303 Beauty v. Division of Labor

2025 COA 20

• Court: Colorado Court of Appeals
• Decided: February 20, 2025
• Docket: 24CA0548
• Status: Published

Opinion

The summaries of the Colorado Court of Appeals published opinions constitute no part of the opinion of the division but have been prepared by the division for the convenience of the reader. The summaries may not be cited or relied upon as they are not the official language of the division. Any discrepancy between the language in the summary and in the opinion should be resolved in favor of the language in the opinion.

SUMMARY February 20, 2025

2025COA20

No. 24CA0548, 303 Beauty v. Division of Labor — Labor and Industry — Wages — Permitted Payroll Deductions — Goods or Services

A division of the court of appeals considers whether an

employer’s deductions from an employee’s wages under section 8-4-

105(1)(b), C.R.S. 2024, for goods that are part of the employer’s

costs of doing business are lawful. The division concludes that,

while section 8-4-105(1)(b) allows an employer to make deductions

for “goods or services” pursuant to a lawful written agreement, it is

ambiguous with regard to what types of goods or services are

allowable deductions and what types of deductions are unlawful,

even if agreed to in writing. Examining the purpose of the Wage Act

and the structure of section 8-4-105(1)(b), the division concludes

that an employer may not deduct its own costs of doing business

from an employee’s wages. The division further concludes the employer salon in this case

shifted its own costs of doing business to its employee by deducting

the cost of hair care products from her wages. Accordingly, the

division affirms the administrative agency’s determination that the

parties’ product fee deduction agreement was unenforceable. COLORADO COURT OF APPEALS 2025COA20

Court of Appeals No. 24CA0548 City and County of Denver District Court No. 23CV31836 Honorable David H. Goldberg, Judge

303 Beauty Bar LLC d/b/a 303 Salon Lohi,

Plaintiff-Appellant,

v.

Division of Labor Standards and Statistics,

Defendant-Appellee.

ORDER AFFIRMED

Division IV Opinion by JUDGE PAWAR Harris and Grove, JJ., concur

Announced February 20, 2025

Lantz Law Group, Robert D. Lantz, Evergreen, Colorado, for Plaintiff-Appellant

Philip J. Weiser, Attorney General, Krista Maher, Senior Assistant Attorney General, Tanya M. Santillan, Assistant Attorney General, Sam Wolter, Assistant Attorney General Fellow, Denver, Colorado, for Defendant-Appellee ¶1 In this wage dispute, plaintiff, 303 Beauty Bar LLC d/b/a 303

Salon Lohi (the salon), appeals a determination by defendant, the

Colorado Department of Labor and Employment’s Division of Labor

Standards and Statistics (the Division), that the salon violated

section 8-4-105(1)(b), C.R.S. 2024, by improperly deducting certain

expenses from its employee’s pay. We conclude that the wage

deductions were for the employer’s costs of doing business, and an

agreement for such deductions is unenforceable under section 8-4-

105(1)(b). Accordingly, we affirm.

I. Background

¶2 The salon employed Elora Buenger as a cosmetologist. It paid

her wages and a commission based on her sales of services and

retail products. Additionally, the salon and Buenger entered into a

written agreement authorizing the salon to deduct from Buenger’s

pay fees for hair care products, such as hair color and dyes, that

she used in the course of providing services to the salon’s

customers.1

1 The amount of deductions varied each year. From 2018-2020, the salon deducted $8.00 from every hair color service Buenger provided. In 2021, it deducted a variable flat fee for particular

1 ¶3 Buenger filed a wage complaint with the Division asserting,

among other claims, that the salon failed to pay all the wages she

earned in 2021 and 2022 due to its improper deduction of product

fees. The Division agreed with Buenger and ordered the salon to

pay her $7,500 for unpaid wages and, based on its determination

that the salon acted willfully, $22,500 in penalties.

¶4 The salon administratively appealed. Following a hearing, an

administrative law judge (ALJ) issued a written order concluding

that the product fee deductions were impermissible under section

8-4-105(1)(b). The ALJ disagreed, however, that the salon acted

willfully and reduced the penalties for improper deductions to

$10,773.38. The salon sought judicial review in the district court

pursuant to section 24-4-106, C.R.S. 2024, and the district court

affirmed.

¶5 The salon now appeals, alleging that the Division misapplied

the law when it determined that the product fee deductions were

improper.

services. In 2022, it deducted four percent of Buenger’s wages across the board.

