What Is Considered Wrongful Termination in Colorado?

In Colorado, the relationship between an employer and an employee is governed by the "at-will" doctrine. This means that, in most cases, either party can end the relationship at any time, for any reason — or no reason at all. However, "any reason" does not mean an "illegal reason".

When a discharge violates state or federal statutes, breaches a contract, or defies public policy, it may be classified as wrongful termination. For business owners and tech leaders, understanding these legal boundaries is essential for mitigating risk and avoiding costly litigation. If you are drafting new agreements or navigating a complex separation, consulting an experienced employment contract lawyer is the most effective way to protect your organization’s interests.

Understanding the "At-Will" Doctrine in Colorado

Colorado is an at-will employment state by default. This gives employers significant flexibility in managing their workforce and adjusting to market shifts. However, this flexibility is not absolute.

Wrongful termination occurs when an employer oversteps the legal exceptions to the at-will rule. These exceptions are found in federal laws (like Title VII of the Civil Rights Act), state statutes (such as the Colorado Anti-Discrimination Act), and common-law principles established by Colorado courts.

The 5 Primary Grounds for Wrongful Termination Claims

To understand what constitutes wrongful termination, businesses must recognize the specific legal "protections" that shield employees from discharge.

1. Discrimination (CADA & Federal Law)

Under the Colorado Anti-Discrimination Act (CADA) and various federal statutes (EEOC), it is illegal to fire an employee based on protected characteristics. These include:

• Race, color, and national origin
• Religion and creed
• Sex, sexual orientation, and gender identity
• Age (specifically 40 and over)
• Physical or mental disability
• Pregnancy and marital status

2. Retaliation and Whistleblowing

Employers cannot terminate an employee for engaging in "protected activities". This includes:

• Reporting workplace safety violations (OSHA)
• Filing a claim for unpaid wages or overtime
• Reporting discrimination or harassment
• Whistleblowing regarding illegal corporate practices
• Taking protected leave under the Family and Medical Leave Act (FMLA) or Colorado’s Healthy Families and Workplaces Act (HFWA)

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3. Breach of Employment Contract

While many employees are at-will, some are governed by written or implied contracts.

• Express Contracts: A signed agreement that specifies a duration of employment or "for cause" termination requirements.
• Implied Contracts: Colorado courts have occasionally found that language in an employee handbook or verbal promises of "job security" can create an implied contract, limiting the employer’s right to terminate at will.

4. Violation of Public Policy

An employer cannot terminate an employee for reasons that violate established public policy. Key examples in Colorado include:

• Refusing to perform an illegal act
• Performing a public duty, such as serving on a jury or voting
• Exercising a legal right, such as filing for workers' compensation

5. Constructive Discharge

A termination doesn't always involve a pink slip. "Constructive discharge" occurs when an employer intentionally creates working conditions so intolerable (e.g., severe harassment or demotion without cause) that a reasonable person would feel forced to resign. Legally, this is treated as a termination.

Proactive Risk Mitigation: A Checklist for Colorado Employers

The best defense against a wrongful termination claim is a well-documented and consistent HR process. Use the following table to identify potential risks and the protective measures your business should take:

Recent Colorado Legal Updates: POWR and PHEW

Colorado’s labor landscape is shifting rapidly. The Protecting Opportunities and Workers' Rights (POWR) Act, effective in late 2023, significantly lowered the bar for what constitutes "harassment", making it easier for employees to bring claims. Additionally, the Public Health Emergency Whistleblower (PHEW) law provides heightened protections for workers who raise health or safety concerns.

For technology and high-growth companies, these changes mean that standard "boilerplate" employment agreements may no longer be sufficient.

How B&T Legal Group Protects Your Business

The experienced attorneys at Business & Technology Legal Group understand that a termination is rarely just a "human resources" issue, but a significant legal event. We assist Colorado businesses in:

• Drafting Enforceable Agreements: Crafting employment contracts and independent contractor agreements that clearly define the at-will relationship.
• Policy Review: Updating employee handbooks to include the necessary disclaimers to prevent implied contract claims.
• Severance Strategy: Drafting comprehensive separation and release agreements that protect the company from future litigation.
• Litigation Defense: Representing your company’s interests before the Colorado Civil Rights Division (CCRD) or in state and federal courts.

Get Success Through Legal Preparedness

Termination is a difficult but necessary part of business operations. By understanding the nuances of Colorado's wrongful termination laws and maintaining high standards for documentation and contracts, you can protect your company’s reputation and bottom line.

Contact B&T Legal Group today to discuss how we can help you build a solid legal foundation for your workforce.

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If Colorado is an "at-will" state, can I still be sued for firing someone?

Yes. While the at-will doctrine gives you flexibility, an employee can still file a lawsuit if they believe the termination was based on a protected characteristic (discrimination), a retaliatory motive, or a breach of a written or implied contract. "At-will" is a defense, but it is not an absolute shield against litigation. “At-will” employment contrasts with employment under an individual employment contract or a union contract.

How does the POWR Act affect how I should handle terminations?

The Protecting Opportunities and Workers' Rights (POWR) Act has made it significantly easier for employees to claim harassment and discrimination. For employers, this means you must maintain more rigorous documentation of "non-discriminatory" reasons for termination and ensure your internal complaint-handling processes are impeccable to avoid retaliation claims.

What is the "Final Paycheck" rule in Colorado?

This is a common pitfall. Under Colorado law (C.R.S. § 8-4-109), if you terminate an employee, their final wages are due immediately. If your payroll office is closed, you have 24 hours to deliver the payment. Failing to meet this deadline can result in penalties that far exceed the original wages owed.

Can my employee handbook be used against me as a contract?

Potentially, yes. If your handbook contains specific promises about "disciplinary procedures" or "permanent employment" without clear at-will employment disclaimers, a court may view it as an implied contract. It is vital to have an employment contract lawyer review your handbook to ensure it doesn't accidentally waive your at-will rights.

What is the difference between a "layoff" and a "wrongful termination"?

A layoff is typically a business decision based on economic necessity or restructuring. However, if a layoff disproportionately affects a specific protected group (e.g., only employees over 40), it can be challenged as a "disparate impact" discrimination claim. Strategic planning before a RIF (Reduction in Force) is essential.

Does an employer have to give a reason for termination in Colorado?

Legally, no, provided the employee is "at-will". However, providing a clear, documented, and lawful reason (such as poor performance) is often the best way to prevent an employee from "filling in the blanks" with a later claim of discrimination or retaliation.

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