The Colorado Wage Payment and Collection Act seems like it should be rather simple, but it’s perhaps the most complicated employment law in the state. Full of traps for the unwary, the law can spell big trouble for even innocent mistakes.
The law covers all Colorado private employers, even those with only one employee, and requires at least two paydays per calendar month unless the employer specifically sets a more frequent pay period.
Employers must pay all wages earned within a month. (If workers are on strike, the employer may not use that fact to delay payment of wages earned prior to the strike.)
Tips and gratuities: Generally, the Wage Act discourages employers from keeping any part of tips, gratuities or presents given to employees by the business’s patrons. However, employers that wish to do so must conspicuously post a sign (measuring at least 12 inches by 15 inches) where patrons can see it, indicating that they keep all or part of employees’ gratuities.
Note: The law doesn’t prohibit tip pooling. As long as you distribute all tips to employees, you don’t have to post a sign. Any employer that violates this provision is guilty of a misdemeanor and subject to fines of up to $300 and 30 days in jail.
Payment upon termination
The Wage Act also covers payment of final wages upon termination, whether it’s voluntary or involuntary. If you terminate an employee, all of the payments he or she earned (including commissions, accrued paid vacation and bonuses) are due immediately.
If your accounting unit isn’t operational at the time, you have until six hours have passed on the next workday to pay the terminated employee.
If the accounting unit is located off premises, an employer has 24 hours from the start of the next workday to deliver the employee’s paycheck to one of the following places (at the employer’s choice):
- The work site
- The employer’s local office
- The employee’s last known address
When an employee quits, payment is due on the next regularly scheduled payday at one of the three above-listed locations (at the employer’s choice).
Separated employees who fail to receive their pay may demand it within 60 days of termination. If the employer disputes the amount, it can pay whatever sum it believes is due within 14 days of the demand and avoid any penalty.
Caution: If an employer fails to respond within 14 days, it must pay the amount the employee demanded plus 125% of the first $7,500 demanded and 50% of any amount demanded over $7,500. If the employee can demonstrate the employer willfully failed to pay the amount demanded, the penalty increases another 50%. To show willful refusal, an employee can present evidence of an employer’s refusal to pay other employees within the past five years. If a court determines the employer was able to pay the wages and willfully withheld them, the employer will be guilty of a misdemeanor and subject to a $300 fine, 30 days in jail or both.
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