Colorado has issued a new wage order titled, Colorado Overtime and Minimum Pay Standards Order #36. (“COMPS Order”). This Order replaces Colorado Minimum Wage Order #35 and is set to institute significant changes affecting minimum wage, wage deductions and credits, overtime compensation, and other important wage and hour issues. Unlike previous wage orders that only covered specific industries, the COMPS Order presumptively covers all employers (unless expressly exempted) and significantly expands employer obligations and liability. Click here to read our advisory.
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.
By Bernie Siebert
On December 4, 2017, the U. S. Department of Labor (“DOL”) issued a Notice of Proposed Rulemaking regarding the tip credit regulations under the Fair Labor Standards Act. https://www.dol.gov/newsroom/releases/whd/whd20171204 The proposed new regulation will be published today, and will be available for public comment. The purpose of the new regulation is to alter the regulations issued in 2011 concerning tipped employees. Under the FLSA, an employer is permitted to pay tipped employees $2.13 so long as the employee receives in tips an amount equal to at least $5.12 per hour. One of the biggest problems for employers under the 2011 regulation was that the number of employees for whom the employer could claim the tip credit was limited to only employees who directly received tips. Thus “tip pooling” arrangements were limited. Under the new proposed regulation, tip pools can be expanded to include non-tipped employees such as cooks and dishwashers. According to DOL: “This would likely increase the earnings of those employees who are newly added to the tip pool and further incentivize them to provide good customer service.” The proposed regulation would also address the issue of the propriety of an employer retaining tips paid to employees while paying its employees an hourly wage that exceeds the minimum wage. The 2011 regulation prohibited an employer from retaining tips and paying employees at least the minimum wage even when no tip credit was claimed. It should be noted, that the regulation is proposed, not final. Moreover, employers utilizing the tip credit should check local law to make sure they are in compliance with any applicable law, regulation or ordinance.
Yesterday the Arizona Supreme Court issued a death knell to the pending legal challenge to Prop. 206. As you will recall from our blog post, last November our citizenry passed a referendum that raised the minimum wage and imposed mandatory paid leave on employers. The minimum wage hike took effect in January, while the paid leave provision becomes effective in July. The ensuing legal challenge to Prop. 206 found no traction, and met its demise yesterday when the Court unanimously rejected the appeal. Given the exigencies of the situation, the Court issued its ruling without a supporting opinion, but promised to publish an actual opinion when ready to do so. It appears that Prop. 206 is the law of the State, and only constitutional/political solutions remain. In the meantime, hello minimum wage hikes and paid leave.
During the election cycle, Arizona voters were treated to ads featuring adorable families hit hard by the current minimum wage. We were asked to vote for Prop. 206 to raise the minimum wage incrementally until it reaches $12.00 an hour by the year 2020—a not-so-unreasonable request when fast-food workers are demanding a single-step increase in the minimum wage to $15.00. Missing in the ads, in fact, missing in the debate on Prop. 206 completely, was the other part of the initiative—employers must provide paid sick leave to employees. This mandate is a big deal for small and large employers alike. Prop. 206 requires employers with fewer than 15 employees to provide at least one hour of paid sick time for every 30 hours worked, although an employee may not accrue or use more than 24 hours of paid sick time per year. Prop. 206 requires employers with 15 or more employees to provide at least one hour of paid sick time for every 30 hours worked, and employees may accrue or use up to 40 hours of paid sick time per year. Arizona employers will have to implement Prop. 206 paid leave by July 1, 2017.
Arizona voters resoundingly approved a very gradual minimum wage hike through Prop. 206, one that was only slightly different from the statutory hikes established almost a decade ago through Prop. 202. But, when they voted for Prop. 206, did Arizonans understand they were creating a new financial burden on job-creators in the form of mandatory paid sick leave benefits?
By Andy Volin
Tipped employees can be paid an hourly rate less than the minimum wage, as long as their wages, along with their tips, are at least the minimum wage. Colorado’s Federal Court just rejected a claim brought by a restaurant server who argued a minimum wage violation. The server’s theory was that her work time should be split into two jobs. One job counted as tipped work, such as actually serving food to customers. However, another aspect of her work, such as rolling silverware and cleaning tables, should have been considered a second, separate job that was not eligible for the lower tipped rate.
This “dual job” argument has some support in the DOL’s Field Operations Handbook. The Court concluded the handbook was inconsistent with the statute and regulations with respect to this particular situation and refused to rely on it. Instead, the proper analysis was to compare the server’s total weekly earnings, including tips, against minimum wage for the hours worked as a server. Because the total was more than minimum wage, there was no violation. Romero v. Top-Tier Colorado, LLC dba Huthot Mongolian Grill, No. 15-CV-02101-MEH (D. Colo. Feb. 9, 2016).
Business owners are often sued personally in FLSA suits, but a recent case shows there’s a significant risk for restaurant managers, as well. In Jang et al. v. Woo Lae Oak, Inc., et al., No. 12-cv-00782, 2013 WL 6577027 (N.D. Ill. Dec. 12, 2013), former employees sued the restaurant and the general manager for minimum wage and overtime compensation violations. The GM asked the court to dismiss the claim against her, arguing she was not an “employer” under the FLSA. The court found the GM told customers she was in charge of everything, interviewed job applicants, overruled other managers’ decisions, told one plaintiff that she would pay the back wages, offered to pay another plaintiff higher wages if the plaintiff did not quit, prepared payroll checks for some employees, and oversaw aspects of the restaurant’s financial transactions and accounting. Based on those allegations, the court found a significant factual issue over whether the GM was legally responsible, at least in part, for the alleged FLSA violations.
This case provides a powerful persuasion tool for manager training on wage and hour issues. Even site managers might be held individually liable for a restaurant’s wage and hour violations. Managers who encourage or tolerate practices such as off-the-clock work and unpaid overtime among restaurant employees cannot just point their finger at the company.