Monthly Archives: February 2018

February 27, 2018

Colorado General Assembly To Consider Immigration, Paid FMLA, and Other Employment Bills

Emily Hobbs-Wright

By Emily Hobbs-Wright

The Colorado General Assembly convened on January 10, 2018 for its regular session. Between now and its scheduled May 9, 2018 adjournment date, the House and Senate will consider numerous employment-related bills. Although some may not get out of committee, and others may not get enough votes to pass, the bills highlighted here provide a glimpse into what our legislature may be considering for our state’s employers.

Immigrant Work-Status Bill

Introduced on February 5, 2018, House Bill18-1230 would create a purple card program that would allow certain persons who came to the United States without legal documentation to work legally in Colorado. To be eligible for the program, a person must have no felony convictions for the three years immediately prior to their application, and they must either have been brought to the U.S. as a minor, or paid state income taxes for the two years immediately prior to their application to the program. Sponsored by Representative Dan Pabon (D-Denver), the bill has been assigned to the House Judiciary Committee.

FAMLI Family and Medical Leave Insurance Program

House Bill18-1001 would create the family and medical leave insurance program (FAMLI) within the Colorado Department of Labor and Employment. The program would offer partial wage-replacement benefits to eligible employees who need to take leave from work because they are unable to work due to a serious health condition or need to care for a new child or a family member with a serious health condition.

The program would be funded through employee contributions, based on a percentage of the employee’s annual wages, not to initially exceed 0.99%. The premiums would be deposited into the FAMLI fund to be paid out to eligible individuals. As introduced, the bill would apply to all employers in the state engaged in activities affecting commerce and only requires that the employer have at least one employee to be covered. The maximum number of weeks of FAMLI benefits payable to an eligible individual would be 12 weeks in any year. The bill has been assigned to the Finance Committee. Although the bill has a decent chance of passing the House, it will likely face opposition in the Republican-controlled Senate.

Non-Compete Exemption for Physician To Provide Continuing Care For Rare Disorders

Colorado’s statute that governs non-compete agreements specifically addresses non-competes for physicians. C.R.S. §8-2-113. Although covenants not to compete that restrict a physician’s post-employment ability to practice medicine are void, agreements may require a physician to pay damages in an amount reasonably related to the injury suffered by reason of the termination of the agreement are enforceable. Senate Bill18-082 would create an exemption allowing a physician, after termination of an agreement, to continue to care for any patient with a rare disorder without liability for damages. As of the time of this writing, the bill has passed the Second Reading in the Senate. It needs to pass on Third Reading before heading to the House.

Minimum Wage Waiver

House Bill18-1106, introduced by Representative Dave Williams (R-El Paso), would allow an applicant for employment, or a current employee to negotiate a different minimum wage than what is required under the Colorado Constitution. The bill would require employers to post a notice informing employees of the right to negotiate wages. Unsurprisingly, this bill already failed in committee.  (Employers should remember that neither an employer nor an employee has the authority to waive minimum wage and overtime pay under federal or state wage law.)

Right-to-Work Bill

Although dead on arrival, Representative Justin Everett  (R-Jefferson) introduced a right-to-work bill, House Bill 19-1030, that would prohibit employees from being required to join, remain in, or pay dues to a union as a condition of employment. Similar bills have been introduced almost every session, and like those before it, this one was shot down. The bill was rejected in committee and will not make it to the House floor for a vote. With Democrats controlling the Colorado House, there is virtually no chance that a right-to-work bill would see the light of day.

More To Come

We will continue to monitor labor and employment developments at the Colorado legislature and will report back in future posts.

February 21, 2018

Dodd-Frank Whistleblower Protection Extends Only to Employees Who Report to SEC

By Brian Neil Hoffman and Jeremy Ben Merkelson

Brian Neil Hoffman

The United States Supreme Court today narrowed the universe of plaintiffs who can claim protection under the whistleblower anti-retaliation provisions of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). In a unanimous decision, the Court held that employees are not protected under Dodd-Frank unless they report information relating to a violation of the securities laws to the Securities and Exchange Commission (SEC). Employees who only report violations internally within their company, therefore, are not protected by Dodd-Frank’s anti-retaliation provisions.

Statutory Whistleblower Definition Applies 

Dodd-Frank defines a “whistleblower” as someone who provides pertinent information “to the Commission” (SEC). Yet this clear language becomes less certain because Dodd-Frank protects “whistleblowers” for engaging in certain specified conduct, including making reports to non-SEC individuals, such as a company supervisor.

In today’s decision in Digital Realty Trust, Inc. v. Somers, the Court concluded that Dodd-Frank’s anti-retaliation provision applies only to employees who fall within the definition of a whistleblower and have engaged in one of the specified types of conduct. As a result, individuals who have not reported to the SEC are, by definition, not Dodd-Frank whistleblowers protected under the act’s anti-retaliation provision. Stated differently, an employee who makes an internal report of securities violations, or an external report to any entity other than the SEC, is not a whistleblower under Dodd-Frank.

Internal Reports of Securities Violations Not Protected

In the case before the Supreme Court, employee Paul Somers reported to senior management at his employer, Digital Realty Trust, Inc., that he suspected violations of securities laws being made by the company. He did not report his suspicions to the SEC. Shortly thereafter, Digital Realty terminated his employment. Somers sued Digital Realty alleging that he was protected from retaliation under the whistleblower protections of Dodd-Frank.

Digital Realty argued that Somers was not a whistleblower under Dodd-Frank because he failed to report to the SEC prior to his termination. A federal district court judge in San Francisco and a divided panel in the Ninth Circuit disagreed with Digital Realty and denied dismissal of Somers’ claim. Judge Ginsburg’s opinion for the Supreme Court, siding with Digital Realty, settles this issue after courts addressing this same issue in other cases reached differing results from Texas to New York to California. It is now clear that a plaintiff cannot claim whistleblower retaliation under Dodd-Frank without having reported to the SEC before suffering adverse conduct by an employer.

Employer Takeaways

This decision presents a mixed bag for employers. On the one hand, the decision is good news for employers because the ruling narrows the scope of protections available under Dodd-Frank’s anti-retaliation provisions. Dodd-Frank contains multiple plaintiff-friendly provisions – including immediate access to federal court, a generous statute of limitations (at least six years), and the opportunity to recover double back pay. Yet these benefits are now only available to a, presumably, smaller number of potential plaintiffs who actually report to the SEC.

On other hand, there are many reasons for employers to be wary of the ruling. Rather than incentivize employees to report their suspected concerns internally, today’s decision heavily encourages potential whistleblowers to report their concerns directly to the SEC – before any adverse action occurs, but also before employers have had the chance to hear, investigate, and address their potential concerns. Indeed, when an internal report does arrive, it may be safest for employers to assume that the SEC already has that same report. Notably, individuals who report their concerns internally may still assert retaliation claims under Sarbanes-Oxley Act (SOX), which itself provides significant monetary recovery in the form of back pay with interest, reinstatement, and other costs.

As a result, employers should remain vigilant about avoiding retaliation when reports about potential concerns arise. Employers should also consider engaging in a timely and proactive response to potential concerns, often in consultation with outside counsel and which may include an appropriate and comprehensive investigation and remediation of the matter.