Changing Colorado’s Minimum Wage Law

This year may be a different story

Twice before, the General Assembly has considered legislation that purported to allow local governments (municipalities and counties) in Colorado the ability to set a minimum wage different than the state minimum wage.  Each time, the legislation failed in a split legislature. In 2019, a different outcome is likely.

american bills business cheque

The premise behind the prior legislation was to repeal a statute enacted in 1998 that specifically preempts local governments from setting their own minimum wage. The Colorado Municipal League was neutral on both the 1998 preemption bill and the 2015 and 2018 attempts to repeal it.  When the preemption was enacted, prior Colorado Supreme Court decisions on wage regulation already seemed to clearly preempt any local variances, and the subsequent enactment of a minimum wage in the constitution clearly established the floor. In 2019, the minimum wage is $11.10 and it will rise to $12.00 in 2020. The attempts to repeal the preemption would not have changed prior case law or the minimum wage established in the constitution.

However, this year things may be different.  HB 19-1210 was recently introduced that both repeals the existing preemption and grants specific authority to local governments to set a higher minimum wage than the state. The grant of authority is the element that has been missing, and CML expects that the legislation will be fine-tuned even more on the authority granted to local governments.

Given the high degree of local control in the legislation, which seems destined to be enacted this year, CML has thrown support behind the bill. Yet, wage regulation is a tricky business, even at a statewide level, and the League’s support should be understood as support for the authority to be held at the local level, even if it means nothing changes. That may not completely align with the goals of the HB 1210 proponents that argue $11.10 – and ultimately $12.00 on January 1, 2020 – is not a living wage and that it must be allowed to exceed the state’s minimum in areas of the state with the highest costs of living.

CML is agnostic as to whether or not the minimum wage should be increased but fully supports the authority granted to local governments to decide. If HB 19-1210 is signed into law, then it will be incumbent upon municipal leaders  to engage with employers and citizens in their communities, as well as with other municipalities and counties, on whether or not and to what extent there should be local variances. They will have to consider the ripple effects in the employment market of even one municipality or county increasing the minimum wage and work together. This kind of collaboration occurs every day in local government on a number of issues that most people are not even aware of. Thankfully, there are other areas of the country from which experience and data can be studied.

HB 19-1210 will get its first hearing on March 6 in the House Transportation and Local Government Committee. It is very likely that the legislation will move quickly through the House and possibly even the Senate. If enacted, the legislation would become effective on August 2, 2019.

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A Better Alternative to Workers’ Comp?

Firefighter cancer and heart attacks in the spotlight

2007-2013: Unfunded mandates

Back in 2007, the General Assembly passed and Gov. Bill Ritter signed legislation strongly opposed by the Colorado Municipal League (CML) that reversed the standard for determination of workers’ compensation (WC) benefits for firefighters with certain cancers. Known as “presumptive eligibility,” the law reversed the standard WC practice of requiring the employee to demonstrate that an illness or injury occurred on the job to a presumption that it did and an accompanying requirement for the employer to prove that it didn’t. At the time, proponents claimed overwhelming evidence of the connection of employment in the fire service and the incidence of certain types of cancer. Ironically, truly overwhelming evidence should actually negate the need for a presumption. Proponents also essentially said the CML was full of beans with our assertion that the costs of WC insurance (or direct costs to self-insured employers) would rise dramatically. Despite bipartisan opposition, the bill carried the day.

It is important to note that there is a right to a process to determine compensability of workplace illnesses and injuries, employees are generally much better served by their employer-sponsored health care coverage and death and disability (D&D) coverage provided by the Fire & Police Pension Association (FPPA). Navigating the WC system is often lengthy and arduous, even for “easy” claims.

Fast forward to 2013. Firefighters and their representatives often stated that the law was inadequate, mostly because they mistakenly believed that “presumptive eligibility” meant “automatic eligibility” and claims would be immediately approved and paid. Just as CML told legislators in 2007, the cost of insuring for WC coverage increased dramatically for municipalities and fire districts, eating into budgets for personnel and equipment. In spite of the reality CML told legislators in 2007 would occur, firefighters began to discuss presumptive eligibility for hearts attacks and coronary events.

