The Colorado Department of Labor and Employment’s New Colorado Overtime and Minimum Pay Standards Order - Effective March 16, 2020

March 12, 2020

By: Michael J. Dommermuth

Important new regulations adopted by the Colorado Department of Labor and Employment (“CDLE”), will become effective on March 16, 2020. The new Colorado Overtime and Minimum Pay Standards Order (“Minimum Wage Order”) is linked here for your review. Please note that the CDLE has made substantial changes to the Minimum Wage Order it initially issued at the beginning of 2020.  As discussed below, CDLE has expanded the coverage of the Minimum Wage Order, adopted language from the Federal Fair Labor Standard Act (“FLSA”) and its regulations, and has changed the required break times for employees who are entitled to receive over-time pay (“non-exempt from overtime” or “non-exempt”).

It is very important that the President and General Manager of your business, Human Resources staff, as well as other managers review the attached Minimum Wage Order, and ensure that each department complies with the Order. As always, you may contact us if you have any questions.  Key points of the attached Minimum Wage Order are described below.

Rule 1 Authority and Definitions

1.9.2 “Travel Time” - Section 1.9.2 provides a detailed description as to when an employee’s “Travel Time” is compensable.  An employee is not entitled to compensation when traveling to or from work.  An employee is not entitled to compensation when traveling at the start or end of the workday, or while riding in employer-provided transportation to the workplace.

Rule 2 Coverage and Exemptions 

2.1 Scope of Coverage – Coverage of the Minimum Wage Order has been expanded to cover all private sector employers, unless specifically exempted, and regulates wages, hours, working conditions and procedures for all employers and employees. Rules 2.2.1 – 2.2.10 contains a list of industries and employment positions, which are exempt from the Order. Please note, that in most cases, employees who are exempt from overtime pay are still required to receive minimum wage pay at the Colorado Minimum Wage rate of Twelve Dollars ($12.00) per hour.  If your business is located in Denver, the Denver Minimum Wage Rate applies, which is Twelve Dollars and Eighty-Five Cents ($12.85) per hour.

2.4 Exemptions from Overtime Requirements - This section lists the positions that are exempt from receiving overtime pay.  You should review carefully to see if this impacts your business.

2.5 Salary Threshold for Certain Exemptions - This section lists in detail the minimum salary an individual must be paid each week to be exempt from overtime.  Please carefully review this section and then review the minimum weekly pay rate of each of your managers.  If you identify any manager, who does not meet the minimum pay requirements outlined in Rule 2.5, the manager either needs to be re-categorized as non-exempt from overtime and begin receiving overtime pay or, the manager needs to receive a pay raise to meet the minimum weekly pay requirements.  Please note that the minimum weekly pay requirements contained in this Rule are higher than the federal requirements.  Therefore, Colorado law applies.

Rule 3 Minimum Wages - The Colorado Minimum Wage is currently twelve dollars ($12.00) an hour.  However, if your business is located in a city that requires a higher minimum wage (i.e., Denver) you are required to pay the higher minimum wage.

Rule 4 Overtime - This section restates longstanding Colorado law which requires that an employee, who is non-exempt from overtime pay, must receive overtime pay for any hours worked in excess of forty (40) in a work week, or if an employee works twelve (12) hours in a workday.  However, a new provision has been added that requires overtime pay for non-exempt employees, who have worked “[twelve] 12 consecutive hours without regard to the start and end time of the workday.”  Please remember that meal periods must be a minimum of thirty (30) minutes and are unpaid.  Meal periods may be subtracted when calculating the amount of hours an employee worked in a day.

Rule 5 Meal and Rest Periods - As previously required by the CDLE, an employee must be given a duty-free thirty (30) minute unpaid lunch break when the employee is scheduled to work five (5) consecutive hours or more.  If the employer allows an employee to work through his or her lunch break, the employee must be compensated for the time worked.

Rule 5.2 Rest Periods - The Rule now states every employer shall “… authorize and permit a compensated ten [10] minute rest period for each four [4] hours of work, or major fractions thereof, for all employees….”  Among other terms, under the new Order, an employee who is scheduled to work two (2) hours to six (6) hours must be given one (1) paid ten (10) minute rest break.  Any employee scheduled to work six (6) hours to ten (10) hours, must be given two (2) paid ten (10) minute rest breaks.  Please remember that because the rest breaks are paid, the ten (10) minute break is included as time worked for purposes of calculating minimum wage and overtime obligations.

Rule 5.2.4 Compensation Required If Break Is Not Provided - Please note that under this Rule if an employer fails to provide a ten (10) minute break to an employee, the employer must pay the employee for an additional ten (10) minutes of work.

6.2 Uniforms - As has been the longstanding rule in Colorado, an employer may not deduct wages from an employee’s paycheck for “ordinary wear and tear of a uniform.”  In addition, the new Order no longer permits uniform deposits.

Rule 7 Employer Record-Keeping and Posting Requirements - This Rule outlines in detail all records which must be kept on each employee including:  the employee’s name and contact information; daily record of all hours worked; regular rates of pay, gross wages earned, withholdings made on each paycheck, and net amounts paid each pay period.  Employers must maintain information that substantiates each earning statement issued to an employee.  Such records must be kept for at least three (3) years after the wages or compensation were due, and for the duration of any pending wage claim filed by the employee.

In order to protect your business from a wage claim filed by either an exempt or non-exempt employee, it is essential that you require every employee to record all hours worked each day. This requirement includes recording when an employee takes his or her lunch break.

7.4 Posting and Distribution Requirements - Employers are required to post the attached Minimum Wage Order “… in an area frequented by employees where it may be easily read during the workday.”  In addition, the CDLE is now requiring that the employer provide a copy of the attached Minimum Wage Order to every employee.

Rule 8 Administration and Interpretation - This Rule outlines in detail the procedures for filing a wage claim against an employer.  Please keep in mind that if any managers or owner(s) of a company are found to have willfully refused to pay wages, or falsely denied the amount of wages owed, such individual(s) can be charged with felony theft.

Please carefully review the Minimum Wage Order and feel free to contact us should you have any questions. Please inform your management team that compliance with the Minimum Wage Order is mandatory.