JD Supra
June 11, 2019
The Legislature was busy this year, passing a variety of bills that will affect Colorado employers. House Bill 19-1267, entitled Penalties for Failure to Pay Wages, amends the Colorado Wage Act in ways that could be significant for all employers with operations in the state. The amendment, which was signed into law this month by Gov. Jared Polis (D), will take effect on January 1, 2020, and will apply to any offenses committed on or after that date.
The Legislative declaration accompanying the amendment says that the Legislature’s purpose is to provide more protection for victims of human trafficking because “[p]ersons who commit the crime of human trafficking often commit other crimes such as wage theft, tax evasion, and workers’ compensation fraud.”
Wage theft
On the surface, the amendment seems to apply only to the criminal provisions of the Wage Act. The current version of the Wage Act provides that certain violations can be prosecuted as unclassified misdemeanors, including “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.” Intentional refusal to pay wages owed is currently punishable by a fine of up to $300, up to 30 days in prison, or both. Intentional failure to pay the minimum wage is punishable by a fine ranging from $100 to $500, or imprisonment ranging from 30 days to one year, or both.
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Individual liability for unpaid wages
The amendment also changes the definition of “employer,” which will affect all other components of the Wage Act, including the civil provisions.
In 2003, the Colorado Supreme Court ruled that officers and agents of a company were not personally liable for unpaid wages. In Leonard v. McMorris, the Court applied the definition of “employer” in Section 8-4-101(6) of the Wage Act and found that the Legislature did not intend to force officers and agents to act as sureties in the event that payroll was not met.
The new amendment specifically says that Leonard “does not provide sufficient protections for workers and their families.” Although it is not completely clear, it appears that the Legislature intends to overrule Leonardand that the case should no longer be relied upon as good law.