The Colorado Department of Labor and Employment’s Division of Labor Standards Statistics (the Department) recently adopted the Colorado Overtime and Minimum Pay Standards (COMPS) Order #36, replacing Minimum Wage Order #35, and bringing significant change to the state’s wage and hour rules. According to the Department, the COMPS Order is the source of key wage rights and responsibilities, including: eligibility for minimum wage; overtime pay for work over 40 hours a week or 12 hours a day; meal and rest breaks; rules on wage deductions; and rules on what work time must be paid.
These rules became effective March 16, 2020, and apply to all employers in any industry who meet the definition of employer under the Federal Fair Labor Standards Act (FLSA). Key changes include: expanded coverage to the majority of private employers; additional wages for missed rest periods and interrupted meal periods; a minimum salary requirement for salaried employees to be considered “exempt” under state law; expansion of the “time-worked” concept; introduction of several new categories of exemptions; and new posting and translation requirements.
- Employers should determine whether COMPS Order #36 applies, and if so, to which employees;
- Employers must display a poster version of the new COMPS Order #36 order;
- Employers must distribute a copy of COMPS Order #36 or the official poster to their employees and must provide a translated version to employees with limited English proficiency;
Employers should review their current practices and work with counsel to ensure legal compliance with COMPS Order #36.
Who is a Covered Employer?
These rules become apply to all employers in Colorado in any industry who meet the definition of employer under the FLSA.* The FLSA defines “employer” broadly, as “any person acting directly or indirectly in the interest of an employer in relation to an employee.”
* On March 16, the Department released a Notice of Adoption as Temporary or Emergency Rules indicating, among other things, a need to promulgate an immediate rule to clarify that the U.S. Department of Labor’s final rule to update regulations interpreting joint employment does not apply to Colorado wage and hour law. This temporary or emergency rule therefore freezes the status quo until a rule is later adopted, by providing that, “joint employment under Colorado wage and hour law shall continue to be analyzed under the versions of the federal Fair Labor Standards Act and applicable FLSA regulations that were in effect as of the enactment of H.B. 19-1267 by the State of Colorado on May 16, 2019.”
Who is a Covered Employee?
COMPS Order #36 applies to all Colorado workers in the private sector unless a specific exemption applies (as outlined in the order and explained further below) and based on the type of work they perform. This is a significant change from the prior framework where Colorado’s Minimum Wage Orders exempted employees by industry and only covered the following 4 industries: Retail/Service; Food/Beverage; Health/Medical; and Commercial Support Service. Employers should determine whether COMPS Order #36 applies, and if so, to which employees. COMPS #36 makes clear that if employers are subject to the order as well as other federal or local laws, the law providing the greater protection to employees or sets the higher standard shall apply.
What are the Exemptions to COMPS Order #36?
The COMPS Order regulates wages, hours, working conditions, and procedures for all employers and employees for work performed within Colorado, with the exceptions and exemptions contained within Rule 2. Employers should carefully review Rule 2 to determine whether a particular type of work is partially or fully exempt.
The following is a non-exhaustive list of exemptions that may apply:
- Executives/supervisors, administrative decision-makers, and professionals who are paid at least a salary required by Rule 2.5, (See Rules 2.2.1 through 2.2.3);
- Outside sales persons (Rule 2.2.4)
- Owners or proprietors (Rule 2.2.5)
- Employees in a highly technical computer-related occupation (Rule 2.2.10)
Rule 2.4 provides a list of exemptions from overtime requirements of the COMPS Order. The following is a non-exhaustive list of exemptions that may apply:
- Salespersons and mechanics (Rule 2.4.1)
- Commission salespersons (Rule 2.4.2)
What are the New Salary Thresholds Qualifying for an Exemption Beginning July 1, 2020?
COMPS #36 specifies, that for exemptions requiring a salary, the “Salary Requirement” rules of the federal Fair Labor Standards Act in 29 C.F.R. Part 541 Subpart G, apply, except that under the COMPS Order the salary must be at least the level listed below and sufficient for the minimum wage for all hours in a workweek (with the exception of certain professionals listed in Rule 2.5.2).
