It’s Springtime for Wage and Hour Rights: Worker-Friendly Changes to Wage & Overtime Regulations Are Blooming in Colorado

Cozen O'Connor
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Cozen O'Connor

In the midst of growing alarm over the coronavirus pandemic and an almost all-consuming focus on public health, workplace and legal developments related to the pandemic, many Colorado employers may have missed the significant changes in Colorado wage and hour laws recently ushered in by the Colorado Department of Labor and Employment (CDLE).  These changes are contained in the March 16, 2020 Colorado Overtime and Minimum Pay Standards Order #36 (“COMPS”) Order #36.

Order #36, which takes effect on April 16, 2020, increases the minimum salary required for overtime exempt status, makes many pre-work and post-work activities compensable work time and imposes a potentially expensive penalty on employers who do not follow the requirement under Colorado law that employees receive a paid rest break of at least 10 minutes for every four hours of work.  Order #36 states that its protections for workers are to be interpreted “liberally construed with narrow exceptions,” meaning that when it comes to compliance, employers should not expect to get the benefit of the doubt from the State.

With the April 16 compliance deadline fast approaching, Colorado employers should review their practices to ensure they are compliant with the new rules.

Here is an overview of the major changes to Colorado wage and hour law made by Order #36:

1.         Broader Employee Coverage

Unlike Colorado’s previous wage orders, which covered only employees in selected industries (retail, service, food and beverage, commercial support, health care), Order #36 covers almost allprivate-sector employees, with a few exceptions such as agricultural workers and ski industry employees.  Importantly, Order #36 includes employees in the manufacturing industry, who did not have the protections of previous wage orders.

 2.        Increasing Minimum Salary Standard for Overtime-Exempt Employees

Order #36 sets a state minimum salary standard for exempt employees beginning on July 1, 2020 and increasing thereafter.  Beginning this July, Colorado matches the federal minimum exempt salary standard of $684/week ($35,568/year), but then increases this minimum threshold above the federal standard by approximately $5,000 per year until it exceeds $55,000 per year in 2025:

Date Weekly Overtime-Exempt Salary
July 1, 2020 $684.00 weekly ($35,568 annually)
January 1, 2021 $778.85 weekly ($40,500 annually)
January 1, 2022 $865.38 weekly ($45,000 annually)
January 1, 2023 $961.54 weekly ($50,000 annually)
January 1, 2024 $1057.69 weekly ($55,000 annually)
January 1, 2025 2024 salary adjusted by CPI

3.         New Category of Overtime –Exempt Employees: “Highly Technical Computer-Related Occupations”

Order #36 also adds a new category of employees who may be exempt from overtime pay:  “highly technical computer-related occupations.”  Employees in this category must receive the minimum exempt salary or $27.63 per hour (adjusted annually by CPI). 

 4.        New “One-Minute” Rule for Pre-Work and Post-Work Activities

Another significant change to Colorado wage and hour rules brought by Order #36 is the requirement that employers compensate employees for most activities that take more than one minute to complete, including those that are performed before or after an employee’s standard work day. This regulation will have a particularly pronounced effect on manufacturers and other employers who require employees to change into and out of (“don or doff”) protective gear before and after their work shift.  Under the new rule, employers will, in most cases, have to pay workers when they perform activities such as clean-up tasks at the beginning or end of their shifts, standing in line to clock-in or clock-out, or waiting for security checks when leaving the worksite at the end of a shift.  This “one-minute” rule differs substantially from federal wage and hour law under which these activities may not be compensable.

5.         Rest Period Penalty

Finally, in a move that might lead some to say that “Colorado is the new California,” Order #36 also toughens rest period requirements.  Colorado employers already were required to provide employees with one paid 10 minute break for every 4 hours of work (in addition to a 30 minute unpaid break for every 5 hours of work). Under the new regulations, if an employer fails to provide the required daily paid breaks, the employer is liable for an additional 10 minutes of pay.  For example, if an employer failed to provide the employee two 10 minute paid breaks during an 8.5 hour shift, the employer would legally be required to pay the employee for 8 hours and 20 minutes.

6.         Posting Notice

Order #36 also requires covered employers to post the updated wage and hour requirements with other required employment posters “in an area frequented by employees where it may be easily read during the workday” and distributed along with all employee handbooks or employment manuals.

7.         What Should Employers Do Now? Increasing regulation by state and local governments in the wage and hour law area has been a growing nationwide trend for years.  More and more, state and local governments are layering worker-friendly laws on top of federal laws which provide just the basic protections.  With the issuance of Order #36, Colorado has shown emphatically that is a leader in this area.  Now is the time for Colorado employers, and national employers with Colorado-based workers, to review hours of work and pay practices to ensure they are up to date with fast-changing Colorado laws.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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