That push was met with resistance from fire chiefs, particularly from fire districts that had seen their budgets for the provision of their sole service of fire prevention and control impacted heavily by the cost of cancer presumptive eligibility. Knowing the cost impacts would be replicated for heart attacks, the fire district chiefs, Special District Association, and the firefighters pivoted toward a requirement for employers to provide heart attack insurance that would cover firefighters for events, regardless of whether or not they applied for WC benefits, by paying out a level benefit depending on the type and severity of the event.

That requirement was introduced in 2014 as SB 14-172, which the Colorado Municipal League opposed as an unfunded mandate prohibited by state statute. In spite of the good intention of the proponents, a bedrock policy of CML is the opposition to the central government of Colorado requiring municipalities to provide a service without funding the mandate. And state law prohibits unfunded mandates (see 29-1-304.5 C.R.S.) and says that without funding a new requirement, local governments may treat it as optional.

The proponents initially argued a mandated requirement was a reasonable exception because they stated 100% participation in a multi-employer pool was the only way the benefit would work. In the end, The League prevailed and  language in SB 14-172 reaffirms the intent of the statute in the face of a new mandate.  The mandate for a new service was (and still is) accompanied with a continuous appropriation from the state for the costs of providing the mandate and the statute states explicitly that: “If, at any time, the funding provided for the benefit required by this section is insufficient to cover the cost of the benefit, then the requirements of this section to maintain the benefit shall become optional pursuant to section 29-1-304.5.”

A funded mandate and a new way to view the world

A trust was created by the end of 2014 and began operating in 2015. Because the mandate was funded and the bill did not require participation in the trust, many self-insured employers self-insured themselves for this required benefit, the cost of which continues to be reimbursed by the State of Colorado. With less than 100% participation, the pool started strongly and continues to thrive, thus proving that 100% participation is not an absolute prerequisite.

Before the ink was dry on the paperwork creating the trust, proponents began discussing creating a similar trust for cancer.  Initially, they started down the same road as they did for SB 172.  The League staff said there would be no more mandates because heart attack insurance experience already showed us that a pool could survive without 100% participation, and there is no excess state revenue to fund a mandate. More importantly, CML argued that if the goal is to lower the utilization and cost of WC, then proponents should want municipalities and fire districts to voluntarily choose to affiliate with a trust, as opposed to trying to make them do it.

This is even more true as employers and taxpayers are still trying to digest the bitter pill associated with the dramatic premiums cost increases associated with presumptive eligibility. Maybe – the League argued – the proponents might cut employers a break if they voluntarily provided cancer coverage similar to the heart attack benefit.

It is hard to pin down precisely when the “a-ha!” moment occurred, but it did. Proponents, fire chiefs, municipalities, and special districts – along with the various experts from each – are now discussing details in a cooperative manner. Cancer is much more complex than heart attack events, which means this program will be trickier to set up in a way to guarantee there is no failure of any trust created to provide the benefits.

The significance of risk managers, pool administrators, fire chiefs, firefighters, CML, SDA and others meeting and discussing a voluntary program that could lower the costs and utilization of WC is clear to all that are participating. While the League still argues that a giant first step in addressing immediate relief for cost and budgeting challenges would be support for repealing the requirement for presumptive eligibility, that is not on the table. However, CML is encouraged that the proponents have talked about incentives for providing the coverage such as scaling back some of the requirements of presumptive eligibility.

Looking ahead

With only 36 days in the 2016 legislative session, there is not time to craft a program that would pass muster. However, people are still meeting, and there is a commitment by all to try to get to “yes” on enabling legislation and implementation in 2017. If successful, the effort will prove that conflict in the capitol that has occurred over the last 10 years – trying to insert the state into what should be handled cooperatively at the local level – is unnecessary.

More importantly, this effort may also be a model for other states that have gone even farther down the road of imposing crushing mandates on employers (and taxpayers) for presumptive eligibility and similar mandates. With little to show for this top down approach, it just might be that Colorado can lead the way with a collaborative approach that reduces costs and more expeditiously addresses health issues of first responders.