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July 28, 2025
Colorado has amended its Wage Act – effective August 6, 2025 – to increase enforcement mechanisms and maximum penalties for misclassification, retaliation, and wage payment claims. See 2025 Colo. HB. 1001.
Broader Definition of Employer
The amendments expand the definition of “employer” to include an individual who owns or controls at least 25% of the ownership interest in a business. Thus, individuals may be held personally liable for wage and hour violations.
Protection of Minimum Wage
Employers will be prohibited from making any payroll deduction that lowers a worker’s wages below the applicable minimum wage for that pay period.
Penalties for Worker Misclassification
An employer found to have misclassified a worker (i.e., as an independent contractor versus an employee) will have to pay a fine in the following amounts, in addition to any other relief ordered:
The Director of the Division will adjust the amount of these fines for inflation by January 1, 2028, and every other year thereafter.
Anti-Retaliation
Current law prohibits an employer from discriminating or retaliating against an employee for taking protection under wage and hour laws. The amendments expand the definition of protected activities to include an employee raising concerns in good faith.
The amendments further require a fact finder to consider the time between an individual’s exercise of a protected activity and an employer’s adverse action when determining whether an employer has retaliated against the worker. A period of 90 days or fewer between protected activity and adverse action carries a presumption of retaliatory intent.
The amendments also specify that it is a violation to use an individual’s immigration status to discriminate or retaliate against a worker who has engaged in protected activity.
Expanded Jurisdiction Over Wage Claims of Higher Value
Current law limits the ability of the Director of the Division to adjudicate claims for nonpayment of wages or compensation to $7,500 or less. The amendments to the Wage Act will increase the maximum amount to $13,000 for claims filed from July 1, 2026, through December 31, 2027, and in an amount specified by the Director to adjust for inflation beginning January 1, 2028.
Public Disclosure and Impact on a Business’s Credentials
The Wage Act also will require the Division – when adjudicating a wage claim – to determine whether the employer’s violation was willful. The Director of the Division will publish on the Division’s website the names of all employers found to have violated the Wage Act and will disclose whether the violation was deemed to be willful.
If the Division deems the violation to be willful and the employer does not remedy the violation within 60 days, the Division may notify all government bodies with the authority to deny, withdraw, or otherwise limit or impose remedial conditions on the employer’s license, permit, registration, or other credential.
Possibility for Penalty Waivers
The amended law gives discretion to the Director of the Division to waive penalties[1] for an employer’s failure to pay wages within 14 days of an employee’s written demand, as long as the employer pays within 14 days of receiving an administrative claim (i.e., a complaint filed with the Division) and as long as the employer has not been found to have violated the Wage Act in the previous five years.
Higher Burden to Award Attorney’s Fees
Currently, an employer may recover attorney’s fees and costs from an employee if it pays an employee’s demand in full but the employee ultimately is awarded less than the amount demanded. The Wage Act will now require a court – before awarding an employer reasonable costs and attorney’s fees – to find that an employee pursued a wage claim that lacked substantial justification.
Other Changes
In addition, the amendments to the Wage Act:
Takeaways
The amendments to Colorado’s Wage Act are plentiful. Colorado employers should take time, before the August 6 effective date of the amendments, to familiarize themselves with the law’s changes, train personnel on the changes, and update employment policies and practices accordingly.
The author of this article, Patricia Tsipras, is a member of the Bar of Pennsylvania. This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in Pennsylvania, Colorado, or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist. Always consult an attorney with specific legal issues.
[1] Under the Wage Act, penalties include the greater of two times the amount owed or $1,000 per employee for non-willful violations or the greater of three times the amount owed or $3,000 per employee for willful violations.
