Tag Archives: wage claims

March 7, 2017

Utah Payment of Wages Act Amendments Passed

By Bryan Benard

On March 7, 2017, the Utah Legislature passed a bill amending certain provisions of the Utah Payment of Wages Act (“UPWA”). H.B. 238 was sponsored by Representative Tim Hawkes and if signed into law by the Governor, will make three primary changes to the law.

Individual Liability For Payment of Wages 

First, the bill changes the definition of “employer” from a unique Utah definition to the definition of employer as used in the federal Fair Labor Standards Act (“FLSA”). The change will allow case interpretation of the FLSA definition of employer to apply to Utah employers under the UPWA. The reason behind this change is to clarify that in certain situations, individual directors and officers of companies may be held individually liable for the non-payment of wages. In a 2015 case, the Utah Supreme Court had ruled that there was no individual liability under the UPWA (Heaps v. Nuriche, 2015 UT 26), causing the Utah legislature to take action this session to effectively overrule that decision, replacing it with the individual liability standards applicable under the FLSA.

Private Cause of Action 

Second, this new law expressly creates a private cause of action for wages under the UPWA. This change also was prompted by a court ruling, namely Self v. TPUSA, Inc., 2009 U.S. Dist. LEXIS 10822, D.Utah Jan. 16, 2009, in which the federal court in Utah suggested that there was no private right of action under the UPWA. After the effective date of the new amendments, a private citizen clearly has the right to file a lawsuit to recover payment of wages under the UPWA in Utah state court. The amendments also provide that Utah state courts may award actual damages (i.e., the unpaid wages), a potential penalty for the violation, and an amount equal to 2.5% of the unpaid wages owed for up to 20 days.

Administrative Process Mandatory For Smaller Wage Claims 

Finally, the new law requires that certain wage claims alleging a violation of the UPWA be filed first with the Utah Labor Commission. Currently, employees “may” file a wage claim at the Commission. After enactment, all wage claims that are less than $10,000 must first be filed with the Labor Commission and the party must exhaust the administrative remedies there on such claims. Claims that are greater than $10,000, employees with multiple claims (that aggregate above $10,000), or multiple employees in the same civil action whose claims together are greater than $10,000, may file such claims directly in court without exhausting the administrative remedies.

Next Steps 

Utah employers should certainly take note of these changes, and specifically the potential for individual liability of directors and officers for the payment of wages. It is also worth watching to see if the new express private right of action increases the amounts of wage claims brought in Utah.

February 17, 2016

Employee May Recover Colorado Wage Claim Penalty And FLSA Liquidated Damages

By Steven T. Collis

An employee may not recover double damages for the same wage claim under both state and federal law. But, an employee may be awarded both the penalty under the Colorado Wage Claim Act (CWCA) and liquidated damages under the Fair Labor Standards Act (FLSA), raising the potential liability for willful wage violations for Colorado employers.

Unpaid Wage Claims Under State and Federal Wage Law

An employee asserting a claim for unpaid wages may be able to sue his or her employer under both the CWCA and the FLSA. In a recent case decided by the Tenth Circuit Court of Appeals (whose decisions apply to Colorado employers), truck driver William Evans sought to recover unpaid wages from his employer, an auto transport company, by asserting both state and federal wage claims. Evans v. Loveland Auto. Inv., Inc., No. 15-1049 (10th Cir. Dec. 10, 2015). Because the FLSA does not preempt the CWCA, Evans was entitled to assert claims under both statutes.

Despite being properly served with the complaint, Evan’s employer failed to file a response. The district court granted Evans a default judgment in his favor on both his FLSA and CWCA claims.

No Double Damages Allowed

The issue then became what damages could be awarded to Evans under both state and federal wage law. Established law in the Tenth Circuit provides that where a federal claim and a state claim arise from the same set of operative facts, the court may not award identical damages under both laws as that would constitute double recovery.

The district court concluded that it should award damages only under the statute that provided the greater relief, which it deemed was the CWCA. The court awarded Evans $7,248.75 in unpaid wages, $12,685.31 as the CWCA penalty of 175% of the unpaid wages due to his employer’s willful violation, $1,077.18 in prejudgment and postjudgment interest, and attorney fees and costs.

FLSA Liquidated Damages Serve Different Purpose

Despite the award in his favor, Evans appealed to the Tenth Circuit arguing that he was also entitled to FLSA liquidated damages in addition to the CWCA penalty. The Tenth Circuit had not previously addressed whether the CWCA penalty and FLSA liquidated damages duplicate one another.

The CWCA imposes a penalty on an employer who fails to pay wages due to an employee within the statutory time period. That penalty begins at 125% of the amount of wages owed, but is increased to 175% if the employer’s failure to pay is willful.

