Monthly Archives: September 2020

September 24, 2020

Colorado Court of Appeals: Terms of Employer’s Vacation Policy Control Whether Accrued, Unused Vacation Time Must Be Paid Out at Separation

By Steven Gutierrez and Jeremy Merkelson, Holland & Hart LLP

Steve Gutierrez

The Colorado Court of Appeals issued a very favorable decision to employers today in a case litigated by Steve Gutierrez and Brad Williams of Holland & Hart, LLP. The case addressed an unsettled question under the Colorado Wage Claim Act (“CWCA”)—namely, whether accrued, unused vacation time must be paid out at separation of employment where an employer’s vacation policy states that it will not be. The Court of Appeals held that such time need not be paid out at separation, echoing a similar decision by the Court of Appeals in a similar case last year. The decision issued today—Blount Inc. v. Colorado Department of Labor and Employment, Division of Labor Standards and Statistics—adds fodder to a judicial debate over payout of vacation time that is likely to be resolved by the Colorado Supreme Court in 2021.

The CWCA requires that any unpaid wages and compensation must be paid to employees within specific time periods after their separation of employment. Amongst the wages and compensation that must be paid out is “vacation pay earned and determinable in accordance with the terms of any agreement between the employer and employee.” Colorado law has long been unsettled regarding whether this provision requires payout of any vacation time after it is accrued (e.g., on the theory that the vacation time is then “earned” and cannot lawfully be denied based on a separate section of the CWCA) or whether the terms of an employer’s specific vacation policy determine whether or not vacation time must be paid out at separation of employment (and if so, under what circumstances). The Colorado Department of Labor and Employment, Division of Labor Standards and Statistics (the “Division”), has long taken the position that vacation time once “earned” must always be paid out at separation, and that vacation policies providing otherwise are illegal. However, the Division has also issued inconsistent guidance and administrative decisions on wage claims that call this position into question—including inconsistent guidance on whether “use-it-or-lose-it” vacation policies are legal under its interpretation of the CWCA. Read more >>

September 23, 2020

New Department of Labor Proposed Rule Makes It Easier to Classify Workers as Independent Contractors under the Fair Labor Standards Act

By Devra Hake and Laurie Rogers, Holland & Hart LLP

Laurie Rogers

On Tuesday, September 22, the United States Department of Labor’s Wage and Hour Division announced a proposed rule that clarifies whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA). The proposed rule adds a new Part 795 to the Code of Federal Regulations. Employees are subject to the FLSA’s minimum wage and overtime protections, whereas independent contractors are not. In the past, courts across the nation have implemented varying multifactor tests to determine whether workers are employees or independent contractors. These tests can be unwieldy and make it challenging for companies to predict outcomes. The Department of Labor’s proposed rule clarifies that the department will use the “economic reality test,” and it identifies two core factors and three guideposts that make up the test. The economic reality test is more business-friendly and makes it easier for employers to classify workers as independent contractors.

The Economic Reality Test

The “economic reality test” is a test to determine whether a worker is economically dependent on a company for work or if the worker is in business for him or herself. If the worker is economically dependent, the worker is an employee. If the worker is in business for him or herself, the worker is an independent contractor. The proposed rule identifies two “core factors” that should be considered when deciding whether a worker is economically dependent:

The nature and degree of the worker’s control over the work. To the extent the worker exercises substantial control over the performance of the work, including setting work hours and selecting work projects, this factor weighs in favor of the worker being an independent contractor. To the extent the putative employer exercises substantial control over the performance of the work, including controlling work hours, workload, and requiring exclusivity, this factor weighs toward the worker being an employee.
The worker’s opportunity for profit or loss based on initiative and/or investment. To the extent a worker has an opportunity to earn more or less profit based on the worker’s own investment in the business or initiative (for example, business acumen or skill), the factor weighs toward independent contractor status. To the extent a worker’s profit or loss is based on the worker’s ability to work more efficiently or the putative employer giving the employee more or less hours, this factor favors classification of the worker as an employee.

September 1, 2020

Colorado Legislature Passes Paid Sick Leave, Other Bills Affecting Employers

by Mark Wiletsky, Holland & Hart, LLP

Mark Wiletsky

In an extraordinary legislative session interrupted by the COVID-19 pandemic—which led to a Colorado Supreme Court ruling approving lawmakers’ right to reconvene after initially adjourning in late March 2020, despite a constitutional provision limiting regular sessions to “one hundred and twenty calendar days”—the Colorado General Assembly passed a number of important bills affecting employers. On July 15, 2020, Governor Jared Polis signed the Healthy Families and Workplaces Act (HFWA), which prescribes new paid sick leave obligations going into effect for covered employers with 16 or more employees on January 1, 2021, and for all other covered employers (regardless of how many people they employ) on January 1, 2022. The HFWA also mandates that all covered employers in Colorado provide paid sick leave for certain COVID-19-related reasons immediately and through the end of 2020. Read on for more details about the HFWA and other important legislative developments. Read more >>