The Colorado Wage Claim Act: Are you liable for wages if your company seeks bankruptcy protection?

• Author: Tuttle, Monique
• Position: Practical Biz - Brief Article

* Corporate officers - did you know that under Colorado state law you could be personally liable if your company fails to pay wages to employees, even if your company has filed for bankruptcy protection?

The Colorado Wage Claim Act (the "Wage Act") requires employers to make timely payments of wages earned by employees. Agreements with employees to forgo wages or to delay them are illegal and will not be enforced. If an employer refuses to pay earned wages without a good-faith legal justification, then an employer also will be assessed a penalty and will be forced to pay the employee's legal fees.

The Wage Act defines "employer" as including "every person, firm, partnership, association, corporation ... employing any person in Colorado" and "any agent or officer thereof." In 1992, the Colorado Court of Appeals held that, by including "any agent or officer thereof" in the definition of employer, the state legislature intended to impose personal liability for wages on at least high ranking corporate officers. The Court held that such personal liability could be imposed based solely on status as a corporate officer and would not be limited to officers with duties relating to the unpaid employee.

More recently, in June 2000, the federal court in Colorado decided that an officer...