In 2005, Colorado passed a bill that allowed the Colorado Department of Labor and Employment (CDLE) to fine businesses that were not in compliance with the state’s workers’ comp laws a certain amount for every day they were not compliant. This bill came after accusations that the state was not enforcing workers’ compensation laws as well as they should be and businesses were not always up on their required workers’ compensation insurance.

Under the bill the Division of Workers’ Comp can fine first-time offenders up to $250 for every day that they are found to be out of compliance. If businesses were noncompliant again, the fines could increase from $250 to as much as $500 a day that they were not in compliance.

The problem that some business owners in Colorado now face is that they were not notified that they were not in compliance in a timely fashion, sometimes not until years later. In an article from “Complete Colorado”, author Todd Shepherd cited an example of a business owner who had had a gap in coverage in 2008 and so had already been labeled a first-time offender. He was then notified in 2015 that he had been out of compliance for two and a half years, and since now he was considered a second-time offender he was facing fines of $271,700. As a small business owner he is worried that could put him out of business entirely. He is now fighting the fines, saying that if the CDLE had notified him earlier he would be looking at a much smaller fine.

In the original 2005 bill notes, authors estimated that they would collect an average of $28,000 from second time offenders. Doing the math, that also means they expected to notify these offenders within a few months. They also estimated that for the first year after this bill was passed, 2006-2007, they would collect a total of $200,000 from every business in the state that was not in compliance.

A CDLE spokeswoman, Cher Haavind, said that they have identified 15 open cases where businesses owe at least $100,000 in noncompliance fines.

Jose Colon, a lawyer in Commerce City, CO represents some of the business owners who are fighting their fines. He said that the bill’s intent may have been to find business owners who were out of compliance and try to help bring them in to compliance, notifying them as quickly as possible. He thinks the bill was meant to penalize business owners who consistently ignored their workers’ compensation insurance responsibilities time and time again. He argues that small business owners are at a disadvantage with this bill because they do not have the resources to stay on top of their legal requirements like a larger business might have, and they may not even know that they are doing anything wrong.

“You should have government encouraging people to stay within compliance, not noting that they’re out of compliance for years and then destroying our local economies, you know, destroying small businesses,” Colon said in an interview with “Complete Colorado”.

Spokeswoman Cher Haavind did not comment on the policy itself, but told the authors that the CDLE was “committed to being held accountable for the efficiency and transparency with which we carry out our statutory responsibility to ensure workers’ comp coverage.”

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