Colorado Supreme Court holds statute of limitations on wage claims runs from pay period following its due date

The Colorado Supreme Court held that the statute of limitations under the Colorado’s Wage Claim Act, CRS. 8-4-101 to -123, begins to run from the pay period when the wage first becomes due and is unpaid.

The facts of the case illustrate the importance of this holding. Like many states, Colorado’s wage claim laws permit an employee to sue at the time of termination for any unpaid wages. Most commonly wage claims involve amounts that are claimed due in that final paycheck, for example, vacation pay, but what about wages that were claimed due in prior periods? This case involved a group of workers who sought wages “as far back as 1992.” Colorado’s wage laws, like federal law (Fair Labor Standards Act, FLSA), set a 2-year statute of limitations on wage claims, or 3 years if the violation is deemed wilful. The plaintiffs argued that the Act allowed them to seek all of their claimed wages, going back decades. In contrast, the company argued that they could seek only wages that came due in their final paycheck, nothing earlier.

The Colorado Supreme Court disagreed with both parties, holding that the plaintiffs can seek any wages that came due in their final paychecks plus any that came due in the 2 years preceding their termination (or 3 if the claim is deemed wilful), but that they cannot seek wages going back farther than that.

We conclude that under section 109, terminated employees may seek wages or compensation that had been earned in prior pay periods but remain unpaid at  termination. This right, however, is subject to the statute of limitations in section 122, which runs from the date when the wages first became due and payable—the payday following the pay period in which they were earned. A terminated employee is thus limited to claims for the two (or three) years immediately preceding termination.

It is noted that the Court there said plaintiffs could seek claims for 2 (or 3) years “immediately preceding termination;” however, it would seem from the language of the Act and the Court’s own reasoning that the Court meant “immediately preceding (the filing of their lawsuit seeking wages upon) termination.” That issue is likely to be litigated in future cases.

Source: Hernandez v. Ray Domenico Farms, Inc., case no. 17SZ77 (Colo. 3/5/18).

Dissenter rights include ability to terminate non-compete?

The Colorado Court of Appeals held that a shareholder’s statutory dissent rights, in at least the facts of the case before it, included the ability to terminate an existing non-compete. In this case, the plaintiff was a doctor at and a shareholder of a clinic. When his clinic merged with another, he disagreed and exercised his statutory right under C.R.S. 7-113-202 to dissent and demand payment for the fair market value of his shares. In addition, he contested the continuing viability of his then-existing non-compete.

In this case, the Colorado Court of Appeals held that he was entitled to be paid the fair market value of his shares but added that he was also relieved of his non-compete. To hold otherwise, the Court of Appeals said, would “further penalize Crocker’s exercise of his right to dissent, rather than protect him from the conduct of the majority” who had voted for the merger.

The decision drew a dissent as to the ruling relieving him of the non-compete. It remains to be seen whether the case will be heard by the Colorado Supreme Court.

In analyzing the case, the Court of Appeals noted a variety of facts, including the geographic radius of the non-compete versus the location of the plaintiff’s residence. It also remains to be seen whether this decision will be limited to its facts.

Source: Crocker v. Greater Colorado Anesthesia, P.C., case no. 2018COA33 (Colo.App. 3/8/18).

Colorado legislative employment law update 2017

The Colorado legislature has closed out its 2017 session. This year’s crop of new employment laws was relatively mild. Highlights included the following:

  • HB17-1214 enhances the Colorado Office of Economic Development’s ability to facilitate employee ownership of existing business. As owners of many business find themselves wanting to retire from their businesses,  the legislature hopes COED will now be better able to help employees to take over ownership.
  • SB17-189 provides employers who need to do background checks involving fingerprints more options than the law enforcement agencies previously permitted.
  • HB17-1021 provides that the Colorado Department of Labor and Employment can release to the public information about employers who have violated state wage laws, but continues to prohibit CDOLE from releasing a company’s trade secrets. Before disclosing information about a company, CDOLE will now provide the employer 20-day notice, allowing it time to object if it believes any information to be disclosed is a trade secret.
  • HB17-1269 expands the reach of preexisting law, which (like the federal National Labor Relations Act) prohibited employers from in turn prohibiting their workers from discussing their wages, hours and working conditions. This bill expands that state law beyond the NLRA to cover even employers who are not subject to the NLRA.
  • HB17-1119 enhances the penalties employers face if they fail to obtain workers compensation coverage for their employees.
  • HB17-1229 fleshes out Colorado’s workers compensation law in regard to mental impairment. It confirms that mental impairment is usually not a recoverable injury, especially when it is the consequence of aspects of the employment relationship, including discharge and discipline. However, workers compensation benefits may be available the mental impairment suffered as a result of a work-related traumatic event.

Failed legislation included the following:

  • HB17-1305 would have brought ban-the-box to Colorado. Ban-the-box laws are being introduced across the country as a way to prohibit employers from asking about an applicant’s criminal history.
  • HB17-1001 would brought back parental leave for children’s academic events (so-called parent-teacher conference leave). In 2009, Colorado passed such a law, but it expired in September 2015 and hasn’t since been revived.


Colorado Supreme Court adopts Iqbal-Twombly pleading standard

Under the federal and state rules of civil procedure, are not required to provide much specificity in their pleadings. Indeed the oft-cited rule is that they must simply give “notice” of their claims. This notice pleading rule was tightened in a pair of 2007 U.S. Supreme Court cases, called Iqbal and Twombly. The Iqbal-Twombly standard continues to impose a notice requirement but explains that, in order to give sufficient notice, a plaintiff must plead enough specific facts to raise their claims “above the speculative level,” such that, if the specifically pled facts are true, he would be entitled to relief under “a plausible claim.” This new notice pleading requirement is often called the “plausibility standard.” State supreme courts are free to decide their own rules of procedure. In this case, the Colorado Supreme Court adopted Iqbal-Twombly’s plausibilty standard.

The case is Warne v. Hall, 2016 CO 50 (Colo. 6/27/16).