Orders of wages, penalties, fines, and consequences for non-compliance

Division of Labor Standards and Statistics
707 17th Street, Denver, CO 80202 | 303-318-8441
www.ColoradoLaborLaw.gov | www.LeyesLaboralesDeColorado.gov

Interpretive Notice & Formal Opinion ("INFO") #2B:
Orders of Wages, Penalties, Fines, and Consequences for Non-Compliance

Overview

This INFO explains consequences of wage non-payment, or non-compliance with Division orders.

Wages Ordered: If the Division finds that an employer owes wages or other compensation, it orders them to pay the claimant that amount in a citation and notice of assessment explaining why.

• The general limit on what wage claims can seek, and what the Division orders on claims, is $7,500 (higher claim amounts are allowed in court). This limit is only for unpaid wages, not penalties, fines, or other remedies (e.g., for retaliation), and the Division can initiate or expand investigations into higher amounts.
• To encourage payment, the Division may waive penalties or fines, but not wages or compensation due. As of August 6, 2025, the Division may waive penalties if an employer pays all owed wages within 14 days of the sending of a Notice of Complaint even if it failed to pay within 14 days of an employee's earlier written demand. However, the Division cannot waive penalties "if the alleged violation is a second or subsequent failure or refusal to pay an employee's wages or compensation within five years" (C.R.S. § 8-4-109(3.5)).

Penalties Ordered: If an employer doesn't pay, within 14 days of a Notice of Complaint (or a written demand in Court), all wages (or other compensation) owed, the Division (or Court) may order penalties (C.R.S. § 8-4-109(3)(b)). Penalties depend in part on whether the violation is "willful":

1. for non-willful violations, the penalty is double the wages owed or $1,000 (whichever is greater) → total due (wages plus penalties) = three times the wages owed, or $1,000 plus the wages.
2. for willful violations, the penalty is three times the wages owed or $3,000 (whichever is greater) → total due (wages plus penalties) = four times the wages owed, or $3,000 plus the wages.

In addition, when the employer pays after a Division order — if it pays in 14 days, the Division may reduce penalties 50%; if it doesn't pay by 60 days, the Division must increase penalties by 50% or (if greater) $3,000 (C.R.S. § 8-4-111(2)(d), (2)(f)(III)).

This penalties framework was enacted as part of Colorado Senate Bill 22-161, effective Jan. 1, 2023. Before 2023, penalties were the greater of 125% of wages owed, or up to 10 days of the claimant's earnings, but the penalties increased 50% for willful violations.

Summary Table: What Employers Are Ordered to Pay Employees for Wage Non-Payment

Notes on penalties versus wages:

• The Division may order an employer to pay only penalties to a claimant if an employer pays all wages owed, but only after its failure to pay the wages generates liability for penalties — such as either of these situations: (1) not paying wages over 14 days after a demand, and only after a complaint is filed; or (2) not paying specific wages owed, while paying another equal sum. Example: if an employer unlawfully denied paid sick leave, requiring work for the pay, it owes no wages — but it still owes penalties, for failing to pay the specific wages the employee was owed. Though it paid regular wages (pay for time worked — the wage type that does require work), it failed to pay the paid sick leave wages (pay for time off — the wage type that doesn't require work) the employee requested, and was entitled to.
• Taxes on wages and penalties may differ. Consult tax resources, officials, or advisors — but generally, unpaid wages are taxed like any wage income, and penalties are taxed as non-wage income, without withholdings limited to wages (social security, etc.).

"Willful" Violations that Increase an Employer's Penalties and Lengthen Its Period of Liability

What's Different for Willful Violations? (1) Penalties increase (see table above); and (2) the period of liability ("limitations period") is longer — unpaid wages can be awarded for two years before a complaint, but three years for a willful violation (see INFO #2A).

What Is or Isn't a Willful Violation? "Not only knowing violations ..., but reckless ones as well," are willful — because the "focus[ is] on the employer's diligence in the face of a statutory obligation, not ... [its] mere knowledge of relevant law" (Safeco Ins. Co. v. Burr, 551 U.S. 47, 57 (2007); Mumby v. Pure Energy Services, 636 F.3d 1266, 1270 (10th Cir. 2011)). An employer lacking knowledge of the law it violated didn't act willfully if it was "merely careless" or "negligent": lack of "diligence" must be egregious enough to be "reckless disregard," which includes "action entailing an unjustifiably high risk of harm ... so obvious that it should be known."

