Small Companies in Colorado Can No Longer Discriminate

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Colorado Governor John Hickenlooper signed a bill into law last week that provides recourse against discrimination to workers at companies that employ fewer than 15 people.

The legislation amends state law so that employees who bring harassment and discrimination suits against their employer can receive punitive and compensatory damages, as well as attorney fees.

Previously, workers who brought successful claims through the state could only get their job back, along with back pay. Employees could receive damages by suing under federal law, but that only applies to companies of 15 people or more.

Furthermore, state law provides protections from discrimination to classes not covered by the federal government, such as sexual orientation and gender identification.


Open the Floodgates

Small business owners fought back hard against the law and lobbied vigorously for the governor to veto it.

Tony Gagliardi, an attorney for a small business association, said the law would “open the floodgates for frivolous lawsuits against Colorado’s job creators: small businesses.”

Even with caps on damages, the legal fees to defend a lawsuit could quickly mushroom and put a company out of business, he asserted. “Incentivizing groundless lawsuits against small businesses also creates its own victims — owners who are forced to hire fewer workers, lay off others or even close the doors altogether,” Gagliardi argued, but to no avail.

Governor Hickenlooper acknowledged the concerns when he signed the bill. “Small business cannot thrive with red tape, needless bureaucracy and frivolous or harassing litigation,” he said in a statement. “As passed, we believe HB13-1136 strikes the appropriate balance between protecting small business employers from costly and frivolous litigation and providing the victims of intentional and unacceptable discrimination with appropriate remedies.”

The bill contains a number of safeguards for employers, as enumerated in the governor’s statement:

  • Workers must establish intentional discrimination by the employer
  • A plaintiff worker must exhaust all administrative remedies before going to court
  • There is a mandatory process of mediation before going to court
  • Only courts and not administrative law judges are empowered to award damages to plaintiffs
  • Courts may award costs and attorney fees to defendant employers for frivolous claims
  • Courts must consider the size and assets of defendant employers before awarding damages.


Limited Remedies

Rachel Arnow-Richman

The upshot of the bill will be to extend meaningful employment discrimination protections to a greater number of people.

“Workers at small employers always had the right to sue for discrimination in Colorado prior to this bill; however, their remedies were limited,” explains Rachel Arnow-Richman, a professor at the Sturm College of Law at the University of Denver. “What this does overall is bring the remedies available under state law in line with the remedies enjoyed by plaintiffs under federal law, as well as give them the same right to have their case decided by a jury.”

“Prior to the bill, there were no compensatory damages and no punitive damages available under state law. That didn’t matter for workers at companies with 15 or more employees, who could pursue those remedies under federal law,” Arnow-Richman says. “It mattered for plaintiffs suing small companies, or those suing for discrimination on the basis of characteristics not protected under federal law like sexual orientation.”

Previously, it might not have been worth it for victimized employees to pay the attorney fees necessary to bring a lawsuit if the best outcome was simply to regain their job. “Prior to this bill, the state law remedies provision limited what plaintiffs could recover and consequently reduced their incentive to sue,” Arnow-Richman says.

Now, the incentives are in place and small business employees, or orientation-related discrimination victims at firms of any size, can have their day in court.

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