Colorado Overtime Laws and the 2024 Federal Updates
THE U.S. DEPARTMENT OF LABOR’S NEW OVERTIME RULES ARE NOW IN EFFECT AND MAKE AN ESTIMATED 4.3 MILLION ADDITIONAL WORKERS ELIGIBLE FOR OVERTIME PAY
What is the Fair Labor Standards Act (FLSA) and Its Overtime Requirements
The Fair Labor Standards Act (“FLSA”) requires employers to pay an overtime premium of 1.5 times the regular rate of pay for all hours worked beyond 40 hours in a work week, unless an employee is exempt from coverage under the FLSA. Some workers are specifically exempt from the FLSA’s minimum wage and overtime protections, including:
- Bona fide executive, administrative, or professional employees (EAP)
- Highly compensated employees (HCE)
Who Qualifies for EAP or White Collar Exemptions?
An EAP exemption (Executive, Administrative, and Professional) under the Fair Labor Standards Act (FLSA) applies to employees who are exempt from overtime pay if they meet these criteria:
- Salary Basis: The employee must be paid a fixed salary.
- Minimum Salary Threshold: The salary must meet or exceed a specific amount.
Job Duties: The employee’s primary role involves executive, administrative, or professional duties.
Get more information about FLSA and Overtime Pay in Colorado and who is Exempt from The Fair Labor Standards Act (FLSA).
New Overtime Pay Rules Effective July 1, 2024
On April 23, 2024, the U.S. Department of Labor (DOL) announced new overtime rules that went into effect on July 1, 2024. The rules, which update the FLSA, increase the salary threshold necessary for an employee to be considered exempt under the EAP exemption, making millions of additional people eligible for overtime pay for the first time.
Updated Salary Thresholds for Exemption
- Current Threshold: $35,568 annually ($684 per week)
- New Threshold (2024): $43,888 annually ($844 per week)
- Upcoming Threshold (2025): $58,656 annually ($1,128 per week)
Changes to Highly Compensated Employee (HCE) Exemptions
The rules also raise the salary requirements for highly compensated employees:
- Current Threshold: $107,432 annually
- New Threshold (2024): $132,964 annually
- Upcoming Threshold (2025): $151,164 annually
Additional Considerations for HCE Exemptions:
- Employees must earn a portion of this salary weekly.
- The remainder may include nondiscretionary bonuses or commissions.
Reduced Duties Test for Highly Compensated Employees
The reduced duties test for highly compensated employees (HCEs) applies when employers need to determine whether an employee earning above the HCE salary threshold qualifies as exempt from overtime pay under the Fair Labor Standards Act (FLSA).
When Would the Reduced Duties Test Apply?
- High-Earning Employees:
- It applies to employees earning a salary that meets or exceeds the HCE threshold (e.g., $132,964 annually in 2024).
- Simplified Evaluation for Exempt Status:
- Instead of conducting the full duties test for executive, administrative, or professional exemptions, the reduced test allows an employer to determine exemption based on whether the employee regularly performs at least one exempt duty (e.g., managing employees, exercising discretion, or applying advanced knowledge).
- Positions Combining Exempt and Non-Exempt Tasks:
- It’s particularly useful for employees who perform some exempt-level duties but also handle tasks that wouldn’t typically qualify for EAP exemptions.
- To Avoid Overtime Liability for High Earners:
- Employers can use this test to confirm exemption status and avoid the requirement to pay overtime to high-earning employees whose salaries already compensate them beyond what overtime pay would provide.
Why It Matters:
This test simplifies compliance for employers managing highly compensated employees, ensuring these employees are correctly classified while reducing the administrative burden of applying the full duties test.
2024 Federal Overtime Updates’ Impact on Employers and Compliance Recommendations
Impact of the 2024 Overtime Rules on Employers
The DOL estimates that the updated salary thresholds will make an additional 4.3 million workers eligible for overtime pay.
Key Compliance Steps for Employers:
- Review Employee Classifications: Ensure exempt employees meet both salary and duties tests.
- Update Pay Practices: Adjust salaries where necessary to maintain compliance.
- Monitor Future Threshold Increases: Plan for the January 2025 changes.
Colorado Employment Lawyers Baird Quinn LLC Help Employers Navigate Federal Overtime Regulations and Requirements
Ensure Compliance with Colorado Overtime Laws Today
Stay ahead of overtime regulation changes to protect your business and avoid costly penalties. Baird Quinn LLC, specializes in helping Colorado employers navigate complex employment laws, including the latest updates to overtime rules.
Contact us today for expert guidance and tailored compliance strategies. Whether you need to review employee classifications, update pay practices, or prepare for future changes, our team is here to help.