2 II. Standard of Review and Relevant Law

¶6 Under section 24-4-106(7), we must sustain an agency’s

decision unless it is arbitrary or capricious, unsupported by the

evidence, or contrary to law. Colo. Real Est. Comm’n v. Vizzi, 2019

COA 33, ¶ 13.

¶7 To resolve the question before us, we must interpret statutes

located within the Wage Act, sections 8-4-102 to -109, C.R.S. 2024.

We review questions involving statutory interpretation de novo.

Nieto v. Clark’s Mkt., Inc., 2021 CO 48, ¶ 12. When interpreting a

statute, our primary purpose is to ascertain and give effect to the

legislature’s intent. Id. To do this, we first consider the statute’s

plain language. Id. If the statute is unambiguous, we enforce it as

written and need not resort to other rules of statutory construction.

Id. But if the statute is reasonably susceptible of more than one

interpretation, we may turn to other interpretive tools to discern the

legislature’s intent. Id. at ¶ 13. These interpretive tools include the

statute’s purpose and structure. Id.

¶8 The Wage Act “is a comprehensive statutory scheme designed

to ensure the payment of employees’ earned wages in a timely

manner.” Id. at ¶ 14. Under section 8-4-105(1),

3 [a]n employer shall not make a deduction from the wages or compensation of an employee except as follows:

....

(b) Deductions for loans, advances, goods or services, and equipment or property provided by an employer to an employee pursuant to a written agreement between such employer and employee, so long as it is enforceable and not in violation of law.

¶9 Additionally, section 8-4-121, C.R.S. 2024, provides that “[a]ny

agreement, written or oral, by any employee purporting to waive or

to modify such employee’s rights in violation of this article shall be

void.”

III. Interpretation and Application of the Wage Act

¶ 10 The Division determined that the parties’ product fee

deduction agreement was unenforceable under section 8-4-105(1)(b)

because it violated the law. In particular, the Division concluded

that the products were primarily for the salon’s benefit and section

8-4-105(1)(b) did not authorize the salon to deduct its costs of doing

business from Buenger’s wages.

¶ 11 As we have already noted, section 8-4-105(1)(b) allows an

employer to enter into a written agreement with an employee to

deduct certain expenses from the employee’s pay, so long as the

4 agreement is “enforceable and not in violation of law.” We further

recognize, and the salon agrees, that section 8-4-121 prohibits a

written agreement in which the employee waives her rights under

the Wage Act. See Nieto, ¶ 14 (Section 8-4-121 “nullifies any effort

to circumvent [the Wage Act’s] requirements.”). In other words,

although a written agreement between an employer and employee

for certain deductions is authorized, it may nevertheless be

unenforceable if it circumvents an employee’s rights that are

otherwise protected by the Wage Act. We must therefore determine

whether the agreement here — to deduct product fees from

Buenger’s pay — was an unlawful waiver of her rights under the

Wage Act.

A. Section 8-4-105(1)(b) is Ambiguous

¶ 12 While section 8-4-105(1)(b) generally prohibits an employer

from making deductions from employees’ wages, the statute

includes a few limited exceptions. One of those exceptions is for

“loans, advances, goods or services, and equipment or property

provided by an employer to an employee pursuant to a [lawful]

written agreement.” § 8-4-105(1)(b).

5 ¶ 13 It is not clear from the plain language of the Wage Act,

however, what types of “goods or services” are allowable deductions

under this section or what types of deductions are unlawful, even if

agreed to in writing. Indeed, the same employer-provided goods or

services may be lawfully deducted under certain circumstances but

not under others. The Wage Act does not define “goods or services,”

and in contrast to other items listed in section 8-4-105(1)(b) — such

as “loans” and “advances,” which directly benefit the employee —

“goods or services” may reasonably be interpreted as benefiting the

employer, the employee, or both. Thus, because the prohibition

against an unlawful agreement for deductions is reasonably

susceptible of more than one interpretation, we conclude section 8-

4-105(1)(b) is ambiguous. See Nieto, ¶ 13. We therefore turn to

other tools of construction to determine the legislature’s intent. Id.

B. Deducting Costs of Doing Business Contravenes the Purpose of the Wage Act and the Structure of Section 8-4-105(1)(b)

¶ 14 The Wage Act is a remedial statute intended to protect

employees from exploitation, fraud, and oppression. See id. at ¶ 27.

As a remedial statute, we must construe it liberally to carry out its

purpose. Id.

