Colorado Termination Laws

June 28th 2024

Colorado termination laws are designed to balance employees’ rights and employer’s obligations. Understanding these laws is crucial for maintaining compliance and practicing your rights, whether you are an employer or an employee.

In Colorado, employment relationships are “at-will,” meaning employers, either the employer or employee, can terminate the employment relationship at any time, with or without cause or notice. However, this principle is subject to several important exceptions and legal constraints. Employees are protected from discriminatory, retaliatory, and other unlawful terminations under the federal and state laws.

This article provides an overview of Colorado’s termination laws, including “at-will” employment principles, wrongful termination claims, and key protections for employees.

This Guide Covers

Legal Considerations for Termination in Colorado
“At-Will” Employment in Colorado
Lawful Termination in Colorado
Legal Protections During Termination in Colorado
Terminated Employee Benefits in Colorado
Layoffs in Colorado
Resignations in Colorado
Legal Cases Related to Wrongful Termination in Colorado

Legal Considerations for Termination in Colorado

When terminating an employment relationship in Colorado, it is important to be aware of several legal considerations to ensure compliance and potential legal disputes.

  • “At-Will” Employment Doctrine: In Colorado, the default employment relationship is “at-will.” This means that the employer or the employee can terminate employment at any time, for any reason, or no reason at all, without prior notice.
  • Wrongful Termination: Employees in Colorado can claim wrongful termination if the termination violates discrimination laws, retaliation, or public policy violations.
  • Employment Contracts: If a contract governs employment, the terms of that contract will dictate the conditions under which termination can occur. Breaching the terms of an employment contract can lead to claims for wrongful termination and breach of contract.
  • Implied Contracts: Even without a written contract, implied contracts can arise from statements made in employee handbooks, policies, or oral assurances of job security. Terminating an employee violating these implied contracts can result in legal claims.
  • Notice Requirements: While Colorado does not require advance notice of termination, certain circumstances, such as mass layoffs or plant closings, may trigger federal WARN Act requirements, mandating 60 days’ notice.
  • Final Pay: Employers must comply with Colorado’s wage payment laws regarding final paychecks. Final wages, including unused vacation time, must be paid immediately upon termination if the employer initiates the termination or by the next regular payday if the employee resigns.
  • Unemployment Benefits: Terminated employees may be eligible for unemployment benefits unless the termination was due to gross misconduct. Employers should be prepared to provide documentation supporting the reason for termination if challenged.
  • Documentation and Process: Proper documentation and adherence to company policies during the termination process are crucial. This includes maintaining records of performance issues, disciplinary actions, and communications regarding the termination decision.

“At-Will” Employment in Colorado

What is “At-Will” Employment?

“At-will” employment is a foundational principle of employment law in the United States, including Colorado. Under this doctrine, the employment relationship between an employer and an employee can be terminated by either party at any time, for any reason, or no reason at all, without prior notice. The key characteristics of “at-will” employment are:

  • Termination Flexibility: Employers can terminate employees without needing to establish just cause, as long as the reason for termination does not violate specific legal protections (e.g., discrimination laws).
  • No Requirement for Cause: Employers are not obligated to provide a reason for terminating an “at-will” employee. This can simplify ending employment but also requires careful consideration to avoid unlawful termination claims.

What are the Exceptions to “At-Will” Employment in Colorado?

While the principle of “at-will” employment allows for terminating employment relationships at any time for any reason, several key exceptions limit this flexibility in Colorado. These exceptions include:

  • Discrimination: Under federal and Colorado state laws, it is illegal to terminate an employee based on certain protected characteristics. These characteristics include race, color, religion, sex, national origin, age, pregnancy, disability, and genetic information. Relevant laws that protect employees from discrimination are Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act (ADA), the Age of Discrimination in Employment Act (ADEA), and the Colorado Anti-Discrimination Act (CADA).
  • Retaliation: Employees are protected from termination in retaliation for engaging in legally protected activities. Examples of such activities include filing a complaint about workplace discrimination or harassment, participating in an investigation or lawsuit regarding employment discrimination, exercising rights under wage and hour laws, and reporting safety violations or other legal activities (whistleblowing). Title VII of the Civil Rights Act, the Fair Labor Standards Act (FLSA), the Occupational Safety and Health Act (OSHA), and the Whistleblower Protection Health and Safety are relevant laws that protect employees from retaliation.
  • Violation of Public Policy: Terminations that contravene established public policies are considered wrongful. Examples include terminating an employee for refusing to engage in illegal activities, firing an employee for performing a legal duty (jury duty or testifying in court), and discharging an employee for filing a workers’ compensation claim.
  • Implied Contracts: Even without a formal written contract, an implied contract may exist if there are assurances of job security or specific termination procedures outlined in the employee handbooks, company policies, or verbal promises made by employers.
  • Covenant of Good Faith and Fair Dealing: Some courts recognized an implied covenant of good faith and fair dealing in employment relationships. This exception is less commonly invoked but can prevent terminations made in bad faith, motivated by malice, or intended to deprive employees of earned benefits or compensation.

