Understanding Recent Impact of Colorado Wage Act

Miller and Law, P.C.
Oct 15
5 min read

Introduction

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Colorado Wage Act Claims after the August 6, 2025 Amendments

On May 22, 2025, the Colorado legislature signed into law House Bill 25-1001, which amends the Colorado Wage Claim Act (“Wage Act”). These amendments became effective August 6, 2025. Given the significant changes in enforcement, employer liability, definitions, and remedies, it is critical for Colorado employers (and their HR/legal advisors) to be aware of the new landscape. This article is intended to highlight the key amendments but focuses primarily upon enforcement actions under C.R.S. § 8-4-109 for unpaid wages after termination.

A Brief Overview of Key Amendments

Here are some of the major amendments enacted under HB 25-1001:

The definition of “employer” is broadened: It now includes an individual who owns or controls at least 25% of the ownership interest in a business unless that individual can show they are a minority owner and have fully delegated day-to-day authority.

Deductions from wages: Employers are prohibited from making payroll deductions that would reduce a worker’s pay below the applicable minimum wage.
Stronger enforcement powers & increased claim amounts: The limit for administrative claims handled by the Colorado Department of Labor & Employment (CDLE) is raised to $13,000 per employee for claims filed on/after July 1, 2026 (with future inflation adjustments).
Significant penalties for misclassification of employees as independent contractors: Willful misclassification now triggers fines starting at $5,000 per violation, with escalating amounts for repeat or unremedied violations.
Stronger anti‐retaliation protections: The amendments extend protections for workers who assert wage claims or raise wage‐hour compliance issues in good faith. Importantly, a rebuttable presumption of retaliation arises if an adverse action is taken within 90 days of the protected activity.
Public disclosures & licensing consequences: Employers found to have willful violations can be publicly listed; the CDLE may notify licensing or permitting authorities if a violation is not remedied within 60 days.
Safe‐harbor waiver of penalties: Under certain conditions, the CDLE Director may waive the automatic penalty for late payment of wages if the employer pays within 14 days of a formal claim and has no prior violations in the last five years.

Payment of Wages after Separation of Employee under C.R.S. § 8-4-109

C.R.S. § 8-4-109 handles the timing and method of wage payments on termination of employment, the penalties for failure to timely pay, and associated payments to surviving spouses or heirs.

Section 8-4-109 (1) requires that in instances of involuntary separation, such as termination, an employer must pay at the time of separation all wages that are earned, vested, determinable, and unpaid. If the separation is voluntary, then the employer must pay the employee all earned, vested, determinable, and unpaid wages upon the next regular payday after separation.

What Constitutes Wages for a Claim under C.R.S. § 8-4-109?

Earned, vested, and determinable wages includes hourly wage or salary, bonuses, commissions, and accrued paid vacation time. This means an employees final paycheck must include not only compensation for the hours worked, but also the balance of any PTO account, any earned bonuses (such as performance-based bonuses), and any commissions. It should be noted that any condition that requires continued employment as a basis to receive a bonus or commission is void and is not a valid defense to withhold payment of commissions and bonuses.

Who Brings a Wage Act Claim?

An employee has a choice whether to initiate a claim through a private action by hiring an attorney, or the employee may initiate the claim through the CDLE. Often the amount of unpaid wages is the determining factor. Previously, the CDLE handled claims of unpaid wages totaling $7,500 or less. After amendment, that amount has increased to $13,000.

If an employee brings a private cause of action, that employee may recover their reasonable attorney’s fees in addition to the unpaid wages and penalties described below.

What Happens if Full Final Payment is not Made?

C.R.S. § 8-4-109(3) deals with failure to pay wages. An employer is provided a 14-day window to pay unpaid wages after receiving a demand or being served with a lawsuit for unpaid wages. If an employer fails to pay the unpaid wages within 14 days, that employer is subject to serious penalties that are added to the amount of unpaid wages:

C.R.S. § 8-4-109(3) imposes an automatic penalty of the greater of two times (2x) the amount of the unpaid wages or $1,000.00.
If non-payment is determined to be willful C.R.S. § 8-4-109(3) imposes an automatic penalty of the greater of three times (3x) the amount of the unpaid wages or $3,000.00.

In addition to these penalties, an employer will be liable for the reasonable attorney’s fees incurred by the employee if the employee brings a private action. If the employee initiates a claim through the CDLE, then the employer will face administrative penalties exceeding $5,000 (the CDLE may waive these penalties if payment is received within 14 days).

Who is an Employer under the Colorado Wage Act?

The Colorado Wage Act defines “Employer” to include not only the company, but also the supervisor, manager, and/or any individual with an ownership interest of 25% or greater. This means that individuals can be held personally liable for unpaid wages, penalties, and attorney’s fees or administrative fines. In addition, the Colorado Wage Act can attach criminal liability to these individuals for wage theft.

Recommendations to Avoid a Colorado Wage Act Claim

Although this list is not exhaustive, the following steps can go a long way in avoiding liability for unpaid wages under the Colorado Wage Act in the future:

Review and update termination processes:

Ensure your payroll system can identify when an employee is terminated or resigns and trigger payment of all earned, vested and determinable wages/compensation promptly.
Review and document what constitutes “earned, vested and determinable” wages/compensation in your context (e.g., unpaid commissions, bonuses, accrued vacation if applicable, etc.).
Confirm that payment method and timing comply with § 8-4-109(d).

Monitor formal claims and demands:

Establish a process to track when a written demand or claim is filed/served so the 14-day clock begins.

If a claim is received, coordinate urgent pay-out (with appropriate verification) to preserve the possibility of penalty waiver under § 8-4-109(3.5).

Ensure compliance with employer definition exposure:

Identify individuals who own or control ≥ 25% of the business and ensure they understand they may now fall within the “employer” definition and be liable under § 8-4-109 and related Wage Act provisions.
For those individuals who claim to have delegated day-to-day control, maintain documentation of that delegation.
Train HR, payroll and leadership staff
Make sure teams understand the heightened enforcement environment: the CDLE’s expanded authority, larger claim amounts (to $13,000+), public disclosure, personal liability.
Emphasize that termination pay is not optional; delayed or incorrect pay may trigger serious consequences.

Conclusion

The August 6, 2025 amendments to the Colorado Wage Claim Act mark a significant shift in Colorado’s wage‐hour enforcement landscape. Under § 8-4-109, the stakes for employers have increased: timely payment on termination remains mandatory, but now employers have an added incentive to respond quickly, and more individuals may face personal liability. Given these changes, proactive compliance — through updated processes, training, and documentation — is essential.

By preparing ahead of time and treating termination pay obligations with the seriousness they now warrant, employers in Colorado can mitigate risk and avoid the heightened penalties, disclosures, and regulatory consequences now in play.

At Miller & Law, our attorneys have decades of experience guiding both employees and employers through tough decisions with care and precision. Think the updates to the Colorado Wage Act might be affecting your life? Reach out to our office at your earliest convenience with further questions or concerns.

*This article is intended for informational purposes only and should not be construed as legal advice. Individuals involved should consult with legal professionals for specific guidance tailored to their circumstances.

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