Employment Mediation and Settlement in Colorado
Whether you are negotiating an exit, responding to a severance offer, or sitting down at a mediation table, the document you eventually sign will likely define your rights going forward more than anything that happened before it. Understanding how mediation and settlement actually work in Colorado, and what the law does and does not allow in these agreements, helps you evaluate an offer instead of just reacting to it.
As Colorado employment law attorneys, we help clients understand and negotiate the agreements that resolve workplace disputes, not just the disputes themselves. If your dispute involves an EEOC or CCRD charge specifically, our what happens after you file an EEOC or CCRD charge page covers that agency-specific process in more detail.
Private Mediation Versus Agency Mediation
Mediation can happen in more than one setting. The EEOC and CCRD each offer their own mediation programs as part of the charge process.[1] This is a distinct track covered in more detail on our companion page above. Separately, parties can agree to private mediation, using an independent mediator outside the agency process, at almost any point, before a charge is filed, while one is pending, or after litigation has begun. Private mediation offers more flexibility over timing and the choice of mediator, though it also depends on both sides voluntarily agreeing to participate.
When Settlement Discussions Typically Happen
Settlement conversations are not confined to a single stage of a dispute. They can start with an informal conversation before any charge is filed, occur through an agency’s mediation or conciliation process, happen during a private mediation session, or take place after a lawsuit is already underway, sometimes shortly before trial. Where a case is in this process often affects what is actually being negotiated, since the risks and costs on both sides change as a matter moves closer to a courtroom.
What a Settlement or Severance Agreement Usually Includes
These agreements vary, but several terms appear in most of them:
- A release of claims, usually the broadest section, giving up your right to sue over the matters described
- Payment or other consideration, such as severance pay, continued benefits, or a neutral job reference
- Confidentiality or non-disclosure provisions, which in Colorado are subject to real limits described below
- Non-disparagement language restricting negative statements about the other side
- Return-of-property and cooperation clauses, particularly in more senior or executive roles
A release is often broader than the specific complaint that prompted it, sometimes covering any claim arising from your employment, known or unknown, up to the date of signing. Reading exactly what is being released, not just what prompted the negotiation, is part of evaluating any offer.
Special Rules for Releasing Age Discrimination Claims
A different rule applies when the waiver instead settles an age discrimination charge you already filed with the EEOC, or a lawsuit already filed in court. In that situation, the fixed 21- or 45-day period does not apply; instead, you generally must be given a reasonable period of time to consider the settlement, while the other core requirements above still apply. A waiver that skips these required elements generally cannot bar an age discrimination claim, even if you already signed it and accepted the payment offered.
Colorado’s Limits on Confidentiality and Non-Disparagement Clauses
This is one of the more distinctly Colorado-specific parts of a settlement or severance agreement. Under the Protecting Opportunities and Workers’ Rights Act (POWR Act), C.R.S. § 24-34-407,[3] for agreements entered into or renewed on or after its August 7, 2023 effective date,[4] a nondisclosure provision that limits your ability to disclose or discuss an alleged discriminatory or unfair employment practice is void unless it meets several conditions. Among other requirements, the provision must apply equally to both sides and expressly preserve your ability to discuss the underlying facts, including the existence and terms of a settlement, with a defined set of people and entities, including immediate family, health care providers, a religious adviser, a mental or behavioral health therapeutic support group, financial, legal, or tax advisors, government agencies, in response to legal process, or as otherwise required by law.
If the agreement also includes a separate non-disparagement provision, the statute adds further conditions: permitted disclosures cannot themselves be treated as disparagement, and if the employer disparages you to a third party, the employer loses the ability to enforce the nondisparagement or nondisclosure provisions against you. Any liquidated damages provision must also be reasonable, proportionate to the actual harm involved, and not function as a penalty, and the agreement generally must include a signed addendum attesting to compliance with these requirements.
An employer that presents a noncompliant nondisclosure provision can be liable for actual damages and a $5,000 penalty per violation, reducible if the employer shows good faith. The Colorado Civil Rights Commission, as well as the employee or prospective employee presented with the agreement, can bring an action to recover the statutory penalty, and a private plaintiff may separately recover actual damages, reasonable costs, and attorney fees. The statute is aimed specifically at provisions restricting disclosure of alleged discriminatory or unfair employment practices; a confidentiality clause addressing unrelated proprietary business information raises a different question and should be evaluated on its own terms.
