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New CO Law Makes Wage Theft a Felony

Friday, May 24, 2019

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Last Thursday (May 16), Colorado Gov. Jared Polis signed The Human Right to Work With Dignity Act (HB-1267) into law, which officially makes wage theft over $2,000 a felony theft.

Previously, the statutory framework identified criminal penalties for employers unwilling to pay wages or compensation as an unclassified misdemeanor with fines of $300-$500.

Under new legislation, employers found guilty of this crime constitutes as theft, with possible charges including petty offense, misdemeanor or felony (depending on the amount unpaid wages).

Bill History

On April 2, Colorado’s General Assembly’s House Judiciary Committee approved the House Bill 1267.

twilightproductions / GettyImages

Last Thursday (May 16), Colorado Gov. Jared Polis signed The Human Right to Work With Dignity Act (HB-1267) into law, which officially makes wage theft over $2,000 a felony theft.

“The bill 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 his or her assets,” according to the bill summary.

“The bill includes in the definition of employee as any person who performs work that is an integral part of the employer's business and includes in the definition of employer foreign labor contractors, officers or agents of an employer entity, and any person acting directly or indirectly in the interest of an employer in relation to an employee.”

According to a report from the Colorado Fiscal Institute, more than 500,000 workers in Colorado lose about $750 million a year because of wage theft. The analysis showed that methods used by employers include:

  • Nonpayment, which includes late payments and not paying employees what they’ve earned;
  • Underpayment;
  • Misclassification of employees as independent contractors in order to avoid having to pay benefits; and
  • Unauthorized payroll deductions for expenses like transportation, materials and tools.

Prior to the bill signing, legislation appeared in the chamber’s Labor & Employment Council, where they discussed the bill on April 10.

Other States

Around the same time as Colorado’s original announcement of the bill, California amended an existing bill which aimed to better codify workers as independent contractors or employees to streamline the wage process.

While the bill was introduced last December, it was amended in assembly on March 26, just a few weeks after a report was released from the University of California Berkeley Labor Center, which found that construction workers were one of three occupations—along with truck drivers and janitorial workers—in the state routinely misclassified as independent contractors.

The legislation pulls from the Dynamex Operations West Inc. v. Superior Court of Los Angeles case, which implemented the “ABC test,” which says that someone is an employee if a company controls what they do, if their work is linked to a company’s primary business and if they do not have an independent business performing that work.

Assemblywoman Lorena Gonzalez, D-San Diego, is sponsoring the bill, which would codify that test.

4kodiak / GettyImages

Around the same time as Colorado’s original announcement of the bill, California amended an existing bill which aimed to better codify workers as independent contractors or employees, as to to streamline the wage process.

Additionally, last year, Oregon also introduced a bill that aims to protect wages by requiring a general contractor to pay wages owed by a delinquent subcontractor if certain conditions are met.

If the general contractor has given the subcontractor what was owed, they are not liable for unpaid wages or benefits on part of the subcontractor.

From 2015-17, there were over 500 wage claims in the construction industry in Oregon, according to the state’s Bureau of Labor and Industry. In 2016-17, the bureau collected more than $600,000 in unpaid wages.

What’s Happening Now

By making labor a “thing of value,” state law enforcement in Colorado will not only be able to prosecute individuals or groups for wage theft, but the new law will also aid in fighting labor trafficking. As reported by the General Assembly, in the state of Colorado, labor trafficking costs tens of millions to the state itself and hundreds of millions to the workers involved.

“Unscrupulous employers who purposefully withhold wages or underpay workers hurt the economy by undercutting good employers’ bids, engaging in tax fraud and denying workers fair compensation,” said one of the Act's sponsors, Rep. Meg Froelich.

The new legislation is slated to take effect on Jan. 1, 2020.

   

Tagged categories: Ethics; Finance; Good Technical Practice; Government; Labor; Laws and litigation; NA; North America; PaintSquare App - Commercial

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