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Proposed Colorado Overtime and Minimum Pay Standard

Jan 13, 2020

On November 15, the Colorado Division of Labor Standards and Statistics proposed revisions to the state's minimum wage order for the first time since the 1990s.

The revisions affect three aspects of the rule:

  1. Establishing a new minimum annual salary for employees exempt from overtime pay. This starts at $42,500 as of July 1, 2020 and would increased annually to $57,500 in 2026.
  2. Covering all employees and industries by the wage order unless they are specifically excluded.
  3. Changing the name to Colorado Overtime and Minimum Pay Standards (COMPS) Order to better reflect the scope of the order

Proposed rule

Colorado Nonprofit Association submitted comments praising the coverage of all employees by the wage order, requesting lower annual increases to the salary for exempt employees, and recommending changes to state exemption categories.

Our comments

Detailed Summary

Changes to rules for employees exempt from overtime

Establishing a minimum salary for exempt employees in Colorado

  • Exempt employees must still meet the federal duties test and be paid a minimum salary of $42,500 per year as of July 1, 2020.
  • The annual salary amount will be increased by $3,000 per year until it reaches $57,500 in 2026.
  • After 2026, the salary amount will be adjusted annually for inflation.
  • As with federal law, no minimum salary is required for doctors, lawyers, or teachers to be exempt.

Establishing a Nonprofit Proprietor and Owner Exemption

  • The highest rank and highest paid employee of a nonprofit is exempt if paid at least the minimum salary for exempt employees.
    • Affects nonprofit executives who don't qualify for the "executives or supervisors" exemption due to supervising volunteers or for other reasons
  • Those who have at least 20% ownership and help manage a business would be exempt, regardless of salary

Removing the exemption for companions and domestic workers

  • These workers are now deemed to be exempt if they meet the definition of an independent contractor

Clarifying job-specific exemptions

  • The order makes changes to clarify exemptions related to agricultural jobs, drivers, mechanics, in-residence work (e.g. students, property managers), and computer occupations

Changes to minimum wage coverage

Covering all employees under the minimum wage order unless specifically excluded.

  • All employees in Colorado would now be covered by the order unless their jobs are subject to a specific exclusion or are exempt under state or federal law. 
  • The existing wage order covers employees who are working in Retail and Service, Food and Beverage, Commercial Support Service, or Health and Medical.
  • Employees covered by the Fair Labor Standards Act are also covered by the existing wage order

Clarifies overtime pay calculation  when pay is not hourly

  • Allows a “fluctuating workweek” calculation if the employee is paid the required overtime on top of the weekly salary.
    • This divides the weekly salary by hours worked to determine the hourly rate
  • Sets the hourly rate equal to the weekly salary divided by 40 for non-exempt employees denied overtime

Clarifying how this order relates to federal and local wage rules and protections

  • The greater of federal, state, or local wage rules applies if the employee is covered by more than one set of rules
  • The Division will accept complaints for unpaid minimum or overtime wages as required by local, state, or federal law
  • The ban on reprisals now includes any reprisal against actual or anticipated participation in any wage investigation, hearing, complaint, or procedure

Changes to workplace practices

  • Rest periods must be provided in the middle of each 4-hour work period
    • Employees are owed 10 minutes of pay if they are not allowed a 10 minute rest period
  • Clarifies rules for employers that reduce wages by taking a credit for providing meals or lodging
  • No longer allows employers to require a security deposit for a uniform required for a job
  • Employers should include a copy of the forthcoming COMPS order or poster with any employee handbook or policy
    • Employers should put up a poster in Spanish if there are employees with limited English proficiency and may ask the Division for translations into other languages
    • Employers are ineligible for employee-specific credits or exemptions if the employer fails to comply with notice requirements