WSMT assists clients with a full spectrum of employment disputes. Our attorneys have experience negotiating and drafting employment contracts; counseling clients on employee benefits and state, federal, and international employment laws; drafting employee manuals and guidelines; advising clients on disciplinary matters, termination matters, and ben...efits issues; and providing litigation support for clients in employment disputes. More

Employer Alert: Colorado Supreme Court Narrows Employer Liability in Negligence Cases

The Colorado Supreme Court recently issued a decision that significantly reduces an employer’s liability in cases where both the employer and the employee are sued for injuries caused by the employee while performing job duties.  

In Ferrer v. Okbamicael, 2017 CO 14, decided on February 27, 2017, a pedestrian sued a taxi cab company and the taxi cab driver who struck her while on the job, causing significant injuries.  The pedestrian asserted two types of claims against the taxi cab employer: one based upon the doctrine of respondeat superior, where an employer is indirectly liable for the acts of its employees, and additional direct claims for negligent hiring, entrustment, supervision and training.  The taxi cab employer admitted that the taxi cab driving was acting within the scope of his employment duties at the time of the accident, thereby conceding the respondeat superior claim, but argued that this concession meant that it could not also be held liable on the direct negligence claims.  The Colorado Supreme Court agreed, establishing new law that an employer can avoid direct claims of negligence in this context by conceding that the employee was acting within the scope of employment at the time of the injury.  

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Employer Alert Update: Nationwide Injunction Delays Implementation of New Overtime Rule for White Collar Employees.

Yesterday, a federal judge in Texas issued a nationwide preliminary injunction barring implementation of the new overtime rule that raises the salary threshold for white collar employees from $23,660 to $47,476. Court Decision This ruling means that the new salary threshold for overtime exemptions of executives, administrators, professionals and highly compensated employees will not go into effect on December 1, 2016, as planned. (Additional information concerning the new rule can be found in this blog post: White Collar Exemption Blog.

The ruling was the result of lawsuits filed in the Texas court against the U.S. Department of Labor (DOL) by 21 states and a coalition of business groups to stop the new overtime rule from ever becoming effective. The Texas court granted the defendants’ request to enjoin implementation of the rule on the ground that the DOL exceeded its authority in raising the minimum salary requirements for the exemptions.

This ruling does not mean that the new law has been struck down for good. Rather, it simply means that the rule cannot be implemented or enforced while further legal proceedings continue on the rule’s validity.

We will post an update when a final ruling on the law issues. For any additional information regarding overtime pay and exemption requirements, please contact Danielle Wiletsky at dwiletsky@wsmtlaw.com.

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Employer Alert: Upcoming Changes to Overtime Laws will Broaden the Scope of “White Collar” Employees Eligible for Overtime Pay

The U.S. Department of Labor just released final rules updating the overtime regulations of the Fair Labor Standards Act (FLSA) that will significantly broaden the scope of employees eligible for overtime pay when the rules go into effect December 1, 2016: DOL Announcement.

Employers that are governed by the FLSA are required to classify their employees as either "exempt" or "nonexempt" for purposes of overtime pay. Most employees are “nonexempt,” and therefore entitled to overtime pay for hours worked over 40 in a workweek. However, the duties and salaries of some employees can qualify the employee for one of the FLSA exemptions for overtime, which means that these “exempt” employees will not receive overtime pay for hours worked over 40 in a workweek. The new FLSA rules impact the qualifications for the FLSA’s “white collar” overtime exemptions for executives, administrators, professionals and highly compensated employees by raising the threshold salary requirements.

Currently, salaried workers falling into the executive, administrator, and professional exemptions must earn at least $23,660 annually (or $455 per week) to qualify for an exempt classification. The new rules nearly double this salary threshold to $47,476 annually (or $913 per week). In general, this means that employees classified as exempt under the current law who earn above $23,660 but below $47,476 will lose their exempt status as of December 1, 2016. The new rules also raise the salary threshold for the highly compensated employee exemption from $100,000 per year to $134,004 a year. The last time the DOL changed the salary threshold for these regulations was twelve years ago, in 2004.

Additionally, while there is no change to the duties test for the white collar exemptions, the new rule will allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the new salary levels. More detailed information about all of the changes the new rules will bring to the overtime compliance procedures can be found on the DOL website here.

