Coalition of business groups ask Polis to veto wage-theft bill

Construction equipment sits ready for use on a roadway project in Wheat Ridge.

A dozen contractors and business organizations have mounted an effort to ask Gov. Jared Polis to veto a recently passed bill that would ramp up enforcement of wage theft in the construction industry by placing new liability onto general contractors.

Coordinated by the Associated General Contractors of Colorado, the push acknowledges that theft of wages is a horrendous act and calls on the state government to increase its use of existing tools to enforce laws designed to stop it. But it argues that the specific new methods of enforcement offered in House Bill 1008 unfairly target one industry, will have disproportionately negative effects on small contractors and will incentivize rather than stop the stealing of wages by bad actors in the sector.

The bill — sponsored by House Majority Leader Monica Duran, D-Denver, and Rep. Meg Froelich, D-Greenwood Village — would allow workers who are stiffed by subcontractors to go straight to general contractors and demand payment within three days. Wage theft occurs not just when an employer fails to remit any or all wages to a worker but when they fail to pay them overtime or differential holiday pay, provide proper benefits or allow required breaks as well.

HB 1008 is based on a law instituted by the city of Denver in early 2023, but it has a key difference. Where the municipal ordinance requires subcontractors to go up the ladder of contractors above them to try to secure payment before approaching a project’s general contractor, the state proposal allows them to skip multiple rungs and go straight to the top.

Why advocates support this approach to curbing wage theft

A large crowd fills House Committee Room 112 to hear a bill on construction wage theft in February.

Nina DiSalvo, policy director for the Towards Justice law firm, told the Senate Business, Labor & Technology Committee during an April 30 hearing that HB 1008 acts like an incentive to ensure contractors are hiring reputable subs and watching their actions. She and other advocates spoke of instances where workers showed up to get paychecks only to find that subcontractors had closed shops and left town, and they argued that current law only allows for judgments against them but often doesn’t make workers whole.

“This bill offers a targeted mechanism to affect wage theft in Colorado’s construction industry,” she said. “We need market incentives to weed out these bad actors, and that is what this bill will do.”

Members of the veto coalition, in sending their requests to the Democratic governor, say that HB 1008 misses that supposed mark significantly in its details and could be harmful to both employers and workers in several ways. Members include AGC, Associated Builders and Contractors, the Colorado Contractors Association and Hispanic Contractors of Colorado, as well as general business organizations like the Colorado Chamber of Commerce and Colorado Competitive Council.

Objections to House Bill 1008

First, it targets a specific industry from which just 8.9% of total wage-and-hour claims submitted to the Colorado Department of Labor and Employment arose in 2023, said AGC Director of Advocacy Michael Gifford in his veto letter. Even then, almost half the claims resulted in no liability against the contractor, meaning that sponsors are singling out one largely complaint sector to test a faulty program that sponsors said could expand to other industries next year, he said.

“It is indefensible to single out one industry as a unique bad actor when the state’s own data shows otherwise,” Gifford wrote, adding that the industry has worked with state officials to implement six laws or executive orders to reduce wage theft since 2009.

Michael Gifford, advocacy manager for Associated General Contractors of Colorado, explains his objections to a wage-theft bill at a January council meeting at the Colorado Chamber of Commerce.

Second, several groups wrote, sticking general contractors who have no knowledge of the illegal actions of subs with the ultimate responsibility for paying for their transgressions actually may serve as an incentive for shady subs to shirk their duties. The bill includes only a $2,000 fine (in addition to having to repay general contractors) for those who are caught, CCA President/CEO Tony Milo wrote, and it sets a legal precedent that makes the state less friendly to business, Colorado Chamber of Commerce President/CEO Loren Furman wrote.

“This is not a solution to combat wage theft; this is an unfair and unnecessary attempt to punish good actors for the actions of others,” Furman wrote.

Could bill on wage theft particularly hurt smaller firms?

Several contractors, including HCC President/CEO Ale Spray, told the Senate committee that more general contractors are likely to require costly bonds from subcontractors, particularly those they don’t know, because of the proposed new rules. That in turn will make it harder for small and upcoming companies, many of which are owned by women and minorities, to be able to afford to carry the bonding and get jobs, she said.

Finally, HB 1008 creates a questionable new legal solution rather than just providing CDLE with more resources to do a job it has been doing effectively in cutting wage theft, Gifford said. A recent law allows CDLE to pay workers when the state can’t find the culpable subcontractor, and giving the state more resources to go after these scofflaws is a better solution than creating a new joint and severable liability, he said.

Jack Tate, president/CEO of ABC’s Rocky Mountain chapter, also wrote in his veto request that the law unfairly exempts collective bargaining agreements put into place on union work contracts. While sponsors said CBAs include their own enforcement mechanisms, Tate wrote that this creates loopholes that could allow wage theft to persist and sends the message that the state will treat union and non-union workers differently.

Polis has until June 7 to sign or veto bills passed by the Legislature.