New Colorado Law Makes Wage Theft a Felony

Colorado has joined a growing number of states that have passed laws making failure to pay wages or paying less than the minimum wage felonies. Formerly, wage theft was a misdemeanor in Colorado.

The law, HB 19-1267, came about as a recommendation of the Colorado Human Trafficking Council to combat labor trafficking, which is a form of modern-day slavery. The law also got a boost from the Worker Misclassification Task Force established by Gov. Hickenlooper last year. This group focuses on identifying and holding companies accountable for misclassifying workers as independent contractors rather than employees. Both groups noted that most victims of labor trafficking are undocumented workers who speak little to no English. They are hired by unscrupulous labor brokers who may send them across national or state lines to perform low-skilled manual labor. They are generally paid less than trained workers and may have their wages withheld without their knowledge or consent.

In passing the law, however, the Colorado Legislature acknowledged that not all victims of wage theft are victims of human trafficking. Wage theft is estimated to cost Colorado workers hundreds of millions of dollars in wages and benefits annually and to cost the State of Colorado tens of millions of dollars in revenue.

The law applies to all employers who are covered by the federal Fair Labor Standards Act (FLSA) and specifically includes foreign labor contractors and migratory field labor contractors or crew leaders in the definition. FLSA coverage extends to enterprises with at least two employees that have an annual dollar volume of sales or business done of at least $500,000 and hospitals, businesses providing medical or nursing care for residents, schools and preschools, and government agencies.

The law covers employees who performs labor or services for the benefit of an employer and includes migratory workers. Independent contractors are not covered.

The law defines wage theft as a felony when the theft is of an amount greater than $2,000. The law adds refusing to pay wages or compensation with the intent to coerce a person who is owed wages as conduct that constitutes wage theft. The law removes the exemption from criminal penalties for an employer who is unable to pay wages or compensation because of a Chapter 7 bankruptcy action or other court action resulting in the employer having limited control over its assets.

Finally, the law defines intentionally paying less than the minimum wage as theft. The State of Colorado and its agencies or entities; counties; cities; municipal corporations; quasi-municipal corporations; school districts; irrigation, reservoir, or drainage conservation companies; or districts organized and existing under Colorado law are exempt from this provision of the new law.

Colorado’s new law takes effect January 1, 2020.