Final COMPS Order Ushers in Near-Universal Coverage, Salary Threshold for Exemptions

By Carissa Davis

It’s official: The Colorado Department of Labor and Employment’s Division of Labor Standards and Statistics (“Division”) has adopted its final formulation of the Colorado Overtime and Minimum Pay Standards (“COMPS” or “Order”) Order #36. The COMPS Order supersedes Colorado’s Wage Orders and implements significant changes. Most of the Order’s provisions will take effect on March 16, 2020, giving employers less than two months to reach compliance.

The most significant change to Colorado wage and hour law as a result of the COMPS Order is a substantial expansion of the employers covered by the Order. Previous wage orders have covered only specific industries, most recently retail and service, commercial support service, food and beverage, and health and medical. The COMPS Order covers all Colorado industries and employers unless expressly exempted under the Order.

Several categories of employees are exempt, including, but not limited to, those employed in residences, outside sales, agriculture, range work, highly technical computer related occupations, and some outdoor field and seasonal staff.

The other major change in the COMPS Order is the introduction of a salary threshold under Colorado law for overtime exemptions. Previous Wage Orders provided that employees must be paid time and one-half the regular rate of pay for overtime work (defined in Colorado as work in excess of 40 hour workweeks or 12 hours in a given day), unless the employee performed exempt duties. Exempt duties included the traditional administrative, executive, and professional categories, among others. However, the COMPS Order provides that in order for employees to be exempt from overtime compensation requirements, they must perform exempt duties and earn a sufficient salary (salary threshold). The COMPS Order sets forth increasing salary thresholds as the years progress. The COMPS salary threshold schedule is lower than what was initially proposed but accelerates in later years. The schedule provides as follows:

July 1, 2020  $35,568
January 1, 2021 $40,500
January 1, 2022
January 1, 2023
January 1, 2024

Subsequent annual adjustments will be made according to a specified consumer price index. Notably, the July 1, 2020 threshold is identical to the Department of Labor’s salary threshold for FLSA “white collar” exempt employees. Additionally, the July 1, 2020 salary threshold does not apply to non-profit employers with an annual total gross revenue under $50 million, and for-profit employers with an annual total gross revenue under $1 million.

The COMPS Order implements significant regulations concerning posting and distribution of the COMPS wage posters. Employers must display the poster in an area frequented by employees. The Order or wage poster must be distributed to employees within the first month of employment. Each time a handbook, manual, or policy is distributed, a copy of the Order or wage poster must accompany the documents. If the employee is required to sign or acknowledge the documents, s/he also must sign and acknowledge receipt of the Order or poster. If one or more employees possess limited English language skills, the employer must obtain a translated poster. If an employer fails to comply with these requirements, it cannot later claim employee-specific credits, deductions, or exemptions.

The COMPS Order makes several smaller changes to past Wage Orders. The COMPS Order dictates that “time worked” should not only include traditional working hours, but also time spent off the clock and on the employer’s premises, including, but not limited to, time spent in security screenings, clocking in and out, and receiving or sharing work information.

The Order advises that interpretation and construction should be liberally construed; however, exceptions and exemptions should be narrowly construed.

Finally, the Order incorporates by reference the entirety of the Fair Labor Standards Act (“FLSA”) and many of its regulations. Incorporation of the FLSA presents an interesting dilemma. The FLSA and the COMPS Order govern many of the same topics, but at times, terminology differs. Further, federal regulations may indicate a position contrary to that which was intended by the Division. Accordingly, incorporation may provide guidance on identical provisions, but could result in costly litigation when different terminology is used, or in areas where COMPS and the FLSA differ.

While this client advisory details some of the main changes and requirements of the Order, it does not cover many nuances that may significantly alter liability and responsibilities in a given industry. Join the Sherman & Howard team on March 12 when Brooke Colaizzi and Carissa Davis present the Order in greater detail and answer audience questions. Stay tuned for details or contact a Sherman & Howard Labor & Employment Attorney for guidance and advice regarding the new rule.