Initiative #74 – Criminal Liability for Executives

StaffScapes review of the devastating labor initiatives on the November Ballot.

Initiative #74 would “hold a business executive criminally responsible for the business’s failure to perform a duty required by law if the official knew of the duty and the failure to perform it.” The term executive extends to partners, officers, directors, managers, proprietors, supervisors and includes executives of non-profits and home owner associations. This initiative would extend criminal accountability to business executives who were aware of their business’s failure to perform a legal duty.

Listed below is the potential impact of initiative #74:

Ø      Current state and federal laws already hold business executives accountable with recent federal laws strengthening criminal and civil penalties for executives who commit fraud.

Ø      Initiative 74 does not require the party bringing the suit to have legal standing, allowing politically-motivated or frivolous charges to be brought against business executives.

Ø      Initiative 74 also allows the plaintiff’s attorney fees to be reimbursed if successful but does not extend that to the executive defending the suit.

Ø      Extending the definition of an executive down to manager level can hinder recruitment of employee talent.

Ø      Community leaders and volunteers may be reluctant to serve on nonprofit boards and home owner associations due to fear of prosecution.

Ø      Initiative 74 creates a way to avoid accountability by creating an immunity loop-hole for executives who report knowledge of their business’s failure to comply with the law.

Should your son or daughter, working as a shift-manager at a local fast food restaurant, face criminal prosecution for a hair on a french fry? Do you think a teenage supervisor at your city’s recreation center should be imprisoned for the pool’s chlorine level being slightly too low? Should you have criminal liability for volunteering on your home owners association? Do you want political organizations to be able to threaten criminal lawsuits against individuals employed by companies that they do not like?

If the organized labor initiatives are successfully passed this November, our state’s economic growth will be dramatically stunted for years to come. Please check future editions of our blog to view the other initiatives that can have a devastating impact to Colorado.

Sources: Tomlinson & Associates; Economic Development Council of Colorado