New ordinance gives Denver auditor authority to penalize wage theft

A new Denver ordinance authorizes the city auditor to investigate and penalize businesses for unlawfully withholding wages from workers. The business community worries the new rule will have unintended consequences.

The ordinance provides administrative and civil remedies for workers alleging wage violations. A motivation for the law was to hold contractors accountable if they worked with disreputable subcontractors.

According to the "Wage Theft Unit" website of the Denver City Attorney's office, approximately half a million Coloradans suffer wage theft every year. It estimates 390 cases occur in Denver each year, and the average loss is less than $2,000.

Research by the Colorado Fiscal Institute, a nonprofit, nonpartisan organization, estimates approximately $728 million in wage theft occurs annually in Colorado. It affects nearly 440,000 low-wage workers each year and results in approximately $45 million in lost state tax revenue, according to the organization's report, "Stolen Labor, Wage Theft in Colorado." The research found white workers are slightly less likely to experience wage theft than workers of color. Latino workers are the demographic group most likely to experience wage theft. Women are much more likely than men to experience wage theft, according to the report.

The ordinance allows the auditor to assess civil penalties. Failure to furnish the auditor with a complete and certified payroll is punishable by a fine up to $1,000. False payroll information is punishable by a $1,000 fine, and each instance of an employer retaliating against an employee for an allegation is punishable by a $5,000 fine.

"The new ordinance empowers my Denver Labor team to support employees and hold bad actors accountable," Tim O'Brien, Denver's auditor, said in a statement. "We are ready to take on this large, new task and will continue to strive to put money back into the wallets of the workers who legally earned it, while still educating and supporting our local business community."

The Denver Metro Chamber of Commerce opposed the legislation. The Chamber "fervently opposes wage theft of any kind and does not defend businesses who fail to pay their employees what they are owed," according to a blog post. However, the Chamber stated concerns about liabilities created for up-the-chain employers. Those businesses might hire subcontractors or vendors and don't have a mechanism for determining if all workers are properly compensated.

The Chamber and other business groups suggested amendments and gained a 14-day grace period to pay the wages after receiving notice of a possible violation by the worker or the auditor.

O'Brien's website states the office will become one of the largest wage protection agencies in the nation. A media release from O'Brien's office reported workers received more than $1.1 million in restitution in 2022 through the auditor's efforts.

"This ordinance now guarantees administrative and civil remedies for wage violations for every worker and allows our office to hold contractors who work with disreputable subcontractors accountable," the website states. "However, the ordinance does allow for discretion in how we find collaborative solutions with businesses who make honest mistakes. We are already working to grow our team to support additional enforcement work, starting with a robust rule making process. We are committed to engaging all stakeholders and the community in this process to implement the new ordinance."

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