Colorado Officially Increases the Minimum Salary Threshold for Exempt Employees and Makes Changes for Non-Exempt Employees Too

As previously discussed, Colorado has taken steps to increase the salary threshold for employees that fall under the “white collar” exemptions, following in the footsteps of Alaska, California, New York, Maine, and Washington State – and the federal Department of Labor. On January 22, 2020, the Colorado Department of Labor adopted the final Colorado Overtime and Minimum Pay Standards Order #36 (“COMPS Order”), which makes significant changes for both exempt and non-exempt employees. Most provisions become effective March 16, 2020, with the exception of the increased salary thresholds, which begin on July 1, 2020.

Under the COMPS Order, which goes into effect on March 16, 2020, there will be an increase in salary thresholds for exempt employees, surpassing the threshold provided by federal law. Below is an annual breakdown of the minimum salary for Colorado employees, with the first changes effective beginning July 1, 2020 (which differs slightly from a previously proposed breakdown we discussed in our last post):

The COMPS Order also imposes changes for non-exempt employees. The prior wage and hour rules applied only to employees in certain industries (including the retail, commercial, food & beverage, and health & medical industries); the COMPS Order will cover all employees in Colorado, unless a specific exclusion applies. Among those excluded employees are (i) in-residence workers, (ii) interstate transportation workers, (iii) owners or proprietors who are full-time employees “actively engaged in managing the business” and own at least a bona fide 20% equity interest in the employer, and (iv) work-study students.

This expansion means that all non-exempt employees will be subject to Colorado’s daily overtime, meal, and rest break rules.  Colorado’s overtime rule requires overtime for hours worked in excess of (i) 12 hours per workday, (ii) 12 consecutive hours regardless of the start and end time of the workday, or (iii) 40 hours per workweek, whichever results in a greater payment for the employee. Colorado’s meal break rule requires a 30-minute uninterrupted break for shifts exceeding 5 hours, which, to the extent practical, must be at least one hour after the shift begins and one hour before the shift ends. Colorado’s rest break rule generally requires a 10-minute rest period for each 4 hours of work, or major fraction thereof, which to the extent practical must be in the middle of each 4 hour work period. Additionally, the COMPS Order adds new components to Colorado’s break time rule, by allowing for employers and employees to enter into certain agreements concerning break time and clarifying that employees who are not permitted the required 10-minute rest period for each four hours of work will receive an additional 10 minutes of compensation.

Additional changes provided in the COMPS Order concern the employee notification and posting requirements. With respect to posting, every employer must display a COMPS Order poster published by the Division of Labor Standards and Statistics (“Division”), unless the workplace conditions make physical posting impractical, in which case employers may distribute it to employees upon hire and must make the COMPS Order available to employees upon request. The poster is not yet available, so employers should monitor the Division’s poster website. Employers who provide a handbook or policies to their employees must include a copy of the COMPS Order or poster in the handbook or policies.  Further, if the employer requires acknowledgment of the handbook or policies, the employer must at the same time or promptly thereafter include a copy of the COMPS Order or poster and have the employee sign an acknowledgment of being provided with the COMPS Order or poster.  Employers with any employees who have limited English language abilities must provide those employees with a version of the COMPS Order and poster in Spanish (if applicable to the employee) or contact the Division to request such materials in the appropriate language.

Employers in Colorado should evaluate their employees’ exemption status to ensure compliance with state and federal requirements in anticipation for the July 1, 2020 changes, and revise their handbooks and acknowledgment procedures for the March 16, 2020 effective date.