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Sweeping Changes Made to Colorado Minimum Wage Order

The Colorado Department of Labor and Employment adopted final rules that expand the wage order coverage, increase minimum exemption thresholds, and clarify additional wage rules.
An employer in Colorado discusses the new minimum wage order final rule.

The Colorado Department of Labor and Employment (“Department”) adopted the Colorado Overtime & Minimum Pay Standards Order #36 (COMPS) on Jan. 22, 2020. 

The expansive final rule makes multiple changes that include: 

Of note, this final rule does not change Colorado's minimum hourly rate for non-exempt employees. The COMPS Order is effective March 16, 2020. 

Expanded Wage Order Coverage 

Colorado’s existing minimum wage order covers four classes of workers exclusively: retail and service, commercial support, food and beverage, and health and medical. As a result, industries such as construction, manufacturing, and domestic services were not included.   

The new Colorado minimum wage order covers almost all employers, unless they are specifically excluded. It does not apply to the state government – including its agencies or entities – or to local municipalities. Also among those employees who are excluded from the COMPS Order include:

  • Outside salespersons 
  • Owners or proprietors (who own at least a bona fide 20 percent equity interest in the employer or for a non-profit employer who meets certain criteria) 
  • Interstate transportation workers and taxi cab drivers,  
  • In-residence workers (casual babysitters, property managers, student residence workers, or certain laundry workers) 
  • Elected officials and their staff 
  • Workers in jobs in agriculture are exempt from the entire COMPS Order if they are not covered by, or are exempt from, the minimum wage provisions of the FLSA. 

Additional exemptions are included for certain agricultural workers, salespersons, mechanics and ski industry workers, as well as others. 

Increased Minimum Exemption Thresholds 

Prior to the COMPS Order, the overtime threshold has remained at $23,600 per year since 2004. The COMPS Order provides increasing salary thresholds annually. While lower than the original proposal, annual thresholds will continue to increase each year. The schedule provides as follows: 

Date Minimum Annual Exemption Threshold
July 1, 2020 $35,586
Jan. 1, 2021 $40,500
Jan. 1, 2020 $45,000
Jan. 1, 2023 $50,000
Jan. 1, 2024 $55,000

Notably, the July 1, 2020 threshold is identical to the U. S. Department of Labor’s salary threshold for FLSA “white collar” exempt employees. However, starting on Jan. 1, 2021 – absent a change in federal law – the Colorado minimum annual exemption threshold will be higher than the federal requirement.  

Under the COMPS Order, the minimum exempt salary threshold will increase annually by $5,000 until it reaches $57,500 ($1,105.77 per week) on Jan. 1, 2026. From that point forward, the exempt threshold will be adjusted annually using the sane Consumer Price Index metrics that annually adjust the Colorado minimum wage. It is important to note that these amounts are higher than the new federal minimum exemption salary threshold that recently took effect.   

Additional Changes included in Colorado Minimum Wage Order #36

In addition to the changes addressed above, the COMPS Order also impacts the following areas:

  • Rest period. The COMPS Order modifies Colorado law regarding employee rest periods. To the extent practical, the new rule will require employers to provide a 10-minute rest period in the middle of each four-hour work period. Employees who do not receive this 10-minute rest period will be entitled to an additional 10 minutes of pay. 
  • Uniform deductions. Colorado employers will be prohibited from requiring a “deposit” or “security” for a required uniform. 
  • Meal and lodging credits. The COMPS Order modifies the rules governing meals and lodging “credits” for employees, including eliminating the current requirement that a meal must be consumed before a deduction may be taken. 
  • Fluctuating workweek. The COMPS Order clarifies the fluctuating workweek calculation, as well as the ban on “reprisals,” which will now include any form of reprisal against actual or anticipated participation in any investigation, hearing, complaint or procedure relating to a wage claim, right or rule. 
  • Notice to employees. The Department acknowledges that a poster may not reach many employees given the increasingly mobile workforce and the fact that many employers may not have traditional break rooms. Accordingly, COMPS Order provides that if an employer distributes a handbook or policies to its workers, it should include a copy of the COMPS Order or poster. Employers who have employees with limited English language ability should provide a copy of the poster in Spanish, as well as in any other language that may be required. Employers can request that the Division of Labor Standards and Statistics provide a translation of the poster into any other language, which the Division will provide to the extent possible. 

What's next?

Paychex understands the complexities of trying to stay up-to-date with regulations that impact your business and offers HR solutions and services to help make it simpler for employers to focus on running their business. 

Kate Hill
Kate Hill is a compliance analyst who concentrates on the impact of legislative and regulatory changes on employment law for Paychex, Inc.
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