Overtime Wage in Colorado
On March 16, 2020, a new ordinance took effect and brought significant changes involving overtime as well as minimum wage in the state. While the Colorado Minimum Wage Order #35 covered only certain industries -- namely, retail and service; commercial support service; food and beverage; and health and medical -- the ordinance that replaced it applies to all industries.
The new ordinance, the Colorado Overtime and Minimum Pay Standards Order #36, will require employers to reconsider who’s exempt from overtime. That’s because effective July 1, 2020, the salary threshold for exemption will be set at $817.31 per week ($42,500 per year). It’ll remain at that level for 2021. Starting Jan. 1, 2022, the annual amount will go up by $3,000, until it reaches $57,500 in 2026. Then, once 2027 hits, the salary threshold will be adjusted by the Consumer Price Index.
In the past, because Colorado didn’t have a salary threshold, businesses only had to follow the FLSA requirements. Now, employers need to keep track of both the federal and state dollar amounts. Right out of the gate, the salary threshold under the Colorado Overtime and Minimum Pay Standards Order #36 was much higher than under the federal regs -- i.e., $684 per week ($35,568 per year) for 2020.
Salary alone doesn’t make someone exempt from overtime. The worker must also perform certain tasks. As in the past, the exemption applies to administrative employees, executives or supervisors, and professional employees. Outside salespersons and other employees who don’t need to be paid the salary threshold may also be exempt from overtime.
Not only will more employees need to be paid overtime under the new ordinance, but employers should also make sure they’re tracking overtime on a daily basis. Although under the FLSA, overtime is required after 40 hours in a workweek, in Colorado after 12 hours of work, an employee may be eligible for overtime. Here are the details:
Overtime pay of one and one-half times the employee's regular rate of pay must be paid anytime an employee works over 40 hours in one workweek, 12 hours in a single workday, or 12 consecutive hours (regardless of start or end day and excluding any meal period).
If an employee's hours fall into more than one of the categories above, they must be paid based on whatever calculation results in higher pay for the employee.
Colorado considers the regular rate of pay to be the total payments received in a workweek divided by the total hours worked for the workweek to receive a per hour rate. Shift differentials, bonuses, and commissions must be included in the total paid calculation.