Four types of common willful violations — with examples of non-willful violations as well:

(1) Repeat violations. An employer's second (or later) similar violation in five years is automatically willful (C.R.S. § 8-4-109(3)(c)). Similarity can be either the type of violation (e.g., two wage deductions the Wage Act prohibits), or type of wages (e.g., two times not paying commissions in violation of the Wage Act, even if for different reasons). Non-"similar" past violations don't automatically make a second violation willful, but can be evidence the second violation was a knowing or reckless violation.

• Example 1A (past violation was similar): In 2021, the Division issued an employer a citation for not paying overtime to a non-exempt hourly employee. In 2022, the Division issued the same employer a citation for not paying overtime to a non-exempt salaried employee. As the employer's second similar violation in five years, it was automatically willful, regardless of employer diligence.
• Example 1B (past violation not similar, but still evidence employer had notice of the law): In 2021, the Division issued an employer a citation for 30 hours of unpaid time worked. In 2022, the Division issued the employer a citation for not letting employees accrue paid sick leave under the Healthy Families and Workplaces Act (HFWA). The 2021 violation wasn't similar enough to make the 2022 violation automatically willful. But it still is evidence the 2022 violation was willful: the 2021 investigation and citation notified the employer of its duties to pay wages due (including HFWA leave).
• Example 1C (prior violation was not similar, and is not evidence the employer had notice of the law): In 2019, the Division issued an employer a citation for an unlawful wage deduction under the Colorado Wage Act. In 2021, the Division issued the same employer a citation for denying accrued paid leave under HFWA. The 2019 violation is not similar enough to automatically make the 2021 violation willful, nor evidence the employer was on notice, because HFWA had not yet been enacted in 2019.

(2) Awareness of actual violations, even if unaware of the details. If an employer "was aware of" both (a) the labor requirements violated, and (b) the work that was not treated as required by wage and hour law, then the violation is willful, even if the employer didn't know all details or amounts of the violation.

• Example 2: Evidence showed the employer knew the law required time-and-a-half overtime pay for weeks of over 40 hours; knew its employee regularly worked over 40 hours weekly; but lacked hours records, so it didn't know the amount of overtime worked or pay owed. The violation still was willful; the employer knew all it needed in order to be aware its conduct was unlawful (Ramos v. Al-Bataineh, 599 F. App'x 548, 551 (5th Cir. 2015)).

(3) Awareness of possible violations, without meaningful inquiry or redress. "Willful" means "greater culpability than mere negligence or inattentiveness" — but courts have found a violation willful when defendants claimed partial but imperfect knowledge and did not pursue the matter with due diligence (Coldwell v. RITECorp Env'tl Property Sol'ns, No. 16-cv-1998, 2018 WL 5043904 (D. Colo. Oct. 17, 2018)), or despite enough notice of possible violations that not inquiring further was reckless.

• Example 3A: In a series of discussions with a professional employee organization, an employer first received advice that its employees were improperly classified, but also differing advice that the classification was uncertain. Whether willfulness applied depended on whether the employer was exercising diligence and good faith in extensive consultations, or was not particularly interested in a definitive resolution.
• Example 3B: An employer asked if its "day rate" pay was lawful; its lawyer said yes so long as it itemized regular and overtime rates, didn't have employees work more than twelve hours per day, and paid overtime for weekly hours over forty regardless of the day rate. But it continued to underpay, including no overtime pay in days over 12 hours. The violation is willful: consultation with an attorney may help prove lack of willfulness, but is insufficient by itself — especially when the employer didn't rely in good faith on its counsel's advice, made no real changes to its compensation policy, and didn't track hours to check compliance (Escamilla v. Nuyen, 227 F. Supp. 3d 37 (D.D.C. 2017); Mumby, 636 F.3d at 1269-71).

(4) Not just negligence, but continuing clear illegality, while never looking into its lawfulness, despite ample opportunity. Knowledge is evidence, not a requirement, of willfulness; never looking into the lawfulness of a clearly illegal practice, despite ample opportunity, can itself be reckless disregard.

