Thank you to everyone who attended our handbook webinar as part of our L&E Live series! In response to several questions we received during and after the presentation, we are providing the following information:
Out-of-State Remote Work
- If a Colorado business has employees working remotely from other states, it can create legal and tax compliance issues that vary from state to state. Labor, employment, and some tax laws of the state where the remote employee is working generally will apply, although this may depend on several considerations, such as whether the employee is permanently residing and working in the state or temporarily working remotely from the state and whether that state presumes COVID-related relocations to be temporary. Proposed legislation may also affect tax issues for out-of-state remote workers (e.g., the HEALS Act, which includes a proposal to create uniform rules for state and local taxes on remote workers due to remote work during COVID). For purposes of drafting compliant handbook policies, it is best to include catch-all phrases incorporating “any other applicable federal, state, or local law.”
- Policies relating specifically to COVID-19 restrictions and procedures (e.g., social distancing, masks in the workplace, health screenings, etc.) are best handled outside of the handbook in a separate policy, as they are subject to frequent changes, depending on your workplace and developments in applicable laws, regulations, and guidance.
Fluctuating Workweek Method for Calculating Overtime Pay
- COMPS Order 36 (and proposed COMPS Order 37 for 2021) permits use of the fluctuating workweek method to calculate overtime pay only for nonexempt employees who are paid a weekly salary or other nonhourly basis and only under certain conditions. These conditions include that the employer and employee must have a “clear mutual understanding” (such as a detailed, written policy in the handbook) that the salary is (1) compensation for all hours each workweek, (2) at least minimum wage for all hours in workweeks with the greatest hours, (3) supplemented by pay for overtime hours (at half the regular rate), and (4) paid for hours the employee works in a workweek. The rationale for the fluctuating workweek calculation is that the employee’s weekly salary is straight time pay for all hours worked in a workweek. Thus, the “regular rate” is the total paid divided by the number of hours worked each week, and overtime is then calculated at one half the regular rate for any hours in excess of 40 hours per workweek, 12 hours per workday, or 12 consecutive hours regardless of the start and end times.
- Keep in mind that under Colorado state law, the salary threshold for overtime exemptions will increase annually, beginning January 1, 2021. These annual increases may prompt more employers to use or consider using the fluctuating workweek method as their salaried employees may become eligible for overtime pay. If your business uses the fluctuating workweek method or is considering using it, we recommend consulting with your legal counsel to ensure compliance with applicable federal and state laws.