What Is The Standard For Determining A Willful Violation Of The Colorado Wage Act?

by | Jan 24, 2024 | Colorado Employment Law Blog

The Colorado Wage Act requires that employers pay employees earned wages in a timely manner.  This includes all forms of compensation, including wages, commissions and bonuses.  If an employer fails to pay earned wages, an employee may make a written demand for payment.  If the employer fails to pay the earned wages to the employee within fourteen (14) days of the written demand, then an employee may recover automatic and/or willfulness penalties against the employer, in addition to the wages owed.  For non-willful violations, the automatic penalty applies. The automatic penalty is double the wages owed or One Thousand Dollars ($1,000.00), whichever is more.  For willful violations, the penalty is the greater of either three (3) times the wages owed or Three Thousand Dollars ($3,000.00). 


Longer Statute of Limitations for Willful Violations

In addition, for willful violations, the period of liability is longer – unpaid wages may be awarded for a three (3) year look back period – as opposed to a limitations period of two (2) years for a non-willful violation. 


Understanding “Willful” Violations: Colorado Division’s Interpretation of Employer Conduct under FLSA

The Colorado Division of Labor and Statistics (“Division”) interprets “willful” consistently with the regulations and cases interpreting this term under the federal Fair Labor Standards Act (“FLSA”), including 29 U.S.C. § 255(a) and 29 C.F.R. § 578.3(c)(1), to include where “the employer knew that its conduct was prohibited … or showed reckless disregard for the requirements” of the law. See Wage Protection Rule 2.18 (incorporating FLSA definition). To act with “reckless disregard” of its obligations under the law, an employer need only have some awareness of the law or of a potential violation, and with this awareness have failed to “diligently” inquire into its legal obligations and ensure compliance therewith, including where the employer ignores complaints or warnings that its conduct is unlawful.

An employer’s second (or more) similar violation in five (5) years is automatically willful.  See C.R.S. § 8-4-109(3)(c).  Non-similar past violations do not automatically make a second violation willful, but can be evidence of a willful and knowing violation.  In Interpretive Notice & Formal Opinion #2B, the Division provides examples of circumstances in which a prior violation may contribute to a willfulness finding:

  • Similar Past Violations.  In 2021, the Division issued a citation to an employer for failing to pay overtime to a non-exempt hourly employee.  In 2022, the Division issued a citation to the same employer for failing to pay overtime to a non-exempt salaried employee.  According to the Division, the second violation is similar and occurred within five (5) years and is therefore automatically willful.
  • Non-Similar Past Violations.  In 2021, the Division issued an employer a citation for failing to pay thirty (30) hours of time worked.  In 2022, the Division issued the same employer a citation for failing to let employees accrue paid sick leave under the Healthy Families and Workplaces Act (HFWA).  According to the Division, these violations are not similar enough to make the 2022 violation automatically willful.  However, the 2022 violation is still evidence that the employer knew its duty to pay wages due and may, along with other evidence, contribute to a willfulness finding.


A Violation may be “Willful,” Even if the Employer does not Know the Extent of the Violation

A willful violation may also be found if an employer was aware of the wage law at issue and that the employee was not being paid consistently with the requirements of the law – even if the employer does not know the extent of the violation.  For example, if an employer understood that a non-exempt employee was supposed to receive overtime pay for hours worked over forty (40) in a workweek, and that the employee was working over forty (40) hours in a workweek without being paid overtime, then a willful violation would be found even if the employer did not know the exact number of overtime hours that the employee worked and should have been paid. 


A Violation may be “Willful,” if the Employer Fails to Conduct a Meaningful Inquiry After Being Put on Notice of a Violation of the Wage Laws

According to the Division, a willful violation may also be found if an employer is aware of possible violations of the wage laws, and then fails to conduct a meaningful inquiry to determine its obligations under the law.  For example, if an employee who works significant overtime has been misclassified as “non-exempt” under the FLSA and the employer had received information that the employee may have been misclassified but then failed to conduct any inquiry into the issue, then the employer is likely to be found to have acted willfully in failing to pay the employee overtime compensation. 


A Violation may be “Willful,” if an Employer Fails to Show Diligence in the Face of a Clear Statutory Obligation

A willfulness finding may also be found if an employer fails to show diligence in the face of a statutory obligation, even if the employer has not been put on notice of a potential violation.  As an example, the Division has pointed to a restaurant owner with years of experience who committed significant, ongoing violations of the law – such as paying below minimum wage or making improper deductions from employees’ paychecks.  While the owner claims that he is ignorant of the law, he also made “no effort to learn” the wage and hour laws.  Here, the Division would find the violations to be willful as the owner’s ignorance, in light of his many years of experience in the industry and opportunities to learn his legal obligations, shows a reckless disregard of the law. 


Unraveling Labor Law Violations: The Colorado Division’s Vigilance against Willful Offenses

The Colorado Wage Act imposes strict requirements on employers to pay employees earned wages in a timely manner.  If a violation of the Colorado Wage Act is found to be willful, an employer is likely to be subject to significant penalties, including 3x penalties for a willful violation. A willful violation occurs when an employer knowingly or recklessly fails to pay employees earned wages within fourteen (14) days of a written demand for payment. A willful violation may be found due to repeat violations of the wage laws by an employer, and/or evidence that an employer disregarded or failed to conduct a proper inquiry into its legal obligations under the wage laws.     

Contact Baird Quinn, LLC today for assistance with wage and hour matters, including issues arising under the Colorado Wage Act.