Update Applicable to: 
All employers in the state of Colorado.

What happened?
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:

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:

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:

Senate Bill 22-261 (SB 22-161)

Colorado General Assembly Bill Summary

Article 1 – Article 2

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.