2025 Legislative Developments for Colorado Employers

At a Glance

• HB25-1312: Legal Protections for Transgender Individuals (The Kelly Loving Act) — Effective May 16, 2025
• SB 25-276: Protections for Civil Rights Immigration Status — Effective May 23, 2025
• HB24-1130: Protections for Privacy of Biometric Identifiers & Data — Effective July 1, 2025
• HB25-1208: Local Governments Tip Offsets for Tipped Employees — Effective July 1, 2025
• HB25-1239: Expanded Remedies for Public Accommodation and Discriminatory Advertising Claims — Effective August 6, 2025
• SB25-083: Limitations and Prohibitions on Restrictive Employment Agreements — Effective August 6, 2025
• SB25-144: Concerning Changes to Paid Family & Medical Leave Insurance Act — Effective August 6, 2025
• HB25-1001: Enforcement of Wage and Hour Laws — Effective August 6, 2025
• SB24-205 and SB25B-004: Consumer Protections for Artificial Intelligence — Implementation Delayed to June 30, 2026

Amid continual shifts to employment law, Colorado passed several laws in the 2025 legislative session that created new rights for employees or materially amended existing employee rights. These recent changes continue the Colorado legislature’s trend of progressively increasing employee protections in the workplace each year.

Many of these laws are already effective and some are set to go into effect in 2026. Below is a summary of the most notable changes for employers in Colorado.

Changes Already in Effect

HB25-1312: Legal Protections for Transgender Individuals (The Kelly Loving Act) — Effective May 16, 2025

HB25-1312 amends the Colorado Anti-Discrimination Act (CADA) to clarify the prohibition on gender expression discrimination in the workplace, specifically by codifying certain legal protections for transgender individuals. CADA already prohibited discrimination based on an employee’s gender expression, and the amendment clarifies that gender expression includes an employee’s “Chosen Name” and “How the Individual Chooses to be Addressed.”

1. Gender Expression: The law defines “gender expression” as “an individual’s way of reflecting and expressing the individual’s gender to the outside world, typically demonstrated through appearance, dress, behavior, chosen name, and how the individual chooses to be addressed.” The italicized portion is the addition to this definition.
2. Chosen Name: The law defines “Chosen Name” as “a name that an individual requests to be known as in connection to the individual’s disability, race, creed, color, religion, sex, sexual orientation, gender identity, gender expression, marital status, familial status, national origin, or ancestry, so long as the name does not contain offensive language and the individual is not requesting the name for frivolous purposes.”
3. How the Individual Chooses to be Addressed: The law does not define this phrase. Notably, the originally introduced bill expressly made it unlawful to “misgender” someone by using incorrect pronouns or to use an individual’s “deadname.” This language was removed from the version of the bill enacted into law. While the final version of HB25-1312 does not make misgendering or using the deadname of an employee a per se violation, it may still constitute evidence of gender expression discrimination.

Colorado’s action on gender expression comes at a time when the federal government, including by the Equal Employment Opportunity Commission (EEOC), have indicated a shift away from protecting transgender rights.

SB 25-276: Protections for Civil Rights Immigration Status — Effective May 23, 2025

SB25-276 protects immigrants by prohibiting disclosure of personal information maintained by Colorado state agencies or political subdivisions to federal immigration enforcement officials. Importantly, public schools, public childcare centers, colleges, public health care facilities and public libraries cannot collect personal identifying information including (1) place of birth; (2) immigration/citizenship status; or (3) information from passports, permanent residence cards, alien registration cards or employment authorization documents unless required by federal and state law, as necessary to perform duties, or to verify an individual’s eligibility for a government-funded program if verification is necessary as a condition of government funding or participation.

Covered institutions must adopt policies regarding the release and protection of personal information of children, students, patients, patrons, parents, relatives and the public by September 1, 2025. These institutions must make the policy available by traditional means including through employee handbooks or website postings. Violation of SB25-276 could result in a penalty up to $50,000 per violation.

HB24-1130: Protections for Privacy of Biometric Identifiers & Data — Effective July 1, 2025

HB24-1130 amends the Colorado Privacy Act to add protections for individuals’ biometric data by requiring the controller of biometric data to comply with additional regulations. It also provides regulations related to employers that want to use biometric data. 

Under HB24-1130, employers may require employees (or future employees) — as a condition of employment — to allow the employer to collect biometric data (i.e., a fingerprint, a voiceprint, an iris scan, a face map, or other unique biological, physical, or behavioral patterns or characteristics), but only for limited purposes. Employers may request consent from an employee for additional purposes, but consent for additional purposes cannot be a condition of employment, and employers cannot retaliate against an employee for withholding consent. Entities that are obtaining and maintaining biometric data must take certain measures to protect this data, including adopting a written policy that meets stated requirements. Additional information can be found in our previous alert here. 

