The U.S. Department of Labor (DOL) and the Colorado Department of Labor and Employment (CDLE) are not the only agencies auditing wage and hour violations. The City and County of Denver is also auditing employers operating within Denver for wage and hour violations.
In January 2023, the City and County of Denver passed its Civil Wage Theft Ordinance. The ordinance specifies procedures and penalties that Denver Labor relies on to audit businesses operating within the City and County of Denver. Denver Labor is a division of the Denver Auditor’s Office. The audits are done to ensure businesses are paying employees the full wages they are legally owed. Audits may be triggered by a complaint made against the business.
Prior to 2023, Denver Labor recovered unpaid wages of around $1 million dollars each year since 2020. Since the passage of the ordinance, Denver Labor has approximately doubled the wages it recovered per year, recovering $2,043,086 in 2023 and $2,070,153 in 2024.
In its 2024 actions against employers, Denver Labor cited violations of applying the tip credit incorrectly, unpaid and underpaid work, and overtime violations as some of the reasons to audit and charge employers under the ordinance. One case cited two staffing companies for misclassifying their workers as independent contractors. The companies involved had to pay restitution for minimum wage, overtime, and sick leave violations of almost $280,000, with fines of over $800,000.
In addition to its ordinance, Denver Labor has also published corresponding rules that interpret how the ordinance is enforced. Employers operating in Denver must understand both the ordinance and the corresponding rules to ensure compliance and avoid these heavy penalties. The rules specify that they do not modify or relieve the employer’s obligations under state and federal law. The rules also contemplate that Denver Labor may collaborate with state and federal wage and labor enforcement agencies and that it may refer complaints it received to those agencies.
One major difference between the ordinance and state and federal law is its statute of limitations. The ordinance allows Denver Labor to audit three years’ worth of payroll records. The statute of limitations under state and federal law is two years, with a third year allowed only where there is a finding of willfulness. Denver Labor does not need to establish willfulness to audit three years’ worth of payroll records.
Denver Labor is aggressively pursuing civil wage theft complaints. If you receive a notice from Denver Labor regarding an audit or if you receive a determination letter from Denver Labor following an audit, please contact an attorney at Employers Council to discuss how we may be able to assist your organization.
Hannah Nelson is an attorney for Employers Council.