Employment Under Contract in Colorado

Employment under contract in Colorado involves a formal agreement between the employer and the employee that outlines the terms and conditions of the employment relationship. Unlike “at-will” employment, contractual employment provides specific protections and obligations for both parties, reducing the flexibility to terminate the relationship without cause. An employment contract outlines the following:

  • Duration of employment: Contracts often specify the length of the employment period, whether for a fixed term or ongoing, until either party decides to terminate the agreement under specific conditions.
  • Job duties and responsibilities: Detailed descriptions of the employee’s role, responsibilities, and expectations are included.
  • Compensation and benefits: Outlines the salary, bonuses, benefits, and other forms of compensation.
  • Termination provisions: Conditions under which either party can terminate the employment relationship are specified, including termination for cause, termination without cause, and procedures for resignation.
  • Confidentiality and non-compete clauses: Many contracts include clauses to protect the employer’s business interests, such as confidentiality agreements (to safeguard proprietary information), non-compete clauses restricting the employee from working with competitors for a certain period after leaving the company, and non-solicitation clauses preventing the employee from poaching clients or employees.

If either party fails to adhere to the contract terms, the other party may have a legal claim for breach of contract.

Lawful Termination in Colorado

Legal Grounds for Termination in Colorado

In Colorado, while the principle of at-will employment allows for termination without cause, there are specific legal grounds and constraints that both employers and employees must be aware of.

  • For Cause Termination: Employers can terminate employees for poor performance, misconduct, absenteeism and tardiness, insubordination, or substance abuse.
  • Without Cause Termination: An employer can terminate an employee without cause in an at-will employment relationship. However, the termination must not violate any exceptions to at-will employment, such as discrimination, retaliation, or violation of public policy.
  • Discrimination: Termination based on discrimination against protected characteristics is illegal. Protected characteristics include race, color, religion, sex, national origin, age, disability, and genetic information.
  • Retaliation: Employees are protected from termination as retaliation for engaging in legally protected activities, such as filing a complaint about workplace discrimination or harassment, participating in an investigation or lawsuit regarding employment discrimination, exercising rights under wage and hour laws, and reporting safety violations or other illegal activities (whistleblowing).
  • Breach of Contract: If the employment relationship is governed by a contract, the terms of that contract will dictate the grounds for termination. Termination that breaches the contract can lead to legal claims for wrongful termination and breach of contract.

Read our comprehensive guide to firing employees in Colorado for further information.

How Do I File a Wrongful Termination Claim in Colorado?

Filing a wrongful termination claim in Colorado involves several steps to ensure employees’ rights are protected, and your case is properly presented. Steps include:

  • Understanding the basis of your claim before filing is important. Common grounds include discrimination, retaliation, violation of public policy, and breach of contract.
  • Gathering all relevant documentation and evidence to support your claim. This can include employment contracts, company policies, performance reviews, correspondence, and witnesses.

If the claim involves discrimination or retaliation, file a charge with the Equal Employment Opportunity Commission (EEOC) or Colorado Civil Rights Division (CCRD).

Legal Protections During Termination in Colorado

In Colorado, federal and state laws provide various legal protections to employees during the termination process. These protections are designed to ensure that terminations are conducted fairly and lawfully.

