LEGISLATORS CONTINUE TO EXPAND LIABILITY FOR COLORADO EMPLOYERS
Prior to the 2018 elections, Colorado’s legislature remained balanced due to its bipartisan composition – with Republicans controlling the Senate and Democrats controlling the House of Representatives and Governor’s mansion. While the trial bar consistently pushed an aggressive liability-expanding agenda in the House, it stalled in the Senate. That changed in November 2018. The 2018 elections brought a significant shift in the legislature and the offices of the governor and AG that empowered the plaintiffs’ bar.
The most troubling employment bill passed in 2019 was S.B. 85. While the bill’s intended goal of addressing pay disparities is noble, legislators rejected a provision that would have allowed employers to show a jury that a wage disparity was due to a legitimate factor other than gender. They also refused to provide employers with an opportunity to address a disparity before an employee files a lawsuit. Business groups across the state fear an onslaught of frivolous lawsuits. Most Colorado small businesses do not have a legal department and the risk of bankruptcy due to litigation is very real.
Another new law, H.B. 1267, makes individual employees, officers and directors personally liable for company errors in wage disputes. The legislature sought to overturn the Colorado Supreme Court’s decision in Leonard v. McMorris. Wage theft now will be considered a felony when the amount in controversy is greater than $2,000. It also removes the exemption from criminal penalties for an employer who is unable to pay wages or compensation because of a bankruptcy action or other pending court action resulting in the employer having limited control over its assets.
Yet another problematic bill, H.B. 1289, amends Colorado’s consumer law in a way that will lead to more lawsuits. Most significantly, the act includes a vague, new catchall prohibition outlawing “any unfair, unconscionable, deceptive, deliberately misleading, false, or fraudulent act or practice.” In addition, for certain violations of the act, the new law lowers the standard for liability. Rather than requiring a showing that a business knew it was engaging in a deceptive practice, a showing of reckless conduct will be sufficient. The new law also will lead to more lawsuits by the state attorney general and district attorneys. It eliminates a requirement that enforcement actions brought by the state’s attorney general or district attorneys address business’ practices that have a significant public impact. It also spikes the potential penalties for violations of the act from $2,000 to $20,000 and from $10,000 to $50,000 when a deceptive practice affects elderly individuals.
The Legislature also enacted a bill that will allow higher awards for subjective noneconomic damages, like pain and suffering, in personal injury lawsuits, as well as larger awards in other types of actions. The amount permitted for noneconomic damages is expected to rise from $468,000 to $584,210 in 2020. As one plaintiffs’ law firm put it, the “even better news” is that these amounts will automatically go up every two years. This law will result in insurance policyholders facing the choice of either paying higher premiums to protect themselves against higher awards and settlement demands or seeing their coverage simply erode due to an act of the legislature.
The Colorado Legislature considered several other problematic bills this session, and while they failed to pass in 2019, the trial bar is expected to aggressively pursue them again next year. For example, S.B. 237 would have moved Colorado toward the type of consumer class action abuse seen in Judicial Hellholes. The bill would have explicitly authorized class actions in this context. In addition, the bill would have authorized larger awards for people who experienced no financial loss. The proposal would have allowed a minimum damage award of $500 to be multiplied “per violation” in individual lawsuits.
In addition, the Legislature considered S.B. 217, which would have legitimized medical lien companies. These companies make their money from “the spread” between the amount billed for medical services and the much lower amount that is ultimately paid to the doctor or specialist. The bill prohibited discovery and introduction of evidence of an existing medical lien for any purpose, including for proof of the reasonable value of medical services. The bill would have allowed medical lien companies to set their own prices for medical services.