Proposed Overtime And Minimum Pay Standards Will Add Jobs, Increase Safety
For immediate release
Denver -- Today the Colorado Department of Labor and Employment’s (CDLE) Division of Labor Standards and Statistics (DLSS) will hold a public rulemaking hearing on the Colorado Overtime and Minimum Pay Standards Order (COMPS). The hearing will take place from 3 to 7 pm at 633 17th Street, 12th floor.
The public comment period officially closes December 31, 2019. A final rule is expected to be adopted in mid-January and take effect on March 1, 2020. COMPS will replace the Colorado Minimum Wage Order (CMWO), which has been widely criticized for its lack of clarity.
Over the 10-month comment period, CDLE has heard from hundreds of workers and employers. For instance, many feel that the current wage order is unclear in defining what 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 two most significant changes to COMPS are:
- It applies to all industries; and
- It raises the minimum salary required to be exempt from wage protections.
DLSS’s “Statement of Basis, Purpose, Specific Statutory Authority and Findings” is the foundational research document with supporting analysis. A summary of key findings is below.
Expanding overtime rights expands employment.
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 dropped 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 $57,500 in 2026. 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.
Expanding overtime and break rights protects public health and extends worklife.
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.
Long hours also result in less time for valuable job training and a work-life balance. As one construction worker testified: “I've been doing this since I was 18 .... Seven days a week, 12 hours a day for my first 18 years. That was a typical week for us …. No time with my family …. We would be out on them bridges till my hardhat was frozen to the back of my head .… There was no breaks for us. I've had a knee replacement, a shoulder replacement, and five back surgeries..Your body just can't hold up.”
The gradually phased-in exempt salary matches Colorado’s economy.
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 lead to a worker’s exemption 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 ($57,500 by 2026) matches. Thus, COMPS will go no further than a level already in use by many and studied extensively.
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 $42,500 in 2020, parallels Colorado’s approach of only gradually raising the minimum wage, which has kept job levels better than in most states.
Coloradans reported that the wage order, last updated decades ago, was unclear.
Extensive comments from employers and employees confirmed that the current 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.
This assumption leads them to be unaware of many important provisions. The confusion has made wage disputes more frequent, more prolonged, and more costly for employers and employees alike. Initial feedback confirms that the COMPS Order is clearer and more readable, helping employers and employees better know their wage rights and responsibilities.
A level playing field—equally covering all industries, not just targeting a few—is fairer to workers and employers.
The CMWO covered just four industries: Retail/Service; Health/Medical; Food/Beverage; and Commercial Support. These categories of industries resulted in made critical rules depend on not workers’ needs, but what their employers sold: store janitors are covered; law firm janitors may not be.
Targeting by industry is also inefficient, distorting markets between covered and uncovered. COMPS puts Colorado in line with modern wage laws covering almost all jobs, as advocated by many—including Good Business Colorado, a 200-business association: “Covering all… removes the confusion that many employers face when attempting to decipher whether or not the Wage Order applies, … mitigating potential for legal liability... All workers [being] covered… levels the playing field, … creates fair and healthy competition... on quality of service. Good actors … will be able to compete more fairly knowing that all workers are given the same protections.”
More information on COMPS can be found at coloradolaborlaw.gov