Beginning January 21, 2020, “wage theft” will be considered a felony if it exceeds $2,000. HB19-1267 or the “The Human Right to Work with Dignity Act” was signed by Governor Polis on May 16. The update intends to align wage theft with other forms of theft. If the stolen amount is under $2,000, it will still be considered a misdemeanor.
So, what is Wage Theft?
Let’s start by saying wage theft is not done accidentally. If it’s truly an accident, simply pay the underpaid employee their owed wages and go about your business. Theft is about intent, and the words “willingly” and “intentionally” are sprinkled throughout the updated bill. So, don’t panic, and let’s break it down with an example.
Pretend you have an employee, Bob, and he makes $20.00 an hour. Bob worked 40 regular hours and 10 overtime hours, but when you sent his hours to payroll, it was accidentally coded to 50 regular hours with no overtime. After receiving his check for a gross amount of $1,000, he comes to you and asks why he wasn’t paid overtime. With time and a half (Colorado’s overtime rate) he should have received a gross amount of $1,100 – that’s $100 missing from Bob’s pay.
Say sorry to Bob for the mistake and write him a manual check for the missing $100. You’re still giving Bob the wages he earned promptly, and you’re not intentionally withholding the missing amount from him. That was easy right?
If you told Bob overtime didn’t apply for this week, you’re withholding the extra money for whatever reason, or any other excuse – this is when it can turn to wage theft. When you’re aware of a pay shortage and intentionally don’t correct the problem, that’s the moment it become an issue. Now it’s not exactly this black and white but bear with us.
What the Bill Says
The Colorado Fiscal Institute estimates that Colorado workers lose $750 million a year because of wage theft. Most of this theft occurs for those in the construction, hotel, and food service industries. Obviously, this is something the state would like to correct!
According to the Colorado General Assembly, the bill, “prohibits wage theft with the intent to coerce a person who is owed wages.” The existing law (remember this is just an update to a law already in place) specifies an employer who willfully refuses to pay or falsely denies the amount of a wage claim. Meaning, we told Bob he can’t have his $100 for any reason, or we told him his calculations were incorrect knowing they weren’t.
Along with this, the bill specifies intent. It states if your unpaid or underpaid wages is held with the “intent to secure any discount or underpayment of such unpaid wage or with intent to annoy, harass, oppress, hinder, delay, or defraud the person who is owed wages (wage theft)” then this is essentially stealing.
The Existing Law
The minimum wage is a law for a reason. You will get in trouble for paying an employee less than the minimum wage. What is the outcome? If your theft amount is less than $2,000, this is still a misdemeanor. However, if you exceed that amount, you can be charged with a felony. $2,000 may seem like a lot, but considering the length of employment, things can add up quicker than you think!
Properly Classifying Employees
Most of the time, “I didn’t know” doesn’t get you very far, and the same is true in this case. As an employer, you’re expected to know how to correctly classify your employees. If you think ‘I don’t want to pay for benefits, overtime, or minimum wage, so I’ll just classify them as 1099s,’ this is another form of wage theft. So, if you’re intentionally classifying employees incorrectly to save some money, buckle up. This is precisely the circumstances they want to crack down on.
While it may seem harmless, it’s still intentionally classifying employees incorrectly for monetary gain. If you really aren’t sure about how to classify an employee, try an online test. Going through a few basic questions should help you classify employees easily. Again, if it was a mistake, pay the employees their missing wages. This could save you and your business should someone go to the labor board about the issue. The definition of “employee” in this bill is specified to include migratory and foreign workers. So, make sure you’re aware of employee definitions and nuances as well.
Long story short, do your research and classify employees correctly. Never (we’d make it size 72 font if we could) misclassify an employee intentionally.
Remember The Golden Rule
Again, this may not seem like a huge deal to some people, but keep the economic ramifications of saving a little money on labor in mind. As we learned in Econ101, the more money people make, the more money they spend. Spending is what keeps our capitalist economy running. If you’re skimping on pay for your own benefits, you impact not only your local economy but the entire economy.
Remember the Golden Rule too, and treat others as you want to be treated. We’re guessing you wouldn’t want someone shortchanging you or your business! So, help out your local and national economy by ensuring your employees are making the money they should be.
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This is not meant to provide legal counsel or advice. Every situation is different. Please contact an HR professional or employment attorney before taking any action.
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