Category Archives: Current Affairs

October 2, 2023

SEC Settlement A Reminder for Employers: Review Your Separation Agreements

Mark Wiletsky

Companies routinely use separation agreements with departing employees. Through those agreements, the employee receives some type of separation benefit (typically a payment or severance), and in exchange the employee waives and releases any potential claims against the company. The goal is to avoid an existing or potential dispute, claim, or lawsuit. But if companies do not routinely review and update those agreements, they risk the agreement being challenged or invalidated. Even worse, companies are sometimes investigated and forced to pay fines or penalties for provisions in these agreements. A recent settlement announced by the Securities and Exchange Commission (SEC) provides a strong reminder to employees to regularly review and update agreements used with employees.

The Facts

On September 19, 2023, the SEC announced a settlement with a real estate services firm. According to the announcement, the company violated the SEC’s whistleblower protection rule with separation agreements it used between 2011 and 2022. The agreements contained a common provision: employees had to affirm that they had not filed a complaint about the company with any state or federal court or local, state, or federal agency. These types of representations are typically included in separation or settlement agreements to ensure that any pending complaint or charge is resolved in conjunction with the separation or settlement agreement. Read more >>

September 10, 2021

Vaccine Mandates Q&A

By Mickell Jimenez, Tyson Horrocks, and other Co-Authors

On September 9, 2021, President Biden issued two executive orders in conjunction with the Path out of the Pandemic, President Biden’s COVID-19 Action Plan (collectively, the “President’s Action Plan”), providing new COVID-19 vaccination requirements, which may affect you and your business. Since the President’s announcement, we have received numerous questions from employers across the spectrum. This article unpacks the White House’s latest efforts as employers continue to navigate the ever-changing COVID and vaccination landscape. Read more >>

September 7, 2021

Employers Consider Raising Premiums for Unvaccinated Workers

by Beth Nedrow

Beth Nedrow

Employers are impacted in many ways by the COVID-19 pandemic, not the least of which are employee health and safety. For the last several months, employers have used mostly soft-sell approaches to encourage their employees to get vaccinated. With the FDA’s approval, employers are showing a willingness to move beyond incentives like gift cards. One of the more notable examples in the headlines lately is Delta Airlines’ decision to implement a premium surcharge on unvaccinated workers. Employees who don’t get the jab will have to pay more in premiums under the Airlines’ medical plan. Read more >>

August 4, 2021

Denver’s New Vaccine Mandate For Some Private-Sector Employers: Are you prepared?

by Laurie Rogers

Laurie Rogers

Colorado employers already grappling with mandatory paid sick leave and complex job posting requirements may now be obligated to implement mandatory vaccination policies for their employees.

On Monday, August 2, 2021, Denver Mayor Michael Hancock announced a mandatory vaccination requirement for the City’s 10,000-plus workers and certain private-sector workers in high-risk settings. Denver is the first major U.S. city to mandate COVID-19 vaccinations for private-sector employees. The City’s Department of Public Health & Environment (“DDPHE”) claims that, as the accredited public health agency for the City and County of Denver, it has the authority to mandate vaccinations to protect the public from immediate and imminent risk to its health and safety. See City of Denver FAQs.

June 21, 2021

Employee Fails At Telework and Then Asks to Work From Home As Accommodation

by Brad Cave

Brad Cave

Question: We asked an employee who was working from home to return to the office because he failed to perform his job duties. Now, in the midst of a disciplinary process, he has submitted a request to work from home as a reasonable accommodation to prevent exposure to COVID-19. Are we required to grant his request?

Answer: Fear of exposure to COVID-19 is not a disability. If he has an underlying disability that causes him to be at higher risk from the virus or that has been exacerbated by the outbreak, however, the Equal Employment Opportunity Commission (EEOC) has stated you should consider whether continued telework might be a reasonable accommodation. You should engage in the interactive process with him to:

Understand the basis of his concern;
Determine whether he has a disability; and
If so, explore possible accommodations that would minimize his potential for exposure.

May 15, 2018

IRS Is Sending ACA Penalty Notices to Employers

Bret Busacker

By Bret Busacker

If you believe your company was subject to the Affordable Care Act (ACA) coverage requirements in 2015 (generally, all employers with 50 full-time or full-time equivalent employees), please take note that the Internal Revenue Service (IRS) is beginning to send out notices of ACA penalties due from employers who failed to satisfy ACA health coverage requirements. Specifically, the IRS is mailing Employer Shared Responsibility Payment (ESRP) notices to employers that it believes failed to comply with the ACA coverage requirements in 2015. Some employers receiving these notices may have actually complied with the ACA requirements in 2015, but the IRS received inaccurate or incomplete information and consequently has incorrectly identified the employer as failing to satisfy the ACA coverage requirements.

