Colorado Enacts the POWR Act

Colorado’s POWR Act went into effect on August 7, 2023, significantly increasing employer obligations to prevent and address harassment and discrimination in the workplace. Companies with Colorado-based employees should act now to ensure compliance.

Here are some key points and action items:

1. Update Anti-Harassment and Anti-Discrimination Policies: The POWR Act lowers the standard for harassment claims in Colorado by eliminating the severe and pervasive requirement for most claims and adding affirmative defense requirements. Increased burdens for affirmative defenses heighten the importance of comprehensive anti-harassment policies and preventative and remedial programs in the workplace. Specifically, under the new law, employers can only bring an affirmative defense if they have established a program reasonably designed to prevent and remedy harassment, have communicated details of such program to employees, and the employee has unreasonably failed to take advantage of the program.

   The law also changes the definition of “harassment,” replacing the previous requirement that conduct be “severe and pervasive” with the requirement that it be “subjectively offensive” to complainant, and “objectively offensive to a reasonable individual who is a member of the same protected class.” While lowering the threshold for conduct to constitute harassment, the law also limits actionable claims to conduct that either:

   • Is an explicit or implicit term or condition of employment.
   • Is a basis for employment decisions affecting the complainant.
   • Has the purpose or effect of unreasonably interfering with the complainant’s work performance or creates an intimidating, hostile or offensive environment.

   The law also modifies the framework for disability discrimination and accommodation, adding the requirement that the disability have a significant impact on the job to justify an adverse action on the basis of a disability. The law further adds marital status as a protected category, which along with the changes described above, should be reflected in a company’s anti-harassment and anti-discrimination policies applicable to Colorado-based employees.

2. Revise Agreements Containing Non-Disclosure and Non-Disparagement Provisions: The POWR Act imposes a series of requirements on employee nondisclosure agreements. The new law requires that a non-disclosure provision that limits an employee’s (or prospective employee’s) ability to disclose or discuss any alleged discriminatory or unfair employment practice:
   • Apply equally to the employer and employee.
   • Expressly state it does not restrain the employee from disclosing the underlying facts of an alleged discriminatory or unfair employment practice, including the existence of a settlement agreement, to the employee’s immediate family members, religious advisor, medical or mental health provider, mental or behavioral health therapeutic support group, legal counsel, financial advisor, tax preparer; a government agency; in response to a subpoena; or for all other purposes required by law.
   • Expressly state that such disclosure does not constitute disparagement.
   • Include a condition that if the employer disparages the employee, the employer cannot seek enforcement of either the non-disparagement or non-disclosure against the employee for violating the same provision.
   • Include specific affirmations regarding any liquidated damages provision in the agreement.
   • Include an addendum, signed by all parties to the agreement and attesting to compliance with Subsection 24-34-407 of the Act. Noncompliant provisions entered into after August 7^th will be void. Additionally, by simply presenting an employee an improperly drafted agreement, employers can expose themselves to significant penalties.

   Failure to comply with these requirements will not only void the noncompliant provision but can also result in a penalty of $5,000 per violation, in addition to actual damages, reasonable costs, and attorney fees. Under the Act, employers can be liable for simply presenting an employee with a noncompliant agreement. Since the requirements apply to provisions that limit the ability to disclose or discuss any alleged discriminatory or unfair employment practices, employers can include a savings clause to exclude these restrictions from the agreement.

3. Review Record Retention Periods: The POWR Act also extends employment record retention requirements for all personnel and employment records to five years. It also expands the requirement to explicitly include requests for accommodations and complaints of discriminatory or unfair employment practices, among other documents. Employers are also now obligated to keep a separate repository of employee complaints of discriminatory or unfair employment practices.