Minimum Wage and Salary Increases in Colorado

The Colorado Overtime and Minimum Pay Standards (COMPS #37) went into effect on January 1, 2021. COMPS #37 governs minimum wage, overtime, rest and meal breaks, and other aspects of Colorado wage and hour law. This post will discuss the details of the increase, how to determine if an employee is exempt, and what employers ought to do now to prepare for the current and upcoming wage increases.

Minimum Wage and Exempt Threshold Increase

Under COMPS Order #37, the minimum wage increased from $12.00 an hour to $12.32 an hour. Also, the salary threshold for certain exempt employees—including those under the administrative, executive, and professional exemptions—increased from $684.00 per week or $35,568 per year to $778.85 per week to $40,500.20 per year.

Employers can anticipate increasing the exempt threshold to $865.38 per week next year with a minimum salary of $45,000 per year. In January 2023, it will jump to $961.54 per week or $50,000 per year, and in January 2024, it will increase again to $1,057.69 per week or $55,000 per year.

Categorizing Exempt Employees

Generally, a business must ensure its workers are paid minimum wage; ensure workers are paid time and a half for any hours worked over 40 per week; keep certain records required by the law; and follow specific rules related to minor employees.

Some workers, however, are exempt from some of these requirements. The most common exemptions are the professional, executive, and administrative exemptions, though there are others. To determine if an employee is exempt and therefore not subject to some of the requirements, consider applying the duties test and the salary test.

The duties test asks what the employee’s duties are and if what they do at work qualifies them for one of the available exemptions. The salary test asks how the employee is paid.

Executive employees have a significant role in managing the organization, regularly direct the work of two or more employees, and have significant influence on hiring, firing, and other personnel matters.

Administrative employees perform office or other non-manual work directly related to the organization’s operations and exercise “discretion and independent judgment” in “significant” matters. The second metric is, of course, more subjective than the first, but strong legal counsel will be able to help define it. Note that this is not intended to include administrative assistants.

Professional employees primarily perform work either requiring advanced knowledge in a scientific field or specialized knowledge acquired by formal education or requiring creativity, invention, imagination, originality, or talent in a “recognized field of artistic or creative endeavor.” Again, there are other exemptions.

The salary test shows how the employee is paid. Currently, an employee must be paid at least $778.85 per week or $40,500.20 per year.

Note that this is a both-and standard. An employee must both be paid enough and meet one of the classifications to be exempt.

Compliance

To ensure compliance with this new Order, employers should review guidance issued by the Colorado Department of Labor and Employment (Department). A review of the actual Order issued by the Department would also be wise. Employers may wish to review job descriptions to determine whether an employee is exempt according to the duties test or salary test. Note that if an employee has exempt duties but is not being paid enough, the employee is simply non-exempt. This is not a problem if the person is being paid minimum wage and overtime. If necessary, an employer may wish to amend job responsibilities to meet budget needs. In addition, an employer should conduct a review of organization policies and practices to ensure compliance with the new minimum wage law and plan for future increases to minimum wage and to the exempt threshold.

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Featured Image by Rebecca Sidebotham.