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8 min read

Employment Law 101: For Small Businesses [in Colorado]

Employment Law 101 for Small businesses picture of two attorneys

When faced with employment issues and lacking a dedicated human resource person or team, how can you effectively navigate the challenges while simultaneously protecting your business and the rights of your employees? Find out in this webinar...



covered in this webinar

  • What do you do when you do not have a dedicated human resource person/team to handle employment issues that arise? 
  • How do you protect your business while safeguarding the rights of your employees? 

In this webinar, Danyelle McNeary, a labor and employment attorney, will discuss the following:

What were the most significant changes to employment laws passed in 2022?

  • How do recent and upcoming court decisions affect small business employers?
  • How small is a small business and how do basic employment laws impact them? 

In addition, Ms. McNeary will share insights into the employment issues that all small businesses should focus on in 2023:

  • Workers’ Compensation
  • Employment Discrimination and Workplace Harassment
  • Wrongful Termination claims
  • Colorado’s New Wage Theft Protection Bill
  • Colorado’s New Family and Medical Insurance Leave (FAMLI) 

After this session, all small businesses will understand better how to protect employees and their business moving forward. This webinar is for any small business in Colorado, including veteran-owned, service-disabled veteran-owned, women-owned, and minority-owned.

Danyelle is the firm's attorney and subject matter expert for labor and employment law. Danyelle has experience working with the Department of Labor, the Sexual Violence Law Center, and other agencies. Danyelle is particularly knowledgeable about race based discrimination claims. The information presented in the webinar is based on Danyelle’s experience and is not meant to be advice.

employment law for small businesses

She discusses employment law for small businesses. Small businesses are defined as having 100 employees or less, with "really small" businesses having under 50 employees. It is important for small businesses to be aware of employment law statutes, even if they are not directly covered by them. Employment law regulates the relationship between workers, employers, trade unions, and the government. The employment relationship is contractual in nature, with the "at will" default rule based on contract and agency law. The facilitator outlines the different categories of workers: employees, independent contractors, exempt, and non-exempt employees.

at-will employment

The facilitator discusses the "at will" default rule, which allows either party to terminate the employment relationship for any reason. This rule has been eroded over time due to statutes, contracts, and public policy concerns. Other countries have "for cause" termination as their default rule, which provides more protection for employees. The facilitator touches on alternatives to the "at will" rule, such as giving notice or providing an internal administrative process.

Termination is a common concern for small businesses, and they must consider the risks involved. The facilitator also discusses damages and deadlines, as well as employee rights and privacy concerns. The facilitator discusses the employer's ability to monitor electronic information, but notes that some statutes limit this ability. She also touches on the use of biometric information for tracking start and stop times, and the importance of having a safe repository for this information.

The facilitator emphasizes the importance of arbitration for small businesses, as it can help avoid costly lawsuits. She also discusses the Fair Labor Standards Act, which sets forth break times and work hours, and the Wage and Hour Division of the Department of Labor, which enforces these regulations. Finally, The facilitator notes that employers are responsible for paying and withholding taxes for employees.

employees versus independent contractors

The facilitator discusses the importance of correctly classifying employees as either employees or independent contractors. She notes that there are tests to determine whether someone is an independent contractor, such as the control test used by the IRS. The facilitator explains the historical context of employment law, and how the concept of "master and servant" has evolved into "employer and employee." She emphasizes the importance of the employer's responsibility for the actions of their employees, and how this responsibility extends to financial obligations such as taxes and benefits.

The facilitator outlines the three categories the IRS uses to determine behavioral control: whether the employer dictates work hours, provides tools and equipment, and trains the employee. The facilitator discusses the importance of financial control when determining whether someone is an independent contractor or an employee. She notes that if the employer is investing in the employee's training, it is likely that they have financial control over the employee. The facilitator also discusses the importance of the type of relationship between the employer and the employee, and how a contract that labels someone as an "independent contractor" is not enough to make that determination. She emphasizes that the length of the relationship, whether it is permanent or temporary, is also a factor in determining whether someone is an independent contractor or an employee.

control test

The facilitator discusses the "control test" for determining whether someone is an employee or an independent contractor, noting that it can be confusing because different sets of workers can be classified differently. She explains that the "economic reality test" is a simplified version of the control test, but that courts often combine the two tests to make a determination. The facilitator stresses the importance of making the correct classification, as misclassification can lead to lawsuits and back taxes. She also briefly mentions the concept of joint and leased employees.

