General Counsel's Insight on the Economy: A Workforce Perspective

I.          Introduction

Over the past decade, Colorado has seen significant growth in its economy and in its general population, diversifying the state.  Colorado’s economic and population growth are anticipated to continue into 2017 and beyond, which will lead to an increasingly diverse workforce.  To stay competitive, Colorado companies must adapt and gain understanding into the variety of cultures and life experiences of its employees and management in order to provide the best product or service to its customers.  Failure to adjust corporate practices to the workforce may lead to employee dissatisfaction, high turnover, low productivity, and potential employee lawsuits against the company. 

This article analyzes the economic growth and the changing workforce of Colorado companies, explores the impact of the Equal Employment Opportunity Commission (“EEOC”) on companies as it relates to charges of employment discrimination, and discusses best practices for managing Colorado’s diverse workforce.

II.        Colorado’s Economy and Workforce

            A.        Colorado’s Economy Anticipated to Grow in 2017

Colorado’s economy, similar to the country as a whole, has grown significantly over the past seven years.  Colorado ranked third highest in nominal state Gross Domestic Product (“GDP”)[1] in 2014, with a 5.7 percent growth rate.[2]  Colorado’s GDP dipped to 3.1 percent in 2015, but is anticipated to grow in 2016 and 2017.[3]  Declining crude oil prices from mid-2014 through early 2016 have hurt energy producing states like Colorado, but the Colorado Legislative Council (“CLC”) anticipates an increase to both Colorado’s crude oil prices and sales in 2016 and 2017, which will contribute to economic growth in 2017.[4]   Colorado’s individual income is projected to increase 5.5 percent in 2017, but corporate income for Colorado companies is anticipated to decrease 5.3 percent before rebounding in 2018.[5]  The CLC has also noted that the tourism, services, real estate, and construction industries will continue to grow at healthy rates in 2017, however, corporate profits, business investment, business credit markets, and manufacturing activity will weaken.[6]  As a result, the CLC anticipates that the state’s economy will continue to grow in 2017, but at a slower pace than in 2016.[7]   

            B.        Colorado’s Population Increases

Colorado’s population has steadily grown over the past five years, adding over 400,000 residents since 2010.[8]  That growth is anticipated to continue.  Colorado added just over 100,000 people in 2015, and the CLC forecasts a total of nearly 200,000 additional people moving to the state in 2016 and 2017.[9] As of July 1, 2015, Colorado’s population was 5,456,574, and has grown more racially diverse since 2010 as shown by the chart below.

Diversity Among Colorado’s Population 

Race

2010 Percent of Population

2015 Percent of Population

Percent Growth or Decrease

Caucasian

70.0

68.7

(1.9%)

Hispanic or Latino

20.7

21.3

2.9%

African American

4.0

4.5

12.5%

Native American

1.1

1.6

45.4%

Asian

2.8

3.2

14.3%

Native Hawaiian or Pacific Islander

0.1

0.2

100.0%

Mixed Race

3.4

2.9

(14.7%)[10]

 

The chart below shows that Colorado’s population has also grown older.

Colorado’s Population By Age 

Age

2010 Percent of Population

2015 Percent of Population

Percent Growth or decrease

Under 18 Years

31.2

29.2

(6.4%)

Ages 18-65

57.9

57.8

(0.1%)

65 Years and Over

10.9

13.0

19.3%[11]

            C.        Employment Trends and the Diverse Workforce

Colorado’s employment growth has outpaced the nation since 2010, but has slowed since late 2014.[12]  While Colorado has achieved full employment, the unemployment rate has risen from 2.9 percent in March 2016 to 3.8 percent in August 2016.[13]  However, the decline in unemployment from 8.5 percent in October 2011 to 2.9 percent in March 2016 was largely due to a surging labor force, suggesting that Colorado’s labor market may be at the natural rate of unemployment.[14] 

