Employment at Will in Colorado
"Employment-at-will" is the legal concept in Colorado that signifies that employers have the right to terminate employees for a good reason, a bad reason or no reason at all, so long as the reason is not prohibited by federal, state or local law. Virtually all employment relationships in Colorado are "at-will" unless the employer and employee have agreed by contract that some measure of due process or review will be given before termination. In other words, unless there is a contract, state or federal law, or evidence that termination resulted from an unlawful motive, an employer can terminate an employee without notice.
As is often the case, there are caveats to this seemingly uncomplicated concept.
Discrimination. The prohibition against terminating employees based on protected class status (e.g., race, national origin, religion, sex and, in Colorado, sexual orientation) creates a limitation on the employment-at-will doctrine.
Immigration. Congress has made it unlawful to terminate an employee while his or her application for permanent lawful immigrant status is pending. 8 U.S.C. § 1262a.
Public policy. The courts have recognized an exception to the employment-at-will rule where employment decisions violate public policy , such as firing an employee called for jury duty or for filing a claim for worker’s compensation benefits. "Public policy" consists of principles developed through state court decisions that ensure that citizens can pursue public interests that outweigh the need for uncompromising protection of individual interests in the workplace. Historically, Colorado courts have recognized only three categories of cases that fall under the public policy exception to at-will employment:
Implied contract. Colorado does not recognize an implied contract that overrides the right to terminate employment at will. Regardless, the Colorado Supreme Court has recognized that the right to terminate employment at will can be modified or negated by an employment contract. However, Colorado courts have rejected the argument that employment policies or procedures of the employer, or verbal representations by supervisors, create an implied contract that bars employment termination at will.
Legitimate Grounds for Termination
Paragraph 2: Legal Grounds For Job Termination
There are several legal grounds for job termination in Colorado. The most common and general reason is business necessity. This means that the company needs to perform a layoff or terminate an employee due to its financial situation. Another typical reason for termination is behavior. If the employee violates company policy despite being warned against certain behavior, termination is often justified. In such situations, it can be clearly shown how the employee was given the opportunity to change his or her behavior and did not do so.
By contrast, there are illegal reasons to terminate an employee. Even though you’re an at-will employee, there are some protected classes. For example, termination based on age, gender, or race is illegal. This is because it violates federal and Colorado anti-discrimination law. It’s important to remember that your employer cannot terminate based on these factors, even if he or she denies it. If you believe that your termination was not based on performance but rather due to your age, gender, race, or other illegal reason, it’s a good idea to talk with a Colorado employment law attorney right away.
Wrongful Discharge Tort Claims
Employees in Colorado may be entitled to bring a civil lawsuit for wrongful termination. State and federal courts in the state recognize several interconnected claims for wrongful termination, which are typically based on either a violation of public policy or a violation of an implied contract of employment.
To establish a claim for wrongful termination in Colorado, there are certain conditions that defendants must meet. Only a few narrowly-defined exceptions give a terminated employee the right to pursue a remedy in court for wrongful termination. If an employee is not covered by any of these exemptions, his or her employment is considered to be "at-will," meaning that absent an applicable exception, an employer in Colorado has the presumptive right to terminate an employee for any reason that is not categorical in nature.
Among the most common exceptions for which an employee might have a cause of action for wrongful termination based on public policy include retaliation for the following actions: To prove a claim for wrongful termination in Colorado, employees should note that it is not only required that there exist the violation of a public policy, but also that the termination deny a public benefit or infringe on a substantial public policy interest.
Further, to establish a claim for wrongful termination in Colorado based on an implied contract, an employee must demonstrate that an original offer was made and accepted. Further, the employee must demonstrate that an implied contract existed at the time of termination, and that termination was wrongful based on that implied contract. In Colorado, an employer’s promise may be implied through written, oral or even simply inferred statements.
Notice and Severance Packages
In Colorado, employers are not required to pay notice or provide severance pay at termination unless there is a contractual obligation to do so. Most employers in Colorado do not provide severance packages at termination. However, some employers periodically offer severance to employees when they terminate employment. An employer’s decision to offer severance often will depend on an employee’s position and the level of responsibility the employee had in the company. A common reason for offering severance to an employee is when the employer wants to avoid paying unemployment compensation and/or when the employer does not want the employee to sue the employer . The offering of severance typically will terminate an employee’s right to sue the employer.
An employer may offer a severance package that must be accepted by the employee before a set deadline or else the offer will be withdrawn. The severance package may be conditioned on execution of a severance agreement by the employee. In other cases, however, employees are offered severance contingent upon the execution of a release of all claims against the employer. Employers offering severance packages should always consult with a labor and employment attorney about the amounts to offer in severance, the agreements that are to be required in connection with the severance package, and the circumstances under which severance is offered.
Termination’s Effect on Benefits
The termination of employment in Colorado generally does not affect post-employment benefits. For example, health insurance coverage will often continue under the Federal Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, which requires that group health insurers offer extended health care coverage to workers who have been terminated, except in cases of gross misconduct or other voluntary terminations. Colorado law supplements the federal law, requiring that employers continue coverage in certain circumstances. Health insurance eligibility and coverage is not affected by the manner of termination.
Termination from employment with a company may enable an employee to collect unemployment compensation from the state of Colorado. Employees discharged for misconduct or for violation of policy may not collect unemployment benefits, but employees who are laid off or who quit without good cause are eligible for unemployment.
What to Do After Termination
After being terminated, terminated employees should take a number of steps, regardless of whether their termination was lawful. First, they should carefully review their termination documents to determine what, if anything, was provided at termination (i.e., final paycheck, COBRA notices, severance checks, etc). If their final check does not include payment for any unused vacation or other paid time off, they should notify their employer immediately . Likewise, if they were laid off or had their hours reduced, their health insurance benefits may be impacted, which means they will need to know how and when to apply for COBRA coverage. Finally, laid off employees should review available severance agreements. A severance agreement can provide additional compensation and other benefits, although there may be significant releases of claims associated with receiving the additional compensation.