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Colorado Democrats give wage theft legislation another try after last year’s veto

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Colorado Democrats give wage theft legislation another try after last year’s veto

By Sara Wilson
Colorado Democrats give wage theft legislation another try after last year’s veto
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Colorado House Majority Leader Monica Duran, a Wheat Ridge Democrat, applauds during opening day proceedings of the Legislature, Jan. 8, 2025, at the Capitol. (Lindsey Toomer/Colorado Newsline)

Democratic state lawmakers are trying once again to pass a bill to further address wage theft in Colorado, following a veto on legislation on the same topic last year.

“People are struggling to pay rent, to put food on the table, get medication, pay for diapers and formula,” House Majority Leader Monica Duran, a Wheat Ridge Democrat who sponsored both last year’s and this year’s bill, said. “They are out here working and thinking that at the end of the week, they’ll get a paycheck. And then they end up not getting paid. What do they do? How can they go back to their kids and say ‘I’m sorry. I can’t put food on the table.’”

Wage theft is an umbrella term for any time an employee receives less money than they are owed for labor, including nonpayment of wages, underpayment and worker misclassification. In Colorado, there is about $728 million of wage theft per year that affects almost half a million workers, according to a 2022 study from the left-leaning Colorado Fiscal Institute. That study found that women and Hispanic workers are at a higher risk of wage theft.

“Not paying someone is the same as stealing their paycheck out of their wallet,” bill sponsor Rep. Meg Froelich, an Englewood Democrat, said.

Last year, lawmakers passed a bill that would have held general contractors in the construction industry liable for wage theft committed by their subcontractors. Though it was introduced in the first few days of the legislative session, it faced immense pushback from contractor associations and passed along party-line votes in the last month of the legislative session.

Then Democratic Gov. Jared Polis vetoed it. He wrote in a veto letter that the bill did not adequately punish the wrongdoers and created a situation where general contractors could essentially pay for the same labor twice.

“That was a huge drag,” Froelich said of the veto. “And even though it was in the top 10 bills, it came down to the last days of session, so that was frustrating on a whole bunch of fronts.”

Following the veto, Duran, Froelich and other bill sponsors got to work on a new bill that could make it past Polis. Discussions began in June with lawmakers, the governor’s team, the Colorado Department of Labor and Employment and other stakeholders. In addition to Duran and Froelich, Democratic Sens. Jessie Danielson of Wheat Ridge and Chris Kolker of Centennial are once again sponsoring the bill.

Not paying someone is the same as stealing their paycheck out of their wallet.

– State Rep. Meg Froelich

The result is a new bill that got a shout-out during Polis’ State of the State address, but it includes a major compromise: It doesn’t include any up-the-chain liability.

“Fundamentally, our union brothers and sisters feel that this bill advances the cause of workers and helps them redress the situation, and that it’s worth running,” Froelich said. “So we’re OK going ahead with this compromise that the governor’s team is also on board with, so we won’t go through the whole process and then get vetoed.”

Increases complaint cap, penalizes misclassification

The new version is much wider in scope, affects all industries and focuses on bolstering existing powers within the Colorado Department of Labor and Employment to punish bad actors.

“It’s still a big step,” Duran said. “We heard last time about needing to hold bad actors accountable. That’s what this bill does.”

Right now, employees can file a wage theft complaint up to $7,500 with the Colorado Division of Labor Standards and Statistics. The bill would increase that cap to $13,000 starting in July 2026 and then get adjusted for inflation starting in 2028.

That increase improves access to justice, said Towards Justice Policy Director Nina DiSalvo.

“Neither employers nor employees want to head to court to resolve smaller wage theft claims. It’s more efficient for everyone to resolve this administratively,” she said.

The division would also need to publish online the name of any employee violators and whether the violation was willful. The Wage Theft Transparency Act already mandates some public disclosure about employer names, wages ordered, penalties and fines, but not whether the violation was willful.

“We want to deter employers from taking advantage of these employees coming in, doing the work and then not getting paid. We need them to know that there will be consequences and their name will be online,” Duran said.

Additionally, if the employer doesn’t fix their violation within 60 days, the division would have the power to report them to any government body that has jurisdiction over the employer’s licensing, registration and permitting. And if an employer fails to pay the affected employee, the bill shortens the time before the employee gets money from the state’s Wage Theft Enforcement Fund from six months to 120 days.

The bill also increases penalties for employers that intentionally misclassify employees as a way to skirt overtime pay and benefit requirements. The bill would put a first violation at $5,000 and a second violation within five years at $25,000, with additional penalties if the violation isn’t fixed within 60 days. DiSalvo said that misclassification is especially rampant in the construction, janitorial and gig worker industries.

“Painters and drywall finishers are particularly impacted by misclassification, which can deny them their rightful wages and benefits. This creates an unfair advantage for those who exploit workers, undermining ethical contractors and making it more difficult for them to compete and provide a livable wage,” Derek Molyneux, the services director for International Union of Painters and Allied Trades District Council 81, said in a statement when the bill was introduced.

Finally, the bill specifies that using a worker’s immigration status to impact their wage rights is illegal.

“Gov. Polis looks forward to working with Majority Leader Duran and Rep. Froelich to strengthen our wage theft laws in an effective way to ensure workers are paid the money they are owed for the work they do. He’s pleased that his team and the sponsors from last year have worked in good faith to bring back a strong proposal to reduce wage theft,” Polis spokesperson Shelby Wieman wrote in an email.

One organization opposed

The bill does not have a published fiscal note yet, but Duran said that sponsors will work, if necessary, to reduce the cost in order to get it passed. There would need to be an additional employee at CDLE, for example, to accomplish the work envisioned in the bill.

The bill has the backing of organizations including the Colorado Center on Law and Policy, Voces Unidas and Towards Justice. The Colorado Chamber of Commerce is still reviewing the language and getting member feedback, according to spokesperson Cynthia Eveleth-Havens.

The Colorado Competitive Council, or C3, is the only organization registered in opposition to the bill so far. It predicts the bill could increase costly litigation and is opposed to language that it think shifts more attorney fee responsibility in civil wage theft cases to employers. The bill repeals language that allows a court to award attorney fees to an employer in certain cases.

The organization is also against provisions granting non-economic damages in wage claim cases and allowing independent contractors to pursue a claim.

“There are a lot of things in this bill that we support, and we think it’s a lot better than last year’s. We oppose wage theft — it’s despicable and companies that do it are despicable,” said C3’s executive director Rachel Beck.

She said the organization has shared concerns with bill sponsors.

“We’re looking at this in the larger context of Colorado’s business climate, and businesses are struggling with the costs of doing business and a lot of that has to do with the increasingly litigious environment.”

The bill is set for its first hearing on Jan. 30 with the House Business Affairs and Labor Committee.