Colorado legislature make significant amendments to Colorado Wage Act, Effective January 1, 2020

by | Jan 16, 2020 | Colorado Employment Law Blog

In the 2019 legislative session, the Colorado legislature amended the Colorado Wage Act to increase criminal penalties for “wage theft” and to potentially impose personal liability on certain individuals or agents who act on behalf of the employer for Wage Act violations. The changes are significant and will take effect on January 1, 2020.

First, under the current Wage Act, certain violations may be prosecuted as misdemeanors, including the “willful refusal to pay wages, falsely denying the amount or validity of a wage claim with intent to underpay or to annoy, harass, oppress, hinder, delay, or defraud an employee, and intentional failure to pay minimum wage.” See C.R.S. § 8-4-114(2). Upon conviction, the Wage Act authorizes a fine of not more than $300.00, or imprisonment in the county jail for not more than thirty days, or both.  8-4-114(2) was amended to provide that “any employer or agent of an employer who willfully refuses to pay wages or compensation as provided in this article 4, or falsely denies the amount of a wage claim, or the validity thereof, or that the same is due, with intent to secure for himself, herself, or another person any discount upon such indebtedness or any underpayment of such indebtedness or with intent to annoy, harass, oppress, hinder, coerce, delay, or defraud the person to whom such indebtedness is due, commits theft as defined in section 18-4-401.”

By characterizing the offense as theft, the legislature introduced a wide range of criminal penalties for employer’s who intentionally violate the Wage Act, from a class 1 petty offense (less than $50) to a class 2 felony (more than $1 million). A conviction of these offenses may be punishable with thousands of dollars in fines and jail time. Even a class 1 petty offense may lead to a prison term of up to six months and a fine of up to $500.

Second, the amendment also changes the definition of “employer” in response to the Colorado Supreme Court’s decision in Leonard v. McMorris, 63 P.3d 323 (Colo. 2003). In that case, the Court held that the definition of “employer” in Section 8-4-101(6) of the Wage Act was not intended to impose liability on individual officers or agents of an employer. The legislative amendment specifically says that Leonard “does not provide sufficient protections for workers and their families.” 

Section 8-4-101(6) has been amended to state that the term “employer” has the same meaning as that set forth in the federal Fair Labor Standards Act. The FLSA defines “employer” as “any person acting directly or indirectly in the interest of an employer in relation to an employee[, including] a public agency, but [not] any labor organization (other than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization.” 29 U.S.C. 203(d). Courts interpreting the FLSA have imposed personal liability on the basis of this definition. With the amendment’s adoption of the broad FLSA language, a Colorado court could hold individuals personally liable under the Colorado Wage Act. In fact, that appears to be the intent of the amendment.