Proposed Ballot Initiative in Colorado Would
Turn At-Will Employment on its Head

by Ted Olsen

The vast majority of states, including Colorado, are so-called "at-will employment" states—employees hired for an indefinite period of time are free to terminate their employment at any time, with or without cause, and with or without notice, and their employers are free to release them on the same at-will basis. Although exceptions to the at-will employment rule have been recognized in court cases, the rule has remained the law presumptively applicable to such employees. 

This rule is consistent with the notions of individual independence and free enterprise. It presumes that an employer should not be required to justify to others its decision to discharge an employee, that discharge decisions are often based on subjective preferences and other amorphous reasons that may not seem "just" or "correct" to others, and that the rule is even-handed as to both employers and employees. Most also fear that a different approach would impair employers' operations and clog the legal system.

However, the rule of at-will employment would be overturned if a proposed initiative now sponsored by two Colorado citizens (Proposed Initiative 2007-2008 # 62) is put on the ballot of a general statewide election and voted into law by the electorate. At this time, its title and submission clause have been approved; however, the measure has not yet been approved for petitions, which must be signed and submitted in adequate numbers to the Secretary of State before the proposition can be put up for a vote by electors. However, considering the passage of the ballot initiative in 2006, amending the Colorado Constitution to provide employees a minimum wage higher than the national minimum wage (Colo. Const. Art. XVIII, Section 15), the possibility of passage of this initiative should not be taken lightly.

The proposed initiative, unofficially captioned "Cause for Employee Suspension and Discharge" by the Colorado Legislative Staff for tracking purposes would present the following ballot question (emphasis added):

Shall there be an amendment to the Colorado constitution concerning just cause for action against an employee by an employer, and, in connection therewith, prohibiting the discharge or suspension of an employee by an employer unless the employer has first established just cause; defining "just cause" to mean specified types of employee misconduct and substandard job performance, the filing of bankruptcy by the employer, or the simultaneous discharge or suspension of ten percent or more of the employer's workforce in Colorado; requiring an employer to provide an employee written documentation of the basis for his discharge or suspension; allowing an employee who believes he was discharged or suspended without just cause to apply for mediation to seek an award of back wages and reinstatement; allowing the mediator to assess costs for his services to the losing party and award attorneys fees to the prevailing party; and authorizing the general assembly to enact legislation to facilitate the purposes of this amendment? 

If the proposed initiative passed, no employee (apparently without regard to his or her length of employment) could be suspended or fired without "just cause." ("Just cause" may even be mandatory for suspensions with pay.) The meaning of the term "just cause" is not defined and will be debated in most cases. The measure would encourage employers to adopt voluminous discipline policies, hoping to anticipate the full array of possible employee mischief, misconduct, unsavory behavior and unsatisfactory performance that might arise. Layoffs of less than 90% of an employer's Colorado workforce will also be subject to the "just cause" test, which may force an employer to prove that a RIF was required and that the laid-off employees were properly selected for layoff.

This proposition has a long road to travel before it takes effect. However, employers should be prepared for this public assault on a long-standing rule of employment law.

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© 2008 Sherman & Howard L.L.C.                                                          March 3, 2008