What to Weigh Before Any Agreement Is Signed
A settlement or severance agreement is usually the very last document in a workplace dispute, which is exactly why its specific terms deserve far more attention than a quick signature.
A release is usually much broader than it first sounds. Signing away your right to sue typically covers far more than the specific complaint that prompted the offer, which is why understanding exactly what claims a release reaches matters before you sign anything at all.
Confidentiality clauses are not automatically enforceable. Colorado law voids certain nondisclosure and non-disparagement provisions tied to discrimination or unfair employment practices, so a broad gag clause in your agreement may not actually bind you the way it appears to on paper.
Deadlines in this process can run in both directions at once. A consideration period gives you time to decide, but a revocation window afterward is often just as short and just as easy to miss, and letting either one pass can turn a negotiable decision into a permanent one.
None of this tells you whether a specific offer is actually fair or exactly what you personally should do, only what is generally worth examining closely before you decide either way.
Frequently Asked Questions
Is mediation the same as settlement?
No. Mediation is a process, a structured conversation with a neutral third party helping both sides look for common ground. Settlement is an outcome, an actual agreement resolving the dispute. Mediation often leads to a settlement, but it does not have to, and a settlement can also happen through direct negotiation without any formal mediation at all.
Do I have to accept a severance agreement?
No. A severance agreement is a proposal, not an obligation, and you generally have the right to negotiate its terms or decline it entirely, though declining also generally means declining the severance pay or benefits offered in exchange. Understanding what you would be giving up, and what you would be getting, is worth doing before deciding either way.
Can my employer stop me from talking about a settlement in Colorado?
Not entirely. Colorado’s POWR Act voids a nondisclosure provision that limits your ability to disclose or discuss an alleged discriminatory or unfair employment practice unless it meets several conditions, including that it applies equally to both sides and expressly preserves your ability to discuss the underlying facts, including the existence and terms of a settlement, with a defined group that includes, among others, immediate family, health care and mental health providers, financial or legal advisors, and government agencies. If the agreement also includes a non-disparagement clause, additional conditions apply. A blanket gag clause that ignores these requirements can be void, and using one can expose an employer to real penalties.
What if I'm over 40 and asked to sign a release?
It depends on what is being released. For an ordinary severance or termination agreement, federal law generally requires at least 21 days to consider it, or 45 days for certain group layoff programs, plus a 7-day revocation period after signing. If the release instead settles an age discrimination charge you already filed with the EEOC, or a lawsuit already filed in court, a different rule applies: you generally must be given a reasonable period to consider the settlement rather than the fixed 21 or 45 days. Either way, the waiver must also be written in a way you can understand, specifically mention age discrimination rights, not attempt to waive future claims, offer you something of value beyond what you are already owed, and advise you in writing to consult an attorney. A release missing these elements generally cannot waive your age discrimination claims, even if you signed it.
Should I have a lawyer review a settlement or severance agreement before I sign?
It is worth strong consideration, particularly because these agreements are usually final once signed and the revocation windows that do exist, such as OWBPA’s 7 days, are short and easy to miss. A lawyer can also help identify whether a confidentiality or non-disparagement clause actually complies with Colorado’s current requirements, since noncompliant clauses can be void even if both sides signed them.
Talk to a Colorado Employment Law Attorney
A settlement or severance agreement is often the most consequential document in a workplace dispute, and it is usually final once signed. Elkus & Sisson, P.C. represents employees across Colorado in discrimination, retaliation, wrongful termination, and related workplace matters. See Colorado office locations to find how to reach us, or visit Elkus & Sisson, P.C. online.
If you have questions about a settlement or severance agreement in Colorado, contact us or call +1 303-567-7981 to schedule a consultation.
Sources
- U.S. Equal Employment Opportunity Commission, Mediation
- 29 U.S.C. § 626(f) (Older Workers Benefit Protection Act, waiver requirements)
- Colorado Revised Statutes § 24-34-407 (limitations on nondisclosure and non-disparagement provisions)
- Colorado Senate Bill 23-172, Protecting Opportunities and Workers’ Rights Act, Colorado General Assembly
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