FLSA liquidated damages, on the other hand, can be awarded at 100% of the amount of wages owed and are authorized unless the employer shows that it acted in good faith and had reasonable grounds for believing that it did not violate the FLSA. These liquidated damages are considered compensatory, designed to compensate the employee for the delay in receiving wages because of the employer’s FLSA violation. They are not considered a penalty.

The Tenth Circuit agreed with Evans and other jurisdictions in concluding that an award of both a state penalty and FLSA liquidated damages would not amount to a double recovery. The appellate court sent the case back to the district court to determine if FLSA liquidated damages were warranted in Evan’s case.

No Prejudgment Interest If FLSA Liquidated Damages Awarded

Because prejudgment interest is meant to compensate the employee for the delay in receiving the wages owed to him – the same purpose articulated for FLSA liquidated damages – the Tenth Circuit stated that an employee may not recover both liquidated damages and prejudgment interest under the FLSA. Consequently, if the district court grants Evans liquidated damages, it must eliminate its award of prejudgment interest to avoid the double recovery.

Increased Wage Claim Liability

Colorado employers need to consider the increased liability that may result from a single wage claim when brought under both the CWCA and the FLSA. If the employer is willful in its failure to pay wages, the combination of both the 175% CWCA penalty and the 100% FLSA liquidated damages award will raise the stakes for wage claims significantly. These two multipliers can turn a relatively small wage claim into a much larger award in a hurry. Take steps to review your payroll processes so that you pay all wages due and owing within the statutory time periods and make good faith efforts to resolve any disputes regarding the amount of wages owed.

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November 30, 2015

Unlimited Vacation Policy: Is It Right For Your Company?

Hobbs-Wright_E Wiletsky_MBy Mark Wiletsky and Emily Hobbs-Wright

Paid vacation time is a perk that can attract and retain the best and brightest employees. It can also impact your balance sheet, as earned but unused vacation days remain a liability until used or paid out. A small, but growing number of companies are trying a new approach, offering unlimited vacation to certain segments of their workforce. Netflix, Best Buy, Virgin America, LinkedIn, General Electric, and others have adopted unlimited vacation policies, or “discretionary time off (DTO),” as it is sometimes called.

Colorado employers, along with organizations in other states, may be wondering whether to scrap existing paid time off or vacation policies and replace them with unlimited vacation. That is especially true given the recent—and sometimes conflicting—information from the Colorado Department of Labor and Employment concerning “use-it-or-lose-it” policies. To help you decide whether unlimited vacation policies are right for your organization, we’ll highlight the pros and cons. But first, some background.

Legal Implications For Vacation Pay

Generally, employers are not required by law to provide paid vacation time to employees. If you choose to provide paid time off for vacation purposes, you get to decide what your vacation policy will be. This includes specifying how much paid vacation you’ll provide, any eligibility requirements, which categories of employees are entitled to it, when it accrues or is “earned,” in what increments it may be taken, the request and approval procedures, whether it carries over from year to year, and other vacation procedures.

That said, state laws will factor into the implementation of your vacation policy. For example, many states classify accrued vacation as compensation or wages and will specify that earned vacation pay may not be forfeited. Such provisions mean that unused, earned vacation must be paid out upon separation of employment. These state laws also can prohibit “use-it-or-lose-it” vacation policies where an employee who fails to use his or her accrued vacation time within a specified time frame loses the accrual of paid time.

By way of example, Colorado wage law states that vacation pay earned in accordance with the terms of any agreement is considered “wages” or “compensation.” Colorado employers who provide paid vacation to employees must pay all vacation “earned and determinable” upon separation of employment. Although the Colorado Department of Labor and Employment recently indicated that a “use-it-or-lose-it” vacation policy is permissible, the Department also noted that such a policy may not operate to deprive an employee of earned vacation time. The Department will look to the terms of the agreement between the employer and employee to determine when vacation pay is “earned.”

Pros – Why Unlimited Vacation May Make Sense

Some organizations have implemented a single paid time off (PTO) policy, allowing employees to accrue a set amount of paid time off to be used for virtually any purpose, such as vacation, sick time, attending kid’s school events, going to appointments, etc. Getting away from traditional (and separate) vacation and sick time policies is believed to offer employees more flexibility while cutting down on administrative headaches for employers. Unlimited vacation, or DTO, goes even further. Here are the potential benefits of an unlimited vacation policy:

  • More Flexible Work Schedules – employees can take advantage of more flexibility to manage their work and personal time; often a great recruiting and retention tool
  • Avoid Keeping Accrued Vacation On Your Books – in many states, because vacation time is no longer “earned,” you arguably will no longer need to pay out any unused vacation time upon separation of employment, effectively eliminating the liability of carrying accrued vacation time on your balance sheet
  • No Cost/Little Cost Perk – if employees take about the same amount of time off under an unlimited vacation policy as under a traditional accrued vacation and sick time policy, employers do not experience any additional cost for the program; as long as the perk is not abused, there may be little financial cost to the company
  • Increased Productivity – reports suggest that employees become more efficient and productive while at work in order to ensure that they suffer no ramifications when utilizing their time off under the unlimited vacation policy
  • Morale Booster – trusting that employees can properly manage their time on and off the job can build morale and loyalty; it can shift the focus from putting in hours to getting results
  • Streamlining of Record Keeping Practices – by eliminating the need to track vacation accruals and usage, you may cut down on the administrative headaches associating with a traditional vacation policy

Cons –  Why Unlimited Vacation May Not Work

An unlimited vacation policy may not be appropriate for all organizations. Depending on the nature of your business and the make-up of your workforce, you may determine that the following risks negate any good that could come from an unlimited vacation policy:

  • Perception That Unlimited Vacation Means No Vacation – some employees may feel that taking away a specific accrual for vacation means that they’ve lost an important perk, especially if they believe that the company or their supervisor will not truly allow them time off when they want it
  • Additional Cost If Abused – if overall time off exceeds previous accrual amounts, and that additional time off is not offset by increased productivity, the perk may cost you more and be less predictable than an accrual-based vacation policy
  • Less Black and White – whether an employee is “abusing” unlimited vacation can be rather subjective; one employee may produce excellent work product while taking six weeks off per year while another employee fails to meet expected output taking only three weeks of vacation; as a result, supervisors may struggle with how to handle discipline and performance issues and create a perception of unfair or, even worse, discriminatory treatment
  • Not Tested, So Liabilities Unknown – it is unclear how state agencies and courts will handle potential wage claims based on an unlimited vacation policy
  • Scheduling Uncertainties – it can be difficult to cover shifts, schedule projects and meet production deadlines when employees have greater flexibility to use unlimited time off
  • Pay Issues For Non-Exempt Workers – an unlimited vacation policy would be difficult to apply to non-exempt hourly employees (e., employees who are eligible for overtime pay) as you need to track all hours worked and ensure that you pay minimum wage and an overtime premium according to applicable state and federal law

Bottom Line: Use Caution

If your workforce utilizes exempt employees (i.e., employees who are not eligible for overtime) who have a great deal of autonomy, such as in technology and creative fields, an unlimited vacation policy may attract and incentivize your employees. If you employ mostly non-exempt hourly workers, have a lot of turnover, or need more predictability in covering shifts and positions, an unlimited vacation policy may not work for you. Your best bet is to compare the pros and cons with the nature of your business to evaluate whether this new type of employee perk is appropriate for your organization. If in doubt, it’s always a good idea to consult with your employment counsel.

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February 4, 2014

Colorado General Assembly Considers Labor and Employment Bills

By John Karakoulakis 

Colorado’s 2014 Legislative Session began on January 8th and nearly 400 bills have been introduced already.  Below is a description of proposed legislation impacting labor and employment issues for Colorado employers. The proposed changes to the workers’ compensation system could result in one of the more controversial bills this session.  We will keep you apprised of these and any other bills affecting employment matters as they progress through the legislative process.

2014 Labor & Employment Legislation





Workers’ Compensation Benefits

The bill seeks to make changes to the following three areas of the workers’ compensation system: 1) Allow for more doctor choice for workers; 2) Address the issue of job separation when a claim is made; and 3) Add a penalty provision for employers that willfully placed employees in a dangerous situation. This last provision is drawing the most concern because it is seen as overly broad and would expose employers to litigation.


Worker Access to Employment Records

Would allow employees to have access to their personnel records and provide written rebuttal information to be added to their file.  Creates a new civil cause of action for an employee to file against an employer for not complying with the provisions of the bill. The employee can seek actual damages, back pay, reinstatement, or other equitable relief, and reasonable attorney fees and costs.


Wage Claims

Reintroduced this year after significant changes from the version of the bill that was killed by the business community last year. The bill speeds up the process by which workers can claim they did not get their full wages and creates a process by which the Colorado Department of Labor and Employment can adjudicate those claims.  These changes which remove last year’s criminal penalties and a provision to require claims to be settled in district court resulted in most business associations taking a neutral stance on the bill, so it is now expected to pass.


Regulatory Reform

Provides relief for business under 100 employees that unknowingly violate a regulation that was put in place within the prior year and one that is defined as a “minor violation” which is mostly clerical in nature and does not affect the life safety of the public or workers.  The first violation of such a rule will result in a warning and written education sent to the business.


Drug Testing Criminal Provisions

Establishes a level 1 drug misdemeanor for an employee who is legally required to undergo drug testing as a condition of the person's job and who uses a controlled substance without a prescription; or knowingly defrauds the administration of the drug test. Also establishes a level 2 drug misdemeanor for any other person who knowingly defrauds a drug test.


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