HB25-1208: Local Governments Tip Offsets for Tipped Employees — Effective July 1, 2025

HB25-1208 changed the standards for how local governments must calculate tip offsets when setting local minimum wages that exceed the state minimum wage. If a local government sets a minimum wage higher than the state minimum wage, it must apply a tip offset of $3.02. Importantly for employers, if the local minimum wage exceeds the state minimum, employers can count up to $3.02 per hour in tips toward meeting the local minimum wage requirement.

Beginning January 1, 2026, local governments will be able to increase the amount of the tip offset beyond $3.02. This will allow employers to count more of a tipped employee’s tip toward a local minimum wage. However, local governments still cannot set the tip offset so a tipped employee ends up earning less than the state minimum wage minus $3.02. Employers should review local government minimum wage standards as relevant.

HB25-1239: Expanded Remedies for Public Accommodation and Discriminatory Advertising Claims — Effective August 6, 2025

HB25-1239 also amends CADA to expand remedies available to individuals with disabilities who experience discrimination in places of public accommodation and related to discrimination in advertising.

For violations related to discrimination in places of public accommodation, aggrieved individuals may now seek attorney’s fees and costs as well as (1) actual monetary damages plus noneconomic damages (capped at $50,000) or (2) a statutory fine of $5,000.

Employers have an opportunity to reduce these remedies if they take corrective action within a certain time frame. Specifically, regarding noneconomic damages, employers are entitled to a 50% reduction on the damages cap if:

• They correct the violation within 30 days of the employee filing the complaint.
• The violation was not knowing, intentional or reckless.

If an employer cannot correct the violation within 30 days, they may be allowed up to three additional 30-day periods to correct the violation and still receive a damages reduction if they show a good-faith effort to make a correction. If the employer has not corrected the violation within 120 days, any chance for a reduction to the noneconomic damages cap is lost.

For violations related to discriminatory advertising, instead of seeking relief from the Colorado Civil Rights Commission, aggrieved individuals can file suit in court. If the individual is successful, the court may issue the following relief:

• An order requiring compliance with CADA’s requirements related to discrimination in advertising.
• Attorney’s fees and costs.
• Either actual damages and noneconomic damages or a fine of $5,000 per violation.
  • Noneconomic damages are capped at $50,000. Small businesses (i.e., businesses with 25 or fewer employees that generate no more than $3,000,000 in annual gross income) are also entitled to a noneconomic damages cap of $25,000, instead of $50,000, if they correct the violation within 30 days of the complaint being filed and the violation was not knowing or intentional.¹

SB25-083: Limitations and Prohibitions on Restrictive Employment Agreements — Effective August 6, 2025

SB25-083 revises the rules regarding noncompetition and nonsolicitation covenants for health care providers as well as minority-interest holders in business sales.

1. Prohibitions on Restrictive Covenants for Health Care Providers: Colorado employers are generally prohibited from enforcing noncompetition covenants unless an exception applies. One of those exceptions historically applied to physicians. While employers could not prohibit physicians from practicing medicine post-employment, noncompetition covenants could subject physicians to reasonable damages for unlawfully competing. SB25-083 made the following changes:
   • Eliminates the noncompetition prohibition exception that historically applied to physicians.
   • Voids any noncompetition covenant, including a customer or patient nonsolicitation covenant, which restricts a health care provider’s practice.
   • Prohibits restrictive covenants that materially restrict or prohibit a health care provider from communicating with patients about the provider’s continuing practice, new contact information or the patient’s right to choose a provider.
   • Defines “Health-Care Providers” broadly to include any professional engaged in the practice of medicine, including physician assistants, advanced practice registered nursing, certified midwifery and dentistry.
2. Restrictions on Covenants With Minority Share Business Owners: A restrictive covenant tied to a sale of business is now enforceable against a minority share owner of the business only if the buyer pays consideration that satisfies a statutory formula. A minority-interest business owner is one holding less than 50% ownership in a business. This act is aimed to prevent buyers from imposing restrictions on individuals who lack control and do not receive substantial financial benefit from a sale.

SB25-144: Concerning Changes to Paid Family & Medical Leave Insurance Act — Effective August 6, 2025

SB25-144 amends the paid Family and Medical Leave Insurance (FAMLI) Act to extend the duration of leave by up to an additional 12 weeks for a parent of a child receiving inpatient care in a neonatal intensive care unit. This means the parent would qualify for up to 24 weeks of leave. This applies to claims arising on or after January 1, 2026.

SB25-144 also extends the current insurance premium amount (0.9% of wages per employee) through 2025. It sets the premium amount for the 2026 year at a lower 0.88% of wages per employee. Additionally, from 2027 forward, the director of the FAMLI Division must adopt the premium rate for the following year in a manner that: (1) balances the insurance’s fund to an amount of at least six months of projected expenditures of the fund, minimizes the volatility of the premium rate, and ensures the rate does not exceed 1.2% of wages per employee.

