New Colorado Immigration Laws Affecting Employers

March 14, 2012

By: Brent T. Johnson

During the 2006 regular and special sessions, the Colorado Legislature passed a multitude of new laws relating to immigration. Several of those laws impact Colorado employers, imposing new obligations or sanctions beyond the provisions of the federal Immigration Reform and Control Act of 1986 (“IRCA”). IRCA requires employers to review certain documents and complete an I-9 form for each new hire, verifying that the individual is authorized to work in the United States. The new Colorado laws are briefly summarized below in order of their effective dates.

HB 06-1343, effective August 7, 2006 (C.R.S. 8-17.5-101 et seq.): This statute affects contractors who provide services to state agencies and political subdivisions of the state, broadly defined to include most state and local governments, districts, and other public entities. Public contracts for services must include provisions which: (1) prohibit the contractor from knowingly employing or contracting with illegal aliens, or using subcontractors who do so; (2) require the contractor to participate in the federal “E-Verify Program” or, under a 2008 amendment to the law, a program of the Colorado Department of Labor (“CDLE”) to verify that it does not employ illegal aliens; and (3) require the contractor to take specified actions if it learns that a subcontractor is employing illegal aliens. Violation of these provisions will constitute a breach of contract, allowing the public entity to terminate the contract and recover damages. The Secretary of State will maintain a list of all terminated contractors. The CDLE is authorized to investigate compliance, and its web site provides information for employers on how to comply with this law.

HB 06S-1001, effective October 1, 2006 (C.R.S. 24-46-105.3): This statute provides that in order to be eligible for state economic development incentives, an employer must provide proof that it is in compliance with IRCA. Under this new Colorado law, employers who do not comply with IRCA may be required to repay economic development incentives received from the state and may be disqualified for five years from receiving any further incentives.

HB 06S-1017, effective January 1, 2007 (C.R.S. 8-2-122): This statute requires all Colorado employers to affirm within twenty days after hiring a new employee that the employer has examined the legal work status of the employee, has retained file copies of all documents reviewed pursuant to IRCA, and has not knowingly hired an unauthorized alien. The employer must maintain those file copies and also the affirmation in written or electronic form for the duration of the employment of the employee. IRCA allows but does not require employers to copy the documents reviewed at time of completion of the I-9 form; this Colorado statute will for the first time require employers to retain copies of those documents. The CDLE may audit compliance, and employers who recklessly either fail to maintain the required documentation or submit false documentation may be fined up to $5,000 for the first offense and up to $25,000 for any subsequent offense. The CDLE has posted information and forms concerning the new Colorado laws that employers may use to comply with this statute, plus an affirmation form that employers may use to comply with this statute.  The CDLE’s web site has posted information and forms that employers may use to comply with this statute.

HB 06S-1015, effective no earlier than January 1, 2008 (C.R.S. 39-22-604): This statute will in some cases require that state income tax be withheld from payments to independent contractors. More specifically, the law requires the state office of innovation and technology to develop a portal by January 1, 2008, that will allow verification of eligibility to work in the United States. Companies or other persons who make payments for services to individuals that are not otherwise subject to tax withholding, but which require a 1099 information return, must either validate the payee's tax ID number through the portal, or withhold Colorado income tax from the payment. If the portal is not created and accessible by January 1 of 2008, the effective date of the withholding provisions will be delayed until the first of January that immediately follows the date on which the portal does become accessible.

HB 06S-1020, effective January 1, 2008, if approved by the voters in November as Referendum H: If approved by the voters, this Colorado law would prohibit employers from claiming a state income tax deduction for wages or remuneration of $600 or more paid to an individual who was known at time of hire to be an unauthorized alien, regardless of whether the individual is an employee or independent contractor, if the payment is for services performed in Colorado. The law includes several exceptions, including payments to individuals hired before the effective date of the law, payments to individuals who present to the employer a valid license or identification card issued by the Department of Revenue, and payments that are not made directly to the unauthorized individual.

In summary, employers who provide services to public entities within Colorado, or who seek economic development incentives from the state of Colorado, will need to comply with new state laws effective in 2006 as described above. All Colorado employers will need to change their I-9 procedures for new hires after January 1, 2007, to make sure that they retain copies of the documents they review at the time of completion of the I-9, and to complete the written affirmation required by HB 1017.

This Article is published for general information, not to provide specific legal advice. The application of any matter discussed in this article to anyone's particular situation requires knowledge and analysis of the specific facts involved.

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Comments or inquiries may be directed to:
Brent T. Johnson