The facilitator discusses the importance of avoiding "finger pointing" between two employers when it comes to discrimination or regulation violations, as courts will often find both parties liable. She moves on to explain the "at will default rule" which allows employers and employees to terminate the employment relationship at any time, for any reason. The facilitator references two early cases, Adair vs. America and the Lochner case, which established this rule. However, she notes that things began to change as people started getting hurt on the job, and regulations were put in place to protect workers. The facilitator argues that these regulations have "chipped away" at the at will default rule.

The facilitator discusses three primary exceptions to the at will default rule: statutory law, common law, and violations of public policy. She references several laws that have changed the default rule, such as the Fair Labor Standards Act, OSHA, the Pregnancy Discrimination Act, the Age Discrimination in Employment Act, and the ADA. The facilitator also mentions the newest Family and Medical Leave Act in Colorado. She explains that contracts can change the nature of at will employment, and that oral contracts are sometimes supported by judges.

The facilitator provides an example of an oral contract that would not be upheld in court. The facilitator discusses the importance of "consideration" in oral contracts, and how it can be difficult to prove. She notes that judges will sometimes uphold oral contracts if the worker detrimentally relies on the promise made by the employer. The facilitator provides an example of a situation in which an oral contract would likely be upheld in court. She also discusses written or express contracts, and the damages that can be awarded if the contract is breached.

contracts and "at-will" employment

The speaker discusses the differences between contracts for individuals and groups. The speaker explains how contracts can alter the nature of "at will" employment The speaker discusses the concept of "promissory estoppel" and how it can be used to enforce a promise even if a contract is not technically valid The speaker emphasizes the importance of employment handbooks and manuals The speaker warns against using policies found online that may conflict with one another The speaker explains how courts use handbooks and manuals to determine the terms of a contract The speaker answers a question about the prevalence of written contracts in "at will" states The speaker discusses the importance of having a contract in order to clarify the relationship between employer and employee The speaker emphasizes the importance of handbooks in order to explain disciplinary processes and protect against discrimination lawsuits The speaker discusses the importance of complying with notice requirements The speaker answers a question about term contracts and the potential consequences of terminating one early

The speaker discusses the importance of balancing employee loyalty with the need to remind them of the at-will nature of their employment The speaker references various anti-discrimination laws, including Title VII of the Civil Rights Act of 1964 The speaker outlines the most common types of discrimination claims they encounter, including age and pregnancy discrimination The speaker discusses state-specific regulations, highlighting Colorado's inclusion of hair texture and type as protected classes.

Labor's Civil Rights Division

The speaker mentions the Colorado Department of Labor's Civil Rights Division and how it shares jurisdiction with federal agencies The speaker discusses the time frame for filing a discrimination lawsuit, noting that it is extended to 300 days when both the EEOC (Equal Employment Opportunity Commission) and a state counterpart are present The speaker moves on to the anti-discrimination framework, emphasizing the importance of determining whether the issue is one of disparate treatment or disparate impact The speaker notes that they represent both claimants and defendants, and that their experience with the Department of Labor allows them to approach these issues from a neutral perspective.

The speaker discusses the importance of distinguishing between a policy that is discriminatory on its face and one that negatively impacts a smaller subset of people The speaker distinguishes between discrete action (e.g. termination, failure to promote) and harassment, noting that the latter requires repeated behavior The speaker outlines the McDonnell Douglas Framework, which is used to evaluate discrimination claims The speaker emphasizes the importance of establishing causality in order to prove discrimination The speaker invites the audience to share their own experiences with discrimination cases.

