The Colorado Department of Labor and Employment (“CDLE”) has proposed replacing Minimum Wage Order 35 with Colorado Overtime and Minimum Pay Standards Order (COMPS Order) #36. This process began with publication of the proposed rule (COMPS Order #36) on November 15, 2019. The rule change was adopted by the CDLE and the effective date of COMPS Order #36 is March 1, 2020, except July 1, 2020, for new exempt salaries. The changes are significant.
The Minimum Wage Orders – and proposed COMPS order – address employee wage rights and employer responsibilities beyond those provided by federal law. They address, among other matters, eligibility for the Colorado minimum wage; overtime for work over 40 hours in a workweek (as also provided by federal law) or work over 12 hours per work day; meal and rest breaks; and permissible deductions from wages.
The Minimum Wage Orders – and proposed COMPS order – address employee wage rights and employer responsibilities beyond those provided by federal law. They address, among other matters, eligibility for the Colorado minimum wage; overtime for work over 40 hours in a workweek (as also provided by federal law) or work over 12 hours per work day; meal and rest breaks; and permissible deductions from wages.
Earlier wage orders only applied to four broadly defined industries: Retail and Service; Food and Beverage; Commercial Support Service; and Health and Medical. The COMPS Order instead covers all employees, unless specifically excluded from coverage. One notable exclusion from coverage is public sector employers.
In addition, the COMPS Order adopts the federal Fair Labor Standards Act’s (“FLSA”) definition of “employer,” which includes “any person acting directly or indirectly in the interest of an employer in relation to an employee.” It is widely recognized that this new definition effectively creates individual liability for any violations of COMPS Order #36. The new definition of “employer” also encompasses foreign labor contractors and migratory field labor contractors and crew leaders. The new definition of “employee” includes anyone “performing a labor or service for the benefit of an employer” and looks to the degree of control the employer exerts and the extent to which the individual performs work that is the “primary work” of the employer in determining whether an individual is an employee or an independent contractor. These three changes will broadly increase the applicability of the new rules within the State.COMPS #36 does list numerous exemptions to coverage, some spanning all employers of certain types, others for specific jobs. The new order maintains the exemption for administrative, executive, professional and outside sales, but now contains a minimum wage threshold to meet those exemptions. Specifically, for an employee to be exempt from overtime and break rights, s/he must have exempt duties (executive/supervisory, professional, or a few others) and be paid a sufficient salary. Specifically, beginning on March 1, 2020, the minimum salary for exemption is $42,500. After 2021,the minimum salary requirement rises $3,000 per year, until reaching $57,500 in 2026, and then adjusting annually by the same Consumer Price Index (“CPI”) that adjusts the Colorado minimum wage annually.. These levels are higher than the levels currently set by the U.S. Department of Labor for similar exemptions under the FLSA. COMPS #36 parallels federal wage law, however, in requiring no minimum salary for doctors, lawyers, and teachers.
COMPS #36 adds a new “Owners” exemption previously present in only federal law. Those who help manage a business and have 20% ownership of the company need not receive any salary to be exempt, which will accommodate Colorado’s thriving community of technology and other startup businesses. COMPS #36 also adds an additional exemption not present in federal law or prior wage orders: The highest-ranked and highest-paid employee of a non-profit employer is now exempt as a “Proprietor,” as long as s/he is paid at least the minimum salary set forth in the rule. This accommodates non-profit organizations whose top employees may not qualify for “executives or supervisors” exemption, whether because they supervise mainly non-employee volunteers or for other reasons specific to their duties running non-profits. COMPS #36 removes an exemption for “companions” and other “domestic” workers that had covered only those employed directly “by households or family members to perform duties in private residences.”
Other exemptions, including those for “interstate drivers, driver helpers, loaders or mechanics of motor carriers”, “taxi drivers”, “student residence workers”, “property managers”, and “patient workers in institutional laundries” are clarified or modestly modified. The “student worker” exemption clarifies that it covers students enrolled for credit, not all workers who happen to be students. After 2020, the $27.63 hourly rate for the “highly technical computer occupations” exemption will inflation-adjust by the same consumer price index as the state minimum wage.
COMPS #36 also clarifies that the Division will accept complaints for unpaid minimum or overtime wages required by local law, state law, or federal law — in conformity with court holdings that unpaid wages required by federal law are a violation of Colorado’s wage payment law.
COMPS #36 also resolves two common points of confusion about required, paid “rest periods.” Specifically, Rule 5.2 of COMPS #36 clarifies that, “to the extent practical,” rest periods shall be provided in the middle of each 4-hour work period. It also clarifies that if an employee is not allowed a 10-minute paid rest period, s/he is owed 10 minutes’ pay.
Rule 6.2 of COMPS #36 continues to let employers reduce wages by taking a “credit” for providing meals or lodging, but eliminates the existing requirement that a meal “must be consumed before deductions are permitted,” and now requires only that accepting a meal must be voluntary for the employee. Rule 6.2 keeps the existing requirement that meals must be provided at cost or value, without added profits. For lodging credits, Rule 6.2 raises the dollar limit and adds elements, similar to those in federal wage law, of voluntariness and employee benefit. It allows credit for lodging that is voluntary for the employee, not primarily for the employer’s own convenience, appropriately documented, and no greater than the smaller of (1) the employer’s cost, (2) the fair market value, or (3) per week, $25 for a room (in a shared residence, dorm, or hotel) or $100 for a private apartment or house. Rule 6.3 no longer allows employers to require a “deposit” as “security” for a required uniform.
COMP #36 (Rule 1.7) also clarifies how to calculate regular and overtime pay rates for exempt and non-exempt workers and specifically addresses the “fluctuating workweek.” Rule 1.7 allows employers to have a fluctuating workweek calculation under certain circumstances.
Earlier Wage Orders left some uncertain as to what employee conduct was protected against employer retaliation. Rule 8.5 of COMPS #36 clarifies that it covers any form of reprisal against actual or anticipated participation in any wage investigation, hearing, complaint, or procedure.
Finally, COMPS #36 provides that an employer that fails to meet required workplace posting obligations (of information related to the minimum wage, overtime, etc.) is ineligible for any employee-specific credits or exemptions because if employees aren’t told of rules, those rules shouldn’t be used against them.
The changes to the Colorado Minimum Wage Order are significant. If you have any questions about COMPS # 36, please feel free to contact one of Baird Quinn’s Denver employment lawyers.