Colorado Employers: Prepare Now for Extensive New Overtime and Minimum Pay Standards

Note: This alert has been revised to reflect updates to the rule that were posted to the Colorado Department of Labor and Employment’s website.

Colorado employers should take steps now to ensure compliance with the new Colorado Overtime and Minimum Pay Standards (COMPS) Order #36 as violations of the rule may expose them to both civil and criminal liability.

COMPS Order #36, issued by the Colorado Department of Labor and Employment, Division of Labor Standards and Statistics, includes significant changes to Colorado law regarding minimum pay and overtime for private employers. The new order will replace Minimum Wage Order #35 and will take effect on March 16, 2020.

Among the most substantial changes included in COMPS Order #36 is an increase in salary thresholds for exempt employees, which are considerably higher than those provided by federal law. (The new federal minimum exempt salary threshold, which took effect on January 1, 2020, is $35,568 annually, or approximately $684 per week.) Effective July 1, 2020 through December 31, 2020, the minimum annual salary for exempt Colorado employees will match the federal threshold at $35,568 ($684 per week). However, starting on January 1, 2021, the COMPS Order will raise the minimum annual salary for exempt Colorado employees to $40,500 ($778.85 per week). The COMPS Order will continue to increase the minimum exempt salary threshold annually, on January 1 of each year, until it reaches $55,000 ($1,057.69 per week) on January 1, 2024. After that time the exempt salary threshold will be adjusted by the same Consumer Price Index as the Colorado minimum wage.

In addition to raising the salary thresholds for exempt employees, COMPS Order #36 will presumptively cover all employees, unless specifically excluded. This is a significant departure from Minimum Wage Order #35, which only applied to employees in the retail and service, commercial support service, food and beverage, and health and medical industries.

Among those employees who are excluded from COMPS Order #36 are interstate transportation workers, taxi cab drivers, in-residence workers (including casual babysitters, property managers, student residence workers and laundry workers), bona fide volunteers, work-study students, and elected officials and their staff. The new rule also exempts an owner or proprietor, defined as a full-time employee “actively engaged in management of the employer” who either “owns at least a bona fide 20% equity interest in the employer” or for a nonprofit employer, “the highest-ranked and highest-paid employee” who is paid at least the COMPS Order #36 salary threshold. Additional exemptions are included for certain agricultural workers, salespersons, mechanics and ski industry workers, as well as others.

COMPS Order #36 also modifies Colorado law regarding employee rest periods. To the extent practical, the new rule will require employers to provide a 10-minute rest period in the middle of each four-hour work period. Employees who do not receive this 10-minute rest period will be entitled to an additional 10 minutes of pay. Along with other changes, the new rule clarifies the ban on “reprisals,” which will now include any form of reprisal against actual or anticipated participation in any investigation, hearing, complaint or procedure relating to a wage claim, right or rule.

COMPS Order #36 also expands previous wage order posting requirements. Specifically, the new rule acknowledges that a poster may not reach many employees given the increasingly mobile workforce and the fact that many employers may not have traditional break rooms. Accordingly, COMPS Order #36 provides that if an employer distributes a handbook or policies to its workers, it should include a copy of the COMPS Order or poster, and states that “[i]f the work site or other conditions make a physical posting impractical” the employer shall “provide a copy of the COMPS Order or poster to each employee within his or her first month of employment.”

Further, employers who have employees with limited English language ability should provide a copy of the poster in Spanish, as well as in any other language that may be required. Employers can request that the Division of Labor Standards and Statistics provide a translation of the poster into any other language, which the Division will provide to the extent possible.