Denver Revises Municipal Code to Increase Civil Penalties Related to Wage Theft Violations and Expands “Up the Chain” Liability

On Tuesday, January 10, 2023, Denver Mayor Michael Hancock signed Bill 22-1614 after it passed the Denver City Council the previous day by unanimous vote. With the Bill’s passage comes increased penalties and new requirements related to wage theft, specifically including joint liability for general contractors, effective upon publication.

Denver’s minimum wage ordinance imposes a current minimum wage of $17.29 per hour, and before Bill 22-1614 passed, the ordinance provided certain penalties for employers that did not pay their workers based on the designated minimum wage. Indeed, prior to the bill’s passing, Denver’s minimum wage ordinance allowed employees to file complaints to the City Auditor within one year of a violation and provided a private right of action for three years to employees to seek to recover unpaid wages plus 12% interest, $100 for each day the violation continued, and liquidated damages three times the amount of unpaid wages.

Under the new ordinance, workers will maintain the above summarized rights. However, now workers can file a complaint to the City Auditor within three years rather than one, and, significantly, the ordinance further creates “joint and several liability” for any employer, including general contractors, “for the payment of any penalty provided pursuant to a violation of [the ordinance], regardless of whether the employer is in a direct contractual relationship with the person who contracted for the labor.”

This so called “up the chain” accountability was included to allow the City Auditor “to seek restitution for the worker from whomever in the chain can pay…[to] ensure[] workers recover their owed wages, even if the direct employer is insolvent or has disappeared.” See Improving Wage Theft Enforcement in Denver, CITY AND COUNTY OF DENVER (Nov. 09, 2022). Under the revised ordinance, employers or other persons may seek to indemnify themselves or recover from the party failing to comply with the wage theft requirements.

Contractors in Denver should implement enhanced procedures to monitor compliance by subcontractors with Denver’s minimum wage ordinance. In addition, contractors should consider adding specific indemnification language in their subcontracts to recover wages, interest, and penalties paid, and other costs incurred, as a result of a subcontractor’s violation of the ordinance.

There are also additional penalties under the revised ordinance, including that the City Auditor can order treble damages, job reinstatement, and/or a fine up to $25,000. The City Auditor can also require the employer to locate and pay the worker their owed wages within a 30-day deadline or provide documentation to the City Auditor of their good faith attempt to do the same within fifteen days of the 30-day deadline.

In addition, the definition of a covered worker now includes independent contractors. Accordingly, unless the ordinance provides otherwise, even independent contractors will be able to seek protections under Denver’s wage ordinance. Employers should also note that the revised ordinance further addresses posting, recordkeeping, and anti-retaliation requirements.

As described above, the new ordinance expands protections for workers in the Denver area substantially. Denver employers, including general contractors, should contact a local labor and employment attorney with questions about their obligations under the Denver wage theft ordinance and for additional assistance with compliance.