Signed into law on May 16, 2019, by Governor Polis, Colorado employers will soon be at risk of a felony conviction and incarceration for “wage theft.” The new law is an express recognition of labor as a thing of value that can be subject to theft, if an employer willfully refuses to pay wages due. The new law increases the criminal penalty from a misdemeanor to a felony when the theft is greater than $2,000. It also removes the exemption from criminal prosecution for an employer that is unable to pay because of bankruptcy. The law goes into effect on January 1, 2020.

Supporters of the bill noted that increased criminal penalties may serve as additional deterrence for employers looking to skirt civil wage and hour requirements and help combat labor trafficking. The new law, however, will undoubtedly face challenges on the ground and in court.

As a practical matter, wage theft is very rarely prosecuted. The risk is that criminal law enforcement against employers can ensnare workers by crippling the businesses on which they rely for employment (not to mention the possibility of cutting off economic and punitive damages to which an employee would normally be entitled). The new law may be at odds with civil legislation like the Colorado Wage Act, which requires employers to make employees “whole” for unpaid wages. Moreover, it is unclear whether criminalizing the problem will increase encounters between police and unauthorized immigrants, subject to deportation, which the law is meant to protect. We will wait and see whether the wage theft law produces its intended result.

In the meantime, could we see employers asserting Fourth and Fifth Amendment challenges (against searches without a warrant and self-incrimination) to regulatory enforcement or civil procedure disclosures? It is possible. The threat of criminal penalties attaches constitutional protections, including Miranda rights, the right to a jury trial, and a higher standard of evidence required for conviction.

The Colorado wage theft law is another reminder for employers to take seriously their obligations under wage and hour laws. Review your pay practices, consult an attorney, and pay wages owed and on time, or else get used to jailbird orange.