On Monday, January 9th, 2023, the Denver City Council voted to pass a new wage theft ordinance, which provides greater authority to the City Auditor’s Office to ensure employees are paid their promised wages. Denver’s existing minimum wage ordinance continues to allow employees to file complaints to the City Auditor’s Office (the “City Auditor”) and provides employees with a right of private action to recover unpaid wages plus interest. The new wage theft ordinance establishes a civil violation for wage theft violations whereby employees can submit complaints to the City Auditor and the City Auditor will pursue the complaint and seek restitution on the employee’s behalf.
The new wage theft ordinance does not impact existing state and federal laws that set out criminal penalties for wage theft, but intends to provide a more accessible remedial option that does not require hiring legal counsel. Remedies may include payment of unpaid wages, 12 percent interest per year on the unpaid wages since due, treble damages, employment reinstatement, and penalty payments of up to $25,000 for each worker not paid full wages.
Under the new wage theft ordinance, individuals (including both employees and third parties) have up to three years after a violation to file a complaint with the City Auditor, rather than the one year limit under the existing minimum wage ordinance. Notably, the City Auditor may now hold contractors “up the chain” accountable for wage theft violators, because an “employer, or any other person who is regularly engaged in business or commercial activity who has contracted with an employer or worker, directly or indirectly, for labor from which such person is the beneficiary, including general contractors, clients of staffing agencies, and labor brokers, shall be jointly and severally liable for the payment of any penalty.” This language effectively covers any contractor in the chain of work, including the general contractor, although the City Auditor must attempt to recover from the employer who failed to pay prior to any other contractors. In addition, once attempts to collect from the various contractors have been exhausted, the City Auditor may attempt to collect from a client who benefitted from the unpaid work.
Therefore, all remedial measures and penalties for which direct employers are liable may become the responsibility of up the chain employers, contractors, and potentially even property owners. The sponsors of the bill intended for employees to have additional opportunities to regain wages where direct employers may be insolvent and for contractors up the chain to have greater incentive to contract with credible individuals and businesses. The Denver Metro Chamber of Commerce suggested inclusion of a 14-day grace period to cure after receiving notice of a possible violation, which was integrated into the final ordinance, thereby ensuring proper notice be given to the party held liable for remedial action.
Employers, contractors, and owners should be aware of the affirmative obligations contained in the new wage theft ordinance, which requires posting informational signage, recordkeeping and inspection requirements, and understanding employee rights in the event of employer actions classified as retaliation.
Stakeholders and the broader community will be engaged throughout the rulemaking process as Denver works to implement the new wage theft ordinance. More information regarding Denver’s Wage Theft Units and filing of complaints can be found here.