Chamber Takes Action Against Rail Strike
Why should businesses care about a rail strike?
The worst-case scenario for the U.S. this holiday season would have been a nationwide rail strike, which would have cost at least $2 billion per day in lost economic output throughout the country. A stoppage would also have ripple effects throughout the economy, affecting trade, raw material transportation and halting manufacturing production. We know that rail service is a crucial economic driver, and during the holidays, the role of rail is more important than ever.
Why does the Denver Metro Chamber care?
Railroads and Colorado grew up together–literally–as towns, cities and businesses sprouted and thrived along the first railroads. Our Chamber was even started in 1867 to bring the railroad through Denver–an invaluable connection to drive our economic growth.
Today, the rail system that was so instrumental in Colorado’s early development has evolved as a prime economic driver in the movement of freight to, from and through the state.
According to GoRail, Colorado’s 14 freight railroads operate over 2,600 miles of track and employ 2,259 workers in the state. Rail also helps reduce traffic congestion and greenhouse gases in the state. In 2019, it would have taken an additional 7.7 million truckloads to move the 138.9 million tons of freight moved by rail, and it prevented 2.47 million tons of greenhouse gas emissions.
The Chamber in action
While the Chamber values the contributions of rail workers throughout the country, and we acknowledge their pivotal role in keeping our economy moving, we almost must stand firm to keep our economic vitality intact for our entire workforce, and any costs incurred by the potential strike cannot come on the back of consumers, who are already struggling to keep pace with record inflation.
For these reasons and more, the Chamber signed a letter addressed to Congressional leadership, urging leaders to step in and ensure the nationwide rail network keeps running. The Chamber was Colorado’s only signatory, and we are proud to be the leading voice for business in the state. While acknowledging the contributions of rail workers, we are pleased that the strike was averted by actions from President Biden and Congress. We are happy to have contributed to maintenance of a functioning economic system and saving consumers money.
What’s Happening with Denver’s Wage Theft Proposal?
What is Denver’s wage theft proposal?
Denver City Council is considering new legislation to address wage theft in Denver. The legislation would update Denver’s existing minimum wage ordinance to provide recourse for employees intentionally misclassified by an employer or employees who are victims of other forms of wage theft. The legislation would allow workers to file complaints with the City Auditor’s office for both minimum wage violations and wage theft claims. If the complaint is pursued by the auditor’s office, it can force companies to remedy the unpaid wages plus 12% interest, pay for treble damages up to three times the actual damages, and reinstate the worker who filed the claim. The proposal also gives the Auditor the authority to assess a penalty of up to $25,000 for each worker not paid full wages for work.
Why are we concerned?
The Denver Metro Chamber fervently opposes wage theft of any kind and does not defend businesses who fail to pay their employees what they are owed.
One of our largest concerns with this proposal is the liabilities it creates for up-the-chain employers who may have hired subcontractors or vendors and have no idea that the employees beyond their direct management aren’t being fairly compensated. If a subcontractor (primary employer) fails to pay a worker what they are owed and then the company dissolves, the Auditor can collect owed wages and any penalties incurred from the secondary or tertiary employer to collect those wages and penalties. Whereas wage theft laws at the state and federal level have some component of up-the-chain liability, state and federal laws cap claims to $7,500 for administrative processes and kicks larger claims to court. The Denver proposal does not cap claims and would allow for claims of any value to be brought to the Auditor.
What are the unintended consequences?
The sponsors’ goal with an aggressive up-the-chain liability structure was to incentivize upstream employers to hire reputable subcontractors. However, we’re concerned that in an effort to protect workers, this proposal seems to assume that up-the-chain employers don’t want to work in good faith to make pay in full to employees. It also jeopardizes up-the-chain employers by making them responsible not just for unpaid wages, but for the misdeeds of (and fines incurred by) down-the-chain employers.
A potentially devastating unintended consequence might be that up-the-chain employers become more guarded with who they subcontract with, stifling new, minority or woman-owned businesses if they don’t already have an existing relationship with the contractor. Further, there’s little guidance and few mechanisms available to give up-the-chain employers confidence contracting down, possibly forcing subcontractors into expensive bonding requirements to prove their merit for the job. The proposal as written increases legal risks and places the burden for policing bad actors on the administrative teams of good-faith upward businesses.
It is also a risk for this compliance mechanism to exist at a municipal level when it is not co-extensive with other rights already provided at the state and federal level, and unlike those other compliance mechanisms, it is likely subject to frequent changes.
