2025 WAGE CLAIM CHANGES
Colorado lawmakers amended several changes of the Colorado Wage Claim Act (largely benefitting employees), which require immediate attention. The changes are effective of August 6, 2025, unless stated otherwise:
-CO employers may not deduct wages from payroll if it reduces the employee’s pay below the minimum wage ($14.81 hourly, $11.79 tipped) or the locality (i.e. Denver and Boulder minimum wage is higher than Colorado minimum wage). Previously the language referred to the federal minimum wage, which is half the amount of CO.
-In the past, the Colorado Department of Labor and Employment (“CDLE”) could assess penalties if an employer failed to pay an employee’s informal Wage Demand within 14 days. Now, CDLE may waive penalties after being served a formal claim by the CDLE if the employer pays the full claim within 14 days and it is not a repeat offender within the past 5 years.
-CDLE may report an employer to any government body that can deny the employer’s license, permit or registration due to violating wage laws.
-Before August 2025 employers could recover attorneys’ fees in a wage claim if the employee recovered less than what was demanded. Under new law, employers cannot recover attorneys’ fees unless the employee’s claim “lacks substantial justification.”
-Not only employees may claim discrimination and retaliation for protected activity, but now contractors may also raise “good faith” concerns.
-When an employer’s “adverse action” is taken within 90 days from an employee’s “protected activity” it is statutorily presumed to be a retaliatory intent.
-Employees may now recover emotional distress damages as well as attorneys’ fees in addition to lost pay.
-The penalty for misclassifying employees as contractors will double for “willful” violations from $5,000 to $10,000 if not paid within 60 days. If a second willful violation occurred within 5 years, the penalties will double from $25,000 to $50,000 if not resolved in 60 days.
-Individuals who own or control 25% or more of a business may face personal liability for wage violations except those who fully delegate their authority to control day-to-day business operations.
-By July 1, 2026, CDLE increases the limit for a wage claim from $7,500 to $13,000. Moreover, if CDLE finds the wage claim is willful, CDLE must publish the employer’s name on its website and notify all government bodies with the ability to remove the employer’s license if not resolved within 60 days.
Please contact Sholler Edwards Law Firm if you need advice regarding the differences of employees versus contractors, wage claims, employment matters and/or if you would like an compliant assessment of your Employee Handbooks.