COMPS Order #36: What Employers Need to Know to Comply with Colorado’s New Pay Laws

On January 22, 2020, the Colorado Department of Labor and Employment issued new rules that will overhaul the state’s wage-and-hour laws. Referred to as Colorado Overtime and Minimum Pay Standards (COMPS), these rules make significant and far-reaching changes to most parts of Colorado’s compensation laws, including overtime pay, rest periods, and travel compensation. During this webinar, Colorado employment law attorney Michael Santo provides an overview of the primary changes to help business owners and managers comply with the new rules.

BIG changes have impacted compensation laws – is your organization in compliance?

As of March 16, 2020, more Colorado workers are covered by the state’s wage and overtime laws courtesy of Colorado Overtime and Minimum Pay Standards Order (“COMPS Order”) #36.

In January, the Colorado Department of Labor and Employment (CDLE) adopted the new rules to replace Colorado Minimum Wage Order #35 (MWO #35). The new provisions provide greater protections to workers beyond the Federal Fair Labor and Standards Act (FLSA) regarding compensation, overtime, and breaks.

TIP: When it comes to federal vs state labor laws, the rules that most benefit the employee take precedence.

Following are some of the primary changes in COMPS Order #36, as well as tips to help you prepare for compliance. As with any new legislation, there are many gray areas and scenarios that will become more defined as laws are challenged in the courts.

TIP: Since there are numerous exemptions and exceptions, we recommend reviewing the entire order and consulting with an employment law attorney with any questions.

Only Public Entities Are Exempt from COMPS

Several industries are exempt from MWO #35: manufacturing, construction, insurance, and community-centered boards. COMPS Order #36 expands coverage to include those industries along with retail and service, food and beverage, commercial support services, and health and medical. If you’re not a government agency, school district, or municipal corporation, you’re likely impacted by the new COMPS rules.

Organizations Exempt from COMPS:

  • State and its agencies or entities
  • Counties and cities
  • Municipal and quasi-municipal corporations
  • School districts
  • Irrigation, reservoir or drainage conservation companies

COMPS Applies More Restrictions on Overtime Exemptions

In Colorado, employers must pay nonexempt employees at the overtime rate (1.5x regular rate of pay) for any work in excess of (1) 40 hours per workweek; (2) 12 hours per workday; or (3) 12 consecutive hours without regard to the start and end time of the workday. Regular rate of pay includes all compensation paid to an employee, including set hourly rates, shift differentials, minimum wage tip credits, non-discretionary bonuses (commission-type), production bonuses, and commissions used for calculating overtime rates for non-exempt employees.

In order to be exempt from overtime pay, workers must be paid both a minimum salary and meet a duty-basis test.

Increased Minimum Salary Threshold

On January 1, 2020, the Federal “standard salary level” for exempt employees increased to $684/week ($35,568/year); your organization should already be following this rule. Under COMPS, the minimum salary threshold for overtime exemption will increase annually:

  • 2020: $35,568/year
  • 2021: $40,500/year
  • 2022: $45,500/year
  • 2023: $50,000/year
  • 2024: $55,000/year
  • 2025 and beyond: Prior year’s salary, inflation-adjusted

More Scrutiny on Duty-Basis Tests

COMPS more narrowly defines requirements to exempt employees from overtime pay based on their roles. For example, to claim the supervisor exemption, at least 50% of the supervisor’s workweek must be spent directly supervising two or more full-time employees.

Overtime Exempt Positions

Note: Exemptions listed below are from COMPS Order #36 only; in some cases reviewing the Federal FLSA overtime rules may still apply. If you think you qualify for an exemption, we suggest you review your pay practices with an HR legal counsel.

  • Executives/supervisors, decision-making administrative employees, and professionals (COMPS Rule 2.2.1-3)
  • 20% owners, or at a non-profit the highest paid/ranked employee, if actively engaged in management (2.2.5)
  • Ski area operation employees, including on-mountain food but not lodging, are exempt from 40-hour overtime (2.4.3)
  • Certain salespersons (2.2.4, 2.4.1., 2.4.2) and transportation workers (2.2.6)
  • In-residence workers, including property managers, range workers, and camp/outdoor education field staff (2.2.7)
  • Highly technical computer-related employees if paid at least $27.63/hour (2.2.10)
  • Certain medical transportation and hospital/nursing home employees have modified rules (2.4.4, 2.4.5)
  • Agriculture jobs are exempt from overtime and meal periods, and have more flexibility regarding rest periods (2.3)

TIP: To ensure your organization is compliant with the new overtime exemption rules, review all staff salaries and job descriptions and revise them accordingly. Job descriptions are the first documents scrutinized for the duty-basis exemption qualification, so ensure the wording closely follows the provisions in COMPS.

COMPS Requires Compensation for All Time Worked

“Time worked” is defined as “…performing labor or services for the benefit of an employer, including all time s/he is suffered or permitted to work, whether or not required to do so.” Essentially this means that you must compensate employees for all job-related tasks that take more than 1 minute, including:

  • Putting on removing work clothes/gear on-site; cleanup/setup, or other off-the-clock duties
  • Awaiting assignments at work or receiving/sharing work-related information
  • Security/safety screening; clocking in/out
  • Travel for employer benefit (excluding normal work/home travel); you can pay a lower rate for travel time as long as it meets minimum wage
  • Unused breaks if employee is not authorized and permitted to take a 10-minute rest period for every 4 hours worked, or an uninterrupted, duty-free 30-minute meal period if working more than 5 hours in a shift

A Bit More About Meal and Rest Periods

If an employee is not permitted or authorized to take a rest period, they are to be compensated for that time. COMPS stipulates that breaks cannot be “stacked” and must take place between 1 hour after start of shift or 1 hour before end of shift. Exceptions apply for certain industries, such as agriculture, Medicaid home care, and collectively bargained work.

  • Meal Periods: Employees who work shifts over 5 hours are allowed an unpaid 30-minute uninterrupted and duty-free meal period. If they cannot be fully relieved of all duties during that time, then the meal period cannot be unpaid. Furthermore, if an uninterrupted meal period is impractical, then employees are permitted to eat an on-duty meal and be compensated for that time.
  • Rest Periods: Employees are allowed a paid 10-minute rest period for every 4 hours worked. When practical, rest periods should be taken in the middle of the 4 hours. Two 5-minute rest periods are permitted if agreed upon voluntarily.

TIP: Enforcing mandatory breaks can be tricky. To protect your organization, include policy language in your employee handbook indicating that employees are “authorized and permitted” to take breaks, and they should inform their managers if they do not take a break.

COMPS Posting and Distribution Requirements

Employers are required to display a COMPS Order poster and include it in their employee handbook. If posting is impractical, you must provide copies of the poster or the COMPS Order to each employee within the first month of work. Employees must also sign an acknowledgement of receiving COMPS information if you require them to sign a handbook or policy acknowledgement. Contact the Division of Labor Standards and Statistics to request COMPS Order #36 posters in other languages.

Download COMPS Order #36 Poster

COMPS Order #36 Resources

Disclaimer: This information is provided as a self-help tool and does not constitute legal or financial advice. Laws and regulations change often, and decisions as to whether or how to use this information and/or what actions to take are solely those of the viewer. The providers of this information disclaim any and all responsibility and liability for its accuracy, completeness or fitness for your particular business purposes.