We would have been happy to share these concerns with bill sponsors in advance of its introduction to committee; however, we were not involved in the stakeholder process as it was being drafted. Several council members on the Finance & Government Committee expressed similar concerns about stakeholder engagement.
What’s next?
The Chamber testified against this bill when it was introduced in committee on Dec. 6. At that meeting, several business groups raised concerns and opposition to the draft language. Multiple committee members advocated delaying the bill so that more stakeholding could be done to address some of the uncertainties raised in public comment. The Chamber has been coordinating with the other business groups affected by the proposal and we have met with them as a coalition to see if there is a solution that works with businesses to protect workers and their wages. We have drafted suggested amendments that we believe would achieve the worker protections the sponsors are working toward without jeopardizing good faith businesses. The proposal, and potentially any amendments, was heard in the Finance & Government Committee on Dec. 20.
Update from Dec. 21:
The Chamber, with support from our Legal Advisory Committee and in coordination with the other interested business groups who testified, shared four suggested amendments to the bill sponsors for consideration. The sponsors redrafted the legislation and shared an updated version in committee on Dec. 20. This version included one of our most important amendment suggestions, a 14-day notice provision for upstream employers with a right to cure. This provision incentivizes good faith up-the-chain actors to move quickly to remedy unpaid wages for indirect employees while also protecting the up-the-chain party from incurring fees for wage claims they may not even have been aware of. This provision is also consistent with state and federal standards and incentivizes a quicker resolution for everyone. We’re excited about this win-win for employers and employees.
Sponsors also considered our other suggestions and believe some of the concerns are best addressed in rulemaking. We will continue to follow this legislation, and it will be heard next by the full council in January. We expect the rulemaking process to follow shortly thereafter.
A special thanks to Council President Torres and Councilmembers Gilmore and Sawyer for their openness to our concerns and thoughtful consideration of our suggestions.
Denver’s Political Spectrum on Business
What’s happening with Denver’s political spectrum?
All bets are off for the 2023 Denver Municipal Election. There are now over 70 people running for an elected position, all but one city council seat out of 13 is contested, and the mayor’s office is vacant for the first time since 2011 (and everyone who is anyone seems to want this job.)
To make this uncertain field even more interesting, we haven’t seen the impact of Denver’s Fair Elections Fund at this scale before. As a refresher, candidates interested in this funding mechanism must agree to raise money in lower amounts and take contributions only from individuals and small donor committees. The Fair Elections Fund provides municipal candidates with matching public funds for donations of $50 or less at a ratio of 9-1. This fund will be hugely impactful for the 2023 candidates. If a candidate manages to have 10 people donate $50 each, they will pocket another $4,500 from the city. That means that small donations have a magnified impact in this race… and that candidates that might otherwise struggle to fund a campaign will be competitive in this climate.
Why should this matter to the business community?
Unfortunately, in Denver’s current political landscape, it’s hard to convince policy makers that they can be progressive and pro-business at the same time. If the results of the 2022 General Election are any indicator (and we think they are), Denver’s political landscape is only getting bluer. Denverites voted for Democrats at a higher rate than former seat-of-progressive-power Boulder. The worst-case scenario for the business community is to have a slate of candidates who believe that in order to earn their progressive credentials, they need to be anti-business.
We hope to engage as thought-partners and business advocates with local policy makers, and the Chamber continues to meet with city council and mayoral candidates. The reality is, doing business in Denver will be impacted by who wins in 2023, and we believe it is critical that the Denver business community play a role in the coming election.
FAMLI Registration System Goes Live
Why should employers care?
All employers must register with the state to report wage data, send payments, apply for private plan exemptions, and other functions to meet the requirements of the paid leave program passed by voters last year. Mandatory fees for the program of 0.9% per employee must be collected beginning Jan. 1, 2023.
The registration system is now live and can be accessed here. Registering your business takes about 20 minutes. Registration must be completed before first quarter payments are due on April 30, 2023.
Hear from Colorado Legislators About Their Plans for the Business Community
Join the Denver Metro Chamber of Commerce and Colorado Competitive Council on Jan. 4 for their annual Business Legislative Preview breakfast, presented by Aetna, a CVS Health® company. This event gives leaders from the Colorado General Assembly an opportunity to directly address the business community, and emphasize their plans and priorities for Colorado businesses in the upcoming session.
Ensure your business is prepared for any hurdle this session by registering today!
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