Compliance Snapshot:
- Employers should determine whether COMPS Order #38 applies, and if so, to which employees;
- Employers must display a poster version of the new COMPS 38 (or ensure employees receive a copy within the first month of employment);
- Employers must distribute a copy of COMPS Order #38 or the official poster to their employees (and must provide a translated version to employees with limited English proficiency).
The Colorado Department of Labor and Employment (CDLE) has adopted the Colorado Overtime and Minimum Pay Standards Order #38 (COMPS Order #38) which replaces a prior order. According to the CDLE, the COMPS Order is the source of key wage rights and responsibilities, including eligibility for minimum wage; overtime pay for work over 40 hours a week or 12 hours a day; meal and rest breaks; rules on wage deductions; and rules on what work time must be paid. We previously wrote about the significant changes brought by COMPS Order #37, aspects of which are now clarified and expanded via COMPS Order #38. This article highlights the key changes effective January 1, 2021.
This article does not provide an overview of updates to the 2022 Publication and Yearly Calculation of Adjusted Labor Compensation Order (2022 PAY CALC Order) or the updated Wage Protection Rules. As a reminder, employers should consult with employment law counsel on matters related employee classification and state wage and hour laws.
Who is a Covered Employer?
These wage and hour rules apply to all employers in Colorado in any industry who meet the definition of employer under the Fair Labor Standards Act (“FLSA”). The FLSA defines “employer” broadly, as “any person acting directly or indirectly in the interest of an employer in relation to an employee.”
Who is a Covered Employee?
COMPS Order #38 applies to all Colorado workers in the private sector unless a specific exemption applies (as outlined in section 2.2 of the COMPS Order) and based on the type of work they perform.
Key Updates to CO COMPS Order #38 Effective January 1, 2022:
- Minimum wage and salary thresholds for certain exemptions will be released through the applicable CO PAY CALC Order. These thresholds will no longer be included in the COMPS Order which means that employers will need to review the PAY CALC Order release annually to be apprised of changes to the CO minimum wage and salary thresholds.
- New exemption for “highly compensated employees.” An employee qualifies under this exemption if they are:
- (1) paid 2.25 times the rounded annual salary for the executive, administrative, or professional salary limit in the PAY CALC Order ($101,250 in 2022);
- (2) customarily and regularly performs any one of the exempt duties and responsibilities of an executive, administrative, or professional employee; and
- (3) whose primary duty is office or nonmanual work.
Whether or not a certain employee meets the requirements of this exemption, or any exemption under the respective CO COMPS Order is a fact-sensitive analysis. Employers are encouraged to consult with counsel to ensure legal compliance.
- Regular rate of pay for an employee with multiple non-exempt jobs with the same employer within the same workweek. COMPS Order #38 establishes two options for determining the regular rate of pay for employees working multiple jobs at different hourly rates for the same employer within a specific workweek:
- (A) Rate based on a weighted average: The employee’s regular rate for the particular workweek is determined by adding together all the wages earned performing each job, then dividing that amount by the total number of hours worked in all jobs, consistent with the federal Fair Labor Standards Act (FLSA) and resulting in a weighted average rate of pay, or
- (B) Rate based on the job actually performed during overtime hours: The employee’s regular rate is the regular rate of hourly pay for the job being performed during the actual overtime hours.
COMPS Order #38 also clarifies that if there is no written agreement between the employee and the employer as to the method of calculating the regular rate of pay in advance of performing the work, the employee’s regular rate shall be calculated using the “weighted average” method described in part (A) above.
What are the Posting and Notice Distribution Requirements?
There is a notice posting requirement that must be located in an “area frequented by employees where they may be easily read during the workday.” The Department has released an official poster that satisfies this requirement. If a physical posting is impractical (for example, if employees work from home, or the work site lacks a break room), the employer must provide a copy of the COMPS Order #38 or poster to each employee within the first month of employment. It must also be made available upon request.
Employers that distribute “any handbook, manual, or written or posted policies” to their employees must also distribute a copy of either the COMPS #38 Order or poster. If an employer requires employees to sign an acknowledgment of receiving any materials mentioned above, the employer must also require a signed acknowledgement that employees were provided a copy of the COMPS Order #38 or poster.
In sum, employers should be aware of the changes above and are encouraged to review their current wage and hour practices and work with counsel to ensure legal compliance with changes under COMPS Order #38 as well as any other applicable other federal or local laws.
Additional Resources
- COMPS Order #38
- Official COMPS Order Posters
- Colorado Department of Labor and Employment
- Sequoia Forewords:
Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2022 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved