Category Archives: Legislation

March 23, 2016

Idaho’s Non-Compete Law Set to Enhance Employer Enforcement

Idaho businesses will have an easier time enforcing non-compete agreements that restrict key employees and independent contractors from engaging in post-employment competition, thanks to a bill passed by the Idaho legislature this week. HB 487 provides that if a court finds that a key employee or key independent contractor breaches a non-compete agreement, a rebuttable presumption of irreparable harm is established. The burden of overcoming that presumption shifts to the former employee to show that he or she has no ability to adversely affect the employer’s legitimate business interests. The bill was sent on Tuesday to Governor Otter, who is expected to sign it into law.

Pro-Business Non-Compete Provision

While some neighboring states, such as Utah, have passed legislation to restrict the use of non-competes and other post-employment restrictive covenants, Idaho has strengthened its non-compete law in favor of protecting employer rights. Not without controversy, this bill reportedly grew out of a recent lawsuit filed by LeapFox Learning, a Meridian computer training company, against its former business director. LeapFox Learning’s owner, Codi Galloway, reportedly testified before the Idaho Senate and Human Resources Committee, that after her former business director left to work for a competitor, she lost customers, vendors, and contractors as a result of that ex-employee’s use of LeapFox Learning’s company’s contact lists and marketing and business strategies.

Tough Burden For Employees To Overcome

Opponents of the bill argued that it infringes on an employee’s ability to change jobs and move to a better position or even start his or her own company. In addition, by placing the burden to rebut the presumption of irreparable harm on the former employee, it essentially forces the employee to prove a negative, namely that he or she cannot harm the former employer’s business. Assistant Chief Deputy Brian Kane is quoted in the Idaho Statesman as saying, “The burden necessary to overcome this presumption may be extremely difficult, if not impossible.”

Proponents, however, reply that the presumption of irreparable harm applies only to non-competes of key employees or key independent contractors, which are defined as the highest paid five percent of employees or independent contractors. Consequently, the amendment will not change enforcement proceedings for non-competes involving lower level employees.

Review Non-Competes For Idaho Compliance

To take advantage of numerous rebuttable presumptions contained in Idaho’s non-compete law, employers should review their non-competes to make certain they do not exceed the time, geographic, and business scope parameters deemed reasonable under the law. In particular, review section 44-2704 of the Idaho Code or consult with competent legal counsel to ensure your restrictive covenants protect your business assets in the best way possible.

If you have any questions about the new bill, or your company’s non-compete agreements, contact Dean Bennett atadbennett@hollandhart.com or 208-383-3993.

January 4, 2016

Pregnancy-Related Accommodation Bill To Be Introduced in Colorado Legislature

Following the national trend, a bill to be introduced during Colorado’s next legislative session intends to expand protection for pregnancy-related leave. Specifically, the draft bill would require employers to provide reasonable accommodations to applicants and employees for conditions related to pregnancy and childbirth. If passed, the bill would mean that employers must engage in an interactive process to assess potential reasonable accommodations, provide notice of employee rights, and refrain from retaliating against employees and applicants that request or use a pregnancy-related accommodation.

With the 2016 Colorado legislative session set to convene on January 13th, here are the highlights of the draft bill.

Reasonable Accommodation Requirement

Under the draft bill, an employer would commit an unfair employment practice if it refuses to make a reasonable accommodation for a job applicant or an employee for conditions related to pregnancy or childbirth, unless doing so would impose an undue hardship on the employer’s business. Employers would need to engage in a good-faith interactive process with the employee to determine possible, effective reasonable accommodations.

Most employers should be familiar with the interactive process as it should be used when assessing accommodations for qualified individuals with a disability. Possible reasonable accommodations listed in the draft bill include more frequent or longer break periods, temporary transfer to a less strenuous or hazardous position, job restructuring, light duty, time off to recover from childbirth, acquisition or modification of equipment, seating, assistance with manual labor, modified schedules, and break-time and private non-bathroom space for expressing breast milk. Employers would not be required hire new employees, or discharge, transfer, or promote another employee in order to make a reasonable accommodation.

The bill would further prohibit employers from requiring an applicant or employee to accept a reasonable accommodation that the individual chooses not to accept. The bill also would prevent employers from requiring an employee to take leave if there are other reasonable accommodations that may be made. These provisions seem to suggest that the employee has veto power over offered accommodations. This differs significantly from disability law as under the Americans with Disabilities Act (ADA), an employer meets its reasonable accommodation duty if it provides an accommodation that allows the employee to perform the essential functions of his or her job, even if that accommodation is not the one preferred by the employee.

Undue Hardship Analysis

An “undue hardship” is defined in the bill as an action requiring significant difficulty or expense proven by the employer. Factoring into that determination would be:

the nature and cost of the accommodation
the overall financial resources of the employer
the overall size of the employer’s business with respect to the number of employees and the number, type, and location of the available facilities, and
the accommodation’s effect on expenses and resources or its impact on the operations of the employer.

If the employer provides a similar accommodation to other classes of employees, it will be presumed that the accommodation does not impose an undue hardship. Employers would have to rebut that presumption if they fail to offer the same or similar accommodation for pregnancy-related conditions.

Retaliation Prohibited

Employers would be prohibited from taking adverse action against an employee who requests or uses a reasonable accommodation for a pregnancy-related condition. An adverse action is defined in the bill as a retaliatory action, such as the failure to reinstate the employee to her original job or to an equivalent position with equivalent pay and accumulated seniority, retirement, fringe benefits and other applicable service credits.

Notice and Posting Requirement

If this bill were to become law, employers would be required to provide employees with written notice of their rights under this provision. New employees would have to be provided the written notice at the start of their employment. Additionally, employers would have ten days to provide the notice to individual employees who inform their employer of their pregnancy. There is also a provision to notify existing employees within a specified time after the effective date of the new law. Finally, employers would be required to post the written notice in a conspicuous place at their business in an area accessible to employees.

Likelihood of Bill Passage

Remember that at present, this bill is only a draft and after it is introduced in the House, it will be assigned to a committee. There are many opportunities for legislators to amend, add, or delete provisions in the bill throughout the legislative process.

That said, some form of the bill stands a reasonable chance of passage within the Democratically controlled Colorado House. It has less chance of success in the Republican-controlled Senate. We will watch to see if other legislators add their names as co-sponsors, or if an alternative (perhaps less onerous) bill is introduced in the Senate. We will track this bill and keep you informed of any important developments.

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June 25, 2015

Affordable Care Act Survives Challenge: Tax Credits Available For Federal Exchanges

By Bret Busacker and Gabe Hamilton

To avoid an economic “death spiral” of insurance markets, the U.S. Supreme Court ruled that tax credits are available to individuals in states that have a federal exchange under the Patient Protection and Affordable Care Act (ACA). King v. Burwell, 576 U.S. ___ (2015). In a 6-to-3 decision, the Court relied on context and policy to resolve an ambiguity in the statute, supporting the ACA’s tax credit in states where the health care exchange is established by the federal government.

An Exchange Established by the State-or the Federal Government

The question before the Court was whether the ACA’s tax credits are available to individuals in states that have a health exchange established by the federal government, or only to those in states where the exchange was established by the state. The ACA provides that individuals are only eligible for premium tax credits under the ACA if the individual obtains insurance through “an Exchange established by the State.” But the Act also provides that if a state fails to set up its own exchange, the federal government will establish “such Exchange.”

The Internal Revenue Service issued a regulation making ACA premium tax credits available regardless of whether the exchange was established and operated by the state or the federal government. The parties challenging that IRS regulation in this case argued that tax credits should not be available in states with a federal exchange as that was not an exchange “established by the State.”

Chief Justice John Roberts, writing for the majority, acknowledged that the challengers’ “plain-meaning” arguments were strong, but concluded that the context and structure of the statutory phrase meant that Congress intended the tax credits to apply to eligible individuals purchasing insurance on any exchange created under the ACA. He wrote that the statute is ambiguous and that plain meaning of a statute is but one means the Court uses to resolve an ambiguity. In this instance, context and structure of the statute were more persuasive.

Roberts noted that Congress passed the ACA to improve health insurance markets, not to destroy them. He cited studies that suggested that if tax credits did not apply to federal exchanges, premiums would increase between 35-47 percent and enrollment would decrease by about 70 percent. He wrote, “It is implausible that Congress meant the Act to operate in this manner.”

Tax Credits Are One of The ACA’s Key Reforms

The Court defined the tax credit scheme as one of the ACA’s three key health insurance reforms. The first key reform is the “guaranteed issue” requirement, which prevents insurance companies from denying health care insurance based on a person’s health, and a “community rating” requirement, which prohibits insurers from charging higher premiums to those in bad health.

The second key reform is the individual insurance mandate, requiring individuals to have health insurance coverage or pay a tax penalty. This reform is designed to get more healthy people into the insurance pool, lowering premiums across the board. Individuals are exempt from this requirement if the cost of buying insurance would exceed eight percent of their income.

The third key reform is providing tax credits to certain individuals in order to make insurance more affordable. People with household incomes between 100 and 400 percent of the federal poverty line are eligible to purchase health insurance on the exchange with tax credits which are provided directly to the insurance provider. The availability of premium tax credits through state and federal exchanges is seen as essential in getting more individuals insured and spreading the risk pool.

Acknowledging that the ACA included many instances of “inartful drafting,” the Court decided that limiting tax credits to state exchanges would gut the second and third key reforms in states with a federal exchange. The combination of no tax credits and an ineffective coverage requirement would result in insurance markets plunging into a “death spiral.” The Court concluded that Congress meant for all of the key reforms to apply in every state, including those with federal exchanges.

Result: No Change for Employers in ACA Requirements

By upholding the tax credit scheme in all states regardless of whether an exchange was set up by the state or the federal government, the Supreme Court supported the overall scheme of the ACA. Although Justice Scalia wrote a scathing dissent that was joined by two other justices, the ACA remains intact. Employers should continue to comply with all applicable ACA requirements.

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May 6, 2015

Colorado Legislators Fail to Pass New Employment Laws in 2015

By Emily Hobbs-Wright

The 2015 Colorado legislative session is ready to adjourn and few substantive bills related to labor and employment were passed by both chambers this session. Numerous bills on topics such as minimum wage, overtime and discrimination were introduced but with Republicans controlling the Colorado Senate and Democrats controlling the House of Representatives, it’s no surprise that little was enacted. Here's a look at employment-related bills that were considered this session.

Raise Colorado’s Minimum Wage – Concurrent resolutions in both the House and Senate sought to put Colorado’s minimum wage on the November 2016 ballot to allow voters to decide whether to amend the Colorado Constitution to increase the minimum wage to $9.50 an hour on January 1, 2017 with annual increases of $1.00 per hour until 2020, which would see a $12.50 minimum wage. In years thereafter, the minimum wage would be increased annually for inflation (which is the current adjustment provided in Colorado’s Constitution). Both bills failed. (HCR15-1001 and SCR15-003)

Overtime Fairness Act – This bill would have set a minimum salary requirement for administrative, executive, supervisor and professional exemptions at 120 times the state minimum hourly wage rate. At the current $8.23 minimum wage, the salary threshold would be $987.60 per week. This bill failed to pass. (HB15-1331)

Repeal of the Job Protection and Civil Rights Enforcement Act of 2013 – The 2013 law that established compensatory and punitive damage remedies for unfair employment practices under Colorado law was under attack in two bills. The Senate passed a bill that would have repealed all components of the 2013 law except for the expansion of age-based discrimination to individuals age 70 or older. (SB15-069) The House killed that bill. A separate bill introduced in the House sought to eliminate the punitive damage provision of the 2013 law. (HB15-1172) That bill never got out of the House.

Expand and Extend Parental Involvement in K-12 Education Act – The current Colorado law that entitles parents to take time off of work to attend their child’s academic activities is set to expire on September 1, 2015. This bill sought to extend the law indefinitely and to expand the types of academic activities for which parents could take this leave. The bill passed in the House but never got out of the Senate committee to which it was assigned. (HB15-1221)

Limit on Audits Performed by the Department of Labor and Employment – This bill sought to amend Colorado’s employment verification law by limiting audits by the Department of Labor and Employment (CDLE). Under this provision, the CDLE would be permitted to investigate only an employer’s compliance with the employment verification and examination requirements. This bill never got out of the House committee to which it was assigned. (HB15-1176)

Right of Private-Sector Employees to Inspect Their Personnel Files – This proposal would have created a right for employees and former employees to inspect or request copies of their personnel file within 30 days of a written request. This bill failed to pass the House. (HB15-1342)

Independent Contractor Determinations – Two bills sought to change the determination of independent contractor status under Colorado’s unemployment insurance law. The first sought to eliminate the requirement that the individual’s freedom from control and direction of the company must be shown “to the satisfaction of the division.” (SB15-107) This bill never got out of committee. The second bill before the Senate sought to create a bright-line test for whether an individual is an employee or an independent contractor. That bill proposed to establish a numerical standard so that an independent contractor relationship would be recognized if at least six of eleven factors listed in the proposed provision were found to exist. This bill, SB15-269, was introduced rather late in the session and at the time of writing (and with just one week before the session adjourns), was still in committee.

Additional bills were introduced that would have affected some Colorado employers, including a bill to require that youth sports organizations conduct criminal history checks on persons who work with children and a bill that would create an income tax credit for employers who assist employees in repaying their student loans for degrees in certain fields, such as science, technology and math. These bill also failed to make it to the Governor’s desk.

Wrap-Up: A Quiet Session for Colorado Employers

Colorado's legislative session adjourns for the year today, May 6th, and it concludes without Colorado employers having to learn new employment-related laws. Accordingly, on the state level, most of our labor laws are remaining status quo for another year. However, with so many recent changes related to federal employment laws, most Colorado employers will consider the lack of any new state employee protections good news.

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April 3, 2015

Presidential Veto Quashes Congressional Attempt to Overturn NLRB “Quickie” Election Rules

By John Husband and Brad Williams

On March 31, 2015, President Obama vetoed a joint resolution passed by both houses of Congress that sought to overturn the National Labor Relations Board’s (NLRB’s) rules designed to speed up the union election process. Scheduled to go into effect on April 14, 2015, these so-called “quickie” or “ambush” election rules significantly shorten the period of time between a petition for a union election and a vote.

History of “Quickie” Election Rules

The “quickie” election rules have a tortured history. First proposed in June 2011, the rules faced immediate and severe criticism that led to a watered-down version of the rules being adopted in December 2011. These watered-down rules went briefly into effect in April 2012, but were quickly invalidated by a federal court just two weeks later. The court ruled that the Board had lacked a statutorily mandated quorum when it voted to adopt the rules.

Notably, the federal court also stated that nothing prevented a properly constituted quorum of the Board from voting to re-adopt the rules in the future. That is exactly what the Board did in February 2014. It re-proposed its original rules, and subsequently adopted the rules in December 2014. The new rules are slated to become effective on April 14th.

Legal Challenges Continue

Despite Congress’s ill-fated attempt to block the rules under the Congressional Review Act, the rules still face potential hurdles. For instance, the U.S. Chamber of Commerce filed a lawsuit in the District of Columbia in January 2015 seeking to vacate the rules and enjoin their enforcement. Business groups in Texas filed a similar lawsuit in January 2015. These lawsuits allege numerous reasons why the rules should be invalidated, including alleged violations of the National Labor Relations Act and Congressional intent, alleged violations of the First Amendment and due process protections, and arbitrary and capricious rulemaking under the Administrative Procedure Act. However, the lawsuits will take time to wind through the courts, and their chances of success are uncertain.

Anticipated Effects of Rules

Barring any unexpected injunction before April 14th, employers should anticipate big changes from the new rules. The rules will shorten the period of time between a petition for a union election and a vote to perhaps fifteen or fewer days (as opposed to the five or more weeks under current practice). The rules are expected to boost organizing activity as unions attempt to increase their membership – and dues-generated revenue – through “ambush” elections. The compressed timeline between a petition and vote will limit employers’ ability to fully explain the pros and cons of union representation before an election, and limit employees’ ability to cast an informed vote. To retain flexibility in dealing directly with their employees, employers should be ready at the first hint of union organizing to educate their employees about the desirability of union representation. Advance preparation, and a properly orchestrated counter-organizational campaign, will be key.

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March 17, 2015

Utah Adds Sexual Orientation and Gender Identity to Anti-Discrimination Laws

By Cecilia Romero

On March 12, 2015, Utah signed into law a bill that protects individuals on the basis of sexual orientation and gender identity in employment and housing. The law contains certain exceptions for religious organizations and permits employers to maintain reasonable dress codes and sex-specific facilities. Here are the details on the employment protections.

Discrimination, Harassment and Retaliation Prohibited

The new law adds sexual orientation and gender identity to the list of protected characteristics under Utah’s employment discrimination law, making it unlawful for Utah employers to refuse to hire, promote, discharge, demote, terminate, retaliate against, harass or discriminate in compensation or any other terms of employment because of an individual’s sexual orientation or gender identity. The full list of protected groups under Utah law is now race, color, sex, pregnancy/childbirth, age, religion, national origin, disability, sexual orientation and gender identity.

Sexual Orientation and Gender Identity Defined

Sexual orientation is defined as an individual’s actual or perceived orientation as heterosexual, homosexual or bisexual. Gender identity is defined by reference to the Diagnostic and Statistical Manual (DSM-5) which refers to individuals who see and feel themselves to be a different gender than their assigned gender.

Reasonable Dress Codes and Sex-Specific Facilities Permitted

The new law specifically addresses two frequent concerns for employers. First, the new law allows employers to adopt reasonable dress and grooming standards and second, employers are allowed to adopt reasonable policies that designate sex-specific facilities, such as restrooms, shower rooms and dressing facilities.

Exemptions for Religious Organizations and Protecting Religious Expression

The new law protects religious organizations and the expression of religious beliefs. The list of excluded religious groups was expanded through this law to include not only religious organizations, associations and corporations, but also religious societies, educational institutions and leaders, and the Boy Scouts of America.

State Law Trumps Local Laws

This new state law supersedes and preempts any laws, ordinances or regulations related to the prohibition of employment discrimination passed by a city, county or other local or state governmental entity. This should help employers maintain uniform policies statewide without having to account for local anti-discrimination laws. Complaints will be handled by the state antidiscrimination division. Recovery under the law is limited to actual damages, not punitive damages.

Practice Points to Employers

These new employment protections will affect many of your employment communications so take time now to:

Review and understand the new law;
Revise harassment and retaliation policies to include sexual orientation and gender identity as prohibited bases for harassment and retaliation; remember such statements might be contained in your employee handbook, on your job applications, in recruiting and training materials and on your website; and
Train managers and supervisors on the new law.

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May 9, 2014

Colorado Legislative Wrap-Up: Wage Theft, Disability Definition and Workers’ Comp Physician Choice Bills Pass

By Emily Hobbs-Wright

The Colorado General Assembly wrapped up its 2014 Legislative Session this week, passing a number of bills that change the landscape for Colorado employers. Here is a look at the significant employment-related bills that passed and are expected to be signed into law by Governor Hickenlooper as well as other bills that were introduced but did not make it through the legislative process.

Bills that Passed This Session.

Wage Protection Act of 2014. Senate Bill 14-005 establishes an administrative procedure to adjudicate wage claims under Colorado law. For wages and compensation earned on or after January 1, 2015, the Colorado Division of Labor may receive complaints and adjudicate claims for nonpayment of wages or compensation of $7,500 or less. The written demand for unpaid wages to the employer may come from or on behalf of the employee and is satisfied if a notice of complaint filed with the Division is sent to the employer. In addition to existing fines that may be levied against employers who fail to pay wages, the new law allows the Director of the Division of Labor or a hearing officer to impose a fine of $250 on an employer who fails to respond to a notice of complaint or any other notice from the Division when a response is required. All fines collected will be credited to the State Wage Theft Enforcement Fund to be used for enforcement of this law.

The Wage Protection Act also requires Colorado employers to keep payroll records, including the information contained in an employee’s itemized pay statement, for at least 3 years after payment of wages and to make such records available to the employee and the Division of Labor. (C.R.S. §8-4-103 (4.5)). Employers who violate this record retention requirement are subject to a fine of $250 per employee per month, up to a maximum fine of $7,500.

This new law also provides for the recovery of reasonable attorney fees and court costs for an employee who recovers unpaid wages under Colorado’s minimum wage requirement. Additionally, the new law sets forth procedural requirements for employers responding to a demand for payment and procedures for resolving wage disputes through the administrative procedure. The majority of the new provisions in this law go into effect on January 1, 2015.

Definition of Disabled Individuals Aligned with Americans With Disabilities Act. Senate Bill 14-118 conforms state law definitions of a disability to match definitions under the federal Americans with Disabilities Act (ADA). Specifically, the terms “disability” and “qualified individual with a disability” under Colorado Revised Statute section 24-34-301 are given the same meaning as under the ADA. This bill also moves the definition of “sexual orientation” out of the Employment Practices definition section (C.R.S. § 24-34-401) and into the general definition section for the Civil Rights Division (C.R.S. § 24-34-301.) It also changes the term “assistance dog” to “service animal” and provides additional penalties for violations of the rights of an individual with a disability who uses a service animal and for persons who cause harm to service animals. The law also expanded the available remedies for retaliation and violations of the fair housing and public accommodations discrimination prohibitions. Once signed into law by the Governor, these provisions will go into effect on August 6, 2014.

Expanded Doctor Choice for Workers’ Compensation. House Bill 14-1383 changes the Colorado workers’ compensation law to allow injured workers more choice of doctors. Currently, an employer or workers’ compensation insurer must provide a list of at least 2 physicians or corporate medical providers from which an injured employee may select a treating physician. This bill expands that number to 4. There are additional provisions related to the location and shared ownership status of the health care providers. After signed into law by the Governor, this law will become effective on April 1, 2015.

Clarification of Credit Report Restriction Allowing Employment Use By Financial Institutions. Senate Bill 14-102 amends last year’s Employment Opportunity Act which restricts an employer’s use of credit reports. This amendment clarifies that all positions at a bank or financial institution are jobs for which credit information is deemed to be “substantially related to the employee’s current or potential job.” As a result, financial institutions will be able to obtain and use credit information on employees and applicants when making employment decisions for all job positions. Governor Hickenlooper signed this bill into law on March 27, 2014 and it became effective immediately.

Bills that Failed to Pass This Session.

Paid Sick Leave. Called the Family and Medical Leave Insurance Act (FAMLI), Senate Bill 14-196 sought to create an insurance program to provide pay to employees who take unpaid FMLA or sick leave. The program would be paid for by employees who pay premiums into a “fund” in the state treasury; employers would not be funding it. Eligible employees would be able to receive a percentage of their pay while on leave, not to exceed $1,000 per week. The bill would have prohibited Colorado employers from discharging, discriminating or retaliating against employees who seek to use benefits under the program or assist in a related-proceeding. Advocated by the Colorado chapter of 9 to 5, this bill, introduced on April 15th, differed from previous paid sick leave bills as it did not require employers to fund the program. On May 1, this bill was postponed indefinitely in committee and therefore, did not make it to a vote.

Drug Testing Misdemeanor. House Bill 14-1040 would have established a drug misdemeanor for an employee who is legally required to undergo drug testing as a condition of his or her job and either tests positive for a controlled substance without a prescription, or knowingly defrauds the administration of the drug test by an employer. To “defraud the administration of a drug test” is defined in the bill to include submitting a sample from someone else or a sample collected at a different time or some other conduct intended to produce a false or misleading outcome. This bill passed the House but the Senate sent it to committee where it was postponed indefinitely.

Anti-Union Bills. – House Bills 14-1087 would have prohibited collective bargaining for the state’s public employees. House Bill 14-1098 and Senate Bill 14-113 would have prohibited employers from entering into agreements to require employees to join a union. All three bills failed shortly after introduction as expected due to the democratic majority in both chambers of Colorado’s legislature.

The bills that passed in the 2014 Legislative Session reflect a continued trend at the state level to implement new or refine existing employment-related laws. We will keep you posted on any further developments.

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March 25, 2014

2014 Wyoming Legislature Keeps Status Quo, But Changes On The Horizon?

By Brad Cave

The 2014 session of the Wyoming Legislature did not pass any significant employment legislation, but the Legislature’s actions on some of the measures it did consider could portend a much more interesting 2015 legislative session.

Independent Contractors. The issue of independent contractors garnered the most legislative attention of any employment issue in the 2014 session. In February, we reported on House Bill 16 which would have created misdemeanor criminal penalties for “knowingly failing to properly classify an individual as an employee” leading to a reduction in unemployment contributions or workers compensation premiums or benefits. (A companion measure, Senate File 112, was introduced in the Senate but failed to get sufficient votes for introduction.) This measure was sponsored by the Joint Corporations, Elections and Political Subdivisions Interim Committee. Although it failed to garner the two-thirds vote required for introduction during a budget session, a majority of the representatives in the House voted in favor introduction in the 32-26 vote. This bill may rear its ugly head again in the 2015 general session, where introduction requires only a majority vote.

On the bright side of the independent contractor issue, Senate File 96 proposed an amendment that would have relaxed the definition of independent contractor in the unemployment and workers compensation statutes. Those two identical definitions currently require that a person classified as an independent contractor meet three requirements:

The person is free from control or direction over the details of the performance of services by contract and by fact;
The person represents his services to the public as a self-employed individual or an independent contractor; and,
The person may substitute another individual to perform his services.

These three factors have always been part of the commonly accepted definition of an independent contractor, as recognized by courts, other statutes and the Internal Revenue Service. But courts and the IRS weigh these and several other factors, without any single factor or group of factors controlling the determination. This approach permits employers to fashion independent contractor relationships under a variety of circumstances. Because of the “and” between the second and third factor, the Wyoming definition requires employers to meet all three of these factors, regardless of the other circumstances surrounding the independent contractor relationship. Add to that the fact that the second factor is wholly outside of the employer’s control, and you have a very strict and onerous definition.

Senate File 96 would have added a second test to the unemployment and workers compensation definitions to give employers two ways to prove independent contractor status. Under the second option, a person providing services would be properly classified as an independent contractor if the person:

is free from control or direction, asserted directly by the person or entity contracting for the services, over the details of the performance of services by contract and by fact; and,
has substantial investment used in connection with the performance of the services. The investment may include physical assets, financial assets, education, experience, intellectual property or any combination of these factors.

This proposed change would obviously open the door to a broader range of independent contractor relationships, and recognize the importance and prevalence of the sole proprietor independent contractor, particularly in technology services.

Senate File 96 passed the Senate with strong support, but the House defeated the measure by a vote of 54 to 6. Reasons for its demise may include timing – it was brought to the floor of the House on the last day for the entire House to consider new measures. Also, there may have been some confusion about whether the changes would be consistent with the IRS definitions of independent contractors and other statutory definitions. Because the House had little or no time to resolve these questions, the measure died. We encourage the Legislature to address this topic again next session.

Employer Access to Social Media Accounts. The surprise proposal of the session was Senate File 81, which would have put Wyoming on the bandwagon of other states which are restricting employer access to employees’ social media accounts. This proposal would have amended the Wyoming Fair Employment Practices Act to make it an unfair employment practice for employers to “request or require” any employee or applicant to disclose any username, password or other method of accessing personal social medial accounts. Social media accounts was broadly defined under the proposal, to include videos, images, blogs, podcasts, instant and text messages, email, internet websites or locations and other online services or accounts.

The measure included exceptions to the general restrictions for (1) access to employer social media accounts used for the employer’s business purposes; (2) when personal social media is reasonably believed to be relevant to an investigation of allegation of employee misconduct or violation of laws or regulations, if access is limited to the investigation or a related proceeding; (3) when conducting an investigation of an employee’s social media when required to comply with the requirements of state or federal law, or the rules of a self-regulating organization; or, (4) when an applicant applies for law enforcement employment.

Senate File 81 flew through the Senate with strong support, and started strong in the House, but was then defeated by a House vote of 36-16.

Our experience suggests that this is a solution in search of a problem. The huge majority of employers already avoid efforts to access employees’ social media because learning such information can cause all sorts of headaches for employers. In fact, employers usually learn about employees’ social media content when employees report to the employer some other employee’s bad behavior as described on social media, and usually expect the employer to do something about it. Although the exception for investigation-related access is helpful, even that language forces employers to couch their requests in terms that will simply raise the stakes of workplace situations.

Wyoming employers should pay attention next session to see if the Legislature takes up this topic.

Misconduct Disqualifications from Unemployment Benefits. Senate File 76 added a new definition of misconduct to the unemployment compensation statute to outline the circumstances under which a former employee may be disqualified from unemployment benefits. It was signed by Governor Mead on March 10, 2014, and will become effective on July 1, 2014.

The unemployment compensation statute already states that an employee will be disqualified from benefits if the Department of Workforce Services finds that the employee was discharged for “misconduct connected with his work” but does not define that phrase. To fill the gap, several years ago the Wyoming Supreme Court adopted a definition that required a showing of an act of the employee that indicated a disregard of the employer’s interests or the commonly accepted duties, obligations and responsibilities of an employee, to include carelessness or negligence of such a degree or recurrence as to reveal willful intent or intentional disregard of the employer’s interests or the employee’s duties and obligations. Violation of company policies or rules could qualify as misconduct under the court’s definition, provided the employee acted intentionally. The court’s definition also provided that inefficiency, failure of good performance due to incapacity or inability, ordinary negligence or good faith errors in judgment were not adequate to disqualify an employee.

The new definition of “misconduct connected with work” seems to adopt much of the Wyoming Supreme Court’s interpretation of the phrase. The phrase is now defined as “an act of an employee which indicates an intentional disregard of the employer’s interests or the commonly accepted duties, obligations and responsibilities of an employee.” The amendment also excludes from the definition of misconduct, (1) ordinary negligence in isolated instances; (2) good faith errors in judgment and discretion, and (3) inefficiency or failure in good performance as the result of inability or incapacity.

Because the new statutory definition is very similar to the definition the Supreme Court has used for years, we will need to see how the definition is applied by the Department and the courts to determine whether the misconduct standard has changed at all through this amendment.

Computer Trespass. Although not an employment measure, House Bill 178 created a new criminal offense that may give employers a new tool to help prevent employee sabotage. This measure, which passed both houses and was signed by Governor Mead, created the crime of computer trespass. A computer trespass occurs when a person knowingly and without authorization, with the intent to damage or cause the malfunction of a computer, system or network, sends malware, data or a program which alters, damages or causes the malfunction of the computer, system or network, or causes it to disseminate sensitive information.

The measure also created a civil remedy for computer trespass, and permits a person who suffers damage due to a trespass to sue the computer trespasser for damage to computers, systems, or networks, and the costs incurred because of the loss of use of those assets. The person brining the action can recover the damages caused by the trespass, as well as the costs incurred to identify the trespasser and to serve a complaint on the trespasser.

House Bill 178 was passed by both houses, and signed by Governor Mead on March 10, 2014. The new law will become effective on July 1, 2014.

This new law may be useful to employers if former or disgruntled employees attempt to misuse an employer’s computer systems. Employers should adopt and periodically review technology policies that carefully define when and how employees are authorized to use the employers’ computer, systems and networks. If an employee causes computer damage under questionable circumstances, such policies may help employers draw clear lines about when an employee’s access is unauthorized and pursue civil remedies under the statute.

And the Rest of the Pack. A few other employment measures never saw the light of day during the 2014 session. House Bill 45, which would have raised the minimum wage, and House Bill 57, which would have restricted employers’ ability to restrict the post-termination value of accrued vacation, both failed to get enough votes for introduction.

Bottom Line. The 2015 legislative session should be interesting, with the possible return of independent contractor and social media legislation. These are significant issues for Wyoming employers. We will keep you posted.

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February 12, 2014

Wyoming Legislature Convenes, Again!

By Bradley T. Cave

The Wyoming Legislature convened its 2014 Budget Session on February 10. Most of the Legislature’s time will be consumed with the state’s finances, but a few significant employment measures have been proposed. If any of these bills can obtain the two-thirds vote required for introduction of non-budget bills, Wyoming employers may need to call their legislators!

Criminal Penalty for Misclassification of Employees as Independent Contractors. House Bill 16 is the most concerning measure proposed this session, and it is a surprise that the measure was approved by the Joint Corporations Committee. It would create a misdemeanor criminal penalty for “knowingly failing to properly classify an individual as an employee” to reduce the employer’s unemployment contributions or to reduce or avoid the payment of benefits to an employee. The offense would permit a sentence of up to 90 days in jail and a fine of up to $750.00. The measure would add the same language to the workers compensation statute, making it a misdemeanor offense to knowingly fail to properly classify an employee on a workers compensation payroll report or generally in connection with workers compensation coverage.

Employers should aggressively resist this proposal because it would greatly raise the stakes of classification decisions that are rarely clear cut. One of the three factors in the definition of an independent contractor for unemployment and workers compensation purposes – whether the individual “represents his services to the public” – is not even in the employer’s control, and could change without the employer’s knowledge. A second factor in the definition – whether the worker is free from control or direction over the details of performance of the services – often depends on the perspective of the person looking at the relationship. Independent contractor relationships are not “check the box” decisions. While an employer could not be convicted of the proposed crime unless they “knowingly” misclassified an employee, the determination of whether a decision was “knowingly” incorrect is the stuff of jury trials. Also, the measure is not needed. Employers already face aggressive auditing by the Employment Tax Division about the independent contractor classification of workers, and audits can result in civil liability and substantial administrative costs.

Finally, don’t buy the argument that the criminal penalty will only be pursued in the worst cases – if a criminal penalty for misclassification is adopted, it will remain a subtle and unspoken threat to employers whenever the Department of Workforce Services conducts an audit and questions independent contractor relationships, and employers may need to “lawyer up” and protect themselves at an entirely new level whenever the Department audits those relationships.

Update: Although House Bill 16 failed to get the two-thirds vote needed to be introduced during the budget session, it was proposed by the Joint Corporations committee and is likely to be raised in future legislative sessions.

Minimum Wage Increase. House Bill 45 is a perennial attempt to raise the minimum wage for employees not covered by the federal Fair Labor Standards Act. The measure would increase the standard minimum wage from $5.15 per hour to $9.00 per hour, and increase the minimum hourly wage for tipped employees from $2.13 to $5.00. As in past years, this bill is not likely to make much progress.

Repeal of Vacation Pay Amendment. Last year, the Legislature amended the wage collection statute to give employers the flexibility to offer paid vacation that was forfeited upon termination of employment, rather than being considered unpaid wages which were required to be paid out after termination. House Bill 57 would repeal the language adopted last year. We expect this measure also has a dim future.

Bottom Line. Employers should pay attention to House Bill 16 and watch if it is proposed again in future legislative sessions. If it makes any progress, employers will want to contact their legislators. You can track the progress of these and all the measures before the Legislature here through the link entitled “2014 Bill Tracking Information.”

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February 4, 2014

Colorado General Assembly Considers Labor and Employment Bills

By John Karakoulakis

Colorado’s 2014 Legislative Session began on January 8th and nearly 400 bills have been introduced already. Below is a description of proposed legislation impacting labor and employment issues for Colorado employers. The proposed changes to the workers’ compensation system could result in one of the more controversial bills this session. We will keep you apprised of these and any other bills affecting employment matters as they progress through the legislative process.

2014 Labor & Employment Legislation

Number	Title	Summary
Draft	Workers’ Compensation Benefits	The bill seeks to make changes to the following three areas of the workers’ compensation system: 1) Allow for more doctor choice for workers; 2) Address the issue of job separation when a claim is made; and 3) Add a penalty provision for employers that willfully placed employees in a dangerous situation. This last provision is drawing the most concern because it is seen as overly broad and would expose employers to litigation.
Draft	Worker Access to Employment Records	Would allow employees to have access to their personnel records and provide written rebuttal information to be added to their file. Creates a new civil cause of action for an employee to file against an employer for not complying with the provisions of the bill. The employee can seek actual damages, back pay, reinstatement, or other equitable relief, and reasonable attorney fees and costs.
SB-005	Wage Claims	Reintroduced this year after significant changes from the version of the bill that was killed by the business community last year. The bill speeds up the process by which workers can claim they did not get their full wages and creates a process by which the Colorado Department of Labor and Employment can adjudicate those claims. These changes which remove last year’s criminal penalties and a provision to require claims to be settled in district court resulted in most business associations taking a neutral stance on the bill, so it is now expected to pass.
HB-1033	Regulatory Reform	Provides relief for business under 100 employees that unknowingly violate a regulation that was put in place within the prior year and one that is defined as a “minor violation” which is mostly clerical in nature and does not affect the life safety of the public or workers. The first violation of such a rule will result in a warning and written education sent to the business.
HB-1040	Drug Testing Criminal Provisions	Establishes a level 1 drug misdemeanor for an employee who is legally required to undergo drug testing as a condition of the person's job and who uses a controlled substance without a prescription; or knowingly defrauds the administration of the drug test. Also establishes a level 2 drug misdemeanor for any other person who knowingly defrauds a drug test.

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