Colorado Labor Wants Big Changes for Colorado Employers

Colorado Union Dues System Remains Unchanged – For Now

On May 16, 2025, Colorado Governor Jared Polis vetoed a bill that would have upended the state’s unique structure around mandatory payment of union dues as a requirement for continued employment. Senate Bill 5 (SB 25-005), called the “Worker Protection Act,” would have dramatically changed the financial incentives for unions to organize Colorado workplaces by eliminating an 82-year-old requirement set forth in the Labor Peace Act to hold a separate election before a collective-bargaining agreement could include a union-security clause.

So-called union security clauses are contract terms that allow unions to mandate the payment of dues or other representation fees as a condition of on-going employment. Federal law leaves it up to each state to decide whether collective bargaining agreements may contain union-security clauses. “Right-to-work” states prohibit union security clauses while non-right-to-work states allow such clauses. Because a union can require all employees to pay dues in non-right-to-work states, workplaces in these states may be more likely targets for organizing. 

Colorado does not fall neatly into this dichotomy. In 1943, the state enacted the Labor Peace Act, which created a one-of-a-kind system: Union-security clauses can only be included in a collective-bargaining agreement if a supermajority of all unit employees authorize a clause in a separate vote. Thus, a union can be certified if it has the support of a majority of voting employees, but it can only include a union-security clause after a separate vote in which 75% of voters (or 2/3 of eligible voters) authorize mandatory dues.¹ Likely as a result of this act, union density is lower in Colorado than states with comparable demographics.

SB 25-005 Would Have Allowed Unions to Include Union-Security Clauses Without a Separate Election

The Colorado Legislature passed the Worker Protection Act along party line votes. The bill was narrowly drafted to accomplish one thing: eliminate Colorado’s longstanding requirement for a second election before a union can include a union-security clause. If it had been signed, unions would have been able to negotiate a union-security clause into any collective bargaining agreement. 

Governor Polis followed through on his veto threat after the bill’s supporters were unable to reach a compromise with the business community. Reports of proposed compromises included eliminating the requirement for a second vote if a union obtained a threshold level of support in the initial election, among other ideas. However, the business and labor communities were unable to come to terms on a compromise.

Labor Vows to Try Again 

Labor unions were vocal in support of repealing the Labor Peace Act and have vowed that the veto does not mark the end of their efforts. A compromise could be struck in time for the 2026 legislative session. Alternatively, Governor Polis will be replaced in 2027 due to term limits and his successor may not have the same position on amendments to the Labor Peace Act. 

Colorado AFL-CIO Executive Director Dennis Dougherty vowed that unions would keep fighting to overturn the Peace Act. “While this veto is a setback, it’s not the end of the road – it’s the beginning of the next phase,” Dougherty noted in a written statement. 

Labor’s Move to Change At-Will Employment in Colorado

In response to the veto, labor unions in Colorado are vowing to push a ballot initiative that, if enacted, would fundamentally reshape employer/employee relations in the state. Ballot Initiative 43 is proposed to be on the ballot in 2026 and is supported by AFL-CIO of Colorado, SEIU Local 105 and United Food & Commercial Workers Local 7.² If passed, Initiative 43 would eliminate at-will employment in Colorado, making it only the second state in the Union—the other being Montana—to require “just cause” to discharge an employee. 

Under the common at-will employment regime followed by 49 states, an employer may discharge an employee who is not subject to an employment contract for any reason that is not discriminatory or impermissible under federal or state law. But if Initiative 43 passes, private employers with at least eight employees in Colorado would need to have “just cause” to discharge or suspend any Colorado employee. The initiative defines “just cause” as:

1. Substandard performance of assigned job duties following notice and opportunity to cure;
2. Material neglect of assigned job duties;
3. Repeated violations of the employer’s written polices and procedures related to job performance;
4. Gross insubordination that affects job performance;
5. Willful misconduct that affects job performance;
6. Conviction of a crime of moral turpitude;
7. Discharge or suspension due to specific economic circumstances that directly and adversely affect the employer and are documented by the employer pursuant to the initiative.

