The Colorado Wage Act, Employee Status, and Terms of Compensation - May 2007 - Labor and Employment Law
| Publication year | 2007 |
| Pages | 63 |
2007, May, Pg. 63. The Colorado Wage Act, Employee Status, and Terms of Compensation - May 2007 - Labor and Employment Law
May 2007
Vol. 36, No. 5 [Page 63]
Labor and Employment Law
The Colorado Wage Act, Employee Status, and Terms of Compensation
by Michael J. Guyerson, Christian C. Onsager
Labor and Employment Law articles are sponsored by the CBA Labor and Employment Law Section to present current issues and topics of interest to attorneys, judges, and legal and judicial administrators on all aspects of labor and employment law in Colorado.
Article Editor:
John M. Husband of Holland & Hart LLP in Denver - (303) 295-8228, jhusband@hollandhart.com
The Colorado Wage Claim Act, the subject of a February 1999 article in The Colorado Lawyer,(fn1) was amended in 2003. The amendments eliminated an employer defense to employee wage claims and consequently expand the reach of employee claims for unpaid wages. Case law has developed over the years in response to the changing workplace and the application of the Act. This article focuses on the statutory changes and the developing case law.
The Colorado Wage Claim Act (Wage Act or Act)(fn2) was created to provide a simple mechanism for employees to recover their unpaid wages. However, ongoing amendments, developing technology, and a changing paradigm in the workforce are creating significant challenges to the enforcement of existing rules and regulations.(fn3)
Employment agreements, which often are recommended by counsel as means of avoiding disputes and litigation, frequently are at the epicenter of wage disputes, because they often define terms in a manner inconsistent with the Act. Whether representing employers or employees, it is important for counsel to know and understand how the Act defines critical terms and to be aware of how the courts have been applying these definitions in the modern business climate. This article provides an overview of the Wage Act; defines important Wage Act terminology, such as "employee," "wages" or "compensation," and "written notice"; and presents significant cases decided under the Act.
Overview of the Wage Act
Many practitioners have had inquiries from clients or prospective clients about their rights as employees for unpaid or disputed wages with an employer. If the inquiry comes from an employer, the nature of the liabilities is the issue. The principal claim of a terminated employee under the Wage Act is not limited to the recovery of the unpaid wages. If successful, the prevailing claimant will be awarded the unpaid wages, plus attorney fees and costs. Moreover, if specific notice procedures have been followed, a 50 percent penalty on the amount of the unpaid wages also is recoverable.(fn4) It generally is unimportant whether the former employee was terminated for cause, terminable at will, or voluntarily separated from employment;(fn5) in almost every case, the employer must pay the wages.(fn6)
To recover under the Wage Act, the claimant must show by a preponderance of the evidence that:
1) the claimant was an "employee" as defined under the Act during the time period for which wages are claimed;
2) the amounts claimed constitute "wages" or "compensation" as defined under the Act; and
3) the wages or compensation claimed were "earned, vested, and determinable" at the time of separation from service.
To recover the 50 percent penalty, the employee or a designated agent must have made a written demand for the payment of wages within sixty days after the date of separation and must have stated in the notice where the payment can be received.(fn7) An employer who receives such a demand has ten days after receiving the written demand to pay the demanded wages; if the employer refuses to make the payment, the employer is liable to the employee for the 50 percent penalty.(fn8)
An employer has very few grounds for refusing to make wage payments. For example, the 2003 amendments to the Act eliminated the employer's rights to withhold wages that were subject to a "bona fide dispute." This means that even if the employer believes the employee has breached a duty of loyalty to the company, such as directly competing with the employer, the employer must pay the wage first and then file a separate civil action to assert the breach of duty claims and recover damages from the employee.(fn9) The Wage Act provides for very limited categories of employer deductions from wages limited to regular payroll deductions (for such items as union dues, insurance, and retirement plan contributions), and for limited offsets for properly documented employee loans...
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