Colorado Employers Face Broader Wage Claim Exposure After July 1, 2026 Changes
John Agbonika, Associate
The Rocky Mountain Employer has been tracking the status and enforcement timelines of House Bill 25-1001 (“HB25-1001”)[1] which became law on May 22, 2025 and amended certain provisions of Colorado’s Wage Claim Act. Effective July 1, 2026, Colorado expanded the Division of Labor Standards and Statistics’ (the “Division”) authority to adjudicate larger wage claims from the current $7,500.00 limit up to $13,000.00.
Background
As discussed in an earlier blog article,[2] HB25-1001 combats wage theft by expanding the Colorado Wage Act's definition of an “employer,” making more individuals and entities accountable.[3] Notably, on or about August 6, 2025, HB25-1001 created additional exposure for misclassification. An employer found to have misclassified an employee as a nonemployee in a way that may affect wage payments or reporting obligations must pay a fine in addition to any other relief ordered. The fine is $5,000.00 for a willful violation, $10,000.00 if the violation is not remedied within 60 days after the Division’s finding, $25,000.00 for a second or subsequent willful violation within five years, and $50,000.00 for a second or subsequent willful violation that is not remedied within 60 days.[4] These amounts are per employee and will be adjusted for inflation beginning in 2028.[5]
Expanded Enforcement Authority
On July 1, 2026, the Division’s authority to adjudicate claims for nonpayment of wages increased from claims of $7,500.00 to $13,000.00 for claims filed from July 1, 2026 through December 31, 2027.[6] Beginning January 1, 2028, that threshold will increase again, either by $1,000.00 or by a higher amount necessary to adjust for inflation.[7]
The practical significance of this change is straightforward. More employee wage claims may now proceed administratively before the Division rather than in court. For employers, that means wage claim disputes that previously may have exceeded the Division’s jurisdiction could now be investigated and decided through the Division’s administrative process. This change is especially important because wage claims often arise from routine payroll practices, including final pay, deductions, commissions, overtime, bonuses, paid time off, and classification of workers as exempt employees or independent contractors.
Key Takeaways
For employers, it is important to note that the July 1 change in the Division’s enforcement threshold does not create an entirely new wage-and-hour regime, but it makes the existing regime more consequential. More employees may bring wage claims at the Division level instead of hiring their own attorney, and the Division may more vigorously pursue wage claims under the auspices of protecting employee rights and/or targeting employers who the Division believes have repeat wage claim violations. Misclassification findings will also carry substantial penalties if a violation is found. Employers that have not recently audited their Colorado wage practices should consider doing so now.
[1] H.B. 25-1001, 75th Gen. Assemb., 2nd Reg. Sess. (Colo. 2025) available at https://leg.colorado.gov/bill_files/40788/download
[2] https://www.rockymountainemployersblog.com/blog/2025/5/15/colorado-general-assembly-passes-bill-expanding-enforcement-of-wage-amp-hour-laws
[3] An employer includes individuals who own or control at least 25% of the ownership interests in an employer, unless a minority owner demonstrates full delegation of authority to control the employer’s day-to-day operations. See Colorado Wage Claim Act, Colo. Rev. Stat. § 8-4-101(6).
[4] Id. at § 8-4-113(1)(a)(I.5)(A)–(D))
[5] Id. at § 8-4-113(1)(a)(I.5)
[6] Id. at § 8-4-113(1)(a)(II)(B)
[7] Id. at § 8-4-113(1)(a)(II)(C)