Seyfarth Synposis: As of March 16, 2020, Colorado's daily overtime and meal and rest break requirements for non-exempt employees, as well as its different duties and salary level requirements for exempt employees, will apply to all employers who meet the definition of an "employer" under the federal Fair Labor Standards Act.
In the past, many employers have heard about some difficult wage-hour requirements under Colorado law, but most haven't needed to follow them. That is because Colorado's Minimum Wage Order applied only to employers in four enumerated industries: retail and service, commercial support service, food and beverage, and health and medical. In fact, if you visit Colorado's Department of Labor and Employment website today, you will find Minimum Wage Order Number 35, effective January 1, 2020, that is still limited in its application to these four industries.
Effective March 16, 2020, however, a new Colorado Overtime and Minimum Pay Standards Order (COMPS Order) #36 will apply to all employers in any industry who meet the definition of an "employer" under the federal Fair Labor Standards Act (FLSA). Once the COMPS Order #36 takes effect in March, non-exempt employees in Colorado will be entitled to the following:
- Overtime pay at time and one-half the regular rate of pay for worktime in excess of (i) 12 hours per workday, (ii) 12 consecutive hours (not counting bona fide meal breaks) without regard to how the employer defines the beginning and end of the workday, or (iii) 40 hours per workweek, whichever of these three provides the greatest payment of overtime wages to the employee;
- Uninterrupted, duty-free meal breaks of at least 30 minutes in length for any shift exceeding 5 consecutive hours, with such meal breaks occurring, to the extent practical, at least one hour after the shift begins and at least one hour before the shift ends; and
- Paid rest breaks of at least 10 minutes for each 4 hours of work, or major fraction of a 4-hour block of work. For example, employees will be owed 1 rest break for up to 6 hours of work, 2 rest breaks if they work more than 6 hours and up to 10 hours, and 3 rest breaks if they work more than 10 and up to 14 hours.
The new rest break rules also provide that a failure to authorize or permit one of these 10-minute paid rest breaks is a failure to pay 10 minutes of wages owed.
To ensure employees are aware of these new rules, COMPS Order #36 requires all employers to display the COMPS Order poster at each worksite, and every employer who publishes or distributes any handbook, manual, or written or posted policies must include in them a copy of the COMPS Order or the COMPS Order poster published by the Colorado Department of Labor and Employment's Division of Labor Standards and Statistics. In addition, the COMPS Order or poster must be provided to employees in other languages if they have limited English language abilities.
COMPS Order #36 also subjects employers to different rules for classifying their employees as exempt from minimum wage and overtime pay requirements. Unlike under the FLSA, Colorado's administrative exemption is limited to employees who directly serve an executive. Colorado's executive exemption is similar to the FLSA's but more stringent in that it requires the employee to spend a minimum of 50% of the workweek supervising subordinates. And the outside salesperson must devote 80% of worktime to activities directly related to his/her own outside sales.
In addition, COMPS Order #36 will soon set a salary threshold higher than the federal threshold to qualify an employee for the administrative, executive, or professional exemption. As of July 1 of this year, Colorado's salary threshold will be the same as the new federal level ($684 per week), but as of January 1, 2021, it will increase to $778.85 per week ($40,500 per year). And every subsequent January 1, the minimum salary level for exempt status will increase another $5,000 or so, reaching $1,057.69 per week ($55,000 per year) by January 1, 2024.
Wage-hour lawsuits were already growing in prevalence in Colorado with a number of wage-hour plaintiffs'-side lawyers in other states setting up satellite operations in Colorado. The above-described changes, particularly the expansion of the COMPS Order's applicability to nearly all employers, are likely to lead to a further increase in wage-hour litigation in Colorado. If your company has not previously been concerned with Colorado wage-hour law, now is the time to dust off and assess your company's timekeeping and break policies, as well as the duties and salary levels of exempt-classified employees, to ensure compliance with Colorado wage-hour laws.
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