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 for new exempt salaries effective July 1, 2020. The changes are significant for Colorado employers and employees.
The Minimum Wage Orders — and the proposed COMPS order — address employee wage rights and employer responsibilities beyond those provided by federal law. They include, among other matters, eligibility for the Colorado minimum wage, overtime compensation for work over 40 hours in a workweek or 12 hours per workday, meal and rest breaks, and permissible deductions from wages.
Earlier wage orders applied to only four broadly defined industries: Retail and Service, Food and Beverage, Commercial Support Service, and Health and Medical. However, COMPS Order #36 now covers all employees unless explicitly excluded. Notably, public sector employers remain excluded.
Expanded Definitions of Employer and Employee
The COMPS Order adopts the federal Fair Labor Standards Act (FLSA) definition of “employer,” which includes “any person acting directly or indirectly in the interest of an employer in relation to an employee.” This new definition effectively creates individual liability for employment law violations, including issues like misrepresentation employment law claims. The term also now encompasses foreign labor contractors, migratory field labor contractors, and crew leaders.
The definition of “employee” has been broadened to include anyone “performing a labor or service for the benefit of an employer,” evaluating the employer’s control and whether the work aligns with the employer’s primary operations to distinguish between an independent contractor and an employee.
Salary Thresholds and Exemptions
Under COMPS #36, employees in administrative, executive, professional, and outside sales roles remain exempt but must now meet new salary thresholds. Beginning March 1, 2020, the minimum salary for exempt employees is $42,500. The threshold will rise $3,000 per year until reaching $57,500 in 2026, adjusting annually with the Consumer Price Index (CPI) that also applies to the Colorado minimum wage.
New exemptions include:
- Owners managing a business with 20% ownership no longer require a salary to be exempt, accommodating Colorado’s startup businesses.
- The highest-paid employees at non-profit organizations can now qualify as exempt “Proprietors” if paid at least the minimum salary threshold.
Clarifications on Rest Breaks, Lodging Credits, and Retaliation
- Rest Breaks: Rule 5.2 clarifies that rest breaks must be provided “in the middle of each 4-hour work period” where practical. Employees denied a rest period are now owed 10 minutes’ pay.
- Lodging and Meal Credits: Rule 6.2 allows lodging credits for voluntary employee accommodations and eliminates requirements that meals be consumed for a deduction. Lodging credits must align with fair market value and cannot exceed certain limits.
- Anti-Retaliation Protections: Rule 8.5 strengthens protections against retaliation for employees involved in any wage investigation, complaint, or hearing.
Addressing Wage Complaints and Posting Requirements
COMPS #36 ensures that the Division will accept complaints for unpaid minimum wages or overtime wages required under local, state, or federal law. Employers failing to meet workplace posting obligations are now ineligible for employee-specific credits or exemptions, reinforcing the importance of proper minimum wage posting compliance.
Baird Quinn Can Help Employers Navigate COMPS #36
The changes introduced in COMPS Order #36 are significant and will impact many aspects of Colorado wage and hour law. If you have questions about compliance, wage deductions, or misrepresentation employment law, please contact one of Baird Quinn’s Denver employment lawyers for guidance.