Further, Colorado’s unemployment outpaced the national rate, which has hovered between 4.7 percent and 5.0 percent since early 2016.[15]  The biggest year-over-year job gains in Colorado have occurred in the Construction, Accommodation & Food Service, Educational Services, and Leisure & Hospitality industries. The Mining & Logging, and Transportation & Utilities industries have experienced negative growth.[16] Looking forward, the Healthcare and Social Assistance industry is projected to add over 100,000 jobs by the year 2024, a growth of over 38 percent, and the Management of Companies & Enterprises industry is anticipated to grow over 36 percent, both outpacing Colorado’s total projected growth of 24.8 percent.[17]  The Retail industry is anticipated to add approximately 45,000 jobs over the same time period, and the Accommodation & Food Services industry is projected to add over 60,000 employees.[18] 

Similar to Colorado’s population in general, Colorado’s labor force is fairly diverse, however, Hispanics and Latinos, African Americans, and Mixed Race individuals are more likely to be unemployed in Colorado than their Caucasian counterparts.

Comparison of Colorado’s Labor Force to Those Unemployed by Race 

Race

Percentage of Labor Force

Percentage of Unemployed Labor Force

Caucasian

64.2

50.5

Hispanic or Latino

20.3

25.8

African American

5.4

9.8

Asian

3.8

3.5

Mixed or Other Races

3.7[19]

1.8[20]

Colorado’s labor force has also grown older since 2010, as shown below.

The Aging of Colorado’s Labor Force 

Age

2010 Percentage of Labor Force

2015 Percentage of Labor Force

Percent Growth or Decrease

Under 18 Years

1.8

2.1

16.7%

Ages 18-65

94.1

92.4

(1.8%)

65 Years and Over

4.1

5.5

34.1%[21]

III.       Changes in Workforce May Lead to Rise in Employment Discrimination Claims

 

As Colorado’s workforce grows more racially diverse and older, employees of different cultures, backgrounds, and ages will interact with each other in various aspects of work, including managing and supervising, working on teams to complete projects and tasks, and providing various services to customers.  While a diverse workforce often leads to an increase in creativity, productivity, and adaptability,[22] workplace concerns may arise from employees working with others from varying cultures, backgrounds, and ages, which may result in an increase in charges of discrimination filed against the company by its employees.

            A.        Process of Filing a Charge of Discrimination

Employees who feel they have been discriminated against on the basis of race, color, national origin, sex, religion,[23] age,[24] disability,[25] or genetic information,[26] or believe they were retaliated against for engaging in protected activity may file a charge of discrimination (a “Charge”) against their employer with the EEOC.[27]  After an employee files a Charge, the EEOC notifies the employer of the Charge within ten (10) days,[28] and if the Charge is eligible to proceed, the EEOC will also notify the employer that it has the option to participate in non-binding mediation of the Charge.[29]  If the mediation is unsuccessful, the EEOC will begin to investigate the Charge, and will likely ask the employer to provide a statement of position as to why no discrimination occurred.  The company will also likely have to respond to the EEOC’s Request for Information.[30] 

The company should also be aware that the EEOC may request that the investigator perform an on-site visit and/or conduct interviews with other Company employees.[31]  Typically, lower level non-management employees will be interviewed by the investigator outside management’s presence, but companies typically have representation when management-level employees are interviewed. 

After the investigation, if the investigator is unable to conclude that there is reasonable cause to believe discrimination occurred, the agency will issue a Dismissal and Notice of Rights, and even though the agency found no discrimination, the employee may still file a lawsuit against the company within ninety (90) days.[32]  If the EEOC believes that discrimination occurred, it will issue a Letter of Determination and invite the parties to resolve the matter through conciliation.[33]  If conciliation is unsuccessful, the EEOC may file a lawsuit against the employer, or issue a Notice of Right to Sue Letter to the employee, giving the employee ninety (90) days to bring a lawsuit.[34]