  • Colorado Wage Claim Act: The Colorado Wage Claim Act ensures that employees receive timely payment of all wages earned. Upon termination, employees must be paid their final wages immediately or by the next regular payday, depending on the circumstances of the termination. This law covers all forms of compensation, including salary, bonuses, commissions, and accrued vacation. Employers who fail to comply may face legal penalties and be required to pay additional damages.
  • Colorado Anti-Discrimination Act (CADA): The CADA protects employees from discrimination based on race, color, religion, sex, sexual orientation, disability, age, and other protected characteristics. Under CADA, it is unlawful for employers to terminate employees for discriminatory reasons. Employees who believe they have been wrongfully terminated under CADA can file a complaint with the Colorado Civil Rights Division (CCRD). Remedies may include reinstatement, back pay, and compensation for damages.
  • Colorado Family Care Act (CFCA): The CFCA allows employees to take unpaid, job-protected leave to care for a family member with a serious health condition. Employers cannot terminate employees for exercising their rights under CFCA. This act extends protections similar to the federal FMLA but includes a broader definition of family members. Violations of CFCA may result in legal action and penalties for the employer.
  • Colorado Healthy Families and Workplaces Act (HFWA): The Colorado HFWA requires employers to provide paid sick leave to employees. This law ensures that employees can take leave for their own health needs or to care for family members without fear of termination. During public health emergencies, additional paid leave is mandated under HFWA. Employers who fail to comply may face fines and other penalties.
  • Public Health Emergency Whistleblower Law (PHEW): The PHEW protects employees who raise concerns about workplace health and safety violations during a public health emergency. Employers are prohibited from retaliating against employees who report unsafe conditions or refuse to work under dangerous circumstances. PHEW provides legal recourse for employees who face retaliation, including reinstatement and compensation for damages. This law promotes a safer working environment during critical times.
  • Fair Labor Standards Act (FLSA): The FLSA sets federal standards for minimum wage, overtime pay, and child labor protections. In Colorado, the FLSA ensures that employees are paid fairly for all hours worked, including overtime. Terminated employees are entitled to receive any unpaid wages due under the FLSA. Employers who violate the FLSA can face legal action, including payment of back wages and damages.
  • Family and Medical Leave Act (FMLA): The FMLA allows eligible employees to take up to 12 weeks of unpaid, job-protected leave for specified family and medical reasons. Employees cannot be terminated for taking FMLA leave, and their health benefits must be maintained during the leave period. Violations of FMLA rights can result in legal consequences for employers, including reinstatement and payment of lost wages. The FMLA ensures employees can balance work and family responsibilities without losing their jobs.
  • Worker Adjustment and Retraining Notification (WARN) Act: The WARN Act requires employers with 100 or more employees to provide 60 days’ notice before large-scale layoffs or plant closures. This advance notice allows employees time to prepare and seek alternative employment. Failure to comply with the WARN Act can result in penalties, including back pay and benefits for the affected employees. The WARN Act aims to mitigate the impact of sudden job loss on workers and communities.

Terminated Employee Benefits in Colorado

When an employee is terminated in Colorado, they may be entitled to various benefits and protections under state and federal laws. These benefits help to provide financial support and other assistance during the transition period following termination:

  • Unemployment Insurance Benefits: Unemployment insurance benefits provide temporary financial assistance to employees who lose their jobs through no fault of their own, such as during layoffs. In Colorado, eligible individuals can apply for these benefits through the Colorado Department of Labor and Employment (CDLE). The amount received is based on the employee’s previous earnings, providing a partial replacement of lost wages while they seek new employment. Employees must meet certain eligibility criteria, including actively seeking work and being able and available to work. This support helps mitigate the financial impact of job loss and provides a safety net during periods of unemployment.
  • Consolidated Omnibus Budget Reconciliation Act (COBRA): COBRA allows employees who lose their jobs to continue their employer-sponsored health insurance coverage for a limited time. Under COBRA, individuals can maintain their health benefits for up to 18 months, or longer in certain situations, by paying the full premium plus a small administrative fee. This continuation coverage helps protect employees and their families from losing health insurance during transitional periods. Employers must provide a COBRA election notice within 14 days of the qualifying event, such as termination or reduction in work hours. COBRA ensures that employees do not face immediate loss of health coverage upon job termination.
  • Final Pay and Accrued Benefits: Colorado law mandates that employees receive their final paycheck immediately upon termination, or by the next regular payday, depending on the circumstances. This final paycheck must include all wages earned up to the termination date, including any accrued but unused vacation time, if stipulated by company policy or employment contracts. Employers are legally obligated to pay out these amounts promptly to avoid penalties. Failure to comply with these requirements can result in legal action and additional damages owed to the employee. This protection ensures that employees receive the compensation they are entitled to without undue delay.

