What Employers Need to Know About Amendments to the Colorado Wages Act
Staying up to date with legalese and technical jargon is a core part of being an employer, more so when an act relating to wages or employment is updated.
However, across the United States since 2025, there have been thousands of updates to employment rights, which can make the legalese a bit confusing, to say the least. One of the most notable updates or amendments is the Colorado Wages Act, which imposes penalties, changes the definition of employer, and highlights key areas related to the recovery of money when an employer seeks legal advice.
So, here is what you need to know about the 2025 amendments to the Colorado Wages Act in jargon-free English.
Employer Definition Change
A core change is that if you are someone who has control (or owns) at least 25% of a business, then you can be held accountable for any wage violations. Owners and shareholders are now at risk of being legally exposed for wage claims, unpaid wages, and penalties. This applies to all employers, even if the business is a corporation or an LLC. To avoid this being an issue that could be costly, it is advised by Colorado commission lawyers to delegate day-to-day control of the business.
Penalties for Worker Misclassification
There has long been an issue with companies and businesses misclassifying employees as independent contractors or freelancers. Why is this a problem? By doing this, businesses can ensure that these workers do not receive the legal protections of a worker, as well as being able to restrict their wage and hour obligations. The amendment ensures that there will be automatic fines for employers who do this, which can range from $5000 for the first violation to $50,000 for each repeated, unresolved violation. So, be sure to review your HR classification practices and seek legal advice for the drawing up of contracts.
Payroll DeductionsÂ
It is somewhat common practice for employers to deduct wages from staff if they have been late to work, for damage to equipment, and so on. However, the Colorado Wages Act now means that these payroll deductions are no longer able to reduce an employee’s wage to below the minimum wage in Colorado, rather than the federal minimum. The minimum wage in Colorado in 2026 is $15.16 per hour, whereas the federal minimum wage is $7.25 per hour. So, that’s a pretty big difference.
Attorneys’ Fees for Employers
Before the 2025 amendment, employers were able to claim back attorneys’ fees via court claims, but this is no longer so accessible.
The new amendments highlight that the court has to see if an employee’s claim against their employer lacked justification before awarding the lost fees. So, if your employee takes you to court for non-payment of wages, that would be classed as a justification. The result is that there is less financial risk to staff for bringing forward wage claims, which can increase the chance of financial loss to bosses and owners for delays with wages, etc.
Remember, this article is a brief guide, and if you need further clarification as to how these amendments impact you, seek advice from your legal team.
