Colorado implemented two new wage laws over the past year that have significant ramifications for employers in the state. The first, COMPS Order #36, represents the most sweeping change to Colorado wage law in decades, and provides significant new wage rights and responsibilities beyond those contained in federal law. COMPS Order #36 is the currently-effective state wage and hour law for employers in Colorado. The second, COMPS Order #37, goes into effect on January 1, 2021, and includes additional important changes of which employers should be aware.
COMPS Order #36
The Colorado Department of Labor and Employment (CDLE) adopted COMPS Order #36 in January 2020, to replace Minimum Wage Order #35. The CDLE made narrow modifications to the law as it took effect in the spring of 2020, particularly surrounding issues that became apparent as employers implemented the law while simultaneously dealing with the COVID-19 pandemic.
Although the law implements multiple significant changes to wage law across the board, one of its two greatest changes is expanded coverage. Prior to COMPS Order #36, Colorado’s Minimum Wage Orders applied to only four industries: (1) retail and service; (2) food and beverage; (3) commercial support services; and (4) health and medical. COMPS Order #36 expands the scope to cover all private industry employers, unless explicitly exempted. This means that, as of the effective date of COMPS Order #36, a large number of Colorado employers who were previously unaffected by Colorado’s overtime, wage and hour, meal period, and rest break laws must now comply with state law on those issues, among others.
COMPS Order #36 also substantially increased the salary threshold for employees to be exempt from Colorado wage law, which is the second of the law’s two greatest changes. Beginning January 1, 2021, the salary threshold established by COMPS Order #36 will significantly exceed the federal salary threshold for exempt employees established by the Fair Labor Standards Act (FLSA), as shown in this table.
Beginning January 1, 2025, the salary threshold will be adjusted on an annual basis by the same Consumer Price Index that adjusts the Colorado minimum wage.
For an employee to qualify as exempt from the wage and hour requirements of COMPS Order #36 (including requirements related to minimum wage and overtime), employees must be paid the applicable salary threshold set forth in the law and qualify for one of the delineated exemptions based on their actual job duties. Many of the exemptions available under COMPS Order #36 are substantially similar to the exemptions available under federal law, although COMPS Order #36 does not provide for the creative professional or highly compensated exemptions available under the FLSA. (The creative professional exemption is addressed by COMPS Order #37, which is described later in this article.)
Rule 2 of COMPS Order #36 sets forth available exemptions, which include exemptions for: (1) administrative employees; (2) executives or supervisors; (3) professional employees; (4) outside salespersons; (5) owners or proprietors; (6) interstate transportation workers and taxi cab drivers (this exemption is modified by COMPS Order #37); (7) in-residence workers; (8) bona fide volunteers and work-study students; and (9) elected officials and their staff. Colorado employers should closely scrutinize the specific criteria set forth for each exemption in determining its applicability to specific employees.
The agriculture industry was provided certain exemptions by COMPS Order #36, although whether an agricultural employer is fully exempt depends on whether they are exempt from compliance with the FLSA. Generally speaking, if an agricultural employee is exempt from the minimum wage requirements of the FLSA, he or she will be fully exempt from the minimum wage and overtime requirements of Colorado wage law.
Other agricultural employees may be exempt from the overtime and meal period rules under Colorado wage law, and all agricultural employees will be subject to a modified, more flexible, rest break rule. The modified rest break rule for agricultural employees allows employers to provide approximately 10 minutes of paid rest for each four-hour period, as long as the rest breaks provided average out to 10 minutes per four hours worked over the workday and employees receive at least five minutes of rest every four hours. If unsure about whether the agricultural exemption applies, employers should consult legal counsel.
COMPS Order #36 does not alter Colorado law with regards to meal periods and rest breaks, although one of its significant new requirements makes clear that if an employee is not provided a 10-minute paid rest break to which he or she is entitled, the employer must pay an additional 10 minutes of wages. The law also reinforces that local municipalities are allowed to set higher rates of minimum wage than provided by state law, and clarifies specific issues concerning deductions, credits, charges, and overtime pay calculations when employee pay is not hourly.
Significantly, COMPS Order #36 also defines as “time worked” any tasks taking over one minute, imposing on employers a more burdensome requirement than that imposed by the FLSA, which has generally been interpreted to not require employers to pay employees for de minimis (generally, up to a few minutes) periods of time worked. Additionally, COMPS Order #36 sets forth specific notice requirements for employers to notify employees of their rights under the law, as well as recordkeeping requirements.
COMPS Order #37
In November 2020, the CDLE published COMPS Order #37, which goes into effect on January 1, 2021. COMPS Order #37 will replace COMPS Order #36, although the sweeping changes implemented by COMPS Order #36 as discussed above carry through in COMPS Order #37. COMPS Order #37 modifies the exemption available for administrative employees and transportation workers, and includes a creative professional employee exemption similar to that set forth in the FLSA. Further, COMPS Order #37 clarifies the definition of “employee” in light of Colorado’s Healthy Families and Workplaces Act (HFWA), which provides paid sick leave for Colorado employees, and makes clear that paid sick leave under the HFWA counts as a form of wages or compensation under COMPS Order #37.
Takeaways for Employers
Employers who previously did not have to consider Colorado wage and hour law may now be subject to new state law requirements concerning overtime, minimum wage, meal periods, and rest breaks, among others. Additionally, new exemption definitions and salary threshold requirements may alter the status of currently exempt employees pursuant to state law. In light of the wholesale changes to Colorado wage and hour law implemented by COMPS Order #36 and continued by COMPS Order #37, employers should consider reviewing their current wage policies and practices, as well as consider conducting an audit of employee classifications (exempt or non-exempt), to ensure compliance with the law.
About the contributor: Jody N. Duvall is an attorney in the Fort Collins office of Cline Williams Wright Johnson & Oldfather. Duvall’s practice focuses on advising employers on employment and immigration issues. The material in this article is provided for informational purposes only and is not intended to constitute legal advice or create an attorney-client relationship. Please consult legal counsel before taking actions based on information contained in this article. Duvall can be reached at jduvall@clinewilliams.com or 970.221-2637.