HB25-1001: Enforcement of Wage-and-Hour Laws — Effective August 6, 2025

HB25-1001 amends the Colorado Wage Claim Act in several ways:

1. Definition of Employer: HB25-1001 amends the definition of “employer” for purposes of wage-and-hour laws to add an “individual who owns or controls at least 25% of the ownership interests in an employer” unless the individual can prove they have delegated control of daily operations to someone else.
2. Payroll Deductions: An employer cannot reduce an employee’s pay below the minimum wage in the state or locality, even though that minimum may be higher that the Fair Labor Standards Act (FLSA) federal minimum wage of $7.25 per hour.
3. Waiver of Employer Penalties: The division director can waive the penalty for an employer’s failure to pay claimed wages or compensation within 14 days of an employee filing a claim if the violation is not a second or subsequent violation within a five-year period. This provides employers an opportunity to “settle” wage claims to potentially avoid penalties.
4. Higher Employer Attorneys’ Fees Standard: A court must find an employee pursued a wage claim that lacked substantial justification before awarding an employer attorneys’ fees in an action for unpaid wages or compensation.
5. Clarification of Equitable Remedies: HB25-1001 clarifies that employees may bring suit to recover all available equitable relief, including equitable relief to deter future violations and prevent unjust enrichment.
6. Increased Threshold for Administrative Claims: The law currently limits the ability of the director to adjudicate claims for the nonpayment of wages or compensation to claims for $7,500 or less. HB25-1001 increased threshold beginning July 1, 2026, as follows:
   • July 1, 2026, to December 31, 2027: The limit is $13,000 per employee.
   • January 1, 2028: The division director will set a new limit every other year, increasing the previous year’s limit by at least $1,000 or more to keep up with inflation.²
7. Public Disclosure and Licensing Consequences: For each violation of Colorado’s Wage law that is a matter of public record, the director will publish the following information on the director’s website: (1) the names of the employer in violation; (2) the citation, determination or written opinion; and (3) whether that violation was willful.
   
   The Division may notify all government bodies with the authority to deny, withdraw or otherwise limit or impose remedial conditions on the employer’s license, permit, registration or other credential when an employer is found in violation of Colorado’s wage-and-hour law. If the violation was willful and not remedied within 60 days, the Division must report an employer to the applicable government bodies described above. The Division also may post a decision against an employer by another government body on the Division’s website.
8. Extension of Determination Deadline: Previously, the Division was required to issue a determination within 90 days after the notice of complaint was sent to an employer unless the Division provided notice of an extension. HB25-1001 removed the 90-day deadline.
9. Misclassification Penalties: If an employer misclassifies a worker as an independent contractor rather than an actual employee, the employer may face the following penalties per affected employee:
   • $5,000 for a willful violation
   • $10,000 if the violation is not corrected within 60 days after the Division finds the misclassification
   • $25,000 for a second or subsequent willful violation within five years
   • $50,000 for a second or subsequent willful violation that remains uncorrected after 60 days

   These amounts will be adjusted for inflation starting January 1, 2028, and every other year afterwards.

10. Wage Recovery for Unpaid Employees After Employer Noncompliance: HB25-1001 shortens employers’ deadlines to pay wages, compensation or other relief to an employee after a final decision or order from six months to 120 days.
11. Anti-Retaliation Protections: Employers are prohibited from retaliating against workers who engage in “protected activities.” HB25-1001 expands the definition of “protected activities” to include an employee raising concerns in good faith about wage-and-hour compliance. The amendment also adds a presumption of a violation where an adverse action occurs within 90 days of a worker engaging in a protected activity (i.e., the timing by itself may be used to decide that an employer has retaliated). Moreover, any attempt to use a worker’s immigration status as a basis for retaliation is prohibited. In addition, HB25-1001 adds that an employee may be awarded relief for retaliation that includes compensatory damages for the economic or noneconomic loss or injury shown through evidence, including for damages related to emotional distress. The Division may also order reasonable attorneys’ fees and costs after investigating a discrimination or relation claim.

Changes Coming in 2026

SB24-205 and SB25B-004: Consumer Protections for Artificial Intelligence —Implementation Delayed to June 30, 2026

As many Colorado employers have been anticipating, SB24-205 requires developers and deployers (i.e., employers using AI) of high-risk artificial intelligence systems (i.e., AI systems that, when deployed, make or are a substantial factor in making a consequential decision) to use reasonable care to protect consumers (i.e., a Colorado employee) from any known or foreseeable risks of algorithmic discrimination. For additional information related to SB 24-205 see our previous alert here.

On August 28, 2025, Governor Jared Polis signed SB25B-004 which delays the implementation of SB24-205 from February 1, 2026, to June 30, 2026. This gives Colorado employers more time to prepare for compliance with SB24-205’s sweeping requirements. It also gives the Colorado legislature more time to consider potential revisions to SB24-205 as lawmakers debate decisions related adding and removing requirements.

Conclusion

Employers should note the effective date of these changes; review employment policies, practices and template agreements; and contact an employment attorney with questions related to compliance. 

Summer associate Isabel Bowen contributed to the publication of this article.