Ever since the state’s Labor Department decided to modernize how most Colorado workers should be paid, the public debate was voluminous and lengthy.
After countless hours of community meetings and public hearings plus more than 1,300 public comments collected since March, the rules are now final. The state Department of Labor and Employment adopted the final standard on Wednesday and it goes into effect March 16, with some of the updates, such as minimum pay for salaried workers, taking effect later than originally proposed.
“What we did was try to strike a balance between business and labor comments,” said Scott Moss, Director of the Division of Labor and Statistics in the state Department of Labor and Employment.
To be clear, this wasn’t about setting a future minimum wage rate, which is why the state renamed the policy to the Colorado Overtime & Minimum Pay Standards, or COMPS (it revised and replaced the confusingly named Minimum Wage Order #35). The policy, which hadn’t been significantly updated since 1998, is about overtime pay, exempt employee status, meal and break times and which employees should qualify for these protections.
Read the new wage order: Colorado Overtime & Minimum Pay Standards, or COMPS
Take overtime pay, for example. If you’re on a salary, you don’t usually get paid for working more than 40 hours a week. But without a minimum standard, stingy employers could move low-wage hourly workers to salary and avoid paying overtime. The new Colorado rule requires that salaried workers must make at least $35,568 a year before they’re disqualified from earning overtime pay. That’s a big jump from the $23,660 federal minimum in place since 2004 but it aligns with the updated national minimum of $35,568, which went into effect Jan. 1.
“The key purpose of overtime since 1938 isn’t money in pockets, it’s job spreading and making sure that especially long hours are the exception not the rule,” Moss said during a hearing with state legislators last week. “… Overtime should cost a premium and incentivize employers, where possible, not to have two folks working 80 hours but three working 50-odd hours, or more working 40, if possible.”
That’s cool with workers like James Sidell, a sign installer. He changed employers last fall and now works for Colographic in Commerce City. At his old company, he’d work 10- to 12-hour days, and get paid overtime. Then his boss wanted to make him a salaried employee.
“I absolutely refused,” Sidell said. “She wanted me to go to a salary that was basically $2,500 more a year than what I was making without overtime. And I’m like that’s not worth it. I’d make that in overtime in a month and a half.”
But not everyone ended up being close to satisfied with COMPS. Employers in rural areas complained that a statewide standard is unfair in regions where average weekly pay is much lower than Denver’s. And farm workers, a group that advocates pushed to include for overtime pay, remain largely excluded because of protections under federal wage law.
The public input and agency outreach resulted in many sides participating in the conversation. Some commenters referred to earlier public comments when submitting their own. The agency brought tacos to one community meeting to get feedback from non-lawyers on whether the draft rule released in November had too much legalese, said Moss, who along with division staff reviewed every single comment.
At last week’s public hearing where state labor officials presented an update to lawmakers, several organizations thanked Moss and the agency.
“They went over the top to make sure that they heard everything twice, and they really did a great job,” said Jason Wardrip, business manager for the Colorado Building and Construction Trades Council, which represents 24 unions and 10,000 workers in the state. “No, we’re not going to be happy with everything that they come down with, but in the end, you heard Scott’s report, it was over-the-top comprehensive. He heard very well, and he’s working extremely hard to come to a consensus for us.”
Attention all private-sector workers
A major update is who now qualifies for wage protection. Since the 1990s, legal protections applied to only four types of workers: those with jobs in retail and service, food and beverage, health and medical and commercial support services. Notably absent? Construction workers, farm laborers, public employees and certain workers in manufacturing and wholesale businesses.
The construction lobby was in full force, with many workers testifying at public hearings. At the August hearing, Eddie Bustamante, political director for Laborers’ International Union of North America Local 720, said companies using non-union workers aren’t required to abide by state wage rules. They can pay less and limit breaks, which the union says hurts public safety and creates unfair competition, he said.
Moss said the labor agency ultimately agreed with a comment written by four state legislators that read “…it is difficult for us to understand that the state would mandate that baristas in a local coffee shop are entitled to a 10-minute break after four hours of work, but a construction worker strapped twenty stories in the air in 95-degree heat does not have this same privilege.”
The new order now protects all private sector workers unless otherwise exempted. Some of the new exemptions include entrepreneurs or business owners who own at least 20% of a company, and the highest-paid employee at a nonprofit organization.
Those not protected still include doctors, lawyers, teachers, highly technical computer workers, executives and supervisors. Other jobs excluded are volunteers, live-in staff (such as babysitters or property managers), elected officials and their staff, and certain transportation workers, like taxi drivers.
Another batch of workers excluded from overtime rules are ski employees who handle downhill skiing and snowboarding services, or work at the food and beverage stands on the slopes. However, they do earn overtime pay if they work more than 12 hours in a day.
Farm and agricultural workers, still largely excluded from all state wage laws, did gain 10-minute rest breaks under the revised state law. Farm workers also have some federal wage protections.
“This is a battle that is not just happening in Colorado but all around the country,” said David Seligman, director of Towards Justice, a group that advocated for farm workers rights. “It’s been incredibly hard work to gain greater protections anywhere and we are happy that farm workers will receive some protections under the new COMPS order. Those 10-minute breaks are really critical for farm workers who work terribly hard.”
Salaried workers and overtime
Another major change was how much — or how little — a worker on salary can earn but not be paid overtime.
Labor advocates pushed for that minimum to be $62,400, or 2.5-times more than Colorado’s current minimum wage of $12. This correlated to the difference back in 1975, when minimum pay was three-times the federal minimum wage. And it was similar to the $47,476 proposed by the Obama administration’s Department of Labor in 2016, which was later invalidated by a federal judge.
