Labor Department Adopts New Colorado Overtime And Minimum Pay Standards Rule
For immediate release
(DENVER) – Today, the Colorado Department of Labor and Employment’s (CDLE) Division of Labor Standards and Statistics (DLSS) adopted as final the Colorado Overtime and Minimum Pay Standards Order (COMPS), with the effective date of March 16, 2020. COMPS replaces the Colorado Minimum Wage Order (CMWO), which had been widely criticized for its lack of clarity.
Over a 10-month comment period, CDLE heard from more than 1,000 workers and employers. Many testified they felt the previous wage order was unclear in defining which workers are covered and what criteria make an employee exempt from the various protections in the wage order.
Based on these comments, and extensive research, the three most significant changes to COMPS are:
- It applies to all industries;
- It raises the minimum salary required to be exempt from wage protections -- starting at $35,568 in July 2020, gradually adjusting to $55,000 in 2024 (equal to the proposed $57,500 by 2026), then adjusting for inflation; and
- It clarifies ambiguous wage rules that had generated litigation and confusion for employers and employees.
Below is a summary of the proposed Colorado Overtime and Minimum Pay Standards Order:
It offers expanded overtime, leading to more job creation
Toward its goals of helping workers prosper and employers thrive, DLSS researched the impact of expanding overtime rights. This new research confirms that requiring overtime pay increases job opportunities as it leads employers to spread work to more workers, rather than assign extensive overtime.
- Many states are now planning higher overtime-exempt salaries, but four states (Alaska, California, Maine, and New York) did so several years ago, a long enough period of time to see the effect: Each state has seen its unemployment rate drop 0.6% on average.
- By 2016, most employers adopted the then-planned U.S. Labor Department (“USDOL”) exemption salary of $47,496. That salary is equal to the COMPS exemption salary of $55,000 in 2024. The result was that employment kept rising. Investment bank Goldman Sachs estimated the revised exemption salary would have added 120,000 new jobs. The National Retail Federation estimated an increase of 120,000 new part-time retail jobs. The combined estimate of new jobs added is more than 100,000 jobs nationally.
- In 1997-1998, when the wage order covered the Construction Industry, construction job growth was higher (+1.0%/month) than before or after (when its job growth was at 0.6 - 0.8%). In addition, pay rose faster.
It offers expanded rights to breaks which will better protect public health and extend a greater work-life balance
Extensive testimony and research confirm the harmful health effects of long hours. Heart disease, injuries, and mental health challenges increase. Tired workers are less able to protect co-worker and public safety at construction sites, factories, and elsewhere. By the year 2030, more than one in four workers in Colorado will be over 55. In an aging workforce,, long hours force many to leave good-paying manual labor jobs for far lower-paid work that under-utilizes their skills.
The salary exceptions will be phased in gradually to sync up with Colorado’s economy
The COMPS Order gives employers three options: pay (a) the exempt salary or (b) any hourly wage plus overtime; or (c) limit overtime hours. The gradual phase-in, from $35,568 in 2020, parallels Colorado’s approach of only gradually raising the minimum wage, which has kept job levels better than in most states.
Based on input from various specific industries, COMPS retains partial exemptions for specific jobs that are traditionally exempt or that require added flexibility for employers: for field staff in seasonal camps and outdoor ed programs, a reduced salary threshold; for ski workers, exemption from 40-hour weekly overtime pay; for Medicaid home service workers and agricultural workers, additional rest break flexibility.
The new USDOL exemption salary of $35,568 is just 20th-percentile pay in the lowest-pay region, the south. In Colorado, $35,568 is less than our $12 minimum wage with overtime for 52 hours or more. The minimum salary to be exempt should not be below minimum wage.
CDLE heard testimony from many employers. Some supported the $35,568 national level; others sought $62,400; others noted that they, like many, had already adapted the $47,496 salary in 2016 — which the COMPS salary ($55,000 by 2024, equal to the proposed $57,500 by 2026 with inflation) matches. Thus, COMPS will go no further than a level already in use by many and studied extensively. Listening to public comments, CDLE accommodated employers by lowering and slowing the salary phase-in, from the proposed $42,500 for 2020-21 to, instead, $35,568 as of July 2020, then $40,500 in 2020. CDLE also accommodated worker requests to reach the full salary level sooner, in 2024 rather than 2026.
Coloradans reported that the previous Wage Order, last updated decades ago, was unclear
Extensive comments from employers and employees confirmed that the previous CMWO impaired CDLE’s goal of providing exceptional services. Categories like “commercial support” were confusing, and with the order not updated for decades, many modern jobs fit poorly into archaic industry categories. Even the name drew confusion: The “Minimum Wage Order” encompasses a broad set of rules that go far beyond salary but many Coloradans still believe it pertains solely to minimum wage.
The confusion has made wage disputes more frequent, more prolonged, and more costly for employers and employees alike.
Substantive clarifications in the COMPS Order include:
- explaining in much more detail what pre- and post-work time (for travel, clothes/gear, screenings, meetings, etc.) does and does not qualify as compensable “time worked”;
- Clarifying that employers disallowing tips do not violate rules against taking worker tips;
- expressly stating how and when employers can divide up 10-minute rest periods; and
- newly detailing what jobs qualify for the high-tech computer exemption.
A level playing field — covering all industries, not just targeting a few — is more fair to workers and employers
The CMWO covered just four industries: Retail/Service; Health/Medical; Food/Beverage; and Commercial Support. These limited categories resulted in coverage that was inefficient, ill-defined, and vague. For instance, store janitors would be covered while janitors that cleaned law firm offices might not be. Coverage of agricultural jobs, traditionally exempt from almost all federal and state wage law, was a compromise, but one that CDLE improved from the proposed form of COMPS based on feedback from employers and employees: as adopted, COMPS now grants rest breaks to all farmworkers (not just those on mid-large farms, as proposed) and exempts herders only if their employ complies with federal regulations protecting their pay.
COMPS puts Colorado in line with modern wage laws that cover almost all jobs, as advocated by a wide range of proponents, including Good Business Colorado, a 200-business association. Good Business Colorado writes: “Covering all … removes the confusion that many employers face when attempting to decipher whether or not the Wage Order applies. All workers [being] covered … levels the playing field, … creates fair and healthy competition. Good actors … will be able to compete more fairly knowing that all workers are given the same protections.”
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This press release provides a summary of key findings regarding the proposed Minimum Pay Standards Order. The Division of Labor Standards and Statistics has issued a “Statement of Basis, Purpose, Specific Statutory Authority and Findings” which is a comprehensive overview of the Division’s findings. In addition to providing greater detail, the document outlines foundational research and supporting analysis.