This narrow definition of “just cause” places the burden on employers to not only ensure performance issues and policy violations are well documented, but also to notify employees regularly of performance issues and allow the employee time to cure their deficiencies. Additionally, the Initiative requires that employers provide an employee with written notification of the discharge “that includes every reason the employer believes there is just cause for the discharge or suspension.” 

The Initiative has significant parallels to Montana’s Wrongful Discharge from Employment Act (WDEA). These similarities include a statutory six-month probation period wherein an employee may be subject to at-will employment. However, the Colorado Initiative is even stricter than the WDEA in that the Montana law allows employers to extend this probationary period in their polices or employment agreements, while Initiative 43 allows for no such alteration. Also, similar to the WDEA, Initiative 43 has a carveout for those employees subject to a collective bargaining agreement (CBA). But the Initiative is again more stringent than the WDEA, given that under the Initiative, for the carveout to be effective, the CBA must “contain[] a just cause provision that provides substantially equal or greater protection than” what is provided in the Initiative, while the WDEA does not apply to any employee subject to a CBA. Finally, the Initiative allows courts to “award reasonable attorney’s fees and costs to the prevailing Plaintiff,” while the WDEA has no such fee-shifting provision. 

As employers have seen in other “just cause” jurisdictions, like Montana or much of Europe, laws like those proposed in Initiative 43 place a high burden on employers doing business in the state and pose a number of questions only the courts will be able to answer. For example, when determining if there was “just cause” to discharge an employee for performance issues, how much notice does an employer need to provide to an employee, and how long should that employee get to cure before they are discharged? When it comes to “willful misconduct,” is alleged sexual harassment per se willful, or if an employee says he was just joking around and an employee took it as harassment, is that sufficient conduct for discharge, or does there need to be clearer intent? The only certainty with Initiative 43 is that if it passes, it will upend the current employment regime in Colorado and create a new paradigm for employers trying to navigate the legal landscape in the state. 

What’s Next? 

At this point, much remains unsettled. It is not even guaranteed that Initiative 43 will qualify for the 2026 ballot. The Initiative was filed on March 7, 2025, and approved for circulation in April 2025, which means that its advocates may now gather signatures from registered voters. For Colorado labor to succeed in getting the Initiative in front of voters, the coalition most collect at least 124,238 valid signatures from registered Colorado voters by October 24, 2025. If Initiative 43 makes it onto the ballot, it would become law with a simple majority vote. If that were to happen, the law would take effect no later than 30 days after the official canvass of the vote is completed, would means the law could be effective as early as December 2026. 

But what is clear is that labor unions in Colorado are willing to use novel methods to fundamentally alter the landscape for Colorado employees. It is not clear how having a universal just cause standard for terminations will be of benefits to unions, as most collective bargaining agreements include a just cause standard. It may be that the union coalition is using the initiative process to bring political pressure to its attempt to repeal the Peace Act. 

If the Peace Act is eventually repealed, unions may be poised to invest in organizing workplaces in the state because the increased financial incentives of winning an NLRB election. The state has already experienced an uptick in unionization. According to the U.S. Bureau of Labor Statistics, in 2024, union members accounted for 7.7% of wage and salary workers in Colorado, compared with 6.9% in 2023.³ According to the Center for Economic and Policy Research, in 2022, 14.6% of employees were union members in states without right-to-work laws, compared to 5.6% of employees who were union members in states with right-to-work laws.⁴

Next Steps

While employers have a reprieve for the time being on a potential onslaught in union organizing, the Labor Peace Act may be on borrowed time. To brace for increased organizing in Colorado, employers can cast a critical eye towards their employee relations. A satisfied workforce means employees are less receptive to a union’s messaging, especially if organizing would entail mandatory dues payment. With this idea in mind, employers should ensure they are maintaining positive relations with their employees. 

With the significant uncertainty Colorado labor has created in the state, employers need to stay up to date on a changing regulatory landscape and be ready to shift their policies and procedures should any of the coalitions goals related to union-security, increased labor organization, or an abolishment of at-will employment become realities. Littler will continue to monitor these developments.