Wage Theft to Be a Felony Under New Colorado Law

Author: David B. Weisenfeld, XpertHR Legal Editor

May 22, 2019

Effective January 1, 2020, Colorado employers will face criminal penalties if they willfully fail to pay wages exceeding $2,000. Under current law, an employer that refuses to pay a wage claim is guilty of a misdemeanor and faces only minor fines.

But the new law defines the failure to pay employee wages as theft, and therefore makes it a felony. It also removes the exemption from criminal penalties for employers that are unable to pay wages because of a Chapter 7 bankruptcy action, or other court action, resulting from the employer having limited control over its assets.

The Colorado wage theft law defines "employer" similarly to the federal Fair Labor Standards Act, and includes foreign labor contractors, migratory field labor contractors and crew leaders in the definition.

Wage theft had been seen as a significant issue in the Rocky Mountain state, particularly in the construction industry, where some companies allegedly lured migrant workers with false promises of good wages.

Other states also have taken steps to crack down on wage theft. For instance, California's Fair Day's Pay Act gives the state labor commissioner increased enforcement rights against employers. The Act provides that a company's owners, directors, officers or managing agents can be held personally liable as the employer for certain wage and hour violations.

In a first-of-its-kind criminal conviction following a wage theft investigation, a San Diego restaurant owner was sentenced to two years in jail in 2016 for promising wages to immigrant workers but paying them only in tips. The jury found him guilty of two felony counts of grand theft of labor and four counts of failing to provide itemized wage statements.

Meanwhile, an Oregon law aims at deterring wage theft by requiring employers to include additional information on employees' pay statements. The law also prohibits contractors or subcontractors from failing to pay an employee at the prevailing wage rate, and states that violators will be guilty of a felony and face hefty fines and/or jail time.