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Colorado employers beware—significant changes to critical employment regulations have been made and will soon take effect. 

The Colorado Department of Labor and Employment adopted new standards for overtime pay, minimum pay, and employee breaks through the passage of the Colorado Overtime and Minimum Pay Standards Order. These new requirements will take effect on March 16, 2020, and theyaffect most employers by significantly expanding the number of workers eligible for overtime pay, raising the minimum salary threshold for exemptions for overtime protections and clarifying rules governing meal periods and rest periods. 

Background

Since the 1990s, Colorado employers and employees have struggled to understand and adequatelycomply with Colorado Minimum Wage Order #35 because of its ambiguities, particularly regarding which workers are covered under Order #35 and the criteria for exempting employees from variousprotections. This confusion has led to increased wage disputes and litigation, which is costly and time–consuming for employers and employees. 

On January 22, 2020, the Colorado Department of Labor and Employment’s Division of Labor Standards and Statistics (DLSS) sought to provide clarification by adopting the Colorado Overtime and Minimum Pay Standards Order (COMPS Order). Effective March 16, 2020, the COMPS Order replaces Minimum Wage Order #35 and all prior Minimum Wage Orders. The COMPS Order makes significant changes, including expanding the industries covered by the order and raising the minimum salary necessary for exemption from wage protections. 

Expansion of Industries Covered by Order

Previously, Minimum Wage Order #35 applied only to private sector employers and employees in the following four industries: retail and service;commercial support service; food and beverage; and health and medical. Order #35 left many workers without certain wage protections, including construction workers, public employees, farm laborers and employees in manufacturing. 

The COMPS Order applies to most Colorado private employees in all industries unless they fall within an exception. Notably,the new Order covers manufacturing workers. 

The following are exempted from major provisions of the COMPS Order, including exemptions from overtime pay and meal and rest break requirements:

• Administrative employees;
• Executives or supervisors who supervise at least two full-time employees and have the authority to hire and fire employees;
• Professional employees in a field with knowledge of “an advanced type in a field of science or learning” who are employed in the field which they were trained;
• Outside salespersons;
• Business owners or entrepreneurs who own at least 20 percent of a company;

• Highest-ranked and highest-paid employee for a nonprofit employer
• Interstate transportation workers and taxi drivers;
• Live-in staff, including babysitters, property managers, student residence workers, and laundry workers;
• Volunteers and work-study students; and
• Elected officials and their staff.

• Agriculture and farmworkers are exempt from the overtime and meal period rules (farmworkers are now entitled to 10-minute rest periods as discussed below).

The COMPS Order exempts the following workers from the overtime requirements: 

• Salespersons and mechanics employed by automobile, truck or farm retail dealers, and salespersons employed by trailer, aircraft, and boat retail dealers;
• Commission sales employees in retail or service industries whose commission comprises at least 50 percent of their total earnings;

• Ski industry workers; and
• Medical transportation employees who work 24-hour shifts.

It is critical to remember that the exemptions described herein are meant to provide an overview. The Z&Ateam can provide specific explanations as to how these changes will impact your business and employees and to ensure you remain compliant will all regulations. 

Order Raises Minimum Salary Threshold to Qualify for Exemptions for Overtime Protections

Before the COMPS Order, Colorado did not have a minimum salary threshold for “white collar” exemptions (e.g., executives, administrative, professionals) and, by default, the State relied on the federal Fair Labor Standards Act (FLSA), which is $35,568 per year ($684 per week) beginning January 1, 2020. 

After the adoption of the COMPS Order, Colorado will officially rely on the federal threshold effective July 1, 2020. In other words, as of July 1, 2020, salaried workers must earn at least $35,568 per year ($684 per week) before they are disqualified from earning overtime pay. This new salary threshold will remain in effect through December 2020.

Beginning on January 1, 2021, Colorado’s minimum salary threshold for exempt employees will increase further and will exceed the current federal threshold. It will increase to $40,500 ($778.15 per week) on January 1, 2021, and thereafter increase by additional amounts annually until reaching $55,000 ($1,057.69 per week) on January 1, 2024. After that, the threshold will be adjusted annually for inflation.

DLSSbelieves this change will increase job opportunities because employers will be incentivized to spread work to more employees rather than permit fewer employees to work overtime hours. The minimum salary thresholds do not apply to exempt physicians, lawyers, teachers, and highly technical computer workers. 

Smaller employers with annual gross revenue of less than $1 million and nonprofit organizations with annual revenues of less than $50 million are exempt from the minimum salary threshold until January 1, 2021.

Some rural employers are concerned with the change because average weekly pay is lower in their areas than in more populated regions. In addition, the COMPS Order still excludes farmworkers. 

Other Notable Changes 

Definition of “Time Worked”

Colorado’s definition of “time worked” was clarified and now includes tasks taking over one minute,which are usually considered off-the-clock tasks. This may include dressing or removing work clothes or gear (except for uniforms worn outside of work), security and safety screenings, waiting for a work assignment, performing clean-up duties, or sharing work-related information. 

Under the FLSA, employers may disregard insignificant periods of time that can be difficult to track. Conversely, Colorado will now require employers to track all time exceeding one minute, and employees will need to be conscientious when recording their time.

Employee Rest Periods

Employers must provide workers a 10-minute rest period for every four hours of work. If the employer genuinely offers the break, and the employee declines to take the break, there is no liability for the employer. Employers and employees may agree that two 5-minute breaks will be provided rather than one 10-minute break. In addition, if an employee is not permitted to take a 10-minute rest break, the employer must pay an additional 10 minutes of wages for each missed rest break.

The COMPS Order provides a specific schedule for breaks:

Employers must now offer farm and agricultural workers 10-minute rest breaks; the COMPS Order does not require meal breaks and overtime pay.

DLSS believes that expanding rights to meal and rest breaks will further protect public health and improve work–life balance. 

Employer Posting Requirements

Employers are required to display a COMPS Order in areas frequented by employees and where it is easily read. If no such area exists, the employer must provide a copy of the poster to all employees within the first month of employment. Employers must also include a copy in any handbook or manual, and employees must sign an acknowledgment that they received a copy. Employers are required to provide a Spanish-language version to employees with limited English language abilities. 

Special Uniforms

If an employee’s job requires a special uniform, employers must provide the uniform, and they can no longer require a security deposit. If clothing “is ordinary, plain, and washable streetwear that is prescribed as a uniform,” employers do not have to provide the uniform unless they require a specific color, pattern, logo or material. 

The new COMPS Order makes significant and comprehensive changes and employers must be prepared. Our employment team has extensive experience providing pre-litigation and litigation support on employment-related matters, including employee classification issues, minimum wage, overtime pay, and meal and rest break disputes. Contact us today or call (303) 894-8948 for more information.