Proposed Replacement for Colorado Minimum Wage Order Promises Big Changes for Employers

By Brooke Colaizzi

The Colorado Department of Labor and Employment’s Division of Labor Standards and Statistics has released its proposed replacement for the annual Colorado Minimum Wage Order, and if adopted, it will bring significant changes to Colorado employers’ wage and hour obligations.

The proposed Order is called the Colorado Overtime & Minimum Pay Standards Order #36 (COMPS Order #36).  The “#36” indicates that despite the name change, the proposed Order is the immediate successor to 2019’s Colorado Minimum Wage Order #35.

The most significant change in COMPS Order #36 is a massive expansion in coverage.  Colorado’s minimum wage orders historically covered employers in only four industries: retail and service, commercial support service, food and beverage, and health and medical.  COMPS Order #36 scraps the industry-specific system and implements presumptive coverage of all employers in all industries unless specifically exempted.  

Along with the expanded coverage comes revised definitions of “employer” and “employee.”  The COMPS Order adopts the federal Fair Labor Standards Act’s definition of “employer,” which includes “any person acting directly or indirectly in the interest of an employer in relation to an employee.”  Without explicitly providing so, this new definition effectively creates individual liability for violations of COMPS Order #36, liability that has never existed under previous Wage Orders.  The new definition of “employer” also includes foreign labor contractors and migratory field labor contractors and crew leaders.  The new definition of “employee” includes anyone “performing a labor or service for the benefit of an employer” and looks to the degree of control the employer exercises and the extent to which the individual performs work that is the “primary work” of the employer in determining whether an individual is an employee or an independent contractor. 

The COMPS Order #36 retains the familiar administrative, executive, professional, and outside sales exemptions but adds a minimum salary threshold to the duties tests.  The minimum salary is higher than the current federal threshold of $35,568.00 per year.  Beginning July 1, 2020, employees are “exempt” if they meet the criteria for one of the exemptions and make at least $817.31 per week or $42,500.00 per year.  The salary threshold increases $3,000 every year until January 1, 2027, when the minimum salary will be indexed by the Consumer Price Index and the Colorado minimum wage.  Companions and domestic workers employed by households are removed from the list of occupations exempt from the Order’s requirements. The Order adds an owners or proprietors exemption covering those who own at least a 20% equity interest in the employer and for the highest-ranked and highest-paid employees of a non-profit employer.

COMPS Order #36 also proposed the following changes or clarifications to existing wage and hour law:

  • Rest periods, to the extent practical, must be provided in the middle of each four-hour work period, and an employee who is unable to take a 10-minute rest period is entitled to an additional 10 minutes’ pay.
  • Similar to federal law, credits against the minimum wage for lodging may be taken only if the lodging is voluntary for the employee and primarily for the benefit of the employee.
  • Employers who distribute policies or handbooks to employees must include a copy of the COMPS Order or the related poster with the distribution.
  • Employers with non-English speaking employees must post a Spanish poster for Spanish-speaking employees and must contact the Division for a translated poster in any additional languages used in the workplace.
  • An employer who neglects to post as required is ineligible for any employee-specific credits or exemptions.

The proposed Order also makes clear that the Division will accept and investigate complaints for violations of not only Colorado wage law, but also federal and local wage laws.

The proposed COMPS Order was released as part of the Division’s formal, statutory rulemaking process.  The Division created the proposed order after a pre-rulemaking comment and testimony period that ended in August 2019.  The Division will hold a public hearing on Monday, December 16, 2019.  Public comments are due to the Division by December 31, 2019.  The Division anticipates adopting the final rule on January 10, 2020.  The new Order will go into effect March 1, 2020, with the exception of the phased-in exemption salary requirements.

We will be hosting an informational session soon to further describe the proposed changes, answer any questions, gather feedback to consider at the public hearing, and provide aid for drafting comments to be submitted before the December 31 deadline.