Colorado Mandatory Overtime Laws

Laws protecting employee wages and working conditions are a mixture of federal and state legislation. The central pillar of federal employee protection laws is the Fair Labor Standards Act of 1938 (FLSA). It sets a minimum hourly wage for workers across the country, defines a workweek, and mandates overtime pay supplements for extra hours.

While federal law sets a nationwide minimum, state employment laws can provide employees with additional protections. Colorado is one of the states that enacted laws to provide higher minimum wages for its workers than those provided in the FLSA, as well as additional overtime protections. Anyone employed in Colorado state or who is considering working there should get an overview of Colorado's employee wage laws.

One might say that the minimum wage laws are the base for most employee wage and hour laws. That makes sense since, for workers who are paid by the hour, their regular and overtime pay depends entirely on the hourly wage.

The federal law sets a nationwide minimum wage. That is, it sets the wage that is the low bar for hourly wages in every state. Although the federal Fair Labor Standards Act has been amended at various times throughout its long history to increase the federal minimum wage, as of 2021, it still sits at the very modest sum of $7.25 an hour. That means that someone working 40 hours a week at federal minimum wage will earn $290.00 a week.

However, the federal law gives states the authority to enact higher minimum wages that will apply to protect employees who work within their boundaries. States can also enact lower minimum wages, but this has no actual effect. The FLSA requires that an employer pay its employees the higher of the state and federal minimum wage. Some states allow cities to enact their own minimum wages as well. For example, in California, most of the large urban centers have their own, higher minimum wage laws.

Colorado law has established a higher minimum wage than the one set at the federal level. As of the end of 2021, the Colorado minimum wage is $12.32 an hour. Since this is higher than the federal wage, Colorado workers are entitled to rely on the state minimum wage.

Like California, Colorado allows its cities to set higher minimum wages for its workers. The city of Denver, for example, has set a minimum wage (in 2021) of $14.77, but this amount increases to $15.87 in 2022. From then on, the Denver minimum wage rate will be adjusted annually for inflation based on the Consumer Price Index.

Some employees would rather not work overtime. They are perfectly happy working 40-hour workweeks but do not want to have to step in for extra hours or work on weekends. But if these employees look to the overtime laws to protect them from mandatory overtime, they will be disappointed.

Colorado law does not say anything about mandatory overtime, so only the federal law applies in this area. It does not forbid mandatory overtime. In fact, the Fair Labor Standards Act allows employers to demand overtime for any employee who is at least 16 years old. It further authorizes businesses to sanction or even dismiss an employee who refuses to work overtime. There are a few exceptions to this for religious observance, disabilities, family leave and illness.

Note that the law discourages employers from assigning minors more than eight hours per day of work except in emergency situations. And underage workers are eligible for time and a half overtime pay for all hours worked over eight hours a day or 40 hours a week.

Federal law defines a workweek as any seven consecutive work days. It provides that employers must add supplemental pay to an hourly worker's wage for every hour over 40 they work in a workweek. The overtime rate is time-and-a-half under federal law.

That means that for minimum wage workers, their overtime rate is determined by the minimum wage rate. Those working at the federal minimum wage of $7.25 an hour will get $10.88 an hour overtime. Those working at Colorado's minimum wage of $12.32 an hour will get $18.48 an hour overtime.

What about those workers who earn an hourly wage above the minimum wage? They are entitled to 150 percent of their "regular" hourly wage as overtime. While calculating the regular rate of pay, the employer must include all compensation paid to an employee, including shift differentials, non-discretionary bonuses, production bonuses and commissions. They need not include business expenses, gifts, discretionary bonuses, employer investment contributions, and paid leave like vacation and holiday pay and sick leave.

If the employee is paid a weekly salary, the regular rate is calculated by dividing their weekly pay by their weekly hours as long as that salary gives the employee at least minimum wage for all hours. If that is not the case, the regular rate will be calculated by dividing the total weekly pay by 40 hours.

Like the minimum wage laws, overtime rights can also be supplemented by state law. Colorado law gives workers additional overtime rights.

