Can Colorado Construction Owners Be Personally Liable For Wage Violations? What HB 25-1001 Means

If you own a construction company in Colorado, a law that took effect last August should be on your radar. Effective August 6, 2025, the Colorado Wage Claim Act was amended in ways that expose business owners to significant personal liability for wage violations. This is an issue that has been coming up frequently in conversations with our construction industry clients.

How Did HB 25-1001 Change Employer Liability Under Colorado Wage Law?

The new law expanded the definition of “employer” under the Colorado Wage Act. Now, anyone who owns or controls at least 25% of a business can be personally liable for wage violations. This isn’t just corporate liability that ends at the business; it involves personal exposure that can reach your individual assets.

The key change here is the burden of proof. It’s not enough to say, “I didn’t handle payroll” or “I wasn’t involved in that decision.” Under the amended law, the owner must affirmatively prove that they fully delegated day-to-day operations to someone else. That delegation needs to be documented, credible, and demonstrable. The burden is on you to establish that you genuinely removed yourself from operational control and not on the claimant to prove you were involved.

Why Are Construction Company Owners at Higher Risk Under the New Law?

The 25% ownership threshold is remarkably low, particularly in the construction industry. Small to mid-size construction companies dominate the Colorado market, and it’s common for one or two people to own the entire business or hold substantial ownership stakes. If you own a closely-held construction firm, you almost certainly meet the 25% threshold.

Construction companies also face unique wage compliance challenges that increase the likelihood of violations. Prevailing wage requirements on public projects add layers of complexity. Multiple subcontractor tiers create additional oversight burdens. Worker misclassification issues (whether someone is properly classified as an employee or independent contractor) remain a persistent concern. Each of these factors increases the likelihood of wage violations, and under the new law, those violations can follow you personally, not just your LLC or corporation.

Can Construction Owners’ Personal Assets Be Seized for Wage Violations?

Yes. If your business entity cannot satisfy a wage judgment, claimants can now go after your personal assets directly. Your home, your savings, and your personal property are all potentially on the line.

Increased Enforcement Starting July 2026

The personal liability provisions are just the beginning. Starting in July 2026, the Colorado Division of Labor Standards and Statistics (CDLE) will have expanded enforcement authority. The agency may investigate wage claims up to $13,000, a significant increase from the previous $7,500 threshold. The CDLE will also publish the names of violators online and report unresolved, willful violations to licensing agencies.

For construction companies that rely on licensure and reputation to secure contracts, these public enforcement measures carry serious business consequences beyond the financial penalties.

How Can Construction Company Owners Protect Themselves from Personal Liability?

Given these changes, here are three key actions construction company owners should take to protect themselves:

1. Document your delegation structure. If you are not involved in day-to-day operations, make sure that delegation is clear, formal, and in writing. Identify who has operational control over payroll, timekeeping, and wage decisions, and ensure that person has the authority, training, and resources to handle those responsibilities correctly.
2. Strengthen your internal payroll controls. Regularly audit wage practices, especially on prevailing-wage projects. Make sure your timekeeping systems are accurate and that workers are correctly classified. Train managers and supervisors on wage-and-hour compliance responsibilities. These internal controls will not only lower the risk of violations but also help show that you have taken meaningful steps to assign and oversee compliance.
3. Consider speaking with a Colorado employment attorney who understands the construction industry. Given the personal exposure at stake and the complexity of construction wage issues, proactive legal guidance is a worthwhile investment. An attorney can review your delegation structures, assess your current compliance practices, and help you establish the documentation needed to defend against personal liability should a claim arise.

Key Takeaways for Colorado Construction Company Owners

HB 25-1001 marks a fundamental change in how Colorado handles wage violations. For construction company owners, the message is clear: “I didn’t know” is no longer an adequate defense. Personal liability is real, the ownership threshold is low, and the burden falls on you to prove you delegated operational control. With increased enforcement on the horizon and personal assets now at risk, now is the time to take action.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.