2023 Colorado Legislative Updates

At A Glance

Colorado Governor Jared Polis signed several legislative items into law, effective August 7, 2023, unless otherwise noted.

• Colorado POWR ACT
  • Lowered Standards for Harassment
  • Changed Standards for Disability Discrimination
  • Record Retention
• Colorado Job Application Fairness Act
• Equal Pay for Equal Work Bill
• Colorado Home Purchase Assistance
• Additional Reasons to Use Paid Sick Leave

POWR Act

The Protecting Opportunities and Workers Rights (POWR) Act makes significant changes to the law of workplace harassment and discrimination.

Harassment Standard

The POWR Act redefines harassment claims under Colorado law. Previously, Colorado had incorporated the definition of “harassment” under federal law, which required that for conduct to be considered harassment, it must be “severe or pervasive.” Under the POWR Act, the severe or pervasive standard no longer applies. Conduct that is “subjectively offensive to the individual alleging harassment and is objectively offensive to a reasonable individual who is a member of the same protected class” will now be considered harassment.

Disability Standard

The POWR act also modifies the standard for disability discrimination claims. Previously, it was not a discriminatory practice for an employer to take an adverse employment action “if there is no reasonable accommodation that the employer can make with regard to the disability, the disability actually disqualifies the individual from the job, and the disability has a significant impact on the job.” Under the POWR Act, the requirement that the disability had “a significant impact on the job” has been eliminated.

The new standard now provides only that it is not a discriminatory practice for an employer to take an adverse employment action “if there is no reasonable accommodation that the employer can make with regard to the disability that would allow the individual to satisfy the essential functions of the job and the disability actually disqualifies the individual from the job.”

Record Retention

Included in the POWR Act is a new requirement for employers to maintain personnel and employment records for at least five years. In this new law, the state broadly defines personnel or employment records to be;

• Requests for accommodations
• Employee complaints of discrimination or unfair employment practices,
• Applications submitted for employment, and
• Other records related to the promotion, demotion, transfer, termination, rates of pay, and records of training that was provided to or facilitated for employees.

This record retention requirement also applies to oral complaints of discrimination or unfair employment practices with the date of the complaint, identify of the person bringing the complaint if it is known, as well as the substance of the complaint.

Job Application Fairness Act

The Job Application Fairness Act (JAFA) prohibits employers from inquiring about a job applicant’s age during the hiring process. Employers may not inquire about an applicant’s age, date of birth, and dates of attendance at or graduation from an educational institution on an initial employment application.

Employers may request that applicants verify compliance with age requirements that are required by (1) “a bona fide occupational qualification pertaining to public" or (2) "occupational safety,” (3) “a federal law or regulation,” or (4) “a state or local law or regulation based on a bona fide occupational qualification.”

If employers request that applicants provide application materials, employers must notify applicants that they may redact information that identifies their age, date of birth, or dates of school attendance or graduation. This will become effective on July 1, 2024.

Ensure Equal Pay for Equal Work

The Ensure Equal Pay for Equal Work Act amends the Equal Pay for Equal Work Act which took effect January 1, 2021. The Amended Act provides that employers must make reasonable efforts to announce, post, or otherwise make known each job opportunity to all employees on the same calendar day and before the employer makes a decision. But if an employer is physically located outside of Colorado and has fewer than 15 employees in Colorado working remotely, the employer need only provide notice of remote job opportunities through July 1, 2029. 

For each job opportunity, employers must disclose to employees, in good faith:

• This will become effective January 1, 2024.
• The hourly or salary compensation or the range of the hourly or salary compensation;
• A general description of the benefits and other compensation applicable to the job opportunity; and
• The date the application window is anticipated to close.

Colorado employers face additional requirements as of January 1, 2024 to comply with the amendments to Colorado’s Equal Pay for Equal Work Act.  Employers will be required to put application deadlines in their external job postings and internal promotional notices.  Within 30 days of every hire or promotion company-wide, employers will be required to notify any Colorado employee with whom the selected candidate will regularly work of the new hire or promotion.  Employers also must inform employees in positions with a defined, objective career progression of the requirements for advancement and what their pay will be if they advance. The Colorado Department of Labor and Employment (CDLE) has issued final regulations and a new Interpretive Notice & Formal Opinion (“INFO”) # 9A detailing the agency’s view of the amendments’ requirements.

Colorado Home Purchase Assistance

The Employer Assistance for Home Purchase Tax Credit is effective tax year 2024, employers may contribute to a savings account for contributions to qualifying expenses an employee may have toward an eligible home purchase. Employees may also elect to have voluntary payroll deductions that contribute to the savings account that the employer establishes.

Employers who contribute to the account may claim up to five percent of their contributions up to $5,000 in expenses per employee, or up to $500,000 total expenses per tax year as a credit against their income tax. The income tax credit is not refundable but may be carried forward by the employer for up to 5 years.

The employee must use the money contributed for eligible expenses, which include a down payment and closing costs, including fees for appraisals, mortgage origination, and inspections.

If an employee ends their employment with the employer or intends to use the employee contribution in a manner that is not consistent with an eligible expense, the employee forfeits any unexpended amount of the employer contribution and the amount of the credit allowed to the employer for the employer contribution is subject to recapture. In such an occurrence, the employee is entitled to the employee contribution, plus any interest earned.

The amount contributed by the employer may be subtracted by the employee from the employee's federal taxable income for the purpose of determining their state taxable income. If employee forfeits the employer contribution, then the amount that the employee had subtracted from their federal taxable income is added back to their federal taxable income for the purpose of determining their state taxable income for the subsequent tax year.

Further guidance is needed from the agency for clarity on establishing these types of deductions and accounts.

Additional Reasons to use Paid Sick Leave

Effective Aug. 7, 2023, Colorado employees will be entitled to use available Healthy Families & Workplaces Act (HFWA) Leave for the following additional reasons:

• The need to grieve, attend funeral services or a memorial, or deal with financial and legal matters that arise after the death of a family member;
• The need to care for a family member whose school or place of care has been closed due to inclement weather, loss of power, loss of heating, loss of water, or other unexpected occurrence or event that results in the closure of the family member’s school or place of care; or
• The need to evacuate the employee’s place of residence due to inclement weather, loss of power, loss of heating, loss of water, or other unexpected occurrence or event that results in the need to evacuate the employee’s residence.

These reasons are in addition to the acceptable uses already stated within the Healthy Families and Workplaces Act.

For more information on Colorado's wage and payroll tax laws, check out our Colorado Wage and Payroll Tax Facts page.

Next Steps

Additional resources, and any additional information made available, will be ready for Paylocity clients in the Paylocity Knowledge Base, PEAK.

Thank you for choosing Paylocity as your Payroll Tax and HCM partner. This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.