What are an employer’s options for employees losing their current exempt status? Several. If the employee rarely, if ever, works more than 40 hours in a workweek, one option is to let the employee convert to non-exempt status given the lack of impact as a practical matter. Of course, such employees must still be treated as all other non-exempt employees as far as recording worked hours and receiving overtime pay for all overtime hours worked, even if unexpected. For those employees who regularly work in excess of 40 hours per workweek, employers can maintain the exempt status by raising the salary to meet the new threshold levels. Other options for employees who regularly work more than 40 hours in a workweek that will lose their exempt status include redistributing workloads to other employees, changing workweek schedules to reduce overtime and reducing base pay so that the total amount of regular and overtime wages will remain largely the same.

The upcoming rule changes provide a good opportunity for employers to revisit their exempt classifications in all respects, including the new threshold salary levels. For any additional information regarding overtime pay and exemption requirements, please contact Danielle Wiletsky at dwiletsky@wsmtlaw.com

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Energy Sector Layoffs-Considerations for Employers

Downsizing and employee layoffs are the harsh reality of the plunging oil prices, as reflected by the announcements of many oil and gas companies in recent weeks. When a reduction in force becomes unavoidable, employers with Colorado operations should take steps to ensure compliance with Colorado and Federal laws, as well as contract obligations. Highlighted below are a few of the legal issues that such employers will face in a layoff.

 Managing Risk

To avoid a wrongful termination claim or lawsuit, employers should use objective criteria in selecting employees for job separation that is well documented. Once an initial group is selected, the group should be viewed as a whole to determine whether a disproportionate percentage falls within a protected employee category, such as age, disability and race. Employers should also assess risk on an individual basis, with consideration of any recent protected activity by the employee or military status.

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Employment Termination For Off-Duty Marijuana Use In Colorado – Is It Legal?

For Colorado employers with a zero-tolerance drug policy, employment termination for marijuana use during off-hours has been an unsettled question ever since medical marijuana first became legal in 2000. While all marijuana use—medical and recreational—is now legal in Colorado, the drug remains classified as an illegal substance under the federal Controlled Substances Act. The quandary for employers, therefore, has been whether firing an employee for marijuana use under an anti-drug policy violates Colorado’s lawful off-duty conduct statute, which generally prohibits employers from firing an employee for “engaging in any lawful activity off the premises of the employer during nonworking hours.” Colorado employers that have continued to enforce zero-tolerance drug policies based upon marijuana use have done so without the certainty of avoiding liability under this statute. The Colorado Supreme Court settled the issue earlier this summer in Coats v. Dish Network LLC, https://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2013/13SC394.pdf by ruling that off-duty use of marijuana does not come within the scope of “lawful activities” so long as it remains illegal under federal law.

This decision establishes solid precedent for all employers because both the facts and underlying empathy weighed squarely in favor of the discharged employee. Far from a partier who just liked to get high, Brandon Coats is a quadriplegic who has been confined to a wheelchair since he was a teenager. Nine years after medical marijuana became legal in Colorado, Coats obtained a state license for medical marijuana to treat painful muscle spasms caused by his paraplegia. He used the drug in this manner in his own home, while off-duty. After Coats tested positive for marijuana use under a drug screening test administered pursuant to Dish’s zero tolerance drug policy, Dish terminated Coats’ employment. Coats then filed a wrongful termination suit against Dish based upon violation of the lawful off-duty statute. In a unanimous decision, the Colorado Supreme Court affirmed the trial court’s dismissal of the case by holding that the activity at issue must be lawful under both state and federal law. While this decision was rendered in the context of a medical marijuana case, it should apply equally in the context of legalized recreational marijuana use. This is particularly true given the express language in the constitutional amendment legalizing recreational marijuana stating that the amendment is not intended to affect employers’ ability to implement and maintain policies restricting employees’ marijuana use.

