Summary of August 2025 Labor Law Updates for Denver, Colorado
Here’s your roundup of major labor & employment law updates in Colorado for August 2025. These are aimed at employers, HR professionals, employees, and compliance leaders. (Brought to you by HKM Employment Attorneys.) The items below cover newly effective legislation, regulatory changes, court rulings, and legislative actions relevant to workplace rights in Colorado.
August 2025 brought several important changes in Colorado’s labor law: stronger wage protections and enforcement, broader definitions of employer liability, delays (but not elimination) of new AI law obligations, and court rulings lowering the bar for what constitutes an adverse employment action. If you’re an employer or HR leader, now is the time to audit internal policies (pay, classification, retaliation, AI use) to ensure you’ll be compliant under these new rules. If you have any questions about how these changes affect your specific business or want help reviewing your policies, don’t hesitate to contact HKM Employment Attorneys at https://hkm.com.
Colorado Wage Act Amendments (HB 25-1001) — Legislation / Wage & Hour Law
Date Effective: August 6, 2025
Summary:
House Bill 25-1001 amends the Colorado Wage Claim Act. Key changes include expanding who can be considered an “employer” (now includes individuals owning or controlling ≥25% of a business), adding personal liability for wage violations for such individuals, increasing penalties for misclassification, allowing the Colorado Division of Labor Standards & Statistics (DLSS) to waive certain penalties in particular circumstances, and restricting deductions that reduce wages below state or local minimum wage thresholds.
Implications:
Employers must review ownership structure and control to assess exposure to liability. Misclassification (contractor vs. employee) risk is higher, because penalties are steeper and liability broader. Payroll, deduction, and wage policies need updating to ensure compliance with the new minimum wage deduction limits. Workers have stronger tools to recover unpaid wages; DLSS has more enforcement powers.
Colorado’s “Wage-Theft Law” Expansions — Legislation / Enforcement & Retaliation Protections
Date Effective: Mainly August 6, 2025, though some components later.
Summary:
Colorado expanded its wage-theft laws to strengthen protections around misclassification, unpaid wages, and retaliation. For example, if an employee makes a wage theft complaint, adverse action by the employer within 90 days is presumed to be retaliation (and there are broader protections even beyond that window). Also, the state increased the maximum claim size that can be handled administratively, among other changes.
Implications:
Employers must ensure their classification decisions are legally defensible. Need robust retaliation policy and procedures for handling complaints so that adverse actions can be justifiably documented. More claims may bypass courts and go through state administrative channels, making speed and clarity of internal investigations more critical.
Delay of Colorado Artificial Intelligence Act (SB-24-205) — Legislation / Regulatory Framework
Date: August 28, 2025 (signed into law)
Summary:
Colorado’s landmark AI Act (originally scheduled for implementation February 1, 2026) has had its effective date delayed to June 30, 2026 by Senate Bill 25B-004. The delay came as part of a special legislative session called in August 2025, during which lawmakers also considered (but in many cases abandoned) tweaks and reforms to the existing AI law.
Implications:
Employers and businesses that may be covered by the AI Act have extra lead time (~5 months) to prepare compliance plans. The delay likely means further amendments are possible; entities should monitor forthcoming legislation and regulatory guidance. Employers should not assume the version of the law that passed in 2024 is final in all respects.
HR / Court Interpretations — Adverse Action Standard under Title VII (Federal / 10th Cir.) & Muldrow precedent — Court Ruling(s) with impact in Colorado
Date: Reported in August 2025
Summary:
In Scheer v. Sisters of Charity Leavenworth Health System (10th Cir. No. 24-01055), the Court of Appeals reversed a trial court dismissal of a case alleging that referral to an Employee Assistance Program (EAP) for mental health issues was an adverse employment action under the ADA. The key point: workers need only show “some harm” to make out an adverse action, consistent with the Supreme Court’s ruling in Muldrow v. City of St. Louis.
Implications:
Employers in Colorado (and the Tenth Circuit) should assume that “adverse employment action” requires a lower threshold of harm than perhaps historically assumed. HR & legal departments should revisit how they assess EAP referrals, performance feedback, reassignments, or other decisions that may cause harm—not just “major” ones. Potential increase in litigation or EEOC/agency claims alleging discrimination or ADA violations even for what an employer might have considered minor or indirect actions.
Special Session on AI and Budget — Legislative Action / Policy Review
Date: August 21-28, 2025
Summary:
Colorado held a special legislative session in late August, mainly to address budget shortfalls (~$1 billion) and to revisit elements of the AI law. During that session, SB25B-004 delaying the AI law was passed. Also, there were several bills pre-filed or proposed to reform the sweeping AI statute—some to narrow its obligations, some to clarify definitions or limit liability under the law. Many of those reforms did not pass.
Implications:
The regulatory landscape around AI is in flux; employers cannot yet fully rely on the original text without anticipating possible further change. For now, compliance with AI law obligations has more time, but delay doesn’t mean cancellation. Businesses involved with or using AI in hiring, discrimination risk, or consumer-facing AI tools should watch legislative changes closely.
Conclusion: Looking Back on Colorado’s Labor Law Updates from August 2025
Colorado’s shifting landscape in employment law—from wrongful termination and wage-and-hour violations to reasonable accommodations and ethics investigations—underscores the importance of having local counsel. At HKM Employment Attorneys in Denver, our Colorado-based advocates have delivered comprehensive support, fighting for compensation under the Wage Act, negotiating employment contracts, and conducting employer investigations when needed . Our team’s depth of experience and no-win, no-fee commitment ensure you’re not navigating this alone. When court decisions resonate with your experience, contact our Denver office to learn how we can help protect your rights and pursue justice in your case.
