With all the hoopla surrounding the new family and medical leave program in Colorado, significant changes in state wage laws have garnered considerably less attention.

Senate Bill 22-161 amended the Colorado Wage Act and created a new worker protection unit in the office of the Colorado attorney general. More specifically, the act:

Increases the penalties imposed on employers for late payment of wages. The Colorado Division of Labor Standards and Statistics (DLSS) previously could impose penalties of 125 percent of the first $7,500 owed and 50 percent of any amount above $7,500 owed or an employee’s average daily earnings for 10 days, whichever is greater, for wages not paid within 14 days of an employee’s demand for payment. The act now authorizes penalties of two times the amount of the unpaid wages or compensation or $1,000. This increases the minimum penalty for small violations and increases the ceiling for larger violations. And if the employee demonstrates the violation is willful, the penalties increase to the greater of three times the amount of the unpaid wages or $3,000.

Allows employees to make claims not only on their behalf, but also on behalf of groups of similarly situated employees. The act authorizes the DLSS to investigate and issue determinations of behalf of the entire class. This practice will expand actions to include claims individuals might not have asserted on their own. Claims for individual damages are often small enough individuals don’t find it worthwhile to invest time and money to pursue their claims. But combining claims in a larger class action reduces the investments by individual members and makes it easier to retain legal counsel.

Beginning in August, employees may bring their own civil actions if they believe they’ve been discriminated or retaliated against for filing a wage complaint, testifying or providing evidence. Employees may seek back pay, reinstatement or front pay, 12 percent interest, a penalty of $50 per day per employee, liquidated damages equal to the greater of two times the amount of the unpaid wages or $2,000, injunctive relief and attorney’s fees and costs.

Makes it more difficult for an employer who prevails on a Colorado wage claim to recover attorney fees. In the past, either prevailing party could request the court to order reimbursement of legal fees and costs. Under the act, the employer may recover attorney fees only when the employer pays all the amounts demanded in good faith for all employees within 14 days of receiving the demand and employees ultimately recover less than the amount the employer paid.

Creates the Worker and Employee Protection Unit within the attorney general’s office and empowers the unit to investigate alleged employee misclassifications and bring actions against employers.

Imposes new requirements on employers before they may deduct the amount of money or value of property an employee failed to properly pay or return to the employer upon the employee’s termination. Now, an employer must provide a notice to the employee within 10 days of separation containing a written accounting specifying the amount of money or specific property the employee failed to pay or return, the replacement value of the property, when the money or property was provided to the employee and when the employer believes the employee should have paid the money or returned the property. If the employee pays the money or returns the property that was the basis for the deduction within 14 days of the employer’s notice, the employer must pay back the employee the amount of the deduction within 14 days of receiving the money or property from the employee.

It’s more important than ever for employers to develop accurate timekeeping methods and keep accurate and thorough pay records. Employers should accurately record all property or money they entrust to employees and have employees sign an agreement authorizing a payroll deduction for unreturned money or property before entrusting the items to the employee. The act already provides for daily penalties on employers that don’t comply with an order of the DLSS. Employers should promptly pay any wage award ordered by the DLSS to avoid significant penalties and interest that increase by the day.

Updated guidance on the investigation of wage claims is available online at https://cdle.colorado.gov/sites/cdle/file/INFO%20%232%20Wage%20Claim%20Investigation%20Process%20Updated%2012.22.2022.pdf. 

The Employers Council is available to advise enterprise and consulting members on this and other employment matters.