Employer groups felt an increase was needed and were OK with the federal increase that went up to $35,568 in January. That meant Colorado employers saw a 49% increase on Jan. 1, said Kelly J. Brough, president and CEO of the Denver Metro Chamber of Commerce.
But the $62,400 figure was shocking, she said.
“It’s like ‘Holy smokes! What are we doing?’ This can really negatively impact workers, not just employers,” Brough said. “That did not feel thoughtful, from our perspective.”
The Chamber pointed to a Joblist survey that found, on average, Colorado employees worked 43.3 hours a week. Workers said they preferred the flexibility of a salary so they could leave work to pick up a child and make up work later that night, or work longer hours during an event one week and make up for it later. Those most concerned were in the nonprofit community, where staff salaries were significantly below $62,400. But nonprofit work, much like the ski and agriculture industries, often means extra hours are required one week for seasonal events or special projects, but with greater flexibility throughout the year, she said.
“They would love the ability to have those assignments because many employers, maybe couldn’t pay overtime and would have to utilize employees who have higher pay to do those kinds of work, which would slow down people’s careers, and so forth,” Brough said. “…The higher you go on that threshold, the fewer employees that we can offer such an opportunity to.”
But $35,568 just didn’t seem adequate for Coloradans, Moss said.
“Once Colorado chose a $12 minimum wage, $35,000 doesn’t make sense,” he said. “Anyone working 52 hours a week, if he or she receives minimum wage plus overtime, makes more than $35,000.”
The division looked at economic data and policies in other states, he added. States that broadened overtime rights to include more exempt workers saw unemployment rates drop by an average of 0.6% compared to the nation. And employer surveys by the Society for Human Resource Management showed that many employers had adopted the higher $47,500 minimum anyway.
That would include Charlie Berger, co-founder of Denver Beer Company. He wrote in a public comment that his company switched to the Obama proposal even though it never went into effect and kept the higher minimum pay standard.
“This means that we’ve had to think more carefully about whether we want to treat some of our supervisors as overtime exempt, but we won’t do so unless we pay them more than the proposed Obama threshold,” Berger wrote.
After more comments and meetings in December and early January, the division decided to keep the minimum salary at federal levels until the end of the year to address concerns by businesses that said annual budgets had already been set.
But the minimum salary increases faster. It jumps to $40,500 on Jan. 1, 2021, and increases about $5,000 a year until it reaches $55,000 in 2024. After that, the minimum salary will increase along with the Consumer Price Index and ultimately reach $57,500 by 2026, Moss said.
There is still pushback. Employers outside of the Denver metro area must abide by the same salary thresholds and deadlines. And that’s rough for a region like Mesa County, where average weekly pay is $895, compared to the state’s $1,180, according to the Bureau of Labor Statistics.
Within the homecare industry, weekly wages are closer to $760 a week, said Meshelle McKendry, who owns an in-home senior care agency Right at Home Grand Junction.
“This will be very detrimental for the Western Slope,” McKendry said. “We are not Denver.”
Moss said the team used the federal proposal under Obama as a guideline. That would have pushed the whole nation higher, including states with much lower wages than Colorado.
“We chose a number that ultimately was $12,000 below the one that was sought by labor,” Moss said. “But another issue if you have regional variation is it gets really complicated for multi-site employers or employers with workers who travel.”
Tyler Jaeckel, policy director of The Bell Policy Center, said his organization was part of a coalition that advocated for workers and would prefer for Colorado to get to that higher minimum threshold faster so that more workers will be covered.
But, he added, “we are making much more progress than most other states across the country, and this is a significant effort to actually pretty much enforce the overtime rules that are already on the books,” he said. “Some more states should be stepping up just as Colorado is. I think we believe that Colorado could have done more and could have affected more people. But this is a very significant step forward.”
What else changed?
While the minimum salary threshold and qualified jobs were the most contentious, the policy had other tweaks to modernize worker pay.
“The COMPS Order clarifies a number of rules on matters that were unclear, commonly misunderstood, or the subject of costly litigation as to what they meant,” Moss said.
- Employers are required to let workers have 10-minute rest periods for every four hours of work, which caused an issue for some employers who find managing rest breaks is overly burdensome. The new rule offers employers more flexibility if they “genuinely offer the break and the employee doesn’t take it. There’s no liability,” Moss said. But the department will watch for jobs that prevent employees from taking a break.
- Affects: All private sector workers, including construction workers, unless otherwise excluded.
- Some jobs excluded from overtime pay: Farm workers, ski industry, public/government workers, seasonal camp counselors
- Big impact: Salaried workers earning less than $42,500 a year must be brought up to the new minimum annual pay standard or get paid overtime for more than 40 hours of work. There are exclusions. That minimum pay threshold will increase $3,000 a year to reach $57,500 in 2026.
- 10-minute rest breaks now offered to farm and agricultural workers, but no meal breaks or overtime pay.
- The amount of time worked was clarified to include tasks that take more than one-minute and are typically considered “off-the-clock,” including changing into work clothes, security and safety screenings and clean up.
- If special uniforms are part of the job, the employer must provide them. Gone is the rule that says employers can require a security deposit for the uniform.
- The revised rules, which must be posted at all workplaces, will be available in at least a dozen languages.
This story was updated at 2:20 p.m. to correct the origin of the survey shared by the Denver Metro Chamber of Commerce. The data came from Joblist and is a state-by-state average of weekly hours worked by full-time employees.