6 ¶ 15 The Wage Act provides that employees must be paid their

wages. See § 8-4-103, C.R.S. 2024. Therefore, a contract that

reduces those wages by shifting the employer’s costs of doing

business to the employee would “contravene the legislature’s

manifest intent to prevent contractual waiver or modification of an

employer’s mandatory obligations” under the Wage Act. Nieto, ¶ 32.

Indeed, it is precisely the type of exploitation the Wage Act is

intended to prevent.

¶ 16 Examining the other exceptions listed within section 8-4-105,

we find further support for our interpretation. As the ALJ observed,

the first two items enumerated in section 8-4-105(1)(b) — loans and

advances — directly benefit employees, without an obvious benefit

to employers. Giving consistent meaning to the other words listed

within the subsection, it follows that the other deductions must

also primarily benefit the employee. See Coloradans for a Better

Future v. Campaign Integrity Watchdog, 2018 CO 6, ¶ 37 (“It is a

familiar principle of statutory construction that words grouped in a

list should be given related meaning.” (quoting Third Nat’l Bank in

Nashville v. Impac Ltd., Inc., 432 U.S. 312, 322 & n.16 (1977))).

7 C. The Salon’s Product Fee Deductions Were Unlawful

¶ 17 Having determined that an employer may not lawfully deduct

its business expenses from an employee’s wages, we review the

product fees at issue here. The salon does not dispute that the

products charged to Buenger were for customers’ use, not for

Buenger’s personal use. It also concedes that the products were

necessary for Buenger to complete the basic duties of her job.2 We

therefore agree with the Division that the salon’s deductions shifted

its own costs of doing business to Buenger.

¶ 18 The salon argues that the product fee deductions were

nevertheless proper because the products mutually benefited it and

Buenger. It contends that by using the products, Buenger was able

to build a client base. Thus, it asserts, the products were not

exclusively for the salon’s benefit. We disagree.

¶ 19 The salon’s business is providing beauty services to its

customers. It employs cosmetologists who are required to use the

salon’s products to provide those services. Adopting the salon’s

2 Indeed, Buenger testified that she did not want to be an

independent contractor because she did not want to incur the added expense of having to purchase her own products.

8 reasoning would allow an employer to deduct from an employee’s

wages any costs that are inherent in the job — for example, the cost

of drafting paper for an architect or polish for a dental hygienist —

simply because the employee may receive an incidental benefit from

the mere fact of being employed.3 We cannot conclude that the

legislature intended such a result. See Env’t Def. Fund v. Colo.

Dep’t of Pub. Health & Env’t, 2022 COA 130, ¶ 13 (we avoid absurd

and illogical statutory constructions).

¶ 20 For these reasons, we conclude the Division properly applied

the law to conclude that the parties’ product fee deduction

agreement is unenforceable under sections 8-4-105(1)(b) and 8-4-

121.

IV. Constitutional Retrospectivity

¶ 21 Sometime after the parties entered into the product fee

deduction agreement, the Division published Interpretive Notice &

Formal Opinion (“INFO”) # 16: Deductions From, and Credits

Towards, Employee Pay (last updated Dec. 23, 2022),

3 As in these examples, we observe that Buenger’s client base was

more likely attributable to her skills as a professional, not to the mere availability of products she was required to use in her employment.

9 https://perma.cc/7CAD-SB26 (INFO #16).4 INFO #16 explicitly

provides that when an employer makes deductions under section 8-

4-105(1)(b), “[t]he things provided must be for the employee’s

benefit, not for an employer’s cost of doing business.”

¶ 22 The salon argues that the Division relied in part on INFO #16

and by doing so violated the Colorado Constitution’s prohibition

against retrospective legislation. See Colo. Const. art. II, § 11

(prohibiting ex post facto laws). It argues there was no way for it to

know that the product fee deductions were improper because the

Division hadn’t published INFO #16 at the time it entered into the

product fee deduction agreement with Buenger or made most of the

deductions in this case.

¶ 23 We reject the salon’s argument because, as the salon

concedes, INFO #16 is not law. See Aurora Pub. Schs. v. A.S., 2023

CO 39, ¶ 41 (“[W]hile retroactive application of statutes is generally

disfavored under both common law and statute, only retroactive

application of a substantive law is constitutionally prohibited.”)

(emphasis omitted). And in any event, we have concluded that the

4 An INFO is an officially approved notice, opinion, or explanation

on a topic of labor law. It is not binding law.

10 Division’s decision applied the Wage Act as it existed at the time the

parties entered into their agreement, irrespective of the nonbinding

agency guidance the Division later published.

V. Disposition

¶ 24 The order is affirmed.

JUDGE HARRIS and JUDGE GROVE concur.