearing.

Changes in AI, Privacy and Health Benefits Coverage

Important changes in the area of AI were enacted into law with the passage of Senate Bill (SB) 24-205. The act creates statutory tort liability for AI algorithmic discrimination in employment. With its passage, employers using “high-risk” AI tools must implement risk management policies, conduct impact assessments, and provide detailed notices by Feb. 1, 2026.

Additionally, HB 24-1058 and HB 24-1130 amended Colorado’s Privacy Act (CPA), which is generally applicable to entities that conduct business in Colorado or target Colorado consumers. HB 24-1058 act expanded the definition of sensitive data. Sensitive data now includes biological data and neural data, which are both collected from an individual’s body or brain functions. The CPA imposes various duties on companies that process sensitive data; hence, employee training on the newly expanded sensitive data may be appropriate. HB 24-1130 imposed new requirements on companies that collect and use biometric information.

Besides AI and privacy, the 2024 legislative session also produced changes in health-benefits coverage. SB 24-73 amended several statutes to reflect that employers must employ no more than 50 employees—down from the pre-amendment ceiling of 100—to qualify as a small employer for health-insurance purposes.

Notable Vetoes

Gov. Jared Polis vetoed two potentially substantial acts on May 17, 2024. The first act he vetoed, HB 24-1008, would have expanded general-contractor liability for subcontractor wage claims in the construction industry. If the bill had passed, it would have held general contractors liable for wages legally owed to an employee of any of its subcontractors. In his veto message, Polis explained that the bill would unnecessarily penalize lawful general contractors while letting subcontractors who fail to pay their employees off the hook.

Specifically, he explained that the act failed to require wage-claim investigations to start at the subcontractor level and work their way up. Polis explained that if enacted, the act would cause general contractors to pay for the same work twice, in addition to fines, penalties, and interest, which would raise costs.

The governor also vetoed HB 24-1260, regarding captive-audience meetings. If enacted, the bill would have barred employers from subjecting or threatening to subject employees to adverse employment action because of an employee’s refusal to attend or participate in employer-sponsored meetings concerning religious or political matters, or for declining to listen to or watch religious or political communications or speech from the employer or the employer’s agent, representative, or designee.

Polis explained that the legislation was overbroad and had uncertain implications for employers. Further, he wrote that the breadth of the definitions of political and religious matters could chill free speech. Namely, Polis explained that the broadness of the act would put employers in the untenable position of determining when any form of speech is legally protected political or religious speech. If it had been enacted, this act would have created a substantial challenge for employers in the day-to-day workplace, such that employers would likely spend too much time policing and analyzing speech.

Though these two acts were vetoed this year, past practice suggests the General Assembly will revisit them next year, barring a change in which political party controls the legislative chambers.

Conclusion

While the Colorado legislature enacted many new laws, most of the new legislation is tailored to specific categories of employers and companies, such that they should act. Otherwise, the generally applicable laws are worth noting for employers, but no immediate action is required.

Specific employers and companies that need to take action include:

• Delivery-network companies.
• Employers whose employee contracts contain training repayment provisions.
• Employers that use “high-risk” AI.
• Employers that collect “sensitive data.”

General changes to note include:

• Small employers in the context of health insurance are now limited to 50 employees.
• Hair length is now a protected characteristic associated with race.
• Living organ donors now have a private right of action for adverse employment action.

Employers should take heed of the additions and modifications that resulted from the 2024 legislative session. As noted throughout this article, many of the new and existing laws carry significant penalties.

Thomas W. Carroll, Matt Freemann, David C. Gartenberg and Billie Jo M. Risheim are attorneys with Littler in Denver. © 2024 Littler. All rights reserved. Reposted with permission.