303 Subsource v. CDOL

Opinion

25CA1730 303 Subsource v CDOL 09-17-2026 COLORADO COURT OF APPEALS

Court of Appeals No. 25CA1730 City and County of Denver District Court No. 24CV31838 Honorable Ian J. Kellogg, Judge

303 Subsource, LLC, d/b/a Firehouse Subs, Plaintiff-Appellant, v.

Colorado Department of Labor and Employment, Division of Labor Standards and Statistics, and Christopher Heffner,

Defendants-Appellees.

JUDGMENT AFFIRMED AND CASE REMANDED WITH DIRECTIONS

Division IV

Opinion by JUDGE HARRIS

Gomez and Martinez*, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)

Announced September 17, 2026

Condit Csajaghy LLC, Stephen E. Csajaghy, Denver, Colorado, for Plaintiff- Appellant

Philip J. Weiser, Attorney General, Thomas J. Archer, Assistant Attorney General, Denver, Colorado, for Defendant-Appellee Colorado Department of Labor, Division of Labor Standards and Statistics

Baker Law Group, PLLC, Robert M. Thomas, Maxim N. Belovol, Denver, Colorado, for Defendant-Appellee Christopher Heffner *Sitting by assignment of the Chief Justice under provisions of Colo. Const. art. VI, § 5(3), and § 24-51-1105, C.R.S. 2026.

¶1 Plaintiff, 303 Subsource, LLC, d/b/a Firehouse Subs (the restaurant), appeals the district court’s order affirming the decision by defendant, the Colorado Department of Labor and Employment’s Division of Labor Standards and Statistics (the Division), that the restaurant is liable for penalties and fines under the Colorado Wage Claim Act (CWCA), §§ 8-4-101 to -127, C.R.S. 2026. We affirm.

I. Background

¶2 Christopher Heffner worked for the restaurant as a manager. After his employment ended, he filed a complaint with the Division under the CWCA. In February 2023, the Division issued an eight- page citation finding the restaurant liable for $225.76 in unpaid wages; imposing a $600 fine; and assessing, based on a determination that the restaurant had acted willfully, a $3,000 statutory penalty. See § 8-4-109(3)(b)(II), C.R.S. 2026 (when employer’s failure to pay wages is willful, the penalty increases to the greater of three times the amount of the unpaid wages or $3,000). The citation was accompanied by a notice of assessment (NOA) that outlined (1) the “wages owed and full penalties and fines” (i.e., the $225.76 in wages, the $3,000 penalty, and the $600 fine); (2) an offer to reduce the penalty to $1,500 and eliminate the fine

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for “prompt payment” (the prompt payment option); and (3) the consequences for failure to pay “all wages and penalties due” by the deadline of April 28, 2023.

¶3 The restaurant did not appeal the Division’s liability finding or its willfulness determination. Instead, it purported to invoke the prompt payment option.

¶4 The prompt payment option required that Heffner be paid the outstanding wages by March 13 and the reduced penalty by April 3. According to the restaurant, on March 13, it “entered its bank’s website and ordered that the wages be paid.” As proof, the restaurant submitted the below bank record showing a “send” date of March 13:

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The bank issued the wage check on March 14.

¶5 Then — again according to the restaurant — on April 3, the owner “went onto the bank’s website and arranged for the [reduced penalty] payment to be issued.” As proof, however, the restaurant submitted the below bank record showing a “sent” date of April 5:

The bank issued the check on April 6.

¶6 In November 2023, the Division contacted the restaurant concerning its failure to pay the penalties and fines by the April 28 deadline. The Division explained that because the restaurant had not paid the wages or reduced penalty by the prompt payment option deadlines, it was required to pay the original penalty ($3,000) and fine ($600) by April 28, but it had failed to do so.

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Accordingly, the restaurant owed the increased penalty of $6,000 (minus the $1,500 paid) and fine of $775.

¶7 The restaurant filed an administrative appeal. It contended that because it had ordered the checks on the due dates, it had complied with the prompt payment option deadlines, and, even if it had not, the NOA provided for a “grace period” in which to pay the wages and reduced penalty — up to April 28 — and it had indisputably paid the amounts by that date.

¶8 After the parties agreed to forgo an evidentiary hearing, the administrative law judge (ALJ) issued a detailed written order rejecting the restaurant’s contentions. First, the ALJ found that “no evidence” in the record supported counsel’s bare assertion that the restaurant ordered the penalty check on April 3. Rather, even assuming the operative date for the prompt payment option was the date the transaction was initiated, the documentary evidence “show[ed] that [the restaurant] initiated the penalty transaction two days later than the deadline set forth in Section II [of the NOA] (April 5 instead of 3).” Hence, the restaurant “did not meet the terms” of the prompt payment option, and it therefore owed the original penalty of $3,000, which it did not pay in full by April 28.

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Based on these findings, the ALJ affirmed the Division’s determination that the restaurant owed $4,500 in penalties ($6,000 minus the $1,500 paid) and $775 in fines.

