Employer’s Separation Notice Obligations

In light of the wave of substantial changes to Colorado’s employment laws, a recent less significant change may have escaped the attention of your human resources team. Recently passed Senate Bill 22-234 reshapes how unemployment benefits are administered and funded in Colorado. One of the new law’s provisions requires employers to provide employees with additional information for unemployment benefits upon separation, including identifying the reason for separation.

At the time of separation, employers must provide a written notice to the employee with detailed and specific information:

  • The employer’s name and address.
  • The employee’s name and address.
  • The employee’s ID number or the last four digits of their social security number.
  • The employee’s start date, end date, year-to-date earnings, and wages for the final week of work.
  • The reason the employee separated from the employer.

The law’s requirements are likely aimed at easing the initial administrative burden on the Colorado Department of Labor and Employment (CDLE) when an application is submitted for unemployment benefits. Indications are that the CDLE will publish a template form for employers that complies with the requirements of the new law. However, the law became effective upon its passage on May 25, 2022, and CDLE has yet to issue a template.

Employers should recognize the legal risks of a notice that does not accurately characterize the reasons for separation. Employers making difficult employment separation decisions, such as employment terminations based on misconduct or poor performance, often exercise discretion and limit those in the organization who know the full reasons motivating the personnel move. If someone filling out the unemployment form does so without a full awareness of the circumstances, a mistaken reason cited on the form may later undermine an employer’s defense to a wrongful termination claim. To mitigate this risk, we recommend that employers provide only the most basic information on the form, such as classifying the separation as either voluntary, a reduction in force, or involuntary.