Colorado has taken another significant step to combat wage theft and worker misclassification with the enactment of House Bill 25-1001 (HB25-1001), which amends Colorado’s chief wage statute, the Colorado Wage Act.

The legislation significantly strengthens enforcement mechanisms and increases financial penalties for employers that misclassify workers as independent contractors. However, the legislation also offers a reprieve to employers who promptly pay wages owed following receipt of a formal demand filed with the Colorado Department of Labor and Employment (CDLE), Division of Labor Standards and Statistics (DLSS).

The new law is part of Colorado’s broader initiative to close wage enforcement gaps and protect employees while allowing employers a path to remedy violations without automatically facing steep fines.

• Colorado’s HB25-1001 significantly increases penalties for employers that misclassify workers as independent contractors, with fines up to $50,000 for repeated violations.
• The new law provides a safe harbor for employers, allowing them to avoid automatic penalties if they pay owed wages within fourteen days of a formal complaint filed with the Colorado Department of Labor and Employment (CDLE).
• HB25-1001 expands the CDLE’s jurisdiction to investigate wage claims up to $13,000 and mandates public disclosure of certain wage violations, enhancing transparency and enforcement.

Steeper Penalties for Worker Misclassification

Employers that misclassify employees as...

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