June 2022

State Updates

 

Colorado finalizes new Pay, Poster rules for 2022

12/02/21

Author: ADP Admin/Monday, November 29, 2021/Categories: Compliance Corner , State Compliance Update, Colorado

The Colorado Department of Labor and Employment has released rules that finalize an increase to the minimum wage and the minimum salary required for exemption from overtime, add a new exemption from overtime for highly compensated employees, and establish new poster rules for employers. The changes are included in Colorado Overtime and Minimum Pay Standards (COMPS) Order #38 and the 2022 Publication and Yearly Calculation of Adjusted Labor Compensation (PAY CALC) Order and take effect Jan. 1, 2022.

Background:

Colorado has its own minimum wage, which adjusts for inflation each year. Colorado also has its own minimum salary requirement for exemption from overtime, which has scheduled increases for 2022, 2023, and 2024 and will adjust for inflation thereafter. In the past, the annual changes to the state’s minimum wage/salary requirements were included in the COMPS Order. Going forward, they will be included in the PAY CALC Order instead.

Minimum wage for 2022:

Effective January 1, 2022, the state’s minimum wage will increase from $12.32 per hour to $12.56 per hour. The state’s minimum direct cash wage for tipped employees will increase from $9.30 per hour to $9.54. If a tipped employee’s cash wages and tips fail to meet or exceed $12.56 per hour in 2022, employers must make up the difference.

Minimum salary required for exemption:

Effective January 1, 2022, the minimum salary required to qualify for the executive/supervisor, administrative, and professional exemptions from overtime under state law will increase to $865.38 per week. The employee must also satisfy applicable duties tests.

Under the state’s exemption for highly technical computer employees, the employee may be paid by salary (at least $865.38 per week in 2022) or by the hour (at least $28.92 per hour in 2022).

Note: In Colorado, an exempt employee’s salary generally must also be sufficient to satisfy the minimum wage for all hours worked in a workweek. Employers may want to consult legal counsel about how this rule may impact them.

New state exemption for highly compensated employees:

COMPS Order #38 adds a new exemption from overtime for “highly compensated employees” that, like the other exemptions, includes both a duties test and a salary test. Under the duties test, an exempt highly compensated employee is one who customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, administrative, or professional employee; and whose primary duty is office or non-manual work. To qualify for this state exemption in 2022, employees must receive total annual compensation of at least $101,250 (at least $865.38 must be paid on a weekly salary basis).

Note: The state’s total compensation requirement for this exemption in 2022 is lower than the one required by federal rules, even though the state’s weekly salary requirement is higher. Under federal rules, the total annual compensation requirement for the "highly compensated employees" exemption is $107,432 per year (at least $684 must be paid on a weekly salary basis). Employers should consult legal counsel to discuss the impact of this and other differences between the state and federal exemption.

New notice rules:

Under existing rules, employers must display an up-to-date COMPS Order poster in the workplace. Employers that publish or distribute a handbook, manual, or written or posted policies must also include a copy of the COMPS Order (or poster) with the handbook, manual, or policies.

Under COMPS Order #38, the rules are revised to state that the required poster/notice must include the minimum wage/salary figures contained in the PAY CALC Order (since they are now published separately). COMPS Order #38 also indicates that employers will be deemed noncompliant with the notice requirements if they attempt to minimize the effect of the notice, such as by communicating positions contrary to, or discouraging the exercise of rights covered in, the notice.

Other changes:

COMPS Order #38 also includes new rules on:

  • Determining the regular rate of pay for the purposes of overtime when an employee has two or more rates of pay.
  • The minimum wage, overtime, meal and rest breaks, and other protections for agricultural workers.

See COMPS Order #38 for details.

Compliance recommendations:

Colorado employers should ensure compliance with COMPS Order #38 and the 2022 PAY CALC Order and meet their poster/notice obligations by January 1, 2022. Please contact your dedicated service professional with any questions.

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Tags: 12/02/21

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