¶9 The restaurant appealed again, this time to the district court under section 24-4-106, C.R.S. 2026, reiterating its arguments that it paid the wages and reduced penalty by the April 3 deadline, and, regardless, it paid before the April 28 “grace period” expired. In an exceptionally thorough and clear order, the district court explained that the evidence did not support the restaurant’s first argument and that the NOA’s plain terms did not support its second one.

II. Discussion

¶ 10 In this third appeal, the restaurant asserts that the ALJ and the district court erred by “rejecting evidence in the record” that it paid the reduced penalty on April 3 and by misconstruing the NOA, which provided for a “grace period” through April 28. We agree with the ALJ and the district court.

A. Standard of Review

¶ 11 In appeals brought under section 24-4-106, we review the district court’s order de novo. Weld Air & Water v. Colo. Oil & Gas Conservation Comm’n, 2019 COA 86, ¶ 32. In doing so, we examine

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the agency’s decision, employing the same standard of review as the district court. Kirkmeyer v. Dep’t of Loc. Affs., 313 P.3d 562, 571 (Colo. App. 2011).

¶ 12 We assume an agency decision is valid and will therefore affirm it unless the party challenging it shows that the agency acted arbitrarily or capriciously, contrary to a statutory or constitutional right, without substantial evidentiary support, or otherwise contrary to law. Schlapp v. Colo. Dep’t of Health Care Pol’y & Fin., 2012 COA 105, ¶ 8.

¶ 13 Whether the record supports an agency’s final decision is a question of law that we review de novo. Rags Over the Ark. River, Inc. v. Colo. Parks & Wildlife Bd., 2015 COA 11M, ¶ 55. We will uphold the agency’s decision as long as the record, viewed as a whole and in the light most favorable to the agency, contains substantial evidence to support the agency’s decision. Sapp v. El Paso Cnty. Dep’t of Hum. Servs., 181 P.3d 1179, 1182 (Colo. App. 2008). Substantial evidence is competent evidence that would warrant a reasonable belief in the existence of facts supporting a particular finding, without regard to the existence of contradictory evidence. Varsity Tutors LLC v. Indus. Claim Appeals Off., 2017

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COA 104, ¶ 17. When applying this standard, we will not second guess an agency’s choice between two equally plausible inferences that may be drawn from the evidence. Weld Air & Water, ¶ 32; see also Bankers Ins. Co. v. Conway, 2026 COA 60, ¶ 14 (“A reviewing court cannot reweigh the evidence or substitute its judgment for that of the agency.”).

¶ 14 We also review de novo the agency’s construction of a written document. See Bartenders & More v. Colo. Dep’t of Lab. & Emp., 2023 COA 123, ¶ 14.

B. The Division Did Not Err by Imposing the Increased Penalties and Fines

¶ 15 The restaurant first challenges the ALJ’s factual finding that the restaurant failed to meet the prompt payment option deadlines.

¶ 16 Throughout the several appeals in this case, the restaurant has argued that, under the “mailbox rule,” payment was effective on

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the date the restaurant initiated the bank transactions.1 That argument does not advance the restaurant’s position, though, because the ALJ agreed to adopt that view for purposes of his analysis and nonetheless found that the restaurant failed to timely pay the reduced penalty.

¶ 17 As the ALJ explained, the documentary evidence showed that the restaurant initiated the wage payment on March 13 and the penalty payment on April 5, two days after the deadline. In both instances, the bank issued a check the next day. The restaurant does not explain why, if the March 13 date on the banking record confirms the date of the wage payment (as it has consistently

1 Generally, payment by mail is not effective until receipt by the

creditor. Werne v. Brown, 955 P.2d 1053, 1055 (Colo. App. 1998). But under the “deposit payment” rule, when payment by mail is authorized by the creditor, “the time of delivery is the time that the payment, properly addressed with postage prepaid, is put in the mail,” unless the operative document specifies that “only the actual receipt of payment will be effective.” Id. In its well-reasoned order, the district court concluded that the NOA’s language — requiring that Heffner “is paid by” a date certain (rather than that the restaurant “pay” by a date certain) — established that only the receipt of payment would be effective under the prompt payment option. In light of our analysis and disposition, we need not decide whether or how the “deposit payment” rule (or some other variation of the “mailbox rule”) applies.

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claimed), the April 5 date on the banking record does not likewise confirm the date of the penalty payment.

