As we previously reported, the Colorado Department of Labor and Employment (CDLE) has been considering major changes to the state’s overtime and minimum wage laws this year.
Details on the recently proposed changes follow.
Currently, there are only four classes of workers covered by the minimum wage and break time protections in Colorado’s minimum wage order: retail and service, commercial support, food and beverage, and health and medical. This left many—including construction, domestic, and manufacturing workers—outside the ambit of those protections.
The draft minimum wage order would cover all Colorado workers unless specifically excluded—such as doctors, lawyers, and agricultural workers.
The draft rule also proposes changes to the salary threshold for the “white collar” exemptions. To be exempt from overtime, an employee must perform executive (supervisory), administrative, or professional duties, be paid on a salary basis, and meet a threshold salary level. Currently, Colorado does not have its own salary threshold, so it defaults to the federal standard. Under federal law, on January 1, 2020, the minimum salary will increase to $35,568. However, states are allowed to set higher standards.
CDLE proposes to substantially exceed the federal standard, with a $42,500 requirement until 2021. After that, the threshold will rise by $3,000 each year until reaching $57,500 by 2026. After 2026, the threshold will change based on the consumer price index. If this draft passes, employers will have to increase the salary of any employee who meets the duties test to at least the new salary level to maintain exempt status, or pay those employees overtime.
The final version of the rule is slated to be published on January 10, 2020, after public hearings and a comment period. In the interim, this draft rule will likely face opposition from both employers, arguing that this change is too aggressive, and labor advocates, arguing that this change is not enough. Nonetheless, Colorado employers should prepare now for some form of this rule to take effect in 2020.
Ballard Spahr’s Labor and Employment Group routinely assists employers in complying with state, federal, and local statutes and regulations, and assists clients with audits to identify employee misclassifications and avoid costly litigation.
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