UPDATE: May 17, 2019: Colorado Gov. Jared Polis on May 16, signed The Human Right to Work With Dignity Act (HB-1267) into law, reclassifying intentional nonpayment of more than $2,000 of wages a felony theft.

“Unscrupulous employers who purposefully withhold wages or underpay workers hurt the economy by undercutting good employers’ bids, engaging in tax fraud and denying workers fair compensation,” said one of the Act's sponsors, Rep. Meg Froelich.

The new law takes effect Jan. 1, 2020.

Dive Brief:

The Colorado General Assembly’s House Judiciary Committee approved a proposed wage theft bill that would make intentional underpayment of certain wages a criminal offense.

In Colorado it is a misdemeanor to willfully short employees on their paychecks, but the new measure would make it a felony theft to intentionally underpay them by $2,000 or more. The bill includes migratory and foreign workers under the definition of employee.

One of the bill's stated intentions is to provide an additional vehicle for state law enforcement to fight labor trafficking by recognizing labor as a thing of value that is subject to theft. According to the General Assembly, labor trafficking each year costs Colorado workers hundreds of millions of dollars and the loss of tens of millions of dollars to the state.

Dive Insight:

According to the Colorado Fiscal Institute, more than 500,0000 workers in the state — many of them in the construction industry — lose $750 million a year because of wage theft. The institute's analysis shows that the most common methods employers use to short employees on their pay are:

Nonpayment, which includes late payments and not paying employees what they’ve earned.

Underpayment.

Misclassification of employees as independent contractors in order to avoid having to pay benefits.

Unauthorized payroll deductions for expenses like transportation, materials and tools.

There has been a push by some states and cities to address wage theft and misclassification of workers as independent contractors. In California, lawmakers are considering codifying a state Supreme Court ruling that sets the parameters of which workers qualify as independent contractors. The “ABC" test asks whether the person claiming to be an independent contractor is free from the control and direction of the employer; performs work that the hiring employer doesn’t typically do; and engages in the work as part of a business.

On the other side of the country, Massachusetts is continuing its crackdown on employers that try to cheat employees out of pay. In 2018, state Attorney General Maura Healey’s office cited 66 contractors with wage theft violations and levied a total of $2.7 million of penalties against them. Of that amount, more than $1.4 million was for wage reimbursement.

Sometimes cases of wage theft can be traced back to more nefarious acts. In California last month, a court convicted contractor Job Torres Hernandez on forced labor charges. Torres refused to pay the undocumented workers he recruited from outside the country and housed them in squalid living conditions, often locking the doors in order to keep them from leaving. The workers said if they complained, he threatened them and their families with physical violence. Torres is facing up to 20 years in prison and $500,000 in fines.