Sponsors of a bill to ramp up penalties for businesses committing wage theft promised to make changes to it Thursday but weren’t yet ready to offer specific amendments, leading to a partisan split as the bill advanced out of its first legislative committee.
House Bill 1001, authored by House Majority Leader Monica Duran of Wheat Ridge and fellow Democratic Rep. Meg Froelich of Greenwood Village, seeks to attack the crime in a different way than their 2024 legislation, which Democratic Gov. Jared Polis vetoed. Rather than focus solely on the construction industry and seek compensation from general contractors when subcontractors fail to pay workers, the new bill takes aim at employers in all sectors, seeking specifically to punish what supporters call repeat and willful offenders.
It would do so by raising fines significantly for employers who misclassify fulltime workers as benefit-light contractors, by identifying on a public website those companies that willfully violate the law and by permitting penalties against even minority owners of firms. It also would allow the Colorado Department of Labor and Employment to adjudicate claims of larger amounts of wage theft — a change hailed by both proponents and skeptics — and would further penalize employer retaliation against workers alleging theft.
“Because current enforcement is so weak, this suggests the benefits of wage theft outstrip the costs of compliance,” said Sophie Mariam, a labor policy analyst for the Colorado Fiscal Institute, which estimates wage theft costs Colorado workers $730 million annually. “This bill is a critical step to making sure that workers who experience wage theft are made whole and can provide for their families and themselves.”
Are proposed changes needed or onerous?
The theft of more than $2,000 in wages — an action that can go beyond straight-up nonpayment of earnings to include failure to pay overtime or refusal to grant breaks allotted by law — is a felony, but labor leaders say that hasn’t stopped it from being rampant. Numerous workers told members of the House Business Affairs and Labor Committee that they’d been forced to work longer hours without more compensation, been shorted as many as five weeks of wages and seen subcontractors vanish before they could get paid.
Leaders from the restaurant, construction and general business communities all decried the act of wage theft Thursday. But they also warned that the far-reaching approach to boosting penalties sought by HB 1001 will subject small businesses making innocent mistakes to onerous penalties that could threaten their existence.
Meghan Dollar, senior vice president of governmental affairs for the Colorado Chamber of Commerce, noted, for example, that a provision banning successful defendant employers from receiving attorney’s fees in court could incentivize costly meritless lawsuits. Another clause presuming that any discipline against a worker within 90 days of them alleging wage theft is retaliation effectively will bar employers from being able to correct unprofessional or unsafe behavior by anyone who makes a claim, warned Jack Tate, president/CEO of Associated Builders and Contractors Rocky Mountain.
A panel of business leaders — Meghan Dollar of the Colorado Chamber of Commerce, Jace Tate of Associated Builders and Contractors Rocky Mountain and Carly West of the Denver Metro Chamber of Commerce — ask a House committee to amend House Bill 1001 on Thursday.
Defining owners liable for penalties
But the provision that generated the most debate is one that changes the definition of “employer” for wage and hour laws to include any individual who controls at least 25% of the ownership interest in a company. That opens them up to fines and to worker lawsuits, even if they have no part in the day-to-day operations of a company.
With more than 50% of restaurants reliant on silent minority investors for capital, exposing them to penalties likely would scare off financial providers who are the difference between eateries opening or not, Colorado Restaurant Association President/CEO Sonia Riggs said. Restaurants already operate uniquely among sectors with provisions like the tip credit requiring them to abide by different financial regulations, and many of those cited for wage theft are small companies who violate the law accidentally, she added.
“Restaurants are having a hard time now keeping their doors open, and this bill makes that even harder,” said Riggs, pointing to rising costs and decreasing foot traffic since the pandemic that’s led to a swath of eateries shutting down.
Sponsors promising coming amendments
Yet, Jonathan Morales, a Western States Regional Council of Carpenters representative, testified the 25% provision is key to the bill because it allows aggrieved workers to go after the people who can make them whole — business owners with money they can recoup. And Froelich, even as she promised to continue working on that provision, noted that any company owners are liable for financial penalties only if they fail to pay workers funds that are owed to them.
“Obviously, if you’re a 25% owner making a profit off of wage theft, then you should be held liable,” Froelich said.
Colorado state Rep. Rebecca Keltie discusses her concerns with a wage-theft bill during a committee hearing on Thursday.
Duran said the sponsors were not going to offer any amendments on Thursday, but she vowed to continue working with groups from the Colorado Chamber to the CRA to the Colorado Municipal League to address their concerns. Several Republicans, however, said they needed to see those fixes attached to the bill before they could get behind it, and every GOP committee member voted against HB 1001 Thursday as it advanced 8-5 to the House Finance Committee for its next hearing.
“There are good bills and there are bad bills. I think this has good-bill potential,” Rep. Rebecca Keltie, R-Colorado Springs, said before casting her vote. “I just think it goes a little too far. And I think it needs more work.”