May 21, 2018

Colorado Court of Appeals: Colorado Wage Claim Act Does Not Categorically Bar Plaintiff from Piercing Corporate Veil

The Colorado Court of Appeals issued its opinion in Paradine v. Goei on Thursday, April 19, 2018.

Wage Claim Act—Corporations—Piercing the Corporate Veil.

Plaintiff served as the chief financial officer and vice president of administration for Aspect Technologies, Inc. (Aspect), a corporation. Defendant Goei was the chief executive officer. Plaintiff sued Goei and Aspect, raising a claim under the Colorado Wage Claim Act (the Act), for fraud, and for breach of contract. He alleged that defendants owed him unpaid wages. The trial court granted Goei’s motion for judgment on the pleadings and dismissed the three claims against him individually with prejudice.

On appeal, plaintiff asserted that he was not barred from piercing the corporate veil and holding Goei personally liable under the Act. The Act does not categorically bar a plaintiff from piercing the corporate veil to hold an individual liable for unpaid wages. Plaintiff’s fraud claim made allegations in support of his request that the trial court pierce the corporate veil to impose liability on Goei, and plaintiff’s breach of contract claim incorporated the allegations in the fraud claim. Because plaintiff pleaded sufficient facts to establish a plausible claim that plaintiff could pierce the corporate veil, the trial court erred when it granted Goei’s motion to dismiss on the pleadings.

The judgment was reversed and the case was remanded with directions.

Summary provided courtesy of Colorado Lawyer.

Colorado Supreme Court: Wage Claim Act Claims Limited to Two or Three Years Prior to Termination

The Colorado Supreme Court issued its opinion in Hernandez v. Ray Domenico Farms, Inc. on Monday, March 5, 2018.

C.A.R. 21.1— Certified Questions of State Law—Colorado Wage Claim Act—Statute of Limitations—Statutory Construction.

The Colorado Supreme Court accepted jurisdiction under C.A.R. 21.1 to answer a certified question of law from the U.S. District Court for the District of Colorado regarding how far back in time a terminated employee’s unpaid wage claims can reach under the Colorado Wage Claim Act, C.R.S. §§ 8-4-101 to -123. The court held that, under the plain language of C.R.S. § 8-4-109, a terminated employee may seek any wages or compensation that were unpaid at the time of termination; however, the right to seek such wages or compensation is subject to the statute of limitations found in C.R.S. § 8-4-122. That statute of limitations begins to run when the wages or compensation first become due and payable and thus limits a terminated employee to claims for the two years (three for willful violations) immediately preceding termination.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Prevailing Employee Presumptively Entitled to Attorney Fees Under Colorado Wage Claim Act

The Colorado Court of Appeals issued its opinion in Lester v. The Career Building Academy on Thursday, July 3, 2014.

Attorney Fees Under the Colorado Wage Claim Act.

Lester appealed a jury verdict awarding him $12,307.69 in unpaid compensation based on breach of an implied contract with defendant, The Career Building Academy (TCBA). TCBA is a Colorado nonprofit corporation that provides vocational training, with an emphasis on residential construction, to high school students.

In 2011, Lester orally agreed to work as TCBA’s chief operating officer. Rick Johnson, TCBA’s founder, promised to pay Lester an annual salary of $150,000, of which $75,000 would be paid by TCBA and $75,000 by Johnson Heating and Plumbing (JHP).

During his first six months, Lester was paid twice, totaling $7,884 in gross pay. Lester resigned and sent a wage demand to TCBA. TCBA rejected the demand, contending that Lester agreed to volunteer as chief operating officer. Lester sued TCBA and JHP, seeking unpaid wages and compensation, as well as penalties and attorney fees.

A jury determined Lester had entered into an implied contract with TCBA and returned a verdict in his favor for $12,307.69. The court dismissed Lester’s claim against JHP. Following the verdict, Lester requested that the court award him statutory penalties and attorney fees under the Colorado Wage Claim Act (CWCA). TCBA argued that the CWCA did not apply to an implied contract. After applying factors in Carruthers v. Carrier Access Corp., 251 P.3d 1199 (Colo.App. 2010), used to determine an award of attorney fees to prevailing employers, the trial court denied the request.

On appeal, Lester argued it was error to apply the Carruthers factors to a prevailing employee who is presumptively entitled to an award of attorney fees. The Court of Appeals agreed. CRS §8-4-110(1) allows a court to award costs and attorney fees to the prevailing party on a CWCA claim. Unlike a prevailing employer, a prevailing employee is presumptively entitled to attorney fees under the CWCA. The attorney fee issue was remanded for reconsideration under the correct standard by the trial court.

Lester also argued it was error for the trial court to have, sua sponte, dismissed his claims against JHP as a matter of law. The Court found no reversible error. It also determined that because JHP was neither a member of TCBA nor an individual, the alter ego doctrine could not be applied to it.

The Court held that if the trial court decides that Lester is entitled to attorney fees in the trial court, Lester also should be awarded appellate attorney fees. The denial of attorney fees under the CWCA was reversed and the case was remanded to the trial court to consider Lester’s request for attorney fees, incurred in the trial court and on appeal.

Summary and full case available here.