            B.        Legal Structure of Discrimination and Retaliation Claims

An employee alleging discrimination based on a protected status and/or retaliation must first establish a prima facie case.  To establish a prima facie case of discrimination, the employee must show that he or she: (1) is a member of a protected class; (2) suffered an adverse employment action; (3) was qualified for the position at issue; and (4) was treated less favorably than others not in the protected class.[35]  A retaliation prima facie case may be established by showing that the employee: (1) engaged in protected activity; (2) suffered a negative or adverse action by the employer; and (3) a cause-and-effect connection exists between the protected activity and the adverse employment action.[36]  In regard to the third element, the employee must show that the protected activity was the but-for cause of the negative or adverse employment action.[37]

If the employee establishes a prima facie case of discrimination and/or retaliation, then the burden shifts to the employer to produce a legitimate non-discriminatory reason for the adverse action.[38]  The employer must show that its decision to terminate or demote the employee was based upon a legitimate business reason that had nothing to do with the employees’ protected trait. 

If the employer produces a legitimate non-discriminatory reason for the adverse action, in order for  the employee to succeed on his/her claim, the employee must show that the employer’s proffered non-discriminatory explanations for its actions was a pretext for discrimination and/or retaliation, i.e. that the employer’s reason was “so incoherent, weak, inconsistent, or contradictory that a rational factfinder could conclude [they are] unworthy of belief.”[39]

IV.       EEOC Focus

The EEOC also has a significant impact on the types of Charges brought by employees.  Recently, the EEOC discussed its Top Ten developments and areas of focus for the agency, which included in order of most to least importance, pursuing claims for: (1) Retaliation; (2) Pregnancy Discrimination; (3) ADA Reasonable Accommodations; (4) Racial Harassment; (5) Disparate Impact; (6) Sex Hiring Discrimination; (7) Sexual Orientation Discrimination; (8) Discrimination against Immigrant, Migrant, and Other Vulnerable Workers; (9) Wage Discrimination; and (10) Religious Discrimination.[40]  Employers will likely see the EEOC pursuing its Charges based on the above-referenced areas over the next several years, and should develop policies and procedures to manage exposure for Charges based upon the EEOC’s top ten list.

V.        Retaliation and Discrimination Charges Rise in Colorado

In Colorado, Charges filed with the EEOC have declined from 2,215 in 2009 to 1,906 in 2015.  In Colorado, Retaliation claims—the EEOC’s number-one focus area—make up the majority of Colorado’s Charges, totaling 50.9 percent of Colorado’s 2015 Charges, an increase from 46.2 percent in 2009.[41]  Charges based on Disability—the EEOC’s third focus area—have increased from 593 in 2009 to 650 in 2015, accounting for 34.1 percent of Colorado’s 2015 Charges,[42] even though disabled individuals make up only 7.2 percent of Colorado’s population.[43]    

Notably, despite Colorado’s growing and diverse workforce, charges of discrimination based upon race and age have remained consistent since 2009, totaling approximately 26 percent and 28 percent of all Charges respectively.[44]  National Origin Charges have declined approximately 19.4 percent since 2009, while Charges based upon an employee’s color have dropped over 60 percent in the same time span. 

As the chart shows below, compared to employers nationally, Colorado employers are less likely to face race Charges on average, but more likely to see Charges based on sex, national origin, retaliation, age, and disability.

Comparison of EEOC Charges National to Colorado 

Charge Type

National Percentage of All Charges filed

Colorado Percentage of All Charges filed

Race

34.6

26.0

Sex

29.4

34.4

National Origin

10.5

16.2

Color

3.2

3.4

Retaliation

44.3

50.9

Age

22.4

27.6

Disability

30.2

34.1

Equal Pay

1.1

1.2

Genetic Information

0.3

0.4[45]

Sexual Orientation discrimination has also become one of the EEOC’s focus areas.  Title VII does not expressly provide protection for employees based on sexual orientation,[46]  however, the EEOC has been pushing to include sexual orientation discrimination as sex discrimination under Title VII.[47]  Because the EEOC only recently began enforcing Title VII as forbidding sexual orientation discrimination, there is little data regarding the number of Charges.  However, from 2014 to 2015, there was an increase of 28% of Charges based on LGBT concerns, and it is anticipated that number will continue to grow.[48]

