The Colorado legislature wrapped up its 2025 session this past May, and the impact of passed legislation is still being assessed in contractor offices and jobsites across Colorado. From new workforce rules to construction litigation to changes in public contracting policy, lawmakers had the construction industry at the center of the action. Construction-related bills took swings at multi-family housing supply, wage-and-hour enforcement, public-works labor rules and workers’ compensation. A fifth bill, which passed overwhelmingly in the Democrat-controlled chambers but was vetoed by Gov. Polis, would have positioned Colorado as a union shop state.

Going After Alleged Wage Theft: HB 25-1001

Colorado has continued to strengthen its wage-and-hour enforcement framework and placed additional burden on businesses with the passage of HB25-1001, which took effect on Aug. 6, 2025. The measure makes sweeping changes to the Colorado Wage Act and Wage Claim Act for all employers, creating stiffer penalties for misclassification, expanding avenues for worker claims and broadening the enforcement powers of the Colorado Department of Labor and Employment (CDLE).

Wage theft is now clearly defined not only as unpaid wages, but also as failure to pay overtime, provide earned benefits or properly classify employees. Despite the focus on our industry over the last couple of years, claims made from the construction industry were only 11% of all wage claims made between 2021 and 2023.

Key Provisions of HB 25-1001

• Stronger Penalties: Misclassifying employees as contractors now carries fines from $5,000 to $50,000 per violation, with higher penalties for repeat or uncorrected offenses. CDLE will adjust fine levels every two years beginning in 2028.
• Expanded Liability for Business and Owners: Owners controlling 25% or more of a business can be personally liable for wage violations unless they’ve fully delegated daily operations. In addition, independent contractors may now also file claims, and employers may only recover fees when a claim “lacks substantial justification.”
• Broader Enforcement and Transparency: Starting July 2026, CDLE may investigate wage claims up to $13,000 (up from $7,500), will publish violators online and report unresolved, willful cases to licensing agencies. This provision was supported by ABC and the business community in response to the draconian bill against construction contractors passed by the legislature and vetoed by the governor last year.
• Safe Harbor for Prompt Payment: Employers can avoid automatic penalties by paying full wages within 14 days of a formal CDLE complaint — provided they have a clean five-year record.
• Retaliation Presumption: Adverse actions taken within 90 days of a wage complaint are presumed retaliatory. Remedies now include reinstatement, damages, attorney fees and daily penalties.

ABC and its members strongly oppose wage theft and largely agree with the goal of reducing wage theft by providing regulators with more tools to quickly administer claims and settle cases. However, we felt that HB 25-1001 might be overly harsh, exposing good-faith employers to steep penalties for complex or technical errors — thus punishing companies that make honest mistakes rather than willful violations.

Worker classification disputes often involve gray areas, and the law’s strict penalty structure and retaliation presumption fail to distinguish intent. We cautioned legislators that these changes may inadvertently hurt small or emerging companies that lack legal or HR staff.

ABC also felt that the 90-day retaliation presumption and limited ability to recover legal fees would invite speculative or defensive claims, forcing employers to settle even weak cases.

ABC supports fair pay enforcement in principle and opposes draconian approaches that add risk, legal exposure and compliance costs at a time when many contractors are dealing with several other economic challenges.

Bottom Line for Contractors: HB 25-1001

Because HB25-1001 combines tougher penalties and public disclosure with a narrow path to forgiveness for employers that act swiftly and in good faith, there are some things contractors should start now to stay compliant.

First, review all worker classifications — especially among trades, subcontractors and independent crews. Ensure that every relationship meets state and federal definitions, and document the reasons why each worker qualifies as a contractor, if applicable. Misclassification fines can reach $50,000 per violation, so it’s worth auditing agreements, supervision practices and project roles now.

Second, tighten payroll and wage-claim procedures. Contractors have 14 days after a formal CDLE complaint to pay any wages owed and avoid automatic penalties. Keep accurate records of hours, pay and deductions, and be ready for the CDLE’s expanded authority to handle wage claims up to $13,000 starting July 2026.

Finally, train superintendents and foremen on retaliation risks. Any disciplinary action within 90 days of a wage complaint can be presumed retaliatory unless properly documented. Encourage field leaders to escalate concerns quickly and handle wage issues professionally.

