To anyone with a trained eye on the ebb and flow of government policies, it is easy to see that government regulations frequently are steered to affect corporate policy. Whether through mandated retirement savings accounts or “minimum-wage warriors,” the government wields legislative power to cause change in organizations.
One prime example: the substantial adjustments made to Colorado’s wage and hour law with the full implementation of the Wage Protection Act of 2014. The act is an amendment of the original Wage Claim Act, which addressed employee compensation, wage deductions and payments to terminated employees. The Wage Protection Act establishes a new procedure for the Colorado Division of Labor and Employment (DOLE) to follow in order to adjudicate wage discrepancy claims.
In fact, more and more states are enacting wage prevention acts like Colorado’s, requiring employers to maintain records for audit purposes.
Out with the Old
Before the law was implemented, employees had little opportunity to garnish their deserved wages for overtime or unpaid work from employers who refused to pay. Not only did employees have to be terminated from their company before seeking restitution, but DOLE only could assist in the resolution of employee complaints. Individuals had 60 days of eligibility to write a demand for payment from the ex-employer and then were left to complete the process alone. Any litigation process pursued by ex-employees were allowed, but still left legal fees to be paid by the individual filing the claim. The whole process left the majority of laborers unemployed and, worse, unpaid. As of Jan. 1, this bill intends to reduce the issue.
In with the New
Under the Wage Protection Act, employees have access to a slew of benefits they previously lacked, including:
- allowing DOLE more authority to pursue employers for violations and greater resources to settle wage claims for employees;
- workers being granted easier access to filing claims and the removal of a 60-day deadline.
- employees being allowed to add attorney fees to the list of recoverable costs, as long as the employee was paid under minimum wage.
By relaxing the 60-day requirement and the cost of legal fees, the bill aims to level the playing field with employers unwilling to remit compensation.
Record Retention and Fines
Adding to the list of requirements, the Wage Protection Act also requires employers to preserve records validating the information itemized on an employee’s pay statement. This includes statements referencing an employee’s wages earned, withholdings and adjustments or records containing private employee information. These records have to be retained for at least three years and can be audited at any time. Employers who are unable to produce these records during an audit can be fined up to $7,500.
What Employers Can Do
Retaining records efficiently is where businesses can make the biggest strides in preparing for the Wage Protection Act. The legislation shines a spotlight on organizations lacking the technology to track and store their employee payroll and information records. Ask your HR team how long it takes them to track down a document.
One consulting firm study showed that employees spend nearly two hours a day searching for information. If your company is chosen for an audit, don’t be the one scrambling through dozens of documents searching for one itemized pay statement. If you are one of these companies, it is time to open the door to new possibilities. Help out HR and say goodbye to the filing cabinet.