Limited Time To Respond To IRS Notice

If an employer receives an ESRP notice, it must dispute the IRS penalty within 30 days of the date of the notice. We have seen employers receiving very large fines for periods in which the employer actually complied with the ACA coverage requirements.

Employers who were subject to the ACA coverage requirements in 2015 should review their 2015 ACA filings (on Form 1094-C) to: (1) determine who at the company will receive the ESRP notice from the IRS, if one should arrive; and (2) make sure the contact address is correct (See Part 1; Lines 1 thru 8 of Form 1094-C). If any of the contact information on the Form 1094-C is inaccurate or if the contact person is no longer employed by the company, the employer should consider updating its contact information with the IRS. Employers with questions about responding to an ESRP notice should contact their legal counsel promptly.

October 20, 2015

Colorado Vacation Policies: Use-It-Or-Lose-It Policy Hinges On When Vacation Is “Earned”

In recent weeks, the Colorado Division of Labor indicated that it was taking a new position when enforcing wage claims based on an employer’s vacation policy. The specific issue has revolved around whether a use-it-or-lose-it vacation policy—i.e., a policy where an employee cannot roll-over some or all earned vacation from year to year—is lawful in Colorado.

In response to inquiries about its position on such policies, the Division recently posted FAQs on its website stating that a use-it-or-lose-it vacation policy does not necessarily run afoul of the Colorado Wage Protection Act. But if an employee challenges the validity of the policy, the determining factor will focus on when the vacation pay is earned.

Division of Labor Leaves Many Questions Unanswered

According to Colorado’s Wage Protection Act, vacation pay “earned in accordance with the terms of any agreement” are “wages.” As a result, many Colorado employers have in place use-it-or-lose-it vacation policies, in which an employee may accrue a certain amount of vacation or paid time off (PTO) each year, but some or all of that vacation time will not roll-over into the following calendar year. The reason for such policies is simple: it avoids employees banking large sums of vacation or PTO, which is typically paid out upon separation from employment. Until recently, the Division had not taken a formal position on such policies.

However, given the recent changes to the Wage Protection Act, the Division is responsible for adjudicating wage claims, albeit the jurisdiction is limited to claims for $7,500 or less. In light of that change, and as many people likely saw, the Division issued guidance informally in recent weeks concerning use-it-or-lose-it vacation policies. After numerous legal alerts were sent out, the Division took a step back, as reflected in a Denver Post article.

Earlier this week, in an effort to clear up the confusion, the Division issued two FAQ’s, as noted above. Those FAQs specifically address whether Colorado employers may have use-it-or-lose-it provisions in their vacation policies. The Division answered that question yes, as long as any such policy is included in the terms of an agreement between the employer and employee. That clarification seems helpful, as it states that use-it-or-lose-it vacation policies are permissible under the Wage Protection Act.

The first FAQ, however, goes on to state that a use-it-or-lose-it policy may not deprive an employee of earned vacation time and/or the wages associated with that time. It also states that any vacation pay that is “earned and determinable” must be paid upon separation of employment. The terms of an agreement between the employer and employee will determine when vacation pay is earned.

This part of the FAQ is less helpful. It raises many questions about how an employer may structure a use-it-or-lose-it vacation policy in a way that will not deprive employees of any earned vacation. The Division’s position appears to be that once vacation is “earned,” it cannot be lost.

The second FAQ addresses what factors the Division will use to determine whether a specific use-it-or-lose-it policy is permissible. The Division first will look to whether the policy states when vacation pay is earned. If the policy does not state or is ambiguous as to when vacation pay is earned, the Division will consider the following factors in determining whether the use-it-or-lose-it policy is permissible:

The employer’s historical practices
Industry norms and standards
The subjective understandings of the employer and employee
Any other factual considerations which may shed light on when vacation time becomes “earned” under the agreement in question.

Take Aways For Use-It-Or-Lose-It Vacation Policies

Because of the many unanswered questions related to the validity of use-it-or-lose-it vacation policies, Colorado employers should exercise caution. Points to consider include:

The Division’s jurisdiction is limited to claims of $7,500 or less
The Division’s interpretation of the Wage Protection Act and vacation policies may or may not be accepted by courts, and
To avoid any potential challenge, consider a maximum accrual policy instead of a use-it-or-lose-it policy (e.g., once an employee hits a certain accrual, the employee will not earn more vacation or PTO until the employee falls below the maximum)

The best practice if you want to maintain a use-it-or-lose-it vacation or PTO policy is to review your policy with experienced employment counsel to determine if/how to revise your policies in light of the new guidance from the Division.