Construction firms that audit classifications, resolve wage claims promptly and train front-line leaders will be best positioned to demonstrate good faith and maintain compliance under Colorado’s tougher wage-law enforcement.

Project Labor Agreements Now in Statute: HB25-1130

New 2025 legislation explicitly authorizes state and local government agencies to require PLAs on public construction projects valued at $1 million or more. While the law does not mandate PLAs across the board, its passage marks a significant shift in state policy and presents new challenges for all the nonunion contractors who represent the overwhelming majority of Colorado’s construction workforce. We discuss this policy matter elsewhere in this publication.

Construction Litigation Reform: HB25-1272

In the first new reform addressing construction defects litigation since 2016 (which originated from a bill I sponsored while serving as a Colorado state senator), HB25-1272 establishes the Multifamily Construction Incentive Program (MCIP), which took effect on Jan. 1, 2026. Builders and developers may choose to participate by providing a no-cost warranty that covers defects and damage for specified periods, commissioning a third-party inspection and recording a notice of election to participate in the property’s chain of title.

For construction defect claims involving MCIP projects, the bill introduces new standards and limitations. Claimants must file a certificate of review when suing architects or engineers and may bring actions only for defects that significantly affect safety, functionality or property use. The bill also sets the statute of limitations at eight years after substantial completion — or six years if the work was performed under a written warranty or with reasonable care. Construction professionals must also provide an offer to settle or a written response identifying the applicable standards and explaining why a repair may not be required.

This is a complex and untested regime. Builders should consult legal counsel and insurance providers before opting a project into the MCIP. Participation may increase exposure while reducing strategic flexibility without adding new protections. Some underwriters of multifamily CGL policies have expressed concern that the program’s parameters could actually raise, rather than reduce, litigation risks. Contractors are also encouraged to coordinate with their trade partners before opting in, as the program’s procedural requirements and disclosure rules will affect all professionals involved — and some trades may decline work on MCIP projects for this reason.

Unfortunately, as can happen in the final hectic days of the legislature, a drafting error in Section 4 of HB25-1272 extends certain notice and disclosure requirements to all construction defect claims, not just those under the MCIP. This was not the intention of the lawmakers and advocates. As a result, beginning Aug. 6, 2025, all construction professionals — including builders, developers, subcontractors, architects and engineers — will be subject to new early disclosure obligations under subsections 3.5 and 3.7 of the bill. These disclosures largely mirror information that would otherwise surface through litigation, but the timing is now accelerated. Professionals must decide whether to comply proactively or wait until a lawsuit is filed, noting that penalties for noncompliance arise only if deadlines are missed once litigation begins. Either way, timely disclosure will be necessary to preserve the ability to designate non-parties at fault.

Follow-up legislation is expected in 2026 to clarify that Section 4 applies only to MCIP-related claims, as originally intended. The Colorado Association of Home Builders (CAHB) has been leading the discussion around this area of public policy and plans to work with ABC and industry partners toward that legislative fix.

Despite these complications, the bill did deliver one positive change: It increased the required vote threshold for homeowners associations to initiate defect litigation from a simple majority to 65% of unit owners — a significant improvement for builders and developers.

ABC’s Perspective: HB25-1272

Several ABC members prospectively operate in the multi-family for-sale housing market. The goal of this legislation and past efforts has been to expand this market. While the intent of HB25-1272 was to promote quality construction and reduce frivolous defect claims, its implementation details raise serious concerns for the construction industry. ABC Rocky Mountain supports balanced reforms that improve accountability without expanding liability risk. We will continue to monitor the rollout of the MCIP and work with allied associations to ensure builders and contractors are protected under any future legislative “fix.”

Major Workers’ Compensation Reform Coming in 2028: HB25-1300

HB25-1300 represents one of the most sweeping changes to Colorado’s workers’ compensation system in more than three decades. Signed into law in June 2025, the measure takes effect Jan. 1, 2028, giving the Division of Workers’ Compensation (DOWC) and industry stakeholders time to adjust before implementation. The new law replaces Colorado’s long-standing “designated provider” system with a broad open-choice model and shifts key responsibilities in medical treatment disputes.