• Example 4A: In its first year of operation, an employer makes a deduction from wages that violates the deductions statute of the Colorado Wage Act, C.R.S. § 8-4-105. The owner credibly asserts no knowledge of the deductions statute, no education or training in the legal requirements to operate their business, and no prior experience as an employer. The violation is not willful: even if careless, that carelessness was closer to negligence than to recklessness.
• Example 4B: A restaurant owner with years of experience committed significant, ongoing violations: paying below minimum wage; paying no weekly or daily overtime; taking 12-25% of employee tips; and making employees pay for equipment and repairs. No evidence disproved the owner's claim of being wholly ignorant of wage and hour law and having made no effort to learn. The violations still were clearly willful: given many years in the restaurant industry, the ignorance amounted to reckless disregard (Cao v. Wu Liang Ye Lexington Rest., No. 08 CV 3725DC, 2010 WL 4159391 (S.D.N.Y. Sept. 30, 2010); Ayres v. 127 Restaurant Corp., 12 F. Supp. 2d 305 (S.D.N.Y. 1998)).
• Example 4C: A maintenance worker received no overtime pay in long workweeks. The owner didn't consult professionals or review any law, instead relying on their own opinion to call the worker an "independent contractor," which was clearly false under all employee/contractor factors. Ignoring the appropriate laws egregiously enough to be reckless disregard made for a willful violation by an employer with years of both industry experience and ownership of the properties requiring the maintenance work (Escamilla, 227 F. Supp. 3d at 53-55; Sellers v. Keller Unlim., 388 F. Supp. 3d 646 (D.S.C. 2019)).
• Example 4D: Several mitigating reasons made an employer's unlawful failure to pay for on-call time non-willful: it was not fully aware of a key fact making the time compensable; it took corrective action once fully aware; and for on-call overtime it knew it had to pay, it paid more than required (Pabst v. Okla. Gas & Elec. Co., 228 F.3d 1128 (10th Cir. 2000)).

Fines Ordered (payable to the State)

Non-compliance with duties under the Colorado Wage Act (C.R.S. Title 8, Article 4). (The first two of the below three fines may be waived or reduced if an employer pays within 14 days after a Division order, or shows good cause to extend its deadline, respectively.)

• For non-payment of wages, up to $50 per day, starting when the wages were due — with the total fine potentially varying, partly based on the amount of wages owed, but also based on whether the violation reflected good faith or bad faith by the employer.

• Fines will be waived if an employer proves "good faith legal justification" for the violation (§ 8-4-113(1)(a)) — the same affirmative defense under federal law for avoiding double damages: that the employer not only genuinely, but objectively, reasonably believed it acted lawfully.

  Example 5A: An employer paid no overtime to banquet servers whom it deemed overtime-exempt "commission salespeople," as they received the majority of a percentage service charge that the employer saw as a commission. Investigation showed the servers didn't directly make sales, so the Colorado exemption didn't apply — but federal law on an analogous exemption, in a factually similar case, had held banquet servers to be overtime-exempt commissioned employees (Mechmet v. Four Seasons Hotels, Ltd., 825 F.2d 1173 (7th Cir. 1987)). This employer had a good-faith legal justification for its belief, so while it did owe overtime wages and penalties for wage non-payment, it ultimately wasn't fined (Brennan v. Broadmoor Hotel Inc., 2023 COA 53, 535 P.3d 1016 (Colo. App. 2023)).

• Fines will be higher (e.g., several thousand dollars per violation) if the evidence proves bad faith employer conduct — more than just illegality despite knowledge or reckless disregard of the law, such as a long pattern of illegality, malicious behavior, or other exacerbating factors.

  Example 5B: The Division issued a citation for failure to pay agreed-upon wages ($4,007.82 or $5,392.07, depending on willfulness). Based on that amount, the Division would typically issue a wage non-payment fine of under $2,000, well below the maximum of $50 per day (which in this case would exceed $20,000), and reduce or waive it for prompt payment. However, this employer had over two dozen relatively recent citations for wage violations, each providing notice of Colorado wage law. The Division therefore, in addition to finding the violation willful, ordered $6,000 in fines (United Parcel Service, Inc., DLSS Claim No. 2085-22 (Apr. 26, 2023), appeal dismissed).

• For failure to respond to any Division notice requiring a response — $250 (§ 8-4-113(1)(b)).

• For pay statements an employer fails to produce — up to $250 per employee per month (§ 8-4-103(4.5)).
• For willful misclassification of an employee as a non-employee (e.g., as an independent contractor) — $5,000 fine for a first violation, increasing to $10,000 if not remedied within sixty days; and $25,000 for a second or subsequent willful violation within five years, increasing to $50,000 if not remedied within sixty days (§ 8-4-113(1)(a)(I.5)).

