In the recent case, By the Rockies, LLC v. Perez, the Colorado Supreme Court clarified that the state’s statute of limitations for claims under the Minimum Wage Act is two years, extended to three years for a willful violation. The decision settles a split among the state’s courts and provides clarity for employers because the Minimum Wage Act is silent on the issue of limitations.
The controversy began when the plaintiff filed a wage and hour claim against their former employer five years after the alleged Minimum Wage Act violations occurred. Initially, the lower court concluded that the two- or three-year limitations period set forth in the state’s Wage Claim Act applied. A later ruling by the Court of Appeals revered this decision concluding that a default statutory period of six-years applied because the claim sought to recover a “liquidated debt or an unliquidated, determinable amount of money” under the Minimum Wage Act. Given the split between the courts and the fact that the Minimum Wage Act contains no statute of limitations language, the Court stepped in to settle the question of which statute of limitations applies.
In reaching its decision, the Court explained that the two statutes – The Minimum Wage Act and the Wage Claim Act – should be construed together as they are part of a comprehensive scheme addressing the same subject matter (e.g., payment of wages). According to the Court, “[a]pplying the limitations period from the Wage Claim Act to claims brought under the Minimum Wage Act harmonizes the entire statutory scheme.”
The Court also took a commonsense approach, finding that the application of a six-year statute of limitations would conflict with the state’s Minimum Wage Order requirements that employers maintain payroll records for three years. In addition, application of the two- or three-year statute of limitations also effectuates the Colorado legislature’s intent that the state’s wage laws generally align with the Fair Labor Standards Act’s (FLSA) statutory scheme.
A few best practices to keep in mind:
- Maintain Accurate Payroll Records: Be sure to maintain detailed and accurate payroll records for at least three years, as required by Colorado’s Minimum Wage Order. This not only supports compliance with recordkeeping requirements but also provides crucial documentation in the event of a wage dispute.
- Align Internal Policies with State and Federal Laws: Regularly review and update wage and hour policies to reflect changes in state and federal laws. This proactive approach demonstrates good faith compliance and reduces the likelihood of inadvertent violations.