HOA Legi-Slate

Governor Owens is expected to sign HB 06S-1017, one of the bills that originated out of the recent legislative special session that focused on immigration issues. (As reported by the Denver Post, the fact that a special session was held at all caused much discussion - let alone the bills that resulted from it.)

HB 06-1017 would require all Colorado employers as of January 1, 2007, within 20 days of hiring a new employee, to affirm the following:

• That the employer has examined the legal work status of the new hire;
• That the employer has retained file copies of the verification documents required by federal law (the I-9 form);
• That the employer has not altered or falsified the employee's verification documents; and
• That the employer has not knowingly hired an unauthorized alien.

The statute does not speak to any specific manner in which the employer must affirm the above with the exception of retaining the required verification documents. (The employer will be required to keep a written or electronic copy of the affirmation, as well as the documents required by the I-9 form, for the length of the employment.) If the bill passes, the State Department of Labor and Employment will set forth any specifications it sees fit. (We'll keep you apprised of any developments, as well.)

In addition, the State Department of Labor and Employment will have the authorization to conduct random audits to verify compliance with the law. If it is found that an employer failed "with reckless disregard" to comply with the documentation requirements of the law or has submitted false or fraudulent documentation,it will be subject to a fine of up to $5,000 for the first offense and a fine of up to $25,000 for each subsequent offense.

Associations (and management companies) should be aware that 'employer' is defined broadly as a person or entity that 1) transacts business in Colorado; 2) that employs another to perform services of any nature; AND 3) has control of the payment of wages for the services or is the officer, agent, or employee of the person (or entity) having control of the payment of wages.

Whether or not an association is an 'employer' that falls under this statute will primarily be based on whether or not it pays 'wages' to those who perform services for the association. When used in a statute, the word 'wages' has a technical legal definition. In its simplest form, wages are the compensation paid to an employee. Of course, the word "employee" also carries a specific legal definition. Colorado law defines an employee as any person who performs services for an employer over which the employer has command of when, where, and how much services will be performed. The law provides that individuals who are "primarily free from control and direction in the performance of the service" and are "customarily engaged in an independent trade, occupation, profession, or business related to the service" are not employees (i.e. independent contractors.)

Associations that do not have 'employees' in the legal sense of the word are not paying 'wages' and, therefore, fall outside the bill's scope. (Examples of such non-employee relationships include the hiring of a landscaping company, a painter, a pool maintenance company, a CPA, a roofing contractor, or offsite management company etc.) An association may have an employee, for example, if it has an on-site manager or maintenance person for whom the association controls working hours, vacation time, benefits etc. and therefore directly pays wages to that individual.

As stated earlier, Governor Owens is expected to sign this bill. If it becomes law, to avoid the possibility of facing a large fine, an association who has any question of whether or not it falls under the definition of 'employer' should consult its legal counsel to make this determination.