(The Center Square)- The city of Denver mandated private businesses to pay $2 million in restitution for “wage theft,” the term the city uses for businesses that don’t pay its minimum wage or prevailing wage.
Denver reported that the city audited over 96,000 payrolls and mandated private businesses to pay $2 million for the 3,570 workers after investigations revealed the businesses had not been paying the city’s minimum wage or prevailing wage, according to the 2023 Annual Report.
On Jan. 9, 2023, the Denver city council passed a civil wage theft ordinance that allowed the city’s auditor to investigate wage theft.
The $2 million the city has labeled the “restitution” was almost double the amount in any other year the city has been investigating what it calls “wage theft” since 2014, reaching $1 million in 2020 during the pandemic.
Wage theft happens when minimum wage violations, overtime violations, prevailing wage violations, paid sick and safe leave violations, and rest break violations occur, resulting in a worker being paid less than legally entitled, according to the 2023 Denver wages report.
The city cited some examples of its restitution.
In one instance, the city discovered a janitorial company had not paid its employees the city’s minimum wage since 2020. The company eventually paid 29 janitorial workers $31,495 in restitution.
The city also had a company that provides full-time customer service representatives give $334,311 to 161 workers who worked remotely and lived within the city and county of Denver. The city informed the company that remote workers within city limits had to be paid the city’s minimum wage.
The current minimum wage rate in Denver was $15.87 in 2022, jumping to $17.29 per hour with few exceptions, and increased to $18.29 per hour in 2024 while the prevailing wage requires employers to pay the highest applicable wage rate.
A study in 2015 found that prevailing wage requirements on highway resurfacing projects in Colorado didn’t result in “statistically significant” higher construction costs, while another study from other states have found prevailing wage led to higher costs according to the report by the House Fiscal Agency.
Employers in Colorado must pay the greater of the applicable prevailing wage, city minimum wage, or other state or federal wage while maintaining records for three years to comply with Denver’s local minimum wage requirements.
Vittorio Nastasi, a policy analyst for the Reason Foundation, said the city has the right to enforce its laws.
Nastasi said the bigger issue was Denver’s minimum wage law, which is $18.29 an hour in 2024. The state’s minimum wage is set at $14.42 an hour in 2024 and the U.S. federal minimum wage is $7.25 an hour.
Nastasi said businesses respond to such a high minimum wage in various manners.
“They might increase prices, or they will schedule fewer hours or they will find a way to automate work somehow,” Nastasi told The Center Square. “The business will find some way to offset that cost. And usually it’s customers who have to pay more. But it is increasing the costs to the business and it’s going to have to be absorbed somewhere.”
Prevailing wage is and the city requires any contractor or subcontractor in connection with contracts with the city involving mostly construction, repairs and maintenance work must pay it to its employees. Prevailing wage is determined by the type of work as well as the area of employment the work will be done. In Denver, the Denver Office of Human Resources determines the rate.
