The Rocky Mountain Employer

“For more than fifty years, disparate impact liability has been a cornerstone of federal employment discrimination law. Under that framework, employers could face liability for facially neutral policies that disproportionately affected protected groups, even without evidence of intentional discrimination. A recent June 9, 2026 Opinion Letter (“Opinion”) from the Department of Justice’s Office of Legal Counsel (“DOJ” or “OLC”) has concluded that the Equal Employment Opportunity Commission’s (“EEOC”) longstanding interpretation and enforcement of disparate impact liability under Title VII of the Civil Rights Act is unconstitutional and inconsistent with federal law.”

“On June 9, 2026, the U.S. House of Representatives (the “House”) passed the Faster Labor Contracts Act (“FLCA”), a bipartisan bill that would substantially alter the timeline for negotiating an initial collective bargaining agreement following a union election. Although the bill still faces consideration in the Senate, its passage reflects efforts to strengthen organized labor and reduce delays in the collective bargaining process.”

“On May 14, 2026, Colorado Governor Jared Polis signed Senate Bill 26-189 (“SB 26-189”) into law, which repeals the SB 24-205 but reenacts that law’s overall objective of providing consumer protection when interacting with Artificial Intelligence (“AI”) systems. SB 26-189 narrows Colorado’s AI framework but still creates important obligations for employers that use automated decision-making technology (“ADMT”) in hiring, promotion, compensation, discipline, termination, or other employment-related decisions. SB24-205 required employers to use reasonable care to protect consumers, including employees and applicants, from algorithmic discrimination by implementing risk-management policies and programs to govern their deployment of high-risk artificial intelligence systems, conducting annual impact assessments, and making public disclosures regarding their use of high-risk artificial intelligence systems. SB 26-189 replaces that broad framework with more targeted obligations, including disclosure requirements, data access and correction rights, meaningful human review, vendor documentation, and recordkeeping. Before January 1, 2027, employers using AI or ADMT should identify covered systems, update vendor agreements, and build internal processes for explaining and reviewing AI-influenced employment decisions.”

On May 11, 2026, the United States Court of Appeals  for the Tenth Circuit affirmed dismissal of an employee’s lawsuit challenging a diversity, equity, and inclusion (“DEI”) training program through a hostile work environment claim. In Young v. Colorado Department of Corrections, the Tenth Circuit Court held that allegations concerning mandatory DEI training, standing alone, cannot plausibly establish the type of “severe or pervasive” harassment required to sustain a hostile work environment claim under Title VII of the Civil Rights Act.

This decision has come at a time where the legal landscape surrounding DEI is changing, particularly following increased federal scrutiny of employer DEI programs and executive action targeting race-based employment practices.

“On May 15, 2026, the U.S. Department of Labor (“DOL”) published its final rule (“2026 Rule”) revising the Fair Labor Standards Act (“FLSA”) minimum salary threshold necessary for exemptions to the FLSA’s overtime requirements for executive, administrative, and professional (“EAP”) employees back to the 2019 minimum salary level, which is lower than Colorado’s minimum salary threshold for exempt employees.”

“On May 6, 2026, the Colorado Senate passed House Bill 26-1210 titled, Concerning Limiting the Use of Intimate Personal Data to Make Inferences That Impact a Person’s Financial Position (the “Bill”), thereby sending the Bill to Governor Polis for his consideration.  The Bill would limit businesses’ ability to use sophisticated algorithmic tools capable of tailoring prices and compensation offers to individual users or employees based on their behavior data, such as their browsing history, purchase patterns, location data, and even biometric information.  Proponents of the Bill claim that making the Bill law is a necessary step to prevent businesses from using automated systems informed with individuals’ personal data to charge individuals more or pay them less.”

“Campbell Litigation has been tracking the status of Colorado’s artificial intelligence (“AI”) law, Senate Bill 24-205 (“SB24-205”), which has undergone substantial changes since its enactment in 2024. What began as one of the country’s first comprehensive AI anti-discrimination frameworks, imposing broad obligations on both AI developers and employers, has since faced implementation delays, proposed legislative rewrites, and now pending litigation that has temporarily halted enforcement of the law. As discussed in prior analysis, SB24-205 generated significant concern among employers and technology companies because of its expansive compliance obligations, particularly those tied to risk assessments, bias mitigation, and transparency requirements in AI employment-related decision-making.”

