A Big Win for Colorado Employers in Wage Claims

A Big Win for Colorado Employers in Wage Claims

How far back in time can a terminated employee’s unpaid wage claim reach under the Colorado Wage Claim Act? This was the sua sponte question before the Colorado Supreme Court in Hernandez v. Ray Domenico Farms, Inc. (2018WL1146468 decided March 5, 2018).

The Supreme Court held that under Colorado Wage Claim Act section 8-4-109, an employee may seek any wage or compensation which was unpaid at the time of termination, but the claim is subject to the statute of limitations. The statute of limitations begins to run when the wages or compensation first become due and payable and therefore limits a terminated employee to a claim of two years (three for willful violations) immediately preceding the termination.

Background

The Hernandez Plaintiffs were year-round and seasonal migrant farmers who previously worked for the Defendant, Domenico Farms, in Platteville, Colorado. The Plaintiffs’ case was filed in United States District Court, District of Colorado.

Plaintiffs claimed they were hourly employees who were never paid overtime during their employment at Domenico Farms. Generally, year-round agricultural workers are exempt from overtime pay under the Fair Labor Standards Act. The plaintiffs argued they were entitled to overtime pay for “non-agricultural” work they performed in excess of their forty-hour work week.  The seasonal worker plaintiffs claimed they were denied Adverse Effect Wage Rate hourly wages they were entitled to under the Migrant Seasonal Agricultural Worker Protection Act during their employment at Domenico Farms. Some of the plaintiffs had been working at Domenico Farms since 1992.

The parties filed cross motions for summary judgment on the issue of whether Wage Claim Act section 8-4-109 allows a terminated employee to seek all unpaid wages during employment including those which came due and would be time barred by the statute of limitations. Plaintiffs argued they were entitled to seek any unpaid wages or compensation earned during the course of their employment and the statute of limitations began to run on their section 109 claim only upon termination of employment. The Defendant argued section 109 only entitled the plaintiffs to collect wages due upon their final paycheck.  Since the parties had such divergent interpretations of section 109, the District Court sua sponte certified this issue to the Colorado Supreme Court.  District Court Judge William J. Martinez held since there were two interpretations of section 109 and the outcome of the decision “was of enormous importance” to the employers and the employees of Colorado, the matter should be sent sua sponte to the Colorado Supreme Court.  The Supreme Court therefore accepted jurisdiction of this issue.

Colorado Supreme Court Rules in Favor of Employers by Strictly Enforcing the Statute of Limitations

The Court held the plain language of section 109 does not allow plaintiffs to resurrect claims for wages that were time-barred on the date of termination. Terminated employees may seek previously unpaid wages or compensation at separation from employment under section 109, subject to the statute of limitations. A claim under section 109 can be for both wages or compensation that do not become earned, vested, or determinable until separation and for regular wages that had previously been earned but remain unpaid.

The court held “to allow an employee to bring claims for wages that had become due and payable many years before would flout the very purpose of statutes of limitations: promoting justice, avoiding unnecessary delay, and preventing the litigation of stale claims.”

A terminated employee is therefore limited to claims for the two (or three) years immediately preceding their termination. The matter was returned to United States District Court for further proceedings.

The Takeaway

This is a big win for employers. A potential claim by a terminated employee will be limited by the statute of limitations. The logistical nightmare in calculating alleged over-time pay will be made less daunting knowing the time period would be capped at two or three years prior to the date of termination.

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