Colorado Ballot Issue 55 amends the Colorado Constitution to limit the circumstances under which employees can have their employment terminated in Colorado. While Colorado Amendment 55 is attractive in many ways, it over reaches in the way that it implements the idea.
The Colorado Status Quo
There are two basic types of employees in Colorado. Most unionized workers and most public employees in the civil service system (including professors and teachers) have full fledged job security. They can only be fired for just cause, a lit of circumstances generally similar to the ones found in Amendment 55, and not only have the right to damages if they are wrongfully terminated, but also typically have reinstatement in their old job as a potential remedy.
The other main type of employee in Colorado is an "at will" employee. Almost all private sector, non-unionized employees are employees "at will." In addition, management employees in unionized workplaces in the private sector, and political appointees in the public sector, are also typically "at will" employees.
While in theory, an "at will" employee may be terminated at any time for any reason, in practice, some reasons, like discrimination on the basis of race, ethnicity, gender, sexual orientation, religion, age over forty, and disabilities that can be reasonably accommodated provide a basis of a wrongful termination lawsuit. Indeed, one of the intellectually satisfying elements of a just cause termination law is that it creates an environment where absurdly stupid reasons, if subjectively true, are valid reasons to fire someone, while discriminatory reasons are not. This absurdity makes wrongful termination cases harder to win, and leads to odd legal arguments and positions (e.g. I fired her because she had blue hair, not because she was Cuban).
Even when there is no basis for one of these discrimination lawsuits, Colorado law sometimes permits wrongful termination suits by people who are otherwise "at will" employees if a firing was for a violation of public policy (like firing someone for refusing to perform an illegal act, or for trying to organize a union, or in retaliation for exercising worker's compensation rights), if there was an implied or express contract setting for specific grounds or procedures pre-requisite to terminating employment, or if the firing was based upon lawful conduct away from work (like smoking).
Finally, a very small number of employees, probably less than 1% of the workforce, typically in senior executive, senior professional, or senior performing arts, religious and athletics positions, have individually drafted protections against termination without just cause, defined on a case by case basis, with a fat golden parachute payment as the typical remedy.
There is almost no place in the country where a private sector, non-union employee has reinstatement as a possible remedy that a court could impose in a wrongful termination action. Generally, remedies in wrongful termination suits are limited to back pay, front pay, lost benefits, related costs like moving costs associated with a new job, interest before and after a judgment, attorneys fees and costs associated with litigation, and non-economic emotional distress damages. In rare circumstances, punitive damages may be available as well.
The main barrier to damages in wrongful termination cases is the employee's duty to mitigate damages. You have significant damages only if it takes you a long time to find a new job that pays as well. But, evidence of difficulty finding a new job resulting in significant damages, also tends to show that you weren't qualified to do the job you were terminated from in the first place, undermining your liability claim.
In practice, most wrongful termination cases are settled, the litigation costs involved in wrongful termination suits tend to be very high ($10,000-$100,000 for each side would be common), and a typical settlement in a case where there is strong evidence of a wrongful termination would be three to twelve months of pay as a severance payment, along with restoration of any benefits that were forfeited due to an early termination. In contrast, in cases where there is a well documented non-discriminatory reason for a termination, and no larger pattern of discrimination at the company, even if it does not fit the kind of narrow grounds found in Amendment 55, it is unusual for there to be more than a nuisance settlement.
Also, virtually no one is truly an "at will" employee, in the sense that an employer may fire them without any economic consequences. Except for certain probationary employees and a very narrow class of exempt employers, anyone who is fired (or forced to resign) for no fault of their own is entitled to unemployment benefits, which are in turn charged against the employer's unemployment tax account. The circumstances which disqualify someone from unemployment benefits are similar to those which authorize a wrongful termination suit under Colorado Amendment 55.
But, unemployment benefits are modest. Typically, an unemployment benefit payout is $10,000 or less, paid out in weekly installment, and the unemployment benefits continue only if the discharged employee actively looks for a job as determined by the unemployment office, and if the employee applies for, and accepts if offered, any available job that the employee is qualified to do, whether or not it is in the employee's long term interests. An employee termination that entitles someone to unemployment benefits does not entitle someone to reinstatement in their job, and is often replaced with a severance payment.
The Montana Experience
One state, Montana, does not follow the employment at will doctrine.
The Montana law has some notable differences from the proposed Colorado Amendment 55.
Montana law allows up to four years wages as damages, has a short (one year) statute of limitations, other procedural hurdles designed to resolve cases before trial, and has a limited allowance of limited punitive damages, but no possibility of reinstatement.
The Colorado proposal has no express damages limitation, although presumably general Colorado law applicable to other types of employment lawsuits would apply. It also has a short statute of limitations (six months from termination). The Colorado proposal also gives courts a right to reinstate an employee. On the other hand, the Colorado proposal applies to very few non-profits (only non-profits with 1000 employees or more like major hospitals and private universities), excludes government and unionized employees, and does not apply to most small businesses which are exempt from other employment laws. It is unclear when Colorado courts would permit reinstatement, but that loss of control over who is at a workplace in some cases is a significant difference from the Montana law.