“On April 23, 2026, the U.S. Department of Labor (“DOL”) published a proposed joint employer rule (“Proposed Rule”) that would apply to the Fair Labor Standards Act (“FLSA”), the Family and Medical Leave Act (“FMLA”), and the Migrant and Seasonal Agricultural Worker Protection Act (“MSPA”). The Proposed Rule seeks to clarify when two or more entities simultaneously employ the same worker (i.e., when they are joint employers) and thus, share legal obligations under the FLSA, FMLA, and MSPA.  Specifically, if the Proposed Rule is adopted, vertical joint-employer status would be determined by, in pertinent part, a four-factor test focused on whether a potential joint employer actually controls key employment decisions, such as hiring, firing, supervision, scheduling, pay, and maintaining employment records, while horizontal joint-employer status would result if two entities are “sufficiently associated.” Regardless of whether an employer qualifies as either a vertical or horizontal joint employer, the employer would have legal obligations under the FLSA, FMLA, and/or MSPA.”

“On January 8, 2026, a former employee of a Colorado corporation, AMS Collective, Inc. (the “Corporation”), filed a lawsuit (“Lawsuit”) against the Corporation and its President alleging, in pertinent part, that the Corporation and its President are liable under the False Claims Act (“FCA”) for terminating her in retaliation for her attempts to stop the Corporation from submitting a response to a request for quotation (“RFQ”) from the U.S. Department of Energy with false information. The Corporation and its President have since moved to dismiss the Lawsuit due to the former employee failing to allege that the response to the RFQ constituted a “claim” for payment under the FCA.  The Lawsuit is an example of what employers attempting to obtain federal contracts should consider when their employees speak out about alleged FCA violations, especially in light of the Trump administration’s recent use of the FCA to prohibit diversity, equity, and inclusion (“DEI”) practices in the workplace.”

“On April 10, 2026, the U.S. Department of Justice (“DOJ”) announced a settlement with International Business Machines Corporation (“IBM”) that resolved allegations that IBM violated the False Claims Act (“FCA”) by failing to comply with anti-discrimination requirements in its federal contracts (the “Settlement”).  This Settlement marks the first instance where the DOJ has utilized the FCA to combat what it considers to be  unlawful diversity, equity, and inclusion (“DEI”) practices after the DOJ announced its intent to utilize the FCA as such in May of 2025. This development, which employers receiving federal funding or operating as government contractors should especially be aware of, reflects the DOJ is holding true to its commitment to utilize the FCA to combat allegedly unlawful DEI practices in the private sector.”

“President Trump’s Executive Order entitled, “Addressing DEI Discrimination by Federal Contractors,” (the “Order”) builds on the Administration’s earlier anti-DEI Executive Orders by defining what it views as prohibited “racially discriminatory DEI activities” in federal contracting. The Order focuses on preventing race- or ethnicity-based disparate treatment in recruiting, hiring, promotion, contracting, mentoring, training, leadership programs and similar opportunities by requiring covered federal contracts to include a lengthy clause controlling federal contractors’ conduct related to racially discriminatory DEI activities and by imposing penalties, such as the termination of contracts, on federal contractors who do not comply with the clause. The Order does not mention discriminatory DEI activities based on sex.”

“On March 9, 2026, Colorado legislators introduced House Bill 26-1327 titled, Large Employer Health-Care Support Enterprise Act (the “Bill”) for the Colorado General Assembly’s consideration.  By doing so, Colorado legislators supporting the Bill are aiming to reduce the costs of state-subsidized medical assistance benefits by imposing a fee of $2,300.00 on large employers for every employee receiving said benefits.”

