Adding on to a busy summer of Colorado employment law changes, major changes to the Colorado Wage Act was approved by Governor Polis on June 3, 2022.
The Wage Theft Employee Misclassification Act (SB22-161) introduces new notice provisions, increases penalties, and expands the enforcement powers of the Division of Labor Standards and Statistics (DLSS). SB22-161 also eliminates the possibility of attorney’s fee-shifting in favor of employers, creates a new private right of action to enforce the CWA’s anti-retaliation provision, and expands the right of employees to bring wage claims on behalf of both themselves and those employees who are similarly situated.
Most of the provisions of SB22-161 will come into effect on January 1, 2023.
Increased Penalties
Like the current (and previous) versions of the Colorado Wage Act, SB22-161 will give employers fourteen days from an employee’s wage demand to tender the amount that they believe (in good faith) to be in dispute. Should an employer fail to pay the wages owed, SB22-161 increases the penalty due to the employee to 200% of the wages owed, a major increase over the previous Act’s penalties (125% of wages owed up to $7,500, and 50% of wages owed over $7,500).
SB22-161 further increases the penalty for willful withholding of wages to 300% of wages owed, which is a substantial increase over the current 50% penalty. The definition of “willful” conduct has also been expanded, allowing employees to show that an employer acted “willfully” by showing the employer failed or refused to pay a demand within the past five years. This replaces the previous threshold which required that an employee show the employer received a judgment for failure to pay wages.
New Notice Requirements for Paycheck Deductions for Theft
In a change to the final paycheck requirements under C.R.S. § 8-4-105, SB22-161 now requires that an employer give notice to the employee within ten days of termination before making any deduction of pay for missing property. If the employee returns the property within fourteen days of notice, the deducted amount is required to be repaid to the employee.
Attorney’s Fees
Under the previous version of the CWA, employees who sought the assistance of DLSS to recover lost wages had no means of recovering attorney’s fees in the same way that private litigants would in court. SB22-161 grants DLSS the new ability to award attorney’s fees to employees who recover more than $5,000 in unpaid wages, opening the possibility for employees to both utilize DLSS’s services in recovering unpaid wages and retaining private counsel for assistance.
Complaints on Behalf of those Similarly Situated
SB22-161 has modified several sections of the CWA to allow employees or DLSS to bring claims on behalf of themselves and now those who are similarly situated to themselves. In other words, this means that an employee bringing a complaint of systemic overtime, pay violations, or other actions prohibited by the CWA may seek relief on behalf of themselves and all other employees who work or worked under the same conditions, past or present. Although this expansion of the CWA has not received much attention, it has the potential for increasing potential liability for employers by a greater degree than any other change to the CWA.
By expanding the right of an employee to bring wage claims on behalf of others, SB22-161 essentially grants an employee the ability to bring a class-action type wage complaint against an employer. This expansion of language in the CWA will potentially multiply the amounts at issue in any given wage claim by many times, which will be compounded by the increased penalties in SB22-161.
Retaliation
The August 2022 revision to the CWA also included a new retaliation provision, which allows an employee who has been retailed against for filing a wage complaint (or who assisted another employee in filing or prosecuting their complaint) to recover back pay, reinstatement or front pay, penalties, liquidate damages, and injunctive relief. The retaliation provision also provides for attorney’s fee-shifting to a prevailing employee.
Enforcement
Finally, SB22-161 expands DLSS’s powers to enforce the CWA by allowing DLSS to enter citations, notices of assessment, and orders against employers as orders of court, thereby allowing an employee to seek writs of garnishment for unpaid judgments. DLSS is also empowered to enter administrative liens – similar to child support liens – against an employer’s real or personal property, and to assess additional fines for late payments of past-due wages.
Takeaway
SB22-161 greatly increases the potential liability for employers for unpaid or improperly paid wages under the Colorado Wage Act and grants significant new rights to employees and DLSS. More information about the Colorado Wage Act, INFO guidance, and information about how to file a wage complaint with DLSS may be found here.
If you have questions or need help navigating this area of employment law, please reach out to our firm or make an appointment here. We welcome your suggestions for future topics as well.
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