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June 26, 2015

Same-Sex Marriage Equality: What Employers Need to Know After Obergefell

By Sarah Wisor

Same-sex couples have a Constitutional right to marry and have their marriages recognized nationwide. In a 5-to-4 decision, the U.S. Supreme Court concluded that states are required to license a marriage between two people of the same sex under the Fourteenth Amendment. Obergefell v. Hodges, 576 U.S. ___ (2015). As a result, same-sex couples may now legally marry in all states. This ruling has massive implications, as rights and benefits extended to opposite-sex spouses will be available to same-sex spouses across the United States.

Marriage Equality Prevails

In an opinion authored by Justice Kennedy, the Court recognized that same-sex couples were not seeking to devalue the institution of marriage, but instead sought for themselves the respect, rights, and responsibilities that accompany a legal marriage. The Court held that under both the Due Process and the Equal Protection Clauses of the Fourteenth Amendment, same-sex couples have the fundamental right to marry.

The Due Process Clause provides that no state shall “deprive any person of life, liberty, or property, without due process of law.” The Court determined that same-sex couples may exercise the right to marry under this Clause for four reasons:

the right to make the personal choice of who to marry is inherent in the right of individual autonomy; choices concerning family relationships, whether to have children, and whether to use contraception are protected intimate decisions that extend to all persons, regardless of sexual orientation;
the right of couples to commit themselves to each other and enjoy intimate association extends to same-sex couples just as it does to opposite-sex couples;
protecting same-sex marriage safeguards children and families because without the recognition and stability of marriage, children of same-sex couples suffer harm and humiliation as well as material costs because of the stigma attached to “knowing their families are somehow lesser” than families of opposite-sex couples; and
marriage is a “keystone” of our country’s social order and national community; governmental recognition, rights, benefits and responsibilities depend in many ways on marital status and same-sex couples should not be denied the benefits that accompany marriage.

The Court also ruled that the right of same-sex couples to marry is a liberty protected by the Fourteenth Amendment’s guarantee of equal protection of the laws. The Court admonished that state laws that ban same-sex marriage deny same-sex couples the benefits afforded to opposite-sex couples, disparage same-sex couples’ choices, and diminish their personhood. The Equal Protection Clause prohibits such “unjustified infringement of the fundamental right to marry.”

Recognition of Marriages Performed in Other States

The Court also ruled that a state may not refuse to recognize the same-sex marriages lawfully performed in another state. The result is that any lawful marriage that has already taken place in the United States, whether same- or opposite-sex, must be recognized in all 50 states.

What This Means for Employers

Multi-state employers that have been dealing with state-specific policies that were dependent on state-law recognition of same-sex marriages may now want to implement a uniform policy that applies to all locations. Here are steps you should consider in light of the legalization of same-sex marriages nationwide:

FMLA leave: Same-sex spouses will be deemed spouses under the Family and Medical Leave Act (FMLA) no matter where the marriage took place or where the employee resides. This means that you need to permit eligible employees to take FMLA leave to care for their same-sex spouse with a serious health condition, for qualifying exigency leave if the spouse is being deployed and other qualifying reasons. Update your FMLA policies, forms and practices to permit this leave.
Bereavement and other leaves: If you offer bereavement leave for the death of a spouse or in-laws, you should update your policy to reflect that this leave includes same-sex spouses and relatives of the same-sex spouse. If you offer any other leaves that define immediate family or extend to familial situations, such as non-FMLA medical leave or military leave, update those definitions as well.
Marital status discrimination: If you operate in states that prohibit discrimination based on an employee’s or applicant’s marital status, you will be prohibited from discriminating based on same-sex marriages.
Emergency contacts and beneficiaries: Employees with a same-sex spouse may want to update their emergency contact or beneficiary information listed on group life insurance or retirement plans. Be prepared to administer these changes.
Employee benefits: Group insurance, retirement and other employee benefit plans will need to be reviewed and updated. Be certain to consult your benefits attorney and plan administrators for advice on required changes.
W-4 Forms and tax updates: In light of potential income tax implications for newly recognized same-sex spouses, some employees may want to change their tax withholding information. Be prepared to update W-4 and state withholding amounts upon request.

These and additional policies and procedures impacted by the Court’s ruling may require that you update your employee handbook, policies on your intranet, plan documents, forms, beneficiary designations and other personnel documents. Be sure to notify and train your human resources professionals and supervisors on all changes.