Layoffs in Colorado

Colorado does not have a separate state-level WARN Act, but it follows the federal WARN Act provisions. The Worker Adjustment and Retraining Notification (WARN) Act is a federal law in the United States that mandates employers to provide a 60-day notice in advance of covered plant closings and mass layoffs. This law aims to provide workers with adequate time to prepare for the transition between jobs or to seek retraining opportunities.

Resignations in Colorado

Voluntary Resignations

When an employee voluntarily resigns from their position in Colorado, it is essential to understand the procedures and considerations involved to ensure a smooth transition and protect your rights.

While not required by law in Colorado, providing a notice of resignation is considered professional courtesy. The customary notice period is two weeks, but this can vary based on company policies or the terms of employment. When writing a notice, ensure to include your intention to resign from your position. The date of your last working day and a brief statement of appreciation for the opportunities provided.

If you resign voluntarily, your employer may pay your final wages on the next regular payday following your resignation date.

Involuntary Resignations

An involuntary resignation occurs when an employer creates conditions or applies pressure that forces an employee to resign, even though the decision appears voluntary. This can include constructive dismissal (where an employer makes working conditions intolerable to encourage resignation), coerced resignations due to threats or harassment, or situations where an employee can resign or be terminated.

If you believe you were unfairly pressured to resign or faced constructive dismissal, seek legal advice from an employment attorney who can assess your situation and provide guidance. Consider filing a complaint with the Equal Employment Opportunity Commission (EEOC) or the Colorado Civil Rights Division (CCRD) if you believe your resignation was due to discrimination or retaliation.

Legal Cases Related to Wrongful Termination in Colorado

1. University of Colorado Employees Awarded $600,000 in Wrongful Termination Case

In May 2001, Richard Siani and Michael Law, former employees of the University of Colorado, were awarded $600,000 in a civil rights lawsuit against their former employer. Siani and Law alleged that they faced wrongful termination and retaliation after raising concerns about the mishandling of hazardous waste on campus.

The Richard Siani and Michael Law v. University of Colorado case proceeded to trial in the United States District Court for the District of Colorado, where the jury sided with Siani and Law. The jury awarded them $600,000 in damages, affirming their claims of wrongful termination and retaliation.

Key lessons learned from this case:

  • The verdict highlights that employees have legal recourse if they face retaliation for exercising their rights or reporting illegal activities in the workplace. This case underscores the importance of protections afforded to whistleblowers.
  • The substantial damages awarded illustrate the potential financial consequences for employers found guilty of wrongful termination and retaliation.

2. Home Depot Settles EEOC Retaliation Lawsuit for $84,750

In a recent settlement between the US Equal Employment Opportunity Commission (EEOC) v. Home Depot, USA, Inc. agreed to pay $84,750 and implement corrective measures to resolve a retaliation lawsuit. The lawsuit, initially filed in the U.S. District Court for the District of Colorado, alleged that Home Depot terminated an employee from its Evergreen, Colorado store in retaliation for filing a sex discrimination charge with the EEOC in 2004.

Home Depot faced allegations that it retaliated against an employee by firing her after she filed a sex discrimination charge with the EEOC. The federal agency claimed that this action violated federal anti-discrimination laws, prompting the lawsuit and subsequent settlement.

The settlement included a financial payout of $84,750 to the affected employee. Additionally, Home Depot agreed to post its anti-discrimination policy prominently and provide comprehensive training on federal anti-discrimination laws to all supervisors and employees. The company committed to making regular reports to the EEOC as part of the settlement terms.

Key lessons learned from this case:

  • The EEOC addresses retaliation against employees who engage in protected activities, such as filing discrimination charges. The EEOC’s role in enforcing federal anti-discrimination laws is crucial in holding employers accountable for unlawful conduct; employers must refrain from retaliatory actions and ensure compliance with federal laws protecting employee rights.
  • Settlement terms requiring Home Depot to implement anti-discrimination policies and provide training underscore the importance of proactive measures by employers. Such initiatives can help prevent future violations and promote a workplace culture that respects employee rights.

Learn more about Colorado Labor Laws through our detailed guide.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.