Under current law, employers are required to provide a short list of four designated physicians from which an injured worker must choose. HB25-1300 repeals that structure and instead allows injured employees to select their own authorized treating physician from any Level I or Level II accredited provider listed in the DOWC directory, so long as the provider is located within 70 miles of the employee’s home or workplace (or within 100 miles, in limited cases). If an employee does not make a selection within seven days of reporting an injury, the employer or insurer may designate a provider from the same directory. Regardless of who makes the initial choice, the worker has an automatic right to one change of physician within 120 days of the first designation or before reaching maximum medical improvement, expanding the current 90-day change period. The bill also shifts the burden of proof in medical treatment disputes, requiring employers or insurers to prove that a physician’s recommended care is not reasonable, necessary or related to the workplace injury.

Business and employer groups, including ABC, NFIB Colorado and the Colorado Chamber of Commerce, opposed the measure, warning that it will raise premiums, reduce coordination of care and erode long-standing cost controls that keep Colorado’s workers’ compensation system efficient. A major concern involves the potential loss of the 2.5% premium discount currently granted to employers who maintain a designated-provider list under Division of Insurance Regulation 5-1-11. Without clear rulemaking to preserve this option, all insured employers could lose that credit, effectively increasing costs statewide.

Additional worries stem from the simultaneous passage of SB25-186, which allows health-care professionals from more than a dozen new fields — including acupuncturists, athletic trainers, massage therapists and even veterinarians — to qualify as Level I accredited providers. Opponents argue that many of these practitioners lack the training or authority to oversee primary care, diagnostics and return-to-work programs, potentially confusing injured workers and delaying recovery.

Gov. Jared Polis signed HB25-1300 with a statement emphasizing that successful implementation will depend on DOWC rulemaking that balances expanded worker choice with timely, coordinated care. Employer groups and insurers are urging regulators to clarify that employers may still recommend accredited physicians from within the state directory and to codify clear timelines for physician selection and change. Without those guardrails, critics warn, the reform could create new administrative burdens, invite “doctor shopping” and erode the efficiency of a system that has historically served both workers and employers well.

A Vetoed Attempt to Make Colorado a Union Shop State: SB25-005

SB25-005 sought to repeal key provisions of the Colorado Labor Peace Act (CLPA) — the 1943 state law that balances employee organizing rights with employer and worker choice. The bill, sponsored by the Senate majority leader, would have eliminated the CLPA’s “second election” requirement, which currently mandates a separate 75% approval vote before a union may require all employees to pay dues or fees through payroll deductions. The measure passed both chambers but was ultimately vetoed by Gov. Polis. Had this bill become law, Colorado would have become a union shop state, like California.

Under current law, employees first vote on whether to form a union and then, if approved, hold a second election to decide whether to authorize a “union shop.” The 75% threshold ensures that a union can only collect mandatory dues or fees when an overwhelming majority of workers support union membership. This two-step process has long distinguished Colorado as a modified right-to-work state, balancing the rights of union and non-union employees.

ABC Rocky Mountain opposed SB25-005, arguing that eliminating the second election would undermine worker choice and increase costs for Colorado employers. Without the 75% requirement, a slim majority could impose union membership or dues obligations on all employees, eroding individual freedom in pay and benefit negotiations. ABC warned that such a law could make Colorado less competitive by driving up compliance costs, limiting flexibility and reducing productivity — burdens that are especially hard on small and mid-sized contractors.

Ultimately, Gov. Polis vetoed SB 25-005, saying it would have disrupted Colorado’s long-standing balance between business, workers and labor organizations. He argued that repealing the Act’s second-election safeguard would eliminate a system that has ensured both worker choice and labor stability for more than 80 years. While reaffirming his support for collective bargaining, the Governor said reforms should preserve the consensus-based framework that has kept Colorado’s labor environment fair and predictable.

Just Around the Corner: 2026

With the 2026 session just a few months away, ABC Rocky Mountain is already preparing to make sure our contractors and those construction advocates supporting free enterprise continue to have a strong voice under the gold dome.

For example, Colorado should consider reversing course and proposing a Fair and Open Competition Act, prohibiting state, county, municipal, school district and public authority contracts (or grants involving construction, renovation or facility work) from including any clause that mandates, prefers, prohibits or discriminates on the basis of a labor-organization agreement. Such a bill would require that all bid solicitations, controlling documents and specifications remain neutral with respect to union affiliation. Contractors or subcontractors may voluntarily enter into agreements, but government entities may not force or condition awards on such agreements.

This approach aligns with ABC’s mission to ensure all construction firms have full access to publicly funded projects without union-mandated restrictions.