“On February 26, 2026, the National Labor Relations Board (“NLRB”) issued a rule withdrawing the 2023 joint employer rule, which had expanded potential employer liability by allowing a finding of joint-employer status based on reserved or indirect control over an employee’s terms and conditions of employment, even if such control was not exercised. The joint employer standard—used to determine whether two entities are considered employers of the same employees—was thereby narrowed, as the NLRB reinstated the more control-based 2020 standard. This latest development reflects another shift in federal labor policy and underscores the ongoing fluctuation in how joint employment is defined under the National Labor Relations Act (“NLRA”).”

“Colorado lawmakers are considering two competing bills that would change agricultural overtime rules. One bill, SB 26-081, would lower the current overtime threshold for agricultural employes from 48 hours to 40 hours per workweek to match the rules that generally apply to other Colorado workers. The other, SB 26-121, would raise the threshold to 60 hours per week. For agricultural employers, the debate matters because either bill could materially change labor costs, scheduling practices, and recordkeeping obligations.”

“On March, 4, 2026, Colorado legislators introduced House Bill 26-1319 titled, Right to Be Out at Work (the “Bill”) for the Colorado General Assembly’s consideration.  The Bill seeks to expand the Colorado Anti-Discrimination Act’s (“CADA’s”) protections of LGBTQ+ employees by generally prohibiting employers from taking adverse employment actions against employees who disclose their gender identity, sexual orientation, transgender or nonbinary status in the workplace, including by referring to themselves or others by their chosen names, pronouns, or personal titles. Further, the Bill would require certain employers to take affirmative steps to accommodate LGBTQ+ employees, such as implementing training programs to ensure inclusive workplaces for LGBTQ+ employees, adopting a transition plan for transitioning employees, and allowing employees to use sick or personal leave to change their legal name or obtaining gender-affirming care. “‍ ‍

“On February 26, 2026, the Department of Labor (“DOL”) announced a proposed rule (the “Proposed Rule”) that would reinstate a modified version of the 2021 employer-friendly “economic reality” test used to determine whether a worker is properly classified as an independent contractor or employee under the Fair Labor Standards Act (“FLSA”), the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act.”

“A new state-level workplace safety enforcement system designed to fill potential gaps in the federal Occupational Safety and Health Administration’s (“OSHA”) enforcement of its regulations contained in House Bill 26-1054 (the “Bill”), is being heard on February 26, 2026, in the Colorado House Business Affairs and Labor Committee. While the Bill mirrors parts of the federal Occupational Safety and Health Act (“OSH Act”), it goes much further, especially by establishing its own workplace standards; allowing private rights of action to enforce safety standards; expanding penalties for workplace safety violations; and giving the Colorado Division of Labor Standards and Statistics (the “Division”) broad rulemaking authority.”

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“On February 6, 2026, the United States District Court for the District of Colorado dismissed a King Soopers employee’s (acting on behalf of a class) case, pursuant to the non-statutory labor exemption, alleging The Kroger Company (“Kroger”) and Albertsons Companies, Inc. (“Albertsons”) unlawfully colluded during Kroger and United Food and Commercial Workers Local 7’s (the “Union’s”) negotiations of the renewal of their collective bargaining agreement.  Specifically, the employee alleged Albertsons agreed with Kroger not to hire any of Kroger’s striking workers in an effort to hamper the Union’s bargaining strength with Kroger in violation of Colorado’s antitrust statute (the “Agreement”). However, the Court determined that the Agreement was exempt from antitrust scrutiny and dismissed the case.”

“Recent federal developments have prompted renewed attention to disparate impact liability in the context of reductions in force (“RIF”). In April of 2025, the Trump administration issued  Executive Order 14281 directing federal agencies, including the U.S. Equal Employment Opportunity Commission (“EEOC”), to de-prioritize disparate impact as a litigation and enforcement tool. Because disparate impact claims frequently arise from workforce reductions, the administration’s announcement has drawn attention to whether this shift meaningfully alters employer risk.”

“On February 1, 2026, two key rules from the Colorado Department of Labor and Employment (“CDLE”) took effect: The Colorado Overtime and Minimum Pay Standards (“COMPS”) Order #40 and the 2026 Publication and Yearly Calculation of Adjusted Labor Compensation (“PAY CALC”) Order. Together, these rules set Colorado’s minimum wage and pay standards for the year. “

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