In 2006, the Colorado legislature enacted C.R.S. §8-2-122, requiring Colorado employers to take steps in addition to those imposed under federal law to verify the eligibility of employees to work in the United States. The state employment verification law applies to any “employer,” defined as a person or entity that transacts business in Colorado, employs another person to perform services of any nature, and has control of the payment of wages for such services or is the officer, agent, or employee of the person or entity having control of the payment of wages. C.R.S. §8-2-122(1)(c).
Under the Colorado law, within twenty days after hiring a new employee, an employer must affirm that it has examined the employee’s legal work status and retained copies of the documents required under the federal employment verification law, 8 U.S.C. §1324a. The employer must further verify that it has not altered or falsified the employee’s identification documents and has not knowingly hired an unauthorized alien. The employer must keep a written or electronic copy of the affirmation and the identification documents for as long as the employee remains employed. C.R.S. §8-22-122(2). The state has prepared an Affirmation of Legal Work Status form, which is available on the Department of Labor’s website, https://www.colorado.gov/pacific/cdle/evr.
The law includes an audit provision, allowing the Colorado Department of Labor to request documentation of compliance with the state’s employment verification requirements. Audits may be conducted randomly, or when the Department of Labor has reason to believe that an employer has not complied with the requirements. C.R.S. §8-22-122(3). The Department of Labor’s implementing regulations provides for the submission of written complaints on a form provided by the Department, which must include the complainant’s signature, contact information, and basis for the complaint. 7 C.C.R. 1103-3, §3-2. Anonymous complaints will not be accepted. Id. The regulations specify that the Department shall use a “reasonable statistical selection procedure” to determine what employers will be subject to a random audit. Id. at §3-3. Although an employer will not be subjected to a second random audit within two years of the first, it is subject to an audit at any time if there is reason to believe there is non-compliance, including a complaint. See id. Employers may also be subject to re-audit if they were found to be in violation in a prior audit. See id. at §3-5.
During an audit, the Department of Labor will evaluate compliance with the requirement to complete the affirmation form and the requirement to copy identification documents mandated under federal law. See id. at §4-4. The Department then aggregates the findings for all new hires to determine an overall compliance rate. See id. An employer whose documentation is complete and accurate at least 87.5% of the time shall be considered compliant, and an employer whose documentation is complete and accurate less than 87.5% of the time is considered non-compliant. See id.
The statute provides for penalties if employers are not in compliance with the employment verification requirements. An employer who, “with reckless disregard,” fails to submit the documentation required by the law or submits false or fraudulent documentation, is subject to a fine of not more than five thousand dollars for the first offense and not more than twenty-five thousand dollars for the second and any subsequent offense. C.R.S. §8-22-122(4). The statute does not define “reckless disregard” and there are no reported cases analyzing this phrase.
However, the Department of Labor’s implementing regulations provide some guidance as to when an employer might be subject to a fine. 7 C.C.R. 1103-3, §5-4. The regulations state that the following situations will result in a finding of reckless disregard: (1) an employer fails to respond to the Department’s audit or fails to submit any requested information, (2) an employer who was classified as non-compliant on an audit but was not fined and is later found non-compliant on a subsequent audit, and (3) an employer who backdated forms. Id.
The regulations also provide guidance as to the amount of the fine, stating that the following factors will be considered: (1) the size of the employer, (2) the employer’s good faith efforts to comply with the law, (3) the extent of the documentation deficiencies, (4) the results of previous audits and the employer’s history of compliance, (5) the employer’s cooperation level and timeliness of responses, and (6) the seriousness of the violations. See id. at §5-1. For certain violations discussed in §5-4, the regulations provide specific fine amounts “per failed requirement per new hire,” based on the size of the employer. Id. at §5-4(B), (C), (D). For example, for a second offense where the first offense did not result in a fine, the regulations provide for fines of $150 per failed requirement per new hire for small sized employers, $200 for medium sized employers, and $250 for large sized employers. Given that there might be multiple failed requirements for each new hire, these fines could quickly add up. Fines can be appealed pursuant to the Colorado Administrative Procedure Act, §24-4-101 et seq. Id. at §5-5.
The Colorado legislature is presently considering enacting a statute that would eliminate the Colorado employment verification requirements due to their redundancy with federal law. This effort is reflected in House Bill 16-1114 and Senate Bill 16-76, both of which are presently being reviewed in committee. In the meantime, employers need to be careful to complete the employment verification form within 20 days of hiring any new employee, and maintain the required documentation to be prepared for an audit.