On January 22, 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:
- Establishing a new minimum annual salary for employees exempt from overtime pay. This starts at $40,500 as of Jan. 1, 2020 and would increased annually to $55,000 in 2024. Starting in 2025, the salary will increase annually by the inflation rate.
- Covering all employees and industries by the Colorado minimum wage unless there are specific exceptions that apply in state or federal law or regulation.
- Changing the name to Colorado Overtime and Minimum Pay Standards (COMPS) Order to better reflect the scope of the order.
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:
- Starting the new minimum salary for exempt employees on Jan. 1, 2021. We expressed concerns that starting on July 1, 2020 would disrupt the budget and fundraising goals that many nonprofits already have in place.
- Starting the new minimum salary at $40,500. With this change, the new minimum salary 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.
- Adding a new exemption for the highest ranked and highest paid nonprofit employee paid at least the new minimum salary. Previously, a chief executive 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 $5,000 (or 10 to 12 percent) until 2024. We recommended increasing the threshold by 4 to 5 percent per year to keep it only 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.
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 $40,500 per year as of January 1, 2020.
- The annual salary amount will be increased by $5,000 per year until it reaches $55,000 in 2024.
- As of January 1 2025, 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 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