Date Weekly Overtime-Exempt Salary (& Rounded Annual Equivalent)
- July 1, 2020 $684.00 per week ($35,568 per year)
- January 1, 2021 $778.85 per week ($40,500 per year)
- January 1, 2022 $865.38 per week ($45,000 per year)
- January 1, 2023 $961.54 per week ($50,000 per year)
- January 1, 2024 $1,057.69 per week ($55,000 per year)
- January 1, 2025 The 2024 salary adjusted by the same CPI as the Colorado Minimum Wage
Employers should be cognizant of the minimum salary thresholds imposed for salaried workers to qualify as exempt under state law and review the current exemption status of existing employees.
Does COMPS Order #36 Provide Clarification of Meal and Rest Period Requirements?
Meal Periods (Rule 5.1) – For shifts over 5 hours, employees are entitled to uninterrupted, duty-free 30-minute meal periods. Employees must be completely relieved of all duties during this time. The Department clarifies that if work makes an uninterrupted meal period impractical, the employee shall be permitted to consume an on-duty meal while working, and that time must be compensated.
Rest Periods (Rule 5.2) – For each 4 hours of work, employers must authorize and permit compensated 10 minute rest periods. Rest periods must not include work, and to the extent practical should be in the middle of each 4-hour work period. If an employee is not authorized a required rest period, then additional work has been performed, requiring additional pay for that time.
What Does Compensable “time worked” Include?
Compensable “time worked” is defined as time during which an employee is performing labor or services for an employer’s benefit, including all time remaining or permitted to work, whether or not required to do so. Compensation is required for certain pre- and post-shift tasks that take more than one minute. Examples provided include:
- putting on or removing required work clothes and gear;
- remaining at work awaiting a decision on a job assignment or when to begin work;
- security or safety screening.
Compensable time worked under the COMPS Order also includes “travel time,” defined as time spent on travel for the benefit of an employer, but not normal home to work travel (See Rule 1.9.2), and “sleep time” defined as time employees may sleep where a shift is 24 hours or longer (see Rule 1.9.3).
What are the Posting and Distribution Requirements?
There is a posting requirement that must be located in an “area frequented by employees where they may be easily read during the workday.” The Department has released an Official Poster that satisfies this requirement. If a physical posting is impractical (for example, if employees work from home, or the work site lacks a break room), the employer must provide a copy of the COMPS Order #36 or Poster to each employee within the first month of employment.
Employers that distribute “any handbook, manual, or written or posted policies” to their employees must also distribute to their employees a copy of either the COMPS #36 Order or Poster. If an employer requires employees to sign an acknowledgment of receiving those materials, the employer must also require a signed acknowledgement that employees were provided a copy of the COMPS Order #36 or Poster. Employers must make a copy of the COMPS Order #36 or Poster available upon request.
What is the Translation Requirement?
If employees have limited English language ability, employers must post and distribute versions of the COMPS Order #36 and Poster in the employee’s native language. The Department has made a Spanish version of the poster available. If employees speak a language other than Spanish, the employer must ask the Division for a Poster in that language.
What are the Employer Record Keeping Requirements?
Employers are required to keep at the place of employment, or at the employer’s principal place of business in Colorado, a true and accurate record for each employee which contains the following information:
- Name, address, occupation, and date of hire of the employee;
- date of birth, if the employee is under 18 years of age;
- daily record of all hours worked;
- record of credits claimed and of tips;
- and regular rates of pay, gross wages earned, withholdings made, and net amounts paid each pay period.
Employers must also provide an itemized earnings statement the includes the information listed above to each employee each pay period, and retain records reflecting the information contained in an employee’s itemized earnings statement for at least 3 years after the wages or compensation were due, and for the duration of any pending wage claim pertaining to the employee.
Employers may reach out to the Department with questions of the COMPS #36 rules by calling (303)-318-8441 or by email at [email protected].