You may have heard that Colorado, like most states across the nation, is an at-will employment state. But what exactly does that mean? Can you really fire an employee for any reason, without warning?
In general, the answer is yes. At-will employment means you can fire any employee for any reason, at any time, and when you do it, the employee can’t turn around and sue for wrongful termination. This is the general principle, and there are good reasons for it, both for the employer and the employee. As one court put it:
"The at-will employment doctrine promotes flexibility and discretion for employees to seek the best position to suit their talents and for employers to seek the best employees to suit their needs. By removing encumbrances to quitting a job or firing an employee, the at-will doctrine promotes a free market in employment analogous to the free market in goods and services generally."1
But the concept in practice is a bit more nuanced. Over time, exceptions to the general rule have developed. These exceptions can be lumped into two general categories: exceptions based on contract and exceptions based on the law.
Employment Contracts (As Long as Your Contract Doesn't Say Otherwise…)
The at-will employment relationship can be modified by contract. An example might be a contract between employer and employee that the employee will be hired for a one year contract. Sometimes, an employment contract might have language that the employee can only be terminated for cause. If it does, firing someone without cause (which is what you are allowed to do under the general principle) can lead to trouble in the form of a lawsuit for breach of contract or wrongful termination. And of course, “cause” is often hotly disputed.
Under this same principle, employee handbooks can sometimes be treated as employment contracts that modify the at-will relationship. For example, the employee handbook might suggest that the company always abides by a progressive discipline procedure. In Colorado, if an employee handbook requires an employer to give a written warning, for example, before firing an employee, discharging one without such a warning can give rise to liability.
Employment Laws (As Long as It Is Not Otherwise Illegal…)
In addition to being able to change the at-will relationship by contract, there are several laws that give a little wiggle room to soften the otherwise harsh results that would come from a strict application of the doctrine. But contrary to popular belief, these exceptions are fairly narrow. Under most circumstances, the at-will doctrine will control. Here is a brief overview of the main exceptions.
Employers in Colorado cannot fire a person because of a protected class. Depending on how large the company is, different laws may apply. For example, at the federal level, Title VII of the Civil Rights Act of 1964 makes it illegal to fire someone because of their race, religion, sex, or national origin. Other laws protect disability status and age (over 40).
Colorado’s law is even broader, protecting those categories, as well as sexual orientation (and gender identity), and covering a larger number of employers.2 In Colorado, if you have employees in the state, you are likely covered.
This means that your reason for firing someone can’t be because of their protected status. If it is, the at-will employment relationship won’t save you from an employment discrimination lawsuit.
Lawful Off-Duty Conduct
Next, Colorado also has a lawful off-duty conduct statute that makes it illegal to fire someone for doing something legal outside of work.3 However, there are limits. First, the conduct has to be truly lawful. For example, even though smoking marijuana is “legal” in Colorado, it is still illegal under federal law. So, firing an employee for using pot is not going to run afoul of this law.4 But firing someone for smoking cigarettes—which was the original intent of the law—might. It is important to note that this doesn’t limit what the employer can require during work hours—just when the employee is off-the-clock and not at work. Second, there are also several exceptions to this law. For example, an employer may be able to limit off-duty conduct of an employee to avoid a conflict of interest with the employee’s responsibilities to the employer.
Wrongful Discharge in Violation of Public Policy
Finally, firing someone for refusing to break the law is another no-no. This typically falls into the category of “wrongful discharge in violation of public policy.” In these cases, the employees are usually given an ultimatum: comply with shady business dealings or hit the road. When they are fired, they can usually come back and argue that their discharge was not fair and they should be compensated for the harm caused by it.
Again this exception is narrow. Surprisingly, this exception does not apply even if the employer fraudulently induces the employee to violate a policy, and then turns around and fires them for it. This can come up, for example, if a written policy says one thing, but in practice, it is done another way entirely.
There are a few other and rarer exceptions to at-will employment, like protection for jury duty or certain whistleblowing issues. Government employees are often treated differently as well. But for average Colorado workers, overcoming the at-will presumption often presents an up-hill battle if they are not squarely within one of the exceptions and can prove that is really why they were fired. Nevertheless, because of the misperception around wrongful termination, lawsuits may still be pursued. And litigation around these issues, even if not meritorious, can often be concerning. Employers would do well to make employment policies clear up front and to attempt to avoid litigation when separation occurs.