Non-compliance with Division orders or investigations under the Industrial Relations Act (Title 8, Article 1): $50 or more per day that an employer fails to provide information to the Division, refuses to furnish records (including books or payrolls), or any person hinders an investigation or inspection; or $100 or more per day that an employer, employee, or other person fails to obey any order or perform any duty required by the Division or a similar court order.

Compliance Orders

In a determination of a violation, orders to the employer may include not only to pay money (wages, penalties, and/or fines), but also to assure compliance with the law, especially if a determination finds that an employer policy or practice is (a) unlawful and (b) continuing to violate the claimant's or others' rights.

Example 6: An employee claimed unlawful denial of paid sick leave. Investigation found the denial was unlawful and arose from an employer policy of not providing required paid sick leave. The Division issued a citation not only to pay (wages, penalties, and fines), but also with a typical compliance order requiring the employer to, within seven weeks: (1) cease and refrain from the violating practices and policies; (2) rescind all contrary policies and practices, and modify or replace them with compliant ones; and (3) notify all employees in writing of all rescissions and replacements — plus, within 14 days of that deadline, provide the Division documentation confirming compliance, signed and verified under oath by an authorized company official (Total Welding Inc., DLSS Claim No. 0925-21 (Dec. 23, 2021)).

A determination with a compliance order commonly will require the employer to produce information to let the Division confirm that the employer brought itself into compliance. Violation of a compliance order may subject an employer to various fines, several of which are detailed in the "Fines" section above.

Example 7: An employer was issued a citation for not listing the pay in job postings as required by law, with a compliance order requiring redress within seven weeks and confirmation within 14 days more. The employer responded, but Division investigation then confirmed the employer continued not listing the pay in numerous job postings. The Division issued another citation fining the employer $1,000 per ongoing violation ($8,000 fine as of the citation), cautioning that fines on future violations will incrementally increase each time a violation is discovered (Monigle, DLSS Claim No. 0902-21 (Dec. 2, 2021)). The employer then paid the fine and remedied its job posting practices.

Awards of Attorney Fees and Costs

Attorney fees: If the Division orders payment of more than $5,000 in wages or other compensation (not fines or penalties), a claimant with an attorney may request an order that the employer pay them attorney fees (C.R.S. § 8-4-110(1)(b)(II), for Division claims filed as of January 1, 2023, or any date for claims filed in court). The claimant has an opportunity to apply for attorney fees, under procedures and deadlines provided by the Division; the employer has an opportunity to dispute the reasonableness of any fee request; a fee or cost award is appealable to a hearing officer, or for judicial review after a hearing officer decision.

Costs: After any order finding a wage and hour violation, a claimant may request an order that the employer pay certain of their costs of pursuing the claim (C.R.S. § 8-4-110(1)(b)). Costs will typically be awarded only if (a) at least $100, (b) documented by a claimant, and (c) of types traditionally reimbursed in legal disputes — e.g., mailing, printing, photocopying, scanning, or faxing the complaint or related materials are covered; the claimant's time or mileage spent pursuing the claim is not.

Consequences of Non-Payment/Compliance: Court Judgments; Further Penalties/Fines; Asset Seizure

Employers who don't pay wages or penalties, or comply with orders in a citation, may face:

1. The Division citation and payment order becoming a court order and judgment — allowing collection of employer assets by the Division or the claimant (see INFO #2D on certified copies).
2. After 60 days of non-payment, the employer will owe additional amounts: penalties already assessed and due to a claimant increase 50% or $3,000, whichever is greater (examples: an $8,000 penalty rises 50% to $12,000; a $1,000 penalty rises $3,000 to $4,000); certain fines already assessed and due to the State will increase by 50%; and attorney fees in court proceedings to enforce as to the non-compliant party.
3. Additional fines for each day of non-compliance with orders to pay, to change unlawful practices, to report information to the Division (on payment or other matters), etc.
4. Collection efforts, including freezing and seizing employer assets (which may include debts owed to the employer) — see INFO #2D on liens and levies.
5. Reporting the employer to "any governmental body with authority to deny, withdraw, or otherwise limit or impose remedial conditions on the employer's license, permit, registration, or other credential" (Colorado House Bill 25-1001, amending C.R.S. § 8-4-111(1)(a.5)(II), (III), effective August 6, 2025).

For More Information: Visit the Division website, call 303-318-8441, or email [email protected].

INFOs are not binding law, but are the officially approved Division opinions and notices on how it applies and interprets various statutes and rules. Last updated Aug. 11, 2025.