An employee who works over 12 hours in one day is not entitled to federal overtime, but they will be eligible for overtime in Colorado. This overtime right also applies to any worker required to work over 12 hours sequentially. It is calculated as one and a half times the normal rate. Hospital and nursing home employees in Colorado are assigned a special overtime threshold of 80 hours per 14 days.

The employee protections in the Fair Labor Standards Act only benefit certain workers. First, in order to be covered, the workers must be employees, not independent contractors or freelancers. Note that while employers are quick to claim that workers are independent contractors and therefore not entitled to overtime pay, the law has something to say about that issue.

To be legally classified as an independent contractor, a worker must be engaged in an independent occupation or profession. Likewise, they may not be controlled or directed by the employer in the performance of their duties.

In addition to employee status, workers protected under the FLSA must be "nonexempt." That is, they must not fit into one of the exempt employee categories. Federal law exempts four general classes of employees: those who work in executive, administrative, professional or outside sales capacities. Anyone whose job fits into one of these exemption categories is not entitled to federal or Colorado overtime regulations.

• Executives holding salaried positions. Workers who are in management and have at least two other employees working under them. To fit within this exemption, the employee must spend no more than 20 percent of their time participating in other activities, or 40 percent if they work in retail.

• Administrative jobs that are salaried positions. Workers holding administrative jobs do not perform manual work but are charged with facilitating business operations, management policies or administrative training. Like executives, administrative employees must spend no more than 20 percent of their time participating in other activities, or 40 percent if they work in retail.

• Workers holding professional positions. This job requires advanced knowledge, education and training. It includes artists, certified teachers and skilled computer professionals. Job duties are primarily intellectual and include using their own discretion and judgment in pursuing assignments. The position must be salaried, and the same time percentages (20/40 percent) apply.
  

• When an employee's main responsibility is making sales or taking orders outside of their employer's main workplace, they are outside sales persons. They must spend at least 80 percent of the time doing sales work to fall under this classification.

If a job falls within these four categories, the employee is "exempted" from federal overtime laws as well as Colorado laws. The worker's employer is not required to pay them an overtime premium.

For most of the work groups that are exempt from Colorado minimum wage and overtime protections, the law requires that they be paid a salary. A 2020 Colorado law sets minimum weekly salaries for these exemptions. The initial minimum salary for these exemptions was set at $684 a week as of July 1, 2020, but increases are scheduled:

• July 1, 2020 – $684/week or $35,568/year.
• January 1, 2021 – $778.85/week or $40,500/year.
• January 1, 2022 – $865.38/week or $45,000/year.
• January 1, 2023 – $961.54/week or $50,000/year.
• January 1, 2024 – $1,057.69/week or $55,000/year.

Even if an employee's duties fit into one of the exempt categories in Colorado, they are not exempt from overtime protections unless their salary meets or exceeds these minimums.

All Colorado employees who are not exempt are generally eligible for overtime pay under the state’s Minimum Wage Order 26. The law specifically mentions some groups of employees as included. One such category is employees in retail and service fields who sell or offer goods to the public and generate at least 50 percent of their sales from such activities.

The Colorado Order also specifies that workers in commercial support services, such as janitorial, laundry, maintenance, clerical or landscaping, are included. So are those employed in eating and/or drinking establishments and those in the health and medical fields.

Employees can bring suit against their Colorado employer for violating federal or state overtime laws. Suit for unpaid wages under the Fair Labor Standards Act must be brought within two years of the date the wages should have been paid to the employee. This statute of limitations is extended to three years if the violation on the employer's part is shown to be willful.

Under Colorado overtime laws and wage rules, an individual can bring a lawsuit for violations up to six years after the wages should have been paid. They are also entitled to collect attorney fees, a fact that makes it easier to find an attorney to handle a wage claim in Colorado.

Criminal charges are possible if an employer retaliates against an employee for exercising their rights under the minimum wage and overtime laws. Penalties can include jail time and significant fines.