How California’s employment regulation trend is gaining ground in Colorado

Employment laws are mounting

The “Californication” of small business regulation—that is, the passing of an increasing number of state employment laws and regulations, many which put even more burden on employers—is picking up steam.

In more and more states, new laws coming into effect are substantially more weighty than even federal laws, especially in the areas of diversity, discrimination, sexual harassment, and pay equity—issues which have risen to the forefront of our attention in recent years [1].

Though Colorado’s employment laws haven’t quite reached the level of California’s yet, the train appears to be headed in that direction.

The depth and breadth of regulation has long been a subject of concern for small to mid-sized businesses. There are approximately 90,000 state and local governments in the U.S. that can each come up with their own rules and regulations [2]. Multiple and near-constant changes to existing regulations pose another challenge, with more changes having occurred in the past ten years than in the previous 50 years [3].

In Colorado, there are at least eight new state employment-related laws, regulations, and rules that go into effect in 2021, not including the existing state and federal laws that businesses must also follow. Between what’s new and what’s changing, it’s a full-time job for Colorado businesses just to keep up.

But compliance is only part of the story. Another result of new regulations is that, similar to California, Colorado employers now need to provide more for their employees than ever before, whether it’s compensation, sick leave, access to promotion opportunities, or legal redress.

And while most employers sincerely want to care for their workforce in the best way possible, many of the new laws expose businesses to additional financial, legal, and other risks that are becoming increasingly difficult to manage.

How employers bear the burden

One of the biggest burdens of greater regulation is the cost to employers. The city and county of Denver raised the minimum wage this year from $12.85 to $14.77 while the state raised both the minimum wage (now $12.32) and the minimum salary for exempt employees (from $35,568 to $40,500). Raising minimum wage and salaries already creates a very real financial burden for many businesses, but when the rising cost of employee benefits is factored in, that financial burden can become crippling.

The average cost of benefits for employers has increased by nearly 50% in the last few years [4]. In addition to mandatory benefits like employer matching for Social Security and Medicare and offering some level of health insurance, as is required in some states, many businesses choose to offer optional benefits since competitive employee benefits packages are one of the most viable ways to attract top talent. But in the current economy hampered by the pandemic, some businesses have valid cause to worry about how they’ll survive any added cost or financial pressure.

Liability is another burden—and the pandemic has led to a slew of new state laws that increase employer liability. In California, for example, new laws passed last year can hold employers liable for employees that test positive for COVID by requiring them to offer workers’ compensation and report workers’ comp claims properly [5]. This is the de facto assumption in Colorado as well for jobs that have exposure to the public.

The pandemic also sparked the Healthy Families & Workplaces Act (HFWA) and the Public Health Emergency Whistleblower (PHEW) Act here in Colorado. Both were signed into law last year and remain significant this year as the health crisis rolls on. PHEW guarantees protection for workers that file complaints about workplace health and safety.

Phase two of the HFWA, which went into effect at the start of 2021, requires employers to provide a minimum of 48 hours (or six days) of sick leave to full-time employees along with a special provision of two weeks paid sick leave in the event of a public health emergency. Not complying with these laws, or any other law for that matter, can incur steep financial penalties. It also runs the risk of reputational damage since no one wants their company name splashed across the news for violating worker protections.

Then there’s the simple fact that many businesses lack the resources and expertise to stay updated on all the details and intricacies of the laws, let alone put the right measures in place at the right time to satisfy requirements. This means either having to hire an in-house expert or an outside resource to manage risk and compliance. But many business owners forgo hiring an expert and try to take on the job themselves, which can make for many a sleepless night worrying about what they don’t know or might be missing.

Other Colorado laws to pay attention to

In addition to the aforementioned HFWA, PHEW, and changes to minimum wage and salary, there are some other important new laws in Colorado that went into effect at the beginning of 2021 that employers will have to respond to.

A big one is Colorado’s Equal Pay for Equal Work Act (Equal Pay Act), which requires equal pay for “substantially similar work.” It also includes a host of other provisions employers are responsible for, including showing the pay or pay range for all job postings, making sure every employee is notified of all promotion opportunities, keeping job description and wage-related documents for two years, and no longer asking about a job applicant’s wage history.

Adding to the mix, 2021 also means Colorado businesses with five or more employees will need to give their workforce access to retirement plans, either by sponsoring their own plan or participating in the Colorado Secure Savings Program. While a target effective date hasn’t been set yet for this year, employers will have to start preparing by updating payroll systems, making decisions about sponsoring a plan vs. participating in the program, and creating a strategy for implementing and rolling out retirement plans to employees [6].

Managing increasing regulation effectively

Business regulation isn’t going away, if the above is a sign of things to come. And if the “Californication” trend continues apace in Colorado, many businesses will soon have to evaluate—if they aren’t already—how well they’re managing risk and compliance, or else face the consequences that come with not preparing for and fully understanding the details, deadlines, and other critical components of each new and changing law.

But it’s important to realize that even the most well-staffed and well-versed in-house HR team can suffer from gaps in legal expertise that bring undue risk to the business. To avoid getting caught in a sticky—and costly—situation, Colorado businesses should consider hiring a local HR provider with legal experts who understand the state’s unique laws and how they’re applied.

A local, expert provider takes on the lion’s share of the time and effort required to navigate laws and regulations and maintain compliance. This frees up staff to focus on other high-value tasks and helps the business owner avoid penalties, lawsuits, and other costly problems that come when risk and compliance aren’t well managed.

Though regulations may be on the rise, they don’t have to sink the ship. Colorado employers can take the right steps now to manage regulation effectively while also caring for and protecting employees and the business.

To learn more about Colorado’s 2021 laws and regulations and how they’ll impact businesses, download Obsidian HR’s handy eGuide.

Jordanconley Headshot Jordan Conley serves as the President of Obsidian HR, leveraging over 20 years of experience in the HR outsourcing industry while offering a unique perspective to the evolving needs and definition of “HR” in the modern workplace. He is married with three sons and currently resides in Denver, CO where he is an active car aficionado, an avid reader and connoisseur of Colorado beer.

(This sponsored content is provided by Obsidian HR)

[1] Katzaman, Jim. “Entrepreneurs take aim at ever-moving employment laws.” Medium. June 15, 2018.
[2] Hendrix, Michael. “Regulations Impact Small Business and the Heart of America’s Economy.” U.S. Chamber of Commerce Foundation. March 14, 2017.
[3] Entrepreneurs’ Organization. “Two Crucial HR Trends to Watch in 2020.” Entrepreneur. Jan. 7, 2020.
[4] Gartenstein, Devra. “Cost of Employee Benefits for An Employer.” Chron. Feb. 12, 2019.
[5] Capell, Julie M.; Bosley, Jeffrey S.; Hoag, Joseph P. “California Passes Two New Important Workplace COVID-19 Laws: Workers’ Compensation Presumption and OSHA-Related Reporting.” Davis Wright Tremaine. Oct. 1, 2020.
[6] “Colorado Employers Need to Add Secure Savings Program to Your 2021 To-Do List.” Fisher Phillips. Nov. 11, 2020.
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