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Final Colorado Overtime and Minimum Pay Standard Rule

Jan 31, 2020

On January 22, 2020 the Colorado Division of Labor Standards and Statistics revised the state's minimum wage order for the first time since the 1990s.

The revisions affect three key aspects of the order (see detailed summary below):

  1. Establishing a new minimum annual salary for employees exempt from overtime pay in Colorado. This starts at $35,568 per year (or $684 per week) as of July 1, 2020**, increases annually until reaching $55,000 per year ($1,057.69 per week) as of January 1, 2024, and the salary will increase annually on every January 1 from 2025 on.
  2. Covering all employees and industries by the Colorado minimum wage unless there are specific exceptions that apply in state or federal law or regulation.
  3. Changing the name to Colorado Overtime and Minimum Pay Standards (COMPS) Order to better reflect the scope of the order.

Final rule

Fact sheet

Our comments

The Division made several changes from the draft rule, based on feedback from the Association and many others, that should make it easier for nonprofits to adapt to the changes made by COMPS:

  • Delaying an increase of the minimum salary for exempt employees over the federal level until Jan. 1, 2021. We expressed concerns that increasing the salary amount over the federal level on July 1, 2020 would disrupt the budget and fundraising goals that many nonprofits already have in place.
  • Increasing the salary to $40,500 in 2021 rather than $42,500. With this change, the new salary in 2021 is 12% higher than the federal minimum salary of $35,568. We asked the Division to start at a lower salary than $42,500, which would have been a 19% increase over the federal salary amount.
  • Adding a new exemption for the highest ranked and highest paid nonprofit employee that is paid at least the state minimum salary. Previously, a chief executive officer would have to supervise at least two full-time employees and spend at least 50% of the workweek on supervisory duties to be covered by the "executives or supervisors" exemption
  • Aligns the definition of bona fide volunteers with the federal Fair Labor Standards Act (FLSA).
  • Clarifies when field staff of seasonal camps or outdoor education programs are exempt.

Unfortunately, the final order does not address several concerns we raised with the Division:

  • Increases the minimum salary by 10 to 12 percent annually until 2024. We recommended increasing the threshold by 4 to 5 percent per year to keep the increases slightly above the inflation rate. The draft rule proposed increasing the threshold by $3,000 per year after the first year. 
  • Accelerates the schedule of salary increases by two years. The draft rule would have concluded these increases by 2026. We would have preferred a slower schedule of increases.
  • Does not modify the exemptions for administrative, executives or supervisors, or professional employees. We expressed concerns that nonprofit employees who are exempt under FLSA may not be exempt under COMPS. This could be confusing for nonprofit organizations seeking to classify employees appropriately. 

Our comments

Detailed Summary of the Order

Changes to rules for employees exempt from overtime

Establishing a minimum salary for exempt employees in Colorado*

  • July 1, 2020: $35,568 per year ($684.00 per week)**
  • January 1, 2021: $40,500 per year ($778.85 per week)
  • January 1, 2022: $45,000 per year ($865.38 per week)
  • January 1, 2023: $50,000 per year ($961.54 per week)
  • January 1, 2024: $55,000 per year ($1,057.69 per week)
  • January 1, 2025: The 2024 salary adjusted for inflation

*As of January 1, 2020, exempt employees covered by the federal Fair Labor Standards Act must be paid at least $35,568 per year (or $684.00 per week). 

**The 2020 salary does not apply to either nonprofit employers with annual gross revenue under $50 million and for-profit employers with gross revenue under $1 million

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 wouldn't otherwise qualify for the "executives or supervisors" exemption. 
    • "Executives or supervisors" must supervise at least two full-time employees and spend at last 50% of the workweek on supervisory duties 
  • Those who have at least 20% ownership and help manage a business would be exempt, regardless of salary

Aligns the definition of bona fide volunteers with the federal Fair Labor Standards Act (FLSA)

  • Previously, the order did not define bona fide volunteers

Clarifies when field staff of seasonal camps or outdoor education programs are exempt.

  • Applies when staff primarily supervise minor or adults, reside on premises, and are provided lodging and meals without charge
  • Seasonal means a camp or program that:
    • does not operate for more than seven months per year; or
    • had average revenues for any six months of not more than 1/3 of its average revenues for any other six months. 
  • Must be paid as follows: 
    • the Colorado minimum wage; or 
    • a salary:
      • equivalent to at least 42 hours per week at 90% of the Colorado minimum wage; or
      • reduced 25% for nonprofit employees with revenues of $25 million or less per year; or
      • reduced $100 per week for lodging or meals compared to all other employers.

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 prior 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 COMPS
  • Reduces the minimum wage by 15% for non-emancipated minors and persons less efficient in performing job duties because of a physical disability.

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 where practical
    • 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, deductions, or exemptions if the employer fails to comply with notice requirements