While several district courts throughout the county have determined that sexual orientation is protected by Title VII, the only federal appellate court to rule on the issue has determined that Title VII does not protect employees from discrimination based on sexual orientation.[49]  However, unless the Supreme Court rules that Title VII does not provide such protection, the EEOC will likely continue to determine that sexual orientation discrimination is protected by Title VII and employers should prepare to defend an EEOC Charge based upon sexual orientation in the same manner that it would defend a properly protected Charge under Title VII.

VI.       Expense of Litigating Employment Discrimination Claims

The expense of employment litigation is largely driven by the time it takes a case to work though the judicial process.  The average cost to litigate an employment discrimination case is approximately $88,000.00,[50] and it takes approximately 710 days to reach trial at the federal level.[51]  The time period to get to trial varies significantly at the state level.[52]  Pretrial and trial expenses typically account for more than half of the total costs of the case, while investigation and discovery expenses total approximately one-third of the costs.[53]  If the employer is unsuccessful at trial, however, depending on the number of company employees, damages could far exceed the costs to litigate.  On average, plaintiff-employee trial verdicts for both state and federal court cases are approximately $200,000.00[54]  Federal court trial verdicts for plaintiff-employees average $335,000.00.[55]

VII.     Best Practices for Managing Colorado’s Diverse Workforce

Colorado has a growing and diverse workforce.  While employment-related lawsuits are often unavoidable, understanding the changes in Colorado’s workforce and the EEOC’s focus areas provides Colorado employers a head start in managing their workforce to minimize costly employment litigation.  Below are best practices employers may undertake to achieve that objective:

A.        Understand and Manage the Workforce

Employers should strive to understand the various aspects of their workforce, particularly when the workforce is growing more diverse.  Failure to understand your employees’ demographics may inadvertently lead to disruption and dissatisfaction, and potentially discrimination Charges.  Understanding these dynamics may allow the employer to implement strategies and training with an eye towards avoiding quick management decisions that, although not intentionally discriminatory, may have an unintended consequence on the workforce.

B.        Ensure Management Knows the Workforce.

It is vitally important to ensure that management knows the various cultures of the workforce.  Training managers on various cultures, ethnic groups, and how to effectively communicate to employees can be critical in handling workplace concerns.  If the workforce largely speaks a language other than English, ensure that you have someone in management who can speak the employees’ language, which will be critical to avoiding potential discrimination Charges due to a language barrier.

C.        Train Employees and Listen to Their Concerns.

Many workplace problems arise because management does not train employees on the company’s expectations and/or how to deal with co-workers and management.  Training employees on the company’s expectations may seem fairly simple, but a lot of companies overlook this task.  During the trainings, management will likely hear employee concerns in the workplace, which may lead to modifications in work processes or schedules and/or company policies.

D.        Utilize the Company’s Disciplinary Process

Companies may benefit by clearly spelling out their disciplinary process in employee handbooks or on employee intranet services and follow the disciplinary process when appropriate.  Doing so, allows management to address the discipline problem, hear the employees’ side of the story, and set clear guidelines for future corrective action in hopes of improving employee performance.  It goes without saying that a history of well-documented employee discipline very often assists the company establishing its legitimate nondiscriminatory reason for taking action against an employee, which will assist in defending employment lawsuits.

E.        Regularly Evaluate Employee Performance

Employers can learn a great deal by regularly evaluating employee performance.  The process allows management to provide direction and guidance to employees about their performance and, if tied to a merit increase system, helps employees understand what they must do to obtain a raise and get promoted.  The evaluation also allows management to praise good employee performance and manage poor performance.  There is a school of thought that companies should do away with performance evaluations,[56] which for some companies may work.  However, performance evaluations can become a vital tool to defending an employment discrimination lawsuit when the employee’s termination was based upon documented poor performance.