The Court’s landmark decision grants “equal dignity in the eyes of the law” to same-sex couples. Take this opportunity to review your employment policies and practices so your company does the same.

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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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June 15, 2015

Employee Termination For Off-Duty Marijuana Use Legal, Says Colorado Supreme Court

By Emily Hobbs-Wright

In a nationally awaited decision, the Colorado Supreme Court upheld an employer’s termination of an employee who tested positive for marijuana due to his off-duty, off-premises marijuana use. Issued on June 15, 2015, the Court’s narrow decision in Coats v. Dish Network, LLC turned on the fact that marijuana use remains illegal under federal law. Construing the term “lawful” to encompass activities that are permitted by both state and federal law, the Court ruled that Coats’s off-duty marijuana use was not a protected activity within the meaning of Colorado’s lawful activities statute because marijuana use remains unlawful under the federal Controlled Substances Act. The Court refrained, however, from addressing the issue of whether the state’s Medical Marijuana Amendment confers a state Constitutional right to such use.

Although binding only on Colorado, this decision provides employers nationwide guidance in enforcing drug-free workplace policies as more and more states legalize some form of marijuana use.

Coats v. Dish Network: Employee Not Impaired By Marijuana At Work

Dish Network, LLC terminated Brandon Coats, a quadriplegic, for violating its zero tolerance drug policy after he tested positive for marijuana in a random workplace drug screen. Coats claimed he only used marijuana after work at home to treat painful muscle spasms caused by his quadriplegia. He stated that he did not use marijuana on Dish’s premises and was never under the drug’s influence at work.

After his termination, Coats sued Dish claiming his termination violated Colorado’s lawful activities statute, which broadly prohibits discharging employees for engaging in “any lawful activity off the premises of the employer during nonworking hours.” Colo. Rev. Stat. § 24-34-402.5(1). Coats argued that because his use of marijuana was legal under state law, he engaged in a lawful off-duty activity for which he could not be discharged. He further argued that the phrase “lawful activity” in Colorado’s statute must be defined in reference to state, not federal law.

Dish countered by focusing on the fact that marijuana remains illegal under federal law, and therefore, its use could not be a “lawful activity” under the Colorado statute, making Coats’s termination legal. The trial court agreed with Dish and dismissed the lawsuit finding that marijuana use is not lawful under state law. A divided Colorado Court of Appeals upheld the trial court’s decision on separate grounds (i.e., that in order for an activity to be “lawful” it cannot contravene state or federal law), which the Colorado Supreme Court has now affirmed.

“Lawful” Means Permitted By Both State and Federal Law

The Colorado lawful activities statute does not define the term “lawful.” Coats argued it should be read as limited to activities that are lawful under state law, which could include legalized marijuana use. The Court disagreed. It looked to the plain language of the statute to conclude that the term “lawful” means permitted by law, or not contrary to, or forbidden by law. The Court refused to impose a state law limitation to the term, ruling that because marijuana use is unlawful under federal law, it is not a “lawful” activity under the Colorado statute.

A successful appeal of the Court’s interpretation of the lawful activities statute to the U.S. Supreme Court is unlikely as the Colorado Supreme Court based its decision on a straightforward common sense construction of a state statute, which is deemed to be within the state’s highest court’s jurisdiction to decide.

Coats’s Impact on Marijuana in the Workplace

The Coats decision is significant to Colorado employers because it confirms that employers are entitled to enforce drug-free workplace policies without fear of violating the state lawful activities statute. Although this case dealt with marijuana use for medical purposes, the Court’s reasoning should apply to recreational marijuana use as well.

Notably, the Court did not decide whether off-duty marijuana use is protected under Colorado’s Medical Marijuana Amendment, which arguably only creates an exemption from criminal prosecution. Any such narrow ruling would almost certainly have spawned additional litigation over the different wording in Colorado’s more recent Recreational Marijuana Amendment, and whether that amendment made off-duty marijuana use “lawful.”

While the Coats decision resolves an important open issue under Colorado law, Colorado employers should continue to exercise caution when dealing with employee marijuana use outside the workplace. Drug testing policies should provide employees with clear notice of consequences for off-duty marijuana use. Further, employers must enforce zero tolerance policies consistently in order to avoid discrimination claims brought under statutes such as the Americans with Disabilities Act and the Colorado Anti-Discrimination Act. When dealing with an employee who uses marijuana off-duty and off-premises, employers should carefully evaluate the facts of each situation and consider the risks of violating other employment laws before making adverse employment decisions.

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