Update Applicable to:
All employers in the state of Colorado.
On June 3, 2022, Governor Polis signed Senate Bill 22-261 (SB 22-161) into law, which addresses issues of wage theft, employee misclassification, and enforcement procedures and remedies for violations of laws about wage payment and employee classification.
What are the details?
Effective August 9, 2022, SB 22-161 eliminates misdemeanor criminal liability for failure to furnish information requested by the Colorado Department of Labor and Employment’s Division of Labor Standards and Statistics (DLSS) and instead implements a penalty of no less than $50 per day.
Beginning January 1, 2023, an employer that does not pay all earned wages within 14 days after a “written demand is sent to the employer or [an] administrative claim or civil action is sent to or served on the employer” is liable for the unpaid wages plus an automatic penalty of “the greater of two times the amount of the unpaid wages or compensation or one thousand dollars [$1,000].” If an employee can show that the employer’s failure to pay was willful, the penalty increases to “the greater of three times the amount of the unpaid wages or compensation or three thousand dollars [$3,000].” An employer’s failure to pay is, per se, willful if the employee can show that the employer has failed to pay wages of a similar type within the five years immediately preceding the claim.
Suppose an employer fails to pay an employee the amount determined to be owed by the DLSS or a hearing officer within 60 days of the determination or decision. In that case, the employer will be liable for:
- the employee’s attorneys’ fees incurred in pursuing civil action to enforce the determination;
- an additional fine equal to 50% of the amount determined to be owed; and
- a penalty equal to 50% of the amount determined to be owed or $3,000.
To collect past-due wages, fines, and penalty obligations ordered as part of a proceeding, the DLSS may place a lien or levy on the employer or any other person with possession, custody, or control of the employer’s assets. These liens are superior to any other liens filed later on the same assets.
SB 22-161 also creates additional avenues for the suit. Effective January 1, 2023, an employee or the DLSS may bring class action-type claims “on behalf of a group of similarly situated employees.”
Additionally, SB 22-161 creates a private right of action for retaliation claims brought under the statute. An employee retaliated against for filing a complaint or instituting a proceeding under any wage and hour rule or who testifies or provides evidence in a proceeding related to any wage and hour rule may file a civil action against the employer. The employee may recover legal and equitable relief, including:
- “back pay”;
- “reinstatement of employment, or if reinstatement is not feasible front pay”;
- “the payment of wages unlawfully withheld”;
- “interest on unpaid wages at a rate of  percent per annum from the date the wages were first due”;
- “the payment of a penalty of [$50] per day for each employee whose rights … were violated and for each day that the violation occurred or continued”;
- “liquidated damages in an amount equal to the greater of two times the amount of the unpaid wages or [$2,000]”; and
- “injunctive relief.”
Worker and Employee Protection Unit
A significant addition to this bill is the creation of the Worker and Employee Protection Unit. This new unit will operate under the purview of the Colorado Attorney General. It has the power to issue civil investigative demands and subpoenas, administer oaths, take sworn statements, and serve/execute search warrants for investigations in any county in Colorado. The Unit may investigate alleged violations of the Colorado Employment Security Act and bring actions under the statute against employers for misclassifying employees as independent contractors. The Unit may also enforce wage determinations that the DLSS refers to the Unit, that the DLSS declines or fails to enforce, or that the DLSS has not yet investigated.
For more information, please see the links below:
What do employers need to do?
Employers should review the links provided above and develop and provide employees with a notice before deducting final pay for unreturned company property. If the Division issues an adverse determination against an employer, the company should timely pay any money owed to avoid increased penalties and enforcement.
Need help understanding how changes to employment laws will affect your business?
Learn more about how Vensure's Colorado PEO services can help you navigate complex employment laws and keep your business compliant.
This communication is intended solely for the purpose of conveying information. The present post might incorporate hyperlinks directing readers to websites managed by third-party entities. The inclusion of any links within this communication is meant to serve as points of reference and could encompass opinion articles from various law firms, articles from HR associations, official websites, news releases, and documents of government agencies, and other relevant third-party sources. Vensure has no authority over these external websites and bears no responsibility for their content. Furthermore, Vensure does not endorse the materials present on these websites. The contents of this communication should not be interpreted as legal advice or as a legal standpoint concerning specific facts or scenarios. Nor should it be deemed an exhaustive compilation of facts potentially pertinent to federal, state, or local laws. It is strongly advised that employers solicit legal guidance from an employment attorney when undertaking actions in response to any legal updates provided. This is due to the possibility of future alterations occurring in federal, state, and local laws, regulations, as well as the directives and guidelines issued by governing agencies. These changes may transpire at any given time, potentially rendering certain portions of the content within this update void or inaccurate.