Considering the fact that employers are subject to both state and federal law with respect to their employment practices, it seems right for employees to be subject to both state and federal law when it comes to lawful activities. Furthermore, the duel legal requirement is a necessity for businesses subject to U.S. Department of Transportation regulations requiring promulgation and enforcement of anti-drug policies prohibiting marijuana use. These employers can now enforce zero-tolerance drug policies for off-duty marijuana use without fear of violating Colorado’s lawful off-duty statute. Best practices dictate advance notice of enforcement to employees by including language in a written drug policy that specifically addresses prohibited use of marijuana despite the drug’s legalization in Colorado.

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Employer Alert: Tenth Circuit Expands Scope of Hostile Environment Claims in Flashing Case

Last week, the Tenth Circuit Court of Appeals delivered new guidance as to the type of conduct that can support a hostile work environment claim in Macias v. Southwest Cheese Co.,(10th Cir. August 24, 2015) (https://www.ca10.uscourts.gov/opinions/14/14-2109.pdf).

Hostile environment claims require discriminatory conduct that is severe or pervasive enough to create an abusive working environment. When only one or two incidents of harassment are involved, the conduct must rise to the level of “extremely serious.” Up until now, the Tenth Circuit’s opinions have only addressed satisfaction of this high standard in cases where the isolated conduct is some sort of physical assault. In Macias, however, the Tenth Circuit signaled broader application of the standard by making clear that physical contact is not required for a single incident of harassment to be actionable. Specifically, the court ruled that a male co-worker’s genital exposure to the female plaintiff could support a hostile environment claim, finding that this act “was not only physically threatening and humiliating—if true, it was also criminal. …The environment was objectively hostile, and Ms. Macias subjectively perceived it to be so, fearing that [her coworker] might expose himself to her again or assault her in some way.”

The takeaway from this decision is that every complaint or known instance of sexual harassment must be taken seriously and addressed appropriately – even if it involves only one incident. It appears that the employer in Macias failed woefully in this regard, although the opinion admittedly focuses on the facts alleged by the plaintiff without presenting the whole story. According to the opinion, the plaintiff reported the flashing to her supervisor but company management never followed up with an investigation or response. A second female employee who reported flashing by the same coworker was fired within a week (albeit for unrelated reasons, according to the employer). There’s no suggestion in the opinion of the employer’s investigation of the plaintiff’s report or any disciplinary action against the flashing coworker. Furthermore, the court suggests the employer’s prior knowledge of the flasher’s penchant for genital exposure by noting that, a year prior to the alleged workplace flashings, the same employee had taken a picture of his genitals while attending a company social function and passed the photo around to company managers who were present – including the director of human resources. Had the employer been proactive in addressing this prior instance of inappropriate behavior despite its presumably humorous intent at a party, the company might have spared its female employees the flashings and avoided at least three lawsuits alleging hostile work environment based in part on this same employee’s conduct. The lesson? Turning a blind eye to an employee’s pattern of inappropriate conduct is not likely to end well for an employer.

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Employer Alert: Colorado’s New Wage Protection Act Implements Sweeping Changes to Wage Claims

Colorado employers need to be more mindful than ever with regard to timely payment of wages. A new Wage Protection Act (“Act”) has expanded wage claims under the Colorado Wage Claim Act by broadening remedies, creating an administrative resolution procedure, and increasing penalties and fines for noncompliance.

Broader Rights:  While previously only former employees had the right to pursue wage claims, the new Act expands this right to current employees. It also adds the right of employees pursuing minimum wage claims to recover attorneys’ fees and costs if they prevail.

Employees are also now afforded significantly more time to pursue wage penalty claims against employers. Before its amendment, the Colorado Wage Act gave employees only 60 days to make a written demand for wages in order to trigger the right to recover a penalty in addition to the unpaid wages. The new Act eliminates this requirement and gives employees two years after payment is due to make a demand for payment; in cases of willful violation, the employee now has three years to make a demand.

Administrative Resolution Procedure:  One of the most significant changes under the Act is the establishment of an administrative procedure designed to provide a speedy resolution of smaller wage claims. This optional remedy permits wage claims of $7,500 or less to be decided by the Colorado Department of Labor and Employment, Division of Labor (the “Division”), which now has the power to investigate and decide claims for wages earned on or after January 1, 2015, and to issue citations and assessments for wages owed, penalties, and fines. The Division is under a mandate to issue its determination on claims just 90 days after it sends notice of the complaint to the employer.