workers' compensation

The speaker discusses workers' compensation, noting that it is state-based The speaker explains the benefits of workers' compensation for employers, including protection from lawsuits The speaker warns of the consequences for employers who do not have workers' compensation The speaker discusses the Family and Medical Leave Act (FMLA) and the Colorado version of the FMLA The speaker notes that FMLA is not required for employers with less than 50 employees, but that it can be a beneficial policy to have

The speaker discusses the importance of understanding leave policies in order to enforce them The speaker notes that different statutes have different thresholds for the number of employees required for coverage The speaker explains that even if an employer is not covered by a statute, they can still be sued under tort liability The speaker outlines four types of wrongful discharge that courts enforce The speaker discusses the importance of understanding contract law, noting that contracts based on illegal or invalid agreements are not enforceable

The speaker outlines three situations in which an employee cannot be retaliated against: exercising a statutory right, fulfilling a public obligation, or whistle-blowing. The speaker also discusses intentional infliction of emotional distress, noting that it is difficult to prove in court The speaker discusses the concept of "intentional or reckless" behavior, noting that the action does not have to be intended to cause harm in order to be considered reckless. The speaker notes that emotional harm is taken into account by courts, but that they often require medical evidence to substantiate the claim The speaker provides an example of a potential intentional infliction of emotional distress claim. The speaker discusses the concept of "bad faith" termination, noting that it can occur when an employer terminates an employee in a way that does not meet the threshold for discrimination.

The speaker advises employers to look into unemployment insurance The speaker discusses the importance of ensuring that employers are withholding or paying the correct amount for unemployment insurance. Employers must contest unemployment claims if they believe the employee is not entitled to benefits, in order to avoid negative consequences for their company. Layoffs can be temporary or permanent, and are often a legitimate business reason for termination. Employers may have a duty under the Worker Adjustment and Retraining Notification Act to provide notice to employees before a layoff.

notice requirements for multiple person terminations

The speaker touches on the importance of understanding notice requirements when terminating multiple employees at one time. The speaker recaps topics covered in the webinar, including non-retaliation, fair wages, and the FLSA. The speaker discusses the New Wage Theft Prevention Administration Program in Denver, which makes it easier for employees to report wage theft. The speaker discusses privacy in the workplace, noting that employers generally have the right to monitor communications for legitimate business reasons.

The speaker mentions the Electronic Communications Privacy Act and the Biometric Information Privacy Act, which both limit employers' ability to monitor or collect certain types of information. The speaker discusses the importance of protecting biometric data, such as fingerprints, eye color, and voice intonation. The speaker notes that while there are benefits to using biometric data for employers, there are also risks, and employers should have formal policies in place to address these concerns. The speaker mentions the Colorado Privacy Act, which is particularly stringent when it comes to privacy. The speaker briefly discusses defamation, noting that it requires a false statement to be made to a third person.

The speaker continues to discuss defamation, emphasizing the importance of employers being careful about what they say about employees, both during and after employment. The speaker also stresses the importance of investigating claims of defamation in the workplace. The speaker then moves on to post-termination contracts, noting that while they are generally enforceable, courts are not always in favor of them.

non-compete agreements

The speaker discusses the requirements for a non-compete agreement, including that it must be in writing, signed by all parties, and that the employee must be able to consult with an attorney. The speaker emphasizes that the agreement must be reasonable in duration, geographic area, and scope in order to be enforceable. The speaker notes that some states are moving away from non-compete agreements altogether, and that they are not enforceable against certain professions. The speaker then discusses the Denver Civil Wage Theft ordinance, which went into effect in 2020, and outlines the new procedures and penalties. The speaker also touches on the different administrative bodies that enforce regulations at the federal, state, and local level. The speaker discusses the importance of including an arbitration clause in employment contracts in order to avoid being sued in court.

The speaker notes the benefits of arbitration, including that it is less formal, faster, and cheaper than going to court. The speaker briefly mentions some pending cases that could impact businesses, such as the Colorado cake case. The speaker also discusses the additional requirements for federal contractors, such as the Service Contract Act and federal contract compliance regulations. The speaker acknowledges that they received several questions, but due to time constraints, they will respond to them offline. The speaker encourages participants to email any additional questions they have. The speaker thanks everyone for attending and mentions that there will be future webinars on employment law.