Colorado Increases Its Criminal Penalty for Violations of Its Noncompete Law

On July 6, 2021, the Colorado legislature passed S.B. 21-271 in an effort to reform the sentencing provisions related to a number of petty offenses and misdemeanors. As a result, several Colorado laws related to labor and employment are affected, including Colorado’s statute addressing restrictive covenant and noncompete agreements, C.R.S. § 8-2-113. Under C.R.S. § 8-2-113, it is unlawful to intimidate workers in order to limit their ability to engage in lawful work; and covenants that restrict trade, such as noncompete and nonsolicitation agreements, are void unless the covenants fit within limited exceptions provided under the statute. Effective March 1, 2022, the penalty for violating the noncompete statute will be increased to a class 2 misdemeanor punishable by up to 120 days in jail, or a fine of up to $750, or both.

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New Wage and Hour Rules in Colorado

The Colorado Department of Labor and Employment (CDLE) has adopted the Colorado Overtime and Minimum Pay Standards (COMPS) Order #38 and new Wage Protection Rules as well as the 2022 Publication and Yearly Calculation of Adjusted Labor Compensation (PAY CALC) Order, which became effective January 1, 2022. Below is a summary of notable changes in the new rules.

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New Guidance on the Colorado Equal Pay for Equal Work Act

The Colorado Department of Labor and Employment’s Division of Labor Standards and Statistics recently issued revised guidance on the Colorado Equal Pay for Equal Work Act (CEPEWA) and the accompanying Equal Pay Transparency (EPT) Rules. The updated guidance, revised Interpretive Notice & Formal Opinion (INFO) #9 (Revised INFO #9), includes revisions and information regarding notice and posting requirements for out-of-state jobs, disclosure obligations as to “Help Wanted” signs, and noncompliant use of open-ended salary ranges and phrases in job postings.

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Parties Stipulate to Dismissal of Legal Challenge to Colorado Equal Pay for Equal Work Act

On July 6, 2021, the parties to a lawsuit challenging the Colorado Equal Pay for Equal Work Act (CEPEWA) filed a stipulation to dismiss the action without prejudice, with the litigants bearing their own costs and attorneys’ fees. On July 7, 2021, the case was terminated pursuant to the stipulation of dismissal.

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Accrued but Unused Vacation Pay Must Be Paid Out Upon Termination of Employment in Colorado

Colorado’s Supreme Court found that Colorado employees receiving vacation time must be paid out accrued but unused time when their employment is terminated. In Carmen Nieto v. Clark’s Market, Inc., the state Supreme Court held that if an employer chooses to provide vacation pay, all accrued but unused vacation pay must be paid to employees upon termination and that no agreement to the contrary will be enforced.

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Colorado Court Rejects Challenge to Colorado Equal Pay for Equal Work Act

Following the passage of Colorado’s Equal Pay for Equal Work Act (CEPEWA), employers were faced with a stricter disclosure regime, including new provisions aimed at redressing gender-based pay inequity. At the close of 2020, the Rocky Mountain Association of Recruiters (Rocky Mountain) brought a lawsuit challenging those provisions and framing the CEPEWA as an undue burden. On May 27, 2021, the U.S. District Court for the District of Colorado weighed in, with Judge William Martínez rejecting Rocky Mountain’s request for a preliminary injunction that would have prohibited enforcement of the CEPEWA.

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