Increased Penalties and Fines:  Under the existing law, employers failing to pay employee wages are subject to penalties equal to the greater of 125% of the wage owed or up to 10 days of the employee’s daily earnings. Under the Act, employers now also face additional fines of up to $50 per employee, per day, beginning on the date the wages were originally due. These penalties and fines establish an expectation for employer’s good faith efforts to pay employees, including the requirement to mail paychecks to employees' last-known addresses within 60 days when other delivery methods fail.

Ignoring a legitimate demand for wages will only increase the penalties and fines. Failing to pay a demand creates a rebuttable presumption against the employer of a willful violation, can increase the penalty by 50%. In addition, if the demand is made by the Division on behalf of the employee, failing to timely respond will result in a $250 fine. On the other hand, an employer’s full payment within 14 days of the demand eliminates the penalties and fines and can head off further investigation by the Division.

Employers can also be fined for failing to adhere to a new three-year record keeping requirement, which applies to the information contained in an employee’s itemized pay statement. These records must be made available to the Division upon request and noncompliance will result in fines up to $250 per employee, per month, up to a maximum of $7,500.

Recommendations:  There are several ways in which employers can ensure compliance with wage laws:

• Make sure all employees are receiving at least minimum wage in every paycheck--even when permissible deductions are taken and regardless of an employee willingness to work for a lessor wage (which is unlawful).

• Wage deductions are only permitted in limited circumstances, so make sure the deduction is permitted before taking it.

• Treat wage demands seriously and respond promptly.

• Implement a three-year retention policy for all wage payment records.

Additional information concerning Colorado’s wage laws can be found at: https://www.colorado.gov/pacific/cdle/wagelaw

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TOP TEN TIPS FOR EMPLOYMENT LAW

Hire Employees “At Will” - “At will” employment provides your business with maximum flexibility in employment relationships by allowing for termination at any time, with or without notice, and for any reason.

Use Employment Agreements - An employment agreement is a useful tool in documenting the “at will” nature of the relationship and obtaining the employee’s agreement to obligations of confidentiality, intellectual property and non-competition/non-solicitation.

Don’t Discriminate - It is illegal to discriminate on the basis of race, religion, color, sex (including pregnancy and gender identity), sexual orientation, parental status, national origin, age, disability, family medical history or genetic information, political affiliation, military service, or any other non-merit based factor. Enforce a “no tolerance” anti-discrimination and anti-harassment policy.

Create a Policy Handbook - Educate employees on the company policies and procedures through an employee handbook. Give each employee their own copy and require each to return a signed acknowledgment.

Review Exempt Classifications - Misclassification of exempt employees is a common mistake and a hot button for the Department of Labor. Review the exemption requirements and make sure they actually match the job duties your exempt employees are performing, regardless of their job title and salaried status.

Pay Overtime – Pay non-exempt employees for all hours worked, including on-call time, travel time, trainings and meetings. Calculate overtime correctly and keep thorough and accurate records of all non-exempt employees' wages and hours.

Provide a Safe Workplace - Make sure to maintain a safe and healthy work environment. Immediately take action to correct any physical hazards or potential safety issues and, when appropriate, conducting safety training.

Document Employee Issues - Keep written documentation of employee performance issues, discipline, complaints and investigations, accommodation and leave requests, which can be critical in defending against any legal claims that may later arise.

Prepare for an Employee Termination Before Acting - Check the employment agreement and policy handbook for any requirements that must be followed, such as payment of accrued vacation and severance obligations. Make sure the personnel file contains all appropriate documentation. Have a final paycheck ready to present at the termination meeting and check the laws or with an attorney before making any deductions. Plan for both a supervisor and an HR representative to attend and handle the termination. You should plan ahead for what to say rather than “winging it.”

Offer Severance in Exchange for a Release of Claims - The best way to end an employment relationship is cleanly, without having to worry about legal claims the employee may assert. Accomplish this by offering a “severance package” that includes a release of all claims against the company and its agents. Make sure the amount is enough to entice the employee and in addition to any severance promised in an employment agreement.

FOR ADDITIONAL INFORMATION ON EMPLOYMENT LAW PLEASE CONTACT:

DANIELLE WILETSKY: dwiletsky@wsmtlaw.com

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