Plan to expand wrongful firing sanctions draws small business fire

Kelly Sloan, The Business Times

A proposed measure subjecting Colorado businesses that employ fewer than 15 people to the same legal sanctions in wrongful-dismissal lawsuits as larger employers has drawn harsh criticism from the small business community and Republican lawmakers.

House Bill 13-1136 would extend payment of attorney’s fees; court costs; and punitive and compensatory awards covering such non-monetary damages such as emotional pain and suffering, inconvenience, mental anguish and loss of enjoyment of life to defendants claiming discriminatory employment practices in a lawsuit or Colorado Civil Rights Commission complaint against an employer with fewer than 15 employees. The proposed law also would provide for such damages to be paid to defendants suing for employment discrimination based on age or sexual orientation.

Federal law allows those fees and damages to be paid in cases in which intentional discrimination is found, but  applies only to employers of 15 or more people.

HB 13-1136 was heard in the House Judiciary Committee. State Rep. Jared Wright, a Republican from Fruita who sits on the committee, said the measured passed on a party line vote. The bill  now heads to the House Appropriations Committee.

Wright said he voted against the bill for imposing what he called a “ridiculous” expansion of liability to small businesses. “We cannot keep increasing tort burdens and regulations on businesses and then expect them to turn around and grow the economy.”

Wright said he preferred the alternative of “taking our hands out of the pockets of small business owners and letting them do what they do best — stimulate the economy — without meddlesome lawmaking.”

The measure is expected to pass the Democratic-controlled House and Senate and end up on the desk of Colorado Gov. John Hickenlooper.

Diane Schwenke, president and chief executive officer of the Grand Junction Area Chamber of Commerce, said the chamber opposes the bill because it would subject even the smallest businesses to  egregious penalties and frivolous lawsuits.

“At a time when the economy is so fragile, it makes no sense for our state lawmakers to advance legislation like this, which only adds to the burdens on small business owners,” Schwenke said.

Tony Gagliardi, state director of the National Federation of Independent Business in Colorado, said the bill would encourage frivolous lawsuits by making them more lucrative for plaintiffs and their attorneys.

“Small businesses are at a significant disadvantage,” Gagliardi said. “A typical Main Street, mom-and-pop business cannot afford full-time human resource professionals and on-staff legal counsel to fight these lawsuits.”

The costs borne by small business owners facing employee discrimination lawsuits can being crippling, Gagliardi said. “Even if settled at summary judgment, the cost for a small business owner can run upwards of $75,000. If it goes to trial, that owner will spend two to three years and as much as $150,000. Not many Main Street businesses can come up with that kind of money.”

While Schwenke said the Grand Junction chamber is prepared to ask the governor not to sign HB 13-1136 into law, she hopes legislators will vote against a measure she considers a job killer.

Gagliardi agreed. “The governor recently attended a forum on agriculture where he spoke highly of Colorado’s agricultural industry. Now imagine a family farming operation with one or two employees and at some point a disgruntled former employee decides to file a lawsuit against the farm owners. It would be financially devastating to that farm business.”

“We are starting today to make sure the governor knows what this bill will cost Colorado in terms of jobs and the economy,” Gagliardi added.