¶ 18 Instead, the restaurant merely repeats its assertion that, on April 3, “while [the restaurant’s owner] was in Oklahoma City attending his grandmother’s funeral,” he “went onto the bank’s website and arranged for the [penalty] payment to be issued and mailed to” Heffner. The restaurant says that counsel’s assertion constitutes “undisputed evidence” of a timely payment and that the ALJ erred by rejecting it. But “bare statements made in the briefs of litigants” are not a substitute for record evidence. Westrac, Inc. v. Walker Field, 812 P.2d 714, 718 (Colo. App. 1991); see also United States v. Broemmel, 428 F. App’x 832, 835 (10th Cir. 2011) (unpublished opinion) (relevant date for purposes of the issue on appeal was established by documentary evidence because “[contrary] statements [the defendant] makes in his briefs . . . are not evidence”). The restaurant could have submitted an affidavit or declined to forgo the evidentiary hearing, but it did neither. (To the extent the restaurant suggests that the ALJ unilaterally vacated the evidentiary hearing, that suggestion is contradicted by the record: The ALJ determined that a hearing was unwarranted but said it

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would cancel the hearing only “if neither party objects”; the restaurant responded by email, “The appellant/employer does not object to vacating the hearing.”) Consequently, the only evidence in the record concerning the penalty payment date is the restaurant’s bank record showing a transaction date of April 5.

¶ 19 Because the ALJ’s factual finding concerning the penalty payment date is supported by the evidence, we may not disturb it. See Jansma v. Colo. Dep’t of Revenue, 2023 COA 59, ¶ 17. And we therefore discern no error in the ALJ’s determination that the restaurant did not meet the prompt payment option requirements.

¶ 20 Still, the restaurant insists that because the NOA provided a “grace period” to make payments through April 28 and the restaurant indisputably paid the wages and reduced penalty before that date, the Division erred by assessing increased penalties and fines. This argument misapprehends the NOA, the relevant sections of which we reproduce below:

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¶ 21 To begin, the Division did not “assess[] a reduced penalty of $1,500,” as the restaurant continues to assert in this appeal. Rather, as Section I of the NOA reflects, on February 23, the Division assessed $3,000 in penalties and a $600 fine against the restaurant. Under Section III, to avoid increased penalties and fines, the restaurant had to pay Heffner all wages and penalties within 60 days, or by April 28. But Section II carves out a prompt payment option. If, instead of waiting to pay until April 28, the

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restaurant paid Heffner the wages and a reduced penalty by April 3, (and sent notice of those payments to the Division by April 10, which the restaurant also failed to do), the Division agreed to waive the remaining penalties and the fine.

¶ 22 Section III did not create a “grace period” that gave the restaurant until April 28 to pay the reduced penalty. Under that interpretation of the NOA, the prompt payment option purportedly required payment of wages and the reduced penalty by April 3 — but really not until April 28. But then what was the point of the April 3 deadline? The restaurant’s interpretation renders the prompt payment option deadlines a nullity and defeats the purpose of Section II — to encourage the employer to pay the wages and penalties before April 28, when all amounts were otherwise due. We will not construe the NOA in a manner that yields an illogical or absurd result. Cf. EnCana Oil & Gas (USA), Inc. v. Miller, 2017 COA 112, ¶ 28 (noting that courts must construe contracts to avoid an absurd result).

¶ 23 The April 28 deadline applies when the employer, for whatever reason, cannot take advantage of the prompt payment option. Here, the ALJ found, with record support, that the restaurant was

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not eligible for the prompt payment option because it missed the prompt payment option deadline of April 3. As a result, the restaurant owed the amounts initially assessed, as set forth in Section I (minus the $225.76 in wages and the $1500 in penalties already paid), by April 28. The restaurant acknowledges that it failed to pay those amounts by the deadline. Thus, under Section III, it was subject to increased penalties and fines.

¶ 24 Because the ALJ and the district court properly construed the NOA, we must affirm the Division’s assessment of an additional $4,500 in penalties and $775 in fines.

C. Heffner is Entitled to Reasonable Appellate Attorney Fees and Costs

¶ 25 Heffner seeks his reasonable appellate attorney fees and costs under C.A.R. 39.1 and the CWCA. See § 8-4-110(1)(b), C.R.S. 2026 (courts may award reasonable attorney fees and costs to an employee who “recovers a sum greater than the amount tendered by the employer”).

¶ 26 An employee who prevails on a CWCA claim is “presumptively entitled to attorney fees.” Lester v. Career Bldg. Acad., 2014 COA 88, ¶ 2. That rule applies to employees who successfully defend the

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district court’s judgment on appeal. Id. at ¶ 48; see Graham v. Zurich Am. Ins. Co., 2012 COA 188, ¶¶ 27-28.

¶ 27 The presumption is rebuttable upon a showing that “special circumstances would render [an award of attorney fees] unjust.” Lester, ¶ 31 (quoting Newman v. Piggie Park Enters., Inc., 390 U.S. 400, 402 (1968)). The restaurant, however, does not attempt to rebut the presumption or otherwise challenge Heffner’s entitlement to an award of reasonable appellate attorney fees under the CWCA.

¶ 28 We conclude that an award of attorney fees and costs is warranted. However, because the district court is better situated to determine the amount of fees and costs to award, we exercise our discretion under C.A.R. 39.1 and remand the case to the district court to determine and award Heffner his reasonable appellate attorney fees and costs.

III. Disposition

¶ 29 The judgment is affirmed, and the case is remanded to the district court for a determination of Heffner’s reasonable appellate attorney fees and costs.

JUDGE GOMEZ and JUSTICE MARTINEZ concur.