Colorado’s Sweeping New Overtime and Minimum Pay Provisions Take Effect March 16

The Colorado Department of Labor and Employment (CDLE) has adopted finalized new standards for overtime, minimum pay, and employee breaks. The changes affect most employers and significantly increase the number of Colorado workers eligible for overtime pay and mandated breaks. 

As we previously reported here and here, CDLE has been considering these changes for some time. After a 10-month comment period during which the agency heard from more than 1,000 workers and employers, CDLE adopted the new standards to take effect March 16, 2020. They are meant to meet the CDLE’s stated goal of “helping workers prosper and employers thrive” by implementing new standards consistent with research that CDLE says “confirms that requiring overtime pay increases job opportunities as it leads employers to spread work to more workers, rather than assign extensive overtime.”

Who Is Covered

Currently, only four classes of workers are covered by Colorado’s minimum wage and break time protections: retail and service, commercial support, food and beverage, and health and medical. This left many categories of workers—including construction, domestic services, and manufacturing workers—outside the scope of those protections.

The new wage order covers most employers and all Colorado workers, unless specifically excluded. It does not apply to the Colorado state government or its agencies or entities, or to counties, cities, municipal corporations, quasi-municipal corporations, school districts, or irrigation, reservoir, or drainage conservation companies, or to districts organized and existing under the laws of Colorado.

Under the new standards, the groups of workers exempt from both the overtime and break requirements are:

1. “white-collar” salaried employees, who meet the requirements for the administrative, executive, professional, or highly technical computer-related exemptions under Colorado law and earn a salary at least meeting the minimum salary threshold discussed below; and
2. workers who meet certain regulatory requirements, including: outside salespersons, business owners or proprietors, interstate transportation workers and taxi cab drivers, “in-residence” workers including certain casual babysitters, resident property managers, resident student workers, laundry and range workers, field staff of seasonal camps or seasonal outdoor education programs, bona fide volunteers and work-study students, and elected officials and their staff.

The standards also set forth additional exemptions and separate requirements for: certain salespersons, mechanics, workers in the ski industry, workers in the medical transportation industry or at hospitals and nursing homes, and certain agricultural workers who are also exempt from the minimum wage provisions of the federal Fair Labor Standards Act.

Changes to Minimum Salary Threshold Requirements for Exempt Employees

Currently, Colorado rules do not include a minimum salary threshold for white collar exemptions, so the threshold defaults to the federal standard. Under federal law, effective January 1, 2020, the minimum annual salary threshold is $35,568. Under Colorado’s new regulations, the state minimum salary threshold for exempt employees will become $35,568, or $684.00 per week, effective July 1, 2020, consistent with the current federal threshold.

However, Colorado’s minimum salary threshold will increase annually on January 1. Effective January 1, 2021, the threshold will increase to a rounded annual salary of $40,500 per year. By January 1, 2024, the threshold will be $55,000 per year, and thereafter will be adjusted for inflation according to the consumer price index. Therefore, some employers will have to increase the salary of Colorado exempt employees or convert those workers to non-exempt status and pay them overtime.

Note that the new minimum salary thresholds do not apply to exempt doctors, lawyers, teachers, and qualifying employees in highly technical computer-related occupations.

Some smaller employers with annual gross revenue of less than $1 million, and nonprofits with annual revenues of less than $50 million, are exempt from the Colorado annual minimum salary threshold until January 1, 2021.

Overtime

The new standards also clarify Colorado’s rules on overtime wage calculation, providing guidance on what qualifies as compensable “time worked” for activities such as donning and doffing work clothing and gear, security or safety screening, cleanup duties, travel time, and “sleep time.”

Employee Breaks

The new measure also provides clarification on Colorado’s rules governing employee meal periods and rest periods. Meal periods, “to the extent practicable,” should not occur during the first or last hour of an employee’s shift, so that an employee has a break for consuming food and/or beverages “within a shift of over five hours.” A required 10-minute rest break for each four hours of work may be taken as multiple shorter breaks adding up to 10 minutes under certain circumstances. The new standards also provide that an employer’s failure to authorize and permit a compensated 10-minute rest period is deemed a failure to pay wages.

Please consult with counsel for assistance with navigating the nuances and complexities of these new standards. Ballard Spahr’s Labor and Employment Group routinely assists employers in complying with state, federal, and local statutes and regulations, and assists clients with internal audits to identify employee misclassification and avoid costly litigation.

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