Colorado Lawmakers Take Another Shot at Confronting Wage Theft with New Bill
Colorado Lawmakers Take Another Shot at Confronting Wage Theft with New Bill
Brett Whitley, Associate
Introduced in the Colorado General Assembly on January 8, 2025, House Bill 25-1001[1] (“HB 25-1001”) represents the latest attempt by legislators to find common ground with Governor Jared Polis on the issue of confronting wage theft after Governor Jared Polis vetoed House Bill 24-1008 in the summer of 2024. If signed into law as is, HB 25-1001 would create even more exposure for employers (and even those who would not normally consider themselves employers) for wage and hour violations under Colorado law by enhancing penalties; expanding accountability; and empowering employees in pre-suit settlement negotiations. However, HB 25-1001 still has a long road ahead of it before it can be signed into law.
House Bill 25-1001
The Colorado General Assembly began its 75th session this January. One of the first bills introduced was HB 25-1001, which, among other things, aims to heighten wage theft protections for employees by prohibiting an employer from making a payroll deduction that drops an employee’s pay below minimum wage; enhancing the penalties for wage theft and employer retaliation; expanding who can be held accountable for wage theft; preventing courts from awarding an employer costs and fees in a civil action for unpaid wages or compensation in certain circumstances; and nearly doubling the amount recoverable in an administrative claim for nonpayment of wages or compensation brought before the CDLE.
Regarding the expansion of accountability mentioned above, HB 25-1001 would expand who can be held accountable for wage theft by amending the definition of “employer” in the Colorado Wage Act to include any individual who owns or controls at least 25% of the ownership interests in any employer. Accordingly, investors or part-owners of business could be held liable for violations of the Colorado Wage Act, regardless of whether these individuals had any knowledge of or involvement with the business’ allegedly unlawful compensation practices. Supporters of HB 25-1001 argue that it makes sense to hold those who are substantially profiting from wage theft accountable for wage theft.
Notably, if signed into law, HB 25-1001 would also repeal the provisions of the Colorado Wage Act that permit courts to award an employer reasonable costs and attorney fees incurred in a civil action for unpaid wages or compensation if, within 14 days after the employee makes a demand or a civil action is served on the employer, the employer tenders all amounts demanded in good faith for unpaid wages or compensation and, at trial, the employee fails to recover more than the amount the employer tendered. In essence, the current provisions allow some limited recourse for employers faced with exorbitant, bad faith demands for wages when they are able to prove that they timely tendered all amounts owed to the employee and that amounts demanded in excess of that tender were made in bad faith. If these provisions are repealed, employees bringing such claims may make higher pre-suit settlement demands to the employer, as there would be no possibility that the employee would have to pay the employer’s litigation costs and fees if the employee did not recover more than the employer tendered in response to an employee’s initial demand, thereby diminishing the prospects of settling claims for unpaid wages or compensation.
HB 25-1001 also seeks to push more claims for unpaid wages and compensation out of the courts and into the administrative realm by allowing the CDLE to adjudicate claims of up to $13,000.00 in unpaid wages, beginning with claims filed from July 1, 2026, through December 31, 2027, and to be adjusted annually for inflation thereafter. Current law only allows the CDLE to adjudicate such claims amounting to $7,500.00 or less. By increasing this threshold, 200 more claims for unpaid wages and compensation are expected to be before the CDLE in lieu of the courts, which is a part of the reason that HB-1001 will require an appropriation of $241,518.00 to the CDLE.[2]
Last, HB 25-1001 seeks to further deter wage theft in two notable ways. First, wage theft resulting from the misclassification of an employee (i.e., classifying a person as an independent contractor, rather than an employee) in a way that affects their compensation or the employer’s reporting obligations will result in a penalty of $5,000.00 for a willful violation. If an initial violation is not remedied within 60 days, then a penalty of $10,000.00 would apply. A second or subsequent misclassification by an employer within a five year period would result in a $25,000.00 fine. The penalty would double to $50,000.00 in the event the employer fails to remedy or cure the second/subsequent violation within 60 days.
Employer Considerations
As of now, HB 25-1001 has passed through the House Business Affairs & Labor Committee (with the vote being 8-5 and along party lines), and the bill is still subject to further revisions and voting in the House and Senate, with the obvious goal of being signed into law by Governor Polis (who, as mentioned, vetoed the General Assembly’s prior attempt to enact similar legislation last year). Nonetheless, given the sweeping changes the bill seeks to implement, Campbell Litigation will continue to monitor the HB 25-1001’s navigation through the General Assembly and will update the Rocky Mountain Employer accordingly.
[1] H.B. 25-1001, 75th Gen. Assemb., First Reg. Sess. (Colo. 2025), available at https://leg.colorado.gov/sites/default/files/documents/2025A/bills/2025a_1001_01.pdf (last visited Feb. 4, 2025).
[2] See Fiscal Note HB 25-1001 Initial, ttps://leg.colorado.gov/sites/default/files/documents/2025A/bills/fn/2025a_hb1001_00.pdf (last visited Feb. 4, 2025)