Anti-discrimination bill roils up small businesses

The Colorado Statesman

Small business owners and the National Federation of Independent Business (NFIB) are pinning their last best hope on killing an anti-discrimination bill with Gov. John Hickenlooper. But the bill’s Senate sponsor believes otherwise.

On Tuesday, Tony Gagliardi, Colorado state director for NFIB, assembled several small business owners and legislators to make his case for a veto on House Bill 13-1136. The bill removes an exemption from discrimination lawsuits for businesses with 15 or fewer employees. HB 1136 was sent to the governor last Friday.

Gagliardi called HB 1136 the “worst bill to come out of the legislature in a decade,” and a “full employment act for lawyers.”

As is the case with dozens of controversial bills during the 2013 session, HB 1136 passed both chambers largely along party lines. In the House, only Rep. Mike McLachlan, D-Durango, voted with all House Republicans against the bill its April 19 final vote. In the Senate, Sen. Cheri Jahn, D-Wheat Ridge, was the only Democrat to side with Republicans in the bill’s final vote on April 26.

HB 1136 is intended to prevent workplace discrimination and to create one uniform standard for protection against discrimination, according to its House co-sponsor, Rep. Claire Levy, D-Boulder. Employees in businesses with 15 or more employees whose civil rights are violated can seek legal remedies in discrimination cases, but those who work for businesses with fewer than 15 employees cannot access those same remedies.

Victims of discrimination under HB 1136 can receive punitive or compensatory damages, attorney’s fees plus front or back pay or be reinstated in the job. The bill caps damages, and includes an instruction to judges and juries to consider the business’s size and ability to pay damages. “The intention is not to force financial hardship on an employer,” Levy told the House Judiciary Committee on February 14.

Under HB 1136, employer defendants also have the ability to use a “good faith” defense, to show that the business attempted to prevent discriminatory practices. Such a defense would negate punitive damages against an employer, according to the bill.

As amended, HB 1136 contains a two-tiered cap on damages that can be awarded to a plaintiff. For businesses with one to four employees, the cap is $10,000; for five to 14 employees, the damage cap is $25,000.

The bill also allows the defendant employer to recoup attorneys’ fees if the lawsuit is found to be groundless or frivolous.

HB 1136 would go into effect January 1, 2015; the delay to implementation is to allow small businesses to be trained on good employment practices, with the assistance of the Colorado Civil Rights Division and a volunteer taskforce of employers and employees that would assist in education and outreach efforts.

Sponsors claim HB 1136 would put Colorado on the same footing with 42 other states, although witnesses testified that 28 states don’t include punitive damages in their laws, and 23 states allow for damages only from businesses with six or more employees.

Tuesday, Gagliardi told reporters he plans to deliver a letter to the governor to ask him to veto HB 1136. He said the caps on damages are meaningless to small businesses because they still must hire lawyers to defend the business. He also noted that a recent Colorado Civil Rights Division report showed that out of 339 employment cases, 313 were found to be without merit. Small businesses will have to buy expensive liability insurance, Gagliardi said, and they cannot afford to employ human resource staff or in-house attorneys. The bill will put a “target on the backs of every small business out there… no business will be safe.”

Gagliardi noted that Hickenlooper has called for a reformed regulatory structure. “It’s time for the governor to walk the walk,” Gagliardi said. Sen. Steve King, R-Grand Junction, told reporters the rhetoric has been “jobs, jobs, jobs, yet we have HB 1136. It’s time for our governor to step up and say ‘either the priority is jobs, jobs, jobs and small business, or the priority is more red tape and litigation and jobs for trial attorneys.’” Sen. Randy Baumgardner R-Hot Sulphur Springs, said the bill will create hardships for small businesses, and that job applicants will sue when they don’t get hired.

Speaking on behalf of small business owners, Gail Lindley of Denver Bookbinding said costs for her fifth generation, 85-year old business have gone up, while the business workforce has gone from 45 employees to 10, due to the digital revolution. “This legislation is killing us,” Lindley said. She later admitted her business has never been sued for discrimination, although it lost a worker’s compensation case several years ago.

The bill’s Senate co-sponsor, Senate Majority Leader Morgan Carroll, D-Aurora, responded to the opponents’ claims later in the day.

Carroll said Tuesday that she believes Hickenlooper will sign the bill, noting that sponsors have worked closely with the governor’s office on more than a dozen amendments, attempting to respond to issues with the business community. “We have every reason to think the governor will sign.”

She disputed claims that job applicants could sue when they don’t get a job. A business decision is a defense against a discrimination claim, Carroll said. “You have to be provably discriminating against someone because of age, race, sexual orientation, and it has to be intentional discrimination,” she explained. “It usually takes a smoking gun that no one has.”

“We made many amendments in accommodation to the business community,” Carroll said, such as on capping damages, the defendant’s ability to pay on compensatory and punitive damages, a “good faith” defense on punitive damages, and a requirement that plaintiffs pay all attorneys’ fees when a lawsuit is deemed frivolous. “The goal is to have civil rights honored regardless of size of employer and to make sure discrimination doesn’t happen in the first place.”

With regard to defendants’ attorneys’ fees, Carroll said the process begins with the Colorado Civil Rights Division, which doesn’t necessarily require attorneys. And if a neutral fact-finder finds the case is frivolous, the defendant can receive an immediate judgment on any attorneys’ fees.

In the other 42 states that have removed the business size exemption, Carroll said, she hasn’t heard of a single instance where a business has gone belly-up because of a discrimination lawsuit. “The business community has embraced this... as a normal, ethical best business practice. Outside of the lobby corps in the Capitol, most businesses would be appalled by the prospect that they would tolerate this kind of conduct.”