Colorado employers need to be more mindful than ever with regard to timely payment of wages. A new Wage Protection Act (“Act”) has expanded wage claims under the Colorado Wage Claim Act by broadening remedies, creating an administrative resolution procedure, and increasing penalties and fines for noncompliance.
Broader Rights: While previously only former employees had the right to pursue wage claims, the new Act expands this right to current employees. It also adds the right of employees pursuing minimum wage claims to recover attorneys’ fees and costs if they prevail.
Employees are also now afforded significantly more time to pursue wage penalty claims against employers. Before its amendment, the Colorado Wage Act gave employees only 60 days to make a written demand for wages in order to trigger the right to recover a penalty in addition to the unpaid wages. The new Act eliminates this requirement and gives employees two years after payment is due to make a demand for payment; in cases of willful violation, the employee now has three years to make a demand.
Administrative Resolution Procedure: One of the most significant changes under the Act is the establishment of an administrative procedure designed to provide a speedy resolution of smaller wage claims. This optional remedy permits wage claims of $7,500 or less to be decided by the Colorado Department of Labor and Employment, Division of Labor (the “Division”), which now has the power to investigate and decide claims for wages earned on or after January 1, 2015, and to issue citations and assessments for wages owed, penalties, and fines. The Division is under a mandate to issue its determination on claims just 90 days after it sends notice of the complaint to the employer.
Increased Penalties and Fines: Under the existing law, employers failing to pay employee wages are subject to penalties equal to the greater of 125% of the wage owed or up to 10 days of the employee’s daily earnings. Under the Act, employers now also face additional fines of up to $50 per employee, per day, beginning on the date the wages were originally due. These penalties and fines establish an expectation for employer’s good faith efforts to pay employees, including the requirement to mail paychecks to employees’ last-known addresses within 60 days when other delivery methods fail.
Ignoring a legitimate demand for wages will only increase the penalties and fines. Failing to pay a demand creates a rebuttable presumption against the employer of a willful violation, can increase the penalty by 50%. In addition, if the demand is made by the Division on behalf of the employee, failing to timely respond will result in a $250 fine. On the other hand, an employer’s full payment within 14 days of the demand eliminates the penalties and fines and can head off further investigation by the Division.
Employers can also be fined for failing to adhere to a new three-year record keeping requirement, which applies to the information contained in an employee’s itemized pay statement. These records must be made available to the Division upon request and noncompliance will result in fines up to $250 per employee, per month, up to a maximum of $7,500.
Recommendations: There are several ways in which employers can ensure compliance with wage laws:
• Make sure all employees are receiving at least minimum wage in every paycheck–even when permissible deductions are taken and regardless of an employee willingness to work for a lessor wage (which is unlawful).
• Wage deductions are only permitted in limited circumstances, so make sure the deduction is permitted before taking it.
• Treat wage demands seriously and respond promptly.
• Implement a three-year retention policy for all wage payment records.
Additional information concerning Colorado’s wage laws can be found at: https://www.colorado.gov/pacific/cdle/wagelaw