F.         Ensure Proper Reduction in Force Procedures, if Layoffs are Necessary

Colorado’s changing demographics may also affect how a company engages in layoffs of employees.  As Colorado’s diverse workforce continues to grow, employers who need to lay employees off should consider conducting a disparate impact analysis.[57]  Such an analysis will help determine whether a layoff disproportionately impacts a particular class of employees based upon race, gender, or age.  This is particularly true where workforce demographics may have changed significantly.  One of the EEOC’s focus areas is disparate impact and conducting a disparate impact analysis will help ensure that a corporate layoff is not statistically discriminatory, which should minimize discrimination claims resulting from the layoff and/or allow the company to effectively defend such a lawsuit if one occurs.

VIII.    Conclusion

As Colorado’s economy prospers and its population increases, the state’s workforce continues to grow more diverse.  Employers should consider following the best practices to help ensure a productive workforce with minimal workplace problems and expensive and time-consuming employment lawsuits.

 

[1] Gross Domestic Product is the total value of goods produced and services provided in a state during one year.

[2] Colorado Legislative Council (“CLC”) Staff, Focus Colorado: Economic and Revenue Forecast, Colorado Legislative Council Staff Economics Section (June 20, 2016).  The CLC Staff is a nonpartisan research arm of the Colorado General Assembly, and prepares fiscal notes and revenue projections in addition to supporting legislative committees.

[3] Id. at 33-35.

[4] Id. at 40-42.

[5] Id. at 23.

[6] Id.

[7] Aldo Svaldi, Colorado economy facing headwinds in coming years, The Denver Post (June 21, 2016).

[8] Joe Murphy, Chart: Colorado is the second-fastest growing state in the U.S., The Denver Post (July 7, 2016).

[9] Colorado Legislative Council, supra note 3, at 57.

[10] United States Census Bureau, Quick Facts: Colorado (available at: http://www.census.gov/quickfacts/table/PST045215/08).

[11] Id.

[12] Colorado Legislative Council, supra note 3, at 42-43.

[13] See Svaldi, supra note 8; see also Colorado Department of Labor, Colorado Employment Situation August 2016 (available at: https://www.colorado.gov/pacific/cdle/news/colorado-employment-situation-august-2016).

[14] Colorado Legislative Council, supra note 3, at 43.  The natural rate of unemployment is the lowest unemployment rate an economy can sustain over a long period of time.

[15] Id. at 44.

[16] Id. at 46.

[17] Metro Denver Economic Development Corporation, Employment Projections By Industry (Revised Sept. 2015) (available at http://www.colmigateway.com/default.asp)

[18] Id.

[19] United States Census Bureau, 2014 American Community survey (available at: http://www.census.gov/acs/www/)

[20] Id.

[21] United States Census Bureau, Colorado’s Beginning of Quarter Employment: Counts by Worker Age and Yearly Averages (available at: qwiexplorer.ces.census.gov/exp-r/f930c.html)

[22] Josh Greenberg, Diversity in the Workplace: Benefits, Challenges and Solutions, The Multicultural Advantage (available at: http://www.multiculturaladvantage.com/recruit/diversity/diversity-in-the-workplace-benefits-challenges-solutions.asp).

[23] See Title VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000e, et seq.  To be covered by Title VII, employers must have at least fifteen (15) employees

[24] See Age Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C. § 621, et seq.

[25] See Americans with Disabilities Act of 1990 (“ADA”), 42 U.S.C. § 12101, et seq.

[26] See Genetic Information Nondiscrimination Act of 2008 (“GINA”), Pub. L. No. 110-233, 122 Stat. 881.

[27] The EEOC is the enforcement agency for employment laws such as Title VII, ADEA, ADA, and GINA. 

[28] Equal Employment Opportunity Commission, What You Can Expect After a Charge is Filed (available at: https://www.eeoc.gov/employers/process.cfm).

[29] Id.

[30] Id.

[31] Id.

[32] Id.

[33] Id.

[34] Id.