Many Latin American countries have a right to severance payments based on seniority, in circumstances where Americans would be entitled to unemployment benefits. Many Western European countries, like France and Germany, which already have much higher unionization rates than in the United States, also have union contract like protections against firings without just cause with a right to reinstatement, for most rank and file employees, at least, much like Colorado Amendment 55.
What's Wrong With Colorado Amendment 55?
There is precedent for the protections that Colorado Amendment 55 provides for the kind of rank and file employees in large enterprises that are typical unionization targets and the typical beneficiaries of civil service protections in governmental entities. In these workplaces, job security is loved by employees, and hated more deeply than almost anything else in a contract, by employers. It is controversial but it can work.
* The main problem for these kinds of workers of a law like Colorado Amendment 55 is that many fairly legitimate reasons for an employer to terminate someone's employment don't fit neatly into the just cause box.
You can terminate someone for substandard performance of assigned job duties, but not simply because an employer thinks it is very likely that a new hire could be found who would perform better than the current person in the job.
Neglect of assigned job duties as a whole is a grounds for termination as are "repeated violations" of the employees written policies and procedures related to performance, but termination is not allowed merely making a mistake, or repeatedly violating unwritten but widely understood performance expectations. Yet, in many employment situations, sometime a mistake, like embarrassing a key client or the company in a key public statement, or harming a child in a daycare, or showing up late to court in a critical case, or disclosing confidential information vital to the company's success, is so central to the mission of the employer, that the seriousness of the matter must be dramatized by immediately firing any employee who makes that kind of mistake.
Gross insubordination is grounds for termination, but not passive-aggressive failure of an employee to affirmatively respect their employer and boss.
Likewise, just cause does not obviously include the common situation of an employee who is competent and performs adequately, as an individual, but doesn't relate well to a group of employees who need to work as a team.
* Another problem with Colorado Amendment 55 is that it doesn't provide any means to force a recalcitrant employee out of an enterprise without opening up the employer to a lawsuit, particularly because damages are so open ended.
Perhaps an employer suspects that an employee is engaged in sexual harassment, or is performing substandard work in circumstances that are hard to monitor, or suspects that an employee may be stealing or engaged in fraud, but can't prove it. Now, that employee can be fired, paid a severance equal to future employment benefits, and be removed from the organization. It isn't clear that this would be possible under Colorado Amendment 55, if adopted.
* A third problem with Colorado Amendment 55 is that its grounds for termination are grossly too narrow for senior managerial and professional employees.
While requiring firings to have "just cause" which doesn't exist when someone does their job in a basically competent way, can be a workable standard for a rank and file employee, for senior management, there are greater expectations.
Successful enterprises need to have a management that shares the same outlook on all key policy issues facing the company. Allowing two managers with strong disagreements over how a business to both stay in the company, can destroy that company, even if everyone does their job and behaves in a civil manner at company meetings. The need to have the best available person for the job, rather than merely an incumbent who isn't screwing up, is likely extreme at this level.
Every collective bargaining agreement in the nation excludes the management team from its employment protections. Every governmental civil service system in the country excludes a top group of politically appointed senior managers and policymakers from its employment protections. Colorado Amendment 55, in contrast, doesn't even have an exemption for the officers of, or general manager of, the company. Once an employee has been there for six months, even if he or she is a senior executive who has lost the confidence of the board of directors and shareholders, perhaps after a corporate takeover, that senior executive can't easily be fired.
* Colorado Amendment 55 is unclear how it would apply in cases where an employee is hired for a fixed term of employment longer than six months, such as a three year appointment as a professor at a private college employing more than 1,000 people. Must the employee be rehired if the job remains available and the work done was up to par, or not?
* The right to reinstate an employee in a court proceeding, typically after half a year to several years of bitter litigation, when someone has been found in the interim to do the job after the contested firing, is also problematic. Reinstatement remedies can only work if they are quick and interpersonal relations with management aren't that important to the job, yet the civil lawsuit remedy, and the broad scope of the statute, makes it unclear that this would always be the case.
* Finally, the constitution is an appropriate place to lay out a scheme of government, and people's rights vis-a-vis government. But, it is generally not an appropriate to entrench private law governing the relationships of private individuals.
In conclusion, I oppose Colorado Amendment 55 because it disallows many employment terminations that have a sound business purposes, particularly for management level employees, and because its possible remedies are too open ended and unworkable. I also disagree with putting such a nuts and bolts employment law in Colorado's constitution.
I would favor a more moderate plan protecting ordinary employees from arbitrary termination with a compensatory or liquidated damages monetary remedy sweeter than unemployment benefits, but viable as an "efficient breach" option for employers and less significant than a right to reinstatement or open ended non-economic damages. But, Colorado Amendment 55 goes too far in shifting the employment law balance in favor of employees, in a state that is already more protective of employees in wrongful termination situations than most.
As a first draft of a statute for consideration by the Colorado General Assembly, it would be worth marking up in committee, to reach a comprise bill. But, like all citizen initiatives, Amendment 55 comes to us on a take it or leave it basis that have devils in the details and isn't amenable to reasonable compromises.
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