Legislators will debate a very different wage-theft bill this year, but opposition remains

After Gov. Jared Polis vetoed a 2024 construction wage-theft-enforcement bill that he said could trip up law-abiding contractors, proponents are back with a follow-up that doesn’t single out one industry — but that may harm many sectors, some business leaders warn.

House Bill 1001, sponsored by House Majority Leader Monica Duran of Wheat Ridge and fellow Democratic Rep. Meg Froelich of Greenwood Village, is scheduled for its first hearing Thursday afternoon before the House Business Affairs & Labor Committee. And its compromise efforts already have gotten a shout-out from Polis in his State of the State Address, starting it on much firmer ground than that on which last year’s effort began.

A major reason that the bill is getting praise from both the Democratic governor and the construction industry is because it doesn’t include the primary provision of the 2024 proposal that led to its veto. That bill sought to require general contractors to pay workers of subcontractors if an unscrupulous subcontractor stiffed them, essentially mandating that large contractors may have to pay wages twice for offenses they did not commit.

After hearing the concerns of construction leaders, Duran said the coalition behind the bill — which includes several unions and the Towards Justice law firm — realized they could not reach consensus on that idea and decided to go in another direction. She said in an interview she hopes that change “put their minds at ease.”

But business leaders outside the construction industry say that what’s replaced that proposal is a slew of provisions that could create legal and financial problems particularly for small businesses that may inadvertently break the law.

Details of new wage-theft bill

HB 1001 would:

• Fine employers found guilty of misclassifying employees as contractors — a practice that often means workers don’t get benefits or workers’ compensation insurance — from $5,000 for a first violation to $60,000 for subsequent violations not remedied within 60 days;
• Require the Colorado Department of Labor and Employment to publish a website listing employers found to violate wage-theft laws and let CDLE notify government bodies that can revoke those businesses’ licenses if the violation isn’t cured within 60 days;
• Expand protections for whistleblowing employees by making it illegal to use a worker’s immigration status to threaten them and by presuming that workers subjected to adverse action within 90 days of reporting theft claims are being subject to retaliatory intent;
• Allow employees alleging wage theft to seek compensatory damages in a lawsuit, in addition to back pay and job reinstatement; and,
• Expand CDLE’s authority to investigate wage-theft claims from those claims totalling $7,500 or less in losses to claims up to $13,000. The division also would be able to pay workers within 120 days when employers can’t be located rather than waiting six months.

“This will focus on a wider group of workers, which I think is a good thing,” Duran told The Sum & Substance. “All this is set up for success, most importantly for workers. It’s a workers’ bill. It’s a wage-theft bill.”

Construction leaders applaud changes

Opponents of last year’s bill had asked the Legislature to expand CDLE’s investigating authority, arguing that would allow for more and quicker adjudication of wage-theft claims without dragging employes into court. But many of the other provisions are generating heartburn for a variety of business leaders.

That heartburn, to be sure, is more minimal for construction-industry leaders, who are lauding Duran for eliminating the attempt to force up-the-chain payments from general contractors. Jack Tate, president/CEO of Associated Builders and Contractors Rocky Mountain, said Duran and others proved their willingness to listen by jettisoning that “unwieldy” enforcement mechanism as well as the singular focus on his industry.

“This shows the proponents heard those objections and went back to the drawing board in good faith,” said Tate, a former state legislator. “It’s a completely different bill. Last year’s was creating liability. This year it’s creating advanced administrative oversight.”

Other business leaders worry about new provisions

But in shifting attention solely from the construction field, Grand Junction Area Chamber of Commerce President/CEO Candace Carnahan argued that sponsors have created a bill that is “more aggressive” to a variety of industries. And her concerns echo those of a growing number of business attorneys who question the impact of several key provisions.

Employee misclassification — which Duran noted has been a long-term concern of labor leaders because it can lead to workers getting shorted of key benefits — is rarely a black-and-white violation of law, Carnahan said. That’s especially true with small employers who don’t have a human-resources or compliance department able to explain the dividing line between employees and contractors, and the large fines proposed for it could have an immense impact, she said.

While some wage-theft violations involve outright failure to pay wages, many involve failure to pay proper benefits, add in overtime pay or allow workers to take required breaks. Attacking worker misclassification could cut down on those issues, Duran said.

The bill’s proposed allowance for workers to seek compensatory damages also is new and signals a new front on the years-long battle by plaintiffs’ attorneys to make easier to file legal actions against businesses and collect larger awards. Business leaders expect that same battle to play out this year over lawsuits involving the rights of Coloradans with disabilities and potentially in a revived effort to make it easier to file pricey Deceptive Trade Practices lawsuits.

Presumption of retaliation

And the provision that states that the firing or disciplining of a worker within 90 days of that worker submitting a wage-theft complaint is sufficient, without other evidence, to find retaliatory complaint concerns both Carnahan and Tate. Tate said it could lead to employers having to maintain more much detailed records around worker behavior that could lead to discipline, from harassment to negligent job performance.

Duran said that she offered the 90-day presumption period as a compromise to employers and would like business leaders to help her understand why that is problematic.

All those provisions, in addition to the creation of a violators’ list that could darken an employer’s name even if they inadvertently failed to pay wages or benefits, sends a bad message Carnahan argued. It says that Colorado is looking to crack down on businesses more than help them.

“Anytime you’re increasing the possibility of litigation, you are absolutely not signaling that we are open for business as a state or want to support business in our community,” she said. “The goal should be to catch the really bad offenders. But you’re going to have some innocent businesses caught in the crosshairs here.”

Adding expenses or reducing cost of living?

Duran noted also that while she included the expansion of CDLE investigative authority at the behest of business leaders, she can’t promise that provision will stay in the bill. Legislators are facing a $670 million budget shortfall for the fiscal year that begins July 1, so she can’t guarantee that funds proposed by Polis to boost investigative staff to cover the greater load of complaints that will be generated by that provision can stay in the budget.

“We know our budget. We’re realists. If we have to go back to $7,500, we will,” she said.

In contrast to business claims of potential financial burden, the Democratic sponsors of HB 1001 are touting it as a measure that can bring down the cost of living for workers in a session where both parties have vowed to attack Colorado’s affordability crisis. Sen. Chris Kolker of Centennial said that increasing the methods by which workers can recover money that has been stolen from them will allow them to afford daily living costs more easily.

“It is one piece in the overall goal of increasing affordability,” Kolker said in a news release when the bill was introduced on opening day. “It will make our employers more transparent in how they pay hardworking Colorado employees.”

HB 1001 is the second bill scheduled on the committee’s hearing docket, which is slated to begin at 1:30 p.m. in House Committee Room 112.