[35] See, e.g. Sanchez v. Denver Pub. Sch., 164 F.3d 527, 531 (10th Cir. 1998).

[36] McCue v. Kan. Dep’t of Human Res., 165 F.3d 784, 789 (10th Cir. 1999).

[37] Univ. of Texas Sw. Med. Cent. v. Nassar, 133 S. Ct. 2517, 2533 (2013).

[38] Id.

[39] Johnson v. Weld Cnty., Colo., 594 F.3d 1202, 1211 (10th Cir. 2010) (citing Hinds v. Spring/United Mgmt. Co., 523 F.3d 1187, 1197 (10th Cir. 2008)).

[40]P. David Lopes and Mary O’Neil, The EEOC’s Top Ten Litigation Developments (Five Year Retrospective Edition), Equal Employment Opportunity Commission (Aug. 29, 2016) (Denver, Colo.).

[41] Equal Employment Opportunity Commission, FY 2009 – 2015 EEOC Charge Receipts for Colorado (available at: https://www1.eeoc.gov/eeoc/statistics/enforcement/charges_by_state.cfm#centercol).

[42] Id.

[43] United States Census Bureau, supra note 20.

[44] See Equal Employment Opportunity Commission, supra note 42.

[45] Equal Employment Opportunity Commission, EEOC Charge Receipts by State (includes U.S. Territories) and Basis for 2015 (available at: https://www1.eeoc.gov/eeoc/statistics/enforcement/state_15.cfm).

[46] 42 U.S.C. § 2000e-2(a).  Title VII protects employees against discrimination based on “race, color, religion, sex, or national origin.”

[47] See Macy v. Dep’t of Justice, EEOC Appeal No. 0120120821, 2012 WL 1435995 (April 20, 2012) (EEOC held that intentional discrimination against a transgender employee because of gender identity violates Title VII because it is discrimination based on sex); see also Baldwin v. Dep’t of Transportation, EEOC Appeal No. 0120133080 (July 15, 2015); Evans v. Ga. Regional Hosp., No. 15-15234 (11th Cir. amicus brief filed Jan. 11, 2016); Burrows v. The College of Cent. Fla., No. 15-14554 (11th Cir. amicus brief filed Jan. 6, 2016); Muhammed v. Caterpillar Inc., No. 12-173 (7th Cir. amicus brief filed Oct. 9, 2014). 

[48] Campbell Litigation, P.C., EEOC’s Push to Include Sexual Orientation As A Title VII Protection, The Rocky Mountain Employer (June 30, 2016) (available at: http://www.rockymountainemployersblog.com/blog/2016/6/30/eeocs-push-to-include-sexual-orientation-as-a-title-vii-protection).

[49] Hively v. Ivy Tech Community College, 2016 WL 4039703 (7th Cir. July 28, 2016). 

[50] Paula Hannaford-Agor & Nicole L. Waters, Estimating the Cost of Civil Litigation, National Center for State Courts, Court Statistics Project (Jan. 2013).

[51] See Theodore Eisenberg & Elizabeth Hill, Arbitration and Litigation of Employment Claims: An Empirical Comparison, 58(4) Dispute Resolution J. 44 (2003)

[52] Id.

[53] Id.

[54] Hiscox, Employee Charge Trends Across the United States, The 2015 Hiscox Guide to Employee Lawsuits.

[55] See Eisenberg & Hill, supra note 52.

[56] Campbell Litigation, P.C., The Corporate Trend to Eliminate Performance Reviews Could Create Difficulty Defending Employment Discrimination Lawsuits, The Rocky Mountain Employer (Oct. 29, 2015) (available at: http://www.rockymountainemployersblog.com/blog/2015/10/29/the-corporate-trend-to-eliminate-performance-reviews-could-create-difficulty-defending-employment-discrimination-lawsuits).

[57] To the extent the Worker Adjustment and Retraining Notification Act (“WARN”) applies, Employers should consult with their labor and employment counsel to ensure all layoffs comply with the WARN Act.

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