Colorado Supreme Court Shuts Door on Stale Wage Claims

CWCA issue draws Justice Hart’s first published opinion

The Colorado Supreme Court considered the ongoing effects of historic contamination in applying waivers to governmental immunity / LAW WEEK FILE

In a decision that potentially affects all employers and workers in Colorado, the state’s highest court ruled that employees, when fired, can’t seek unpaid wages going back further than two or three years.

The Colorado Supreme Court unanimously rejected a plaintiff group’s argument that a certain section of the Colorado Wage Claim Act enabled them to sue their former employer for all unpaid wages once they were terminated. The plaintiffs in Hernandez v. Ray Domenico Farms argued that section of CWCA revived wage claims that would otherwise be time-barred if the plaintiffs were still employed.

If not for the Supreme Court’s decision, Colorado-based employers might have seen more wage-and-hour claims seeking damages — and discovery — that reach back more than a decade.

Though not a common practice, employee counsel in Colorado have been known to argue that the CWCA entitles workers to all unpaid wages, even those reaching back beyond its statute of limitations, which is two years or three years for willful violations, once they are terminated. They would bring claims under Section 109 of the act and maintain that the CWCA’s statute of limitations begins running only once the employee is fired. That would essentially give fired employees an indefinite look-back period for unpaid wages that they wouldn’t have if still employed.

Adolfo Hernandez and six other farm workers sued former employer Ray Domenico Farms under the CWCA and the Fair Labor Standards Act, claiming they were owed overtime pay they never received. Using the indefinite look-back theory of the CWCA, the plaintiffs claimed unpaid wages for their entire time working for the defendant. Two of the plaintiffs first started working for Ray Domenico Farms in 1992.

The Supreme Court said that Section 109 does entitle terminated workers to unpaid wages, but the statute of limitations still dictates the period in which they can seek them.

“The plain language of these sections shows that the General Assembly intended for claims to be brought within two or three years of when the wages became due and payable, and not after that time,” according to the opinion written by Justice Melissa Hart. This was the court’s first published opinion by Hart, who was appointed to the bench in December. 

“To allow the result Plaintiffs urge would in effect create an indefinite period for a statute of limitations,” the court continued. “This would be an unusual result. We decline to find that the General Assembly intended such an unusual result absent clear and specific language in the statute.”

The defense argued that Section 109 only entitled terminated employees to collect wages as part of the final paycheck, but the court rejected that interpretation as well.

Leah VanLandschoot, who is representing Ray Domenico Farms and argued the case before the Supreme Court, said the court has effectively “closed the door on an indefinite look-back for unpaid wages.”

“I’m happy obviously for purposes of my client and cutting off claims that go back 18 years for back pay,” she said.

The decision didn’t originate from an appeal but rather a question posed by Colorado’s federal court. U.S. District Judge William Martinez, who is presiding over Hernandez v. Ray Domenico Farms, asked the Supreme Court sua sponte to sort out whether CWCA allows an indefinite look-back, as the issue arose during discovery. The plaintiffs, who brought the claims in 2016, asked Ray Domenico Farms to produce records and pay stubs dating back as far as the early 1990s. The parties filed cross-motions for summary judgment with each arguing a different reading of CWCA.

State wage claims almost always accompany federal wage claims, which is how the CWCA often ends up in front of Colorado federal judges. Some courts would allow the indefinite look-back theory, and others wouldn’t, which is why the Supreme Court’s clarification here is significant, VanLandschoot said.

It’s also significant for employers: the indefinite look-back can balloon the scope of state wage claims. For just one of the seven plaintiffs in the Hernandez group, the estimated damages and penalties calculation would have reached six figures if the statute of limitations didn’t bar any of the wage claims, VanLandschoot said.

In his order certifying the question to the high court, Martinez acknowledged that in this case “the ‘real money,’ so to speak, appears to be in the CWCA causes of action,” rather than the FLSA claims, which were clearly limited to two or three years.

“I would say that there is no plaintiff who could in good faith … bring a claim that’s more than three years prior to their termination,” VanLandschoot said of the opinion’s impact.

Attorneys from Husch Blackwell’s Denver office submitted an amicus brief on the case on behalf of the Colorado Civil Justice League. 

The brief urged the court to adopt a stance similar to what is seen in the opinion — that “Section 109 does not permit stale claims to spring back into existence.”

“We absolutely view it as a win for employers,” Husch Blackwell partner Christopher Ottele said of the Hernandez opinion. He added that former employees had been filing claims under Section 109 to transcend the statute of limitations for some time, but before the issue came before the Supreme Court, many employers weren’t aware plaintiffs could do that. “I think a lot of employers were frankly caught off guard.”

Sonia Anderson, a Husch Blackwell associate who co-authored the amicus brief with Ottele, said that “the world the plaintiffs were painting would put employers in a difficult position to defend themselves” considering the potentially long reach of discovery.

Ottele said that while the Hernandez decision shouldn’t change how employers treat or pay their employees day-to-day, it could make a “radical difference” in the claims scope when it comes to wage-and-hour class actions. It also means that employers and their counsel can rely on the CWCA’s language “as it’s clearly written,” he said.

“What this unanimous decision by the Colorado Supreme Court does is it says … you do not have to jump through the hoops that the plaintiffs bar wants you to.”

— Doug Chartier

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