The Fair Labor Standards Act (FLSA) establishes standards for a minimum wage rate, maximum number of hours, overtime pay, record keeping, and youth employment standards. The fundamental requirement of the FLSA is that covered non-exempt employees are entitled to a minimum wage of not less than $7.25 per hour and overtime pay at a rate not less than one and one-half times the regular rate of pay after 40 hours of work in a single week. While the FLSA requires employers to pay a minimum wage and overtime to many employees, it also contains numerous exemptions to these requirements.
Additionally, Colorado has enacted its own laws governing certain wage and hour requirements, with some differing standards and requirements. Significantly, Colorado law expands employers' obligations to pay overtime to most employees where an employee works 12 or more hours in a single workday or 12 or more consecutive hours. Additionally, the Colorado Overtime & Minimum Pay Standards Order #36 (COMPS Order) expanded those categories of employees that may be eligible for overtime and reduces the number of employees that may otherwise qualify for an exemption under federal law. As of January 1, 2022, Colorado’s minimum wage is $12.56 per hour. Minimum wage for a tipped employee is $9.54, provided the employee's tips combined with the cash wage of $9.54 equal at least $12.56.
Denver has enacted its own minimum wage ordinance of $12.85 per hour, which took effect January 1, 2020. Denver's minimum wage is $15.87 for 2022 (tipped employee rate is $12.85).
Both the FLSA and the Colorado statutes covering wages and hours law are highly fact intensive and nuanced, and this chapter provides only an overview of both the FLSA and the Colorado provisions most relevant to all employers.
If an employer falls under both the FLSA and Colorado wage laws, it must comply with the stricter law. Otherwise, the employer must comply with whichever laws it is subject to.
The FLSA applies to enterprises, or a company as a whole, with related operations performed for a common business purpose, including all operations regardless of whether performed at the same location. For instance, all departments of a store or plant and all stores and plants within a company are included in the enterprise, though independent contractors and certain independent retail and service establishments are not included within the enterprise. A business that is a covered enterprise is subject to the FLSA with respect to all of its employees. To qualify as a covered enterprise, a company must have both:
In addition to these commercial employers, the FLSA applies to hospitals, businesses providing medical or nursing care for residents, schools and preschools, and government agencies regardless of their sales volumes. Each of these enterprises is addressed below.
Hospitals and institutions primarily engaged in the care of the sick, aged, mentally ill or disabled who reside on the premises are covered by the FLSA.
Public employers are covered by the FLSA. Special provisions apply to certain public employees, such as law enforcement and fire protection employees, including higher overtime eligibility levels and longer work periods in which to calculate overtime. Elected officials and their personal staff members and appointees, as well as members of the legislative branch, are excluded from the FLSA’s coverage of public agencies.
Preschools (including child care facilities), elementary schools, secondary schools, institutions of higher education, and schools for gifted or handicapped children are covered by the FLSA.
The vast majority of manufacturing companies that are engaged in the production of goods for commerce are covered by the FLSA.
Transportation companies are covered by the FLSA. However, certain employees such as interstate truck drivers and the helpers and mechanics working on those trucks are exempt from the overtime requirements of the FLSA. Notably, however, certain employees exempt from the overtime requirements of the FLSA may be subject to the overtime provisions of the COMPS Order.
Public utilities are covered by the FLSA.
Retail and service establishments whose annual revenues are at least $500,000 are covered by the FLSA. The term “retail and service establishment” has a special meaning under the FLSA and is any establishment where 75% of its annual dollar volume of goods or services (or a combination of both) is not for resale and is recognized as retail sales or services in the particular industry it serves. These establishments include:
Numerous businesses are excluded from the definition of retailers because the concept of retailing is not generally applicable to them. Such businesses include:
Employees of retail and service establishments paid on commission are not subject to the FLSA’s overtime requirements. In order to be considered such an employee, the employee must receive at least one and one-half the current minimum wage and more than 50% of his/her earnings must come from commissions.
Even if an organization is not a covered enterprise as outlined previously, its individual employees may still be covered by the FLSA. An individual is covered if he/she is engaged in interstate commerce, produces goods for interstate commerce, or performs activities closely related and directly essential to the production of goods for commerce.
The FLSA also covers certain domestic service workers depending on the amount of cash wages they receive from one employer in a calendar year, or if they work a total of more than eight hours a week for one or more employers. Examples of service workers are:
Employers covered by the FLSA are required to display an official poster outlining FLSA provisions. This poster is available at no cost from local offices of the Wage and Hour Division. (Contact information for these offices is provided at the end of this topic.) The poster is also available through the U.S. Department of Labor (DOL) by calling 1-866-4USWage (1-866-487-9243) and it is available electronically for downloading and printing at:
Employees subject to the FLSA must be paid overtime compensation for all hours worked over 40 per week and must be paid, at a minimum, at a rate not less than one and one-half times the regular rate of pay after 40 hours of work in a single workweek. Colorado law mirrors the FLSA in this regard. Additionally, Colorado requires employees to be paid one and one-half times the regular rate of pay for:
Whichever calculation results in the greater payment of wages.
The DOL estimates that approximately 86% of the workforce is covered by federal wage and hour law. Both the FLSA and Colorado law exempt some employees from overtime pay and minimum wage provisions (total exemptions), and also exempt certain employees from the overtime pay provisions alone (partial exemptions). Employers are required to follow the law that best benefits the employee. Due to the general shift from manufacturing to services and focus on technology, the employees exempted from FLSA provisions have changed somewhat since the inception of the FLSA. Indeed, traditional “white-collar” jobs once classified as exempt from overtime provisions are now often covered by the FLSA based on the duties performed. Most of the FLSA’s exemptions relate to specific jobs or industries.
Note: The duties, not the title, determine whether an employee is exempt from the FLSA.
There are three principal white-collar exemptions under FLSA law:
To determine whether any position is exempt under one of the white collar exemptions, the employer must apply both the salary test and the duties test.
An employee is paid on a “salary” basis if, for each week the employee works, he or she receives a predetermined salary (exclusive of board, lodging, or other facilities). The salary cannot be subject to reduction based upon the quality or quantity of work performed. Therefore, before an employer takes a deduction from an exempt employee’s salary, it must look closely at whether that deduction might negate the exemption and subject the employer to overtime liability.
The minimum required salary for the executive, administrative or professional exemption to apply is $684 per week ($35,568 annually). However, as described below, the minimum required salary for an employee to be considered exempt under Colorado’s COMPS Order is significantly higher. As a result, many employees who would otherwise be exempt under the FLSA are not exempt from Colorado’s overtime provisions.
In addition, the DOL allows employers to attribute up to 10% (or $3,557) of the employee’s annual minimum salary by using nondiscretionary bonuses, incentive pay or commissions. Under this rule, an employer must pay a salary of at least $32,011 per year ($615.60 per week) and then make up the difference ($3,557 per year) with the additional compensation. If the amount of additional compensation through bonus payments, incentive pay or commissions is not sufficient to close the gap with the minimum salary level over the course of the year, then the employer must provide a catch-up payment prior to year end to bring the employee's total salary plus nondiscretionary income to $35,568. An employee that falls below the minimum salary level for the year must be reclassified as nonexempt and paid overtime retroactively for the year. Employers who choose this option must be very careful, as an incorrect application will lead to wage claims related to the failure to properly classify an employee.
Week-long absences - Exempt employees need not be paid for any week in which they perform no work, regardless of the reason for the absence. If an employee performs any work, no matter how insignificant, he or she must be paid for the entire week. For instance, if an employee is on vacation but regularly responds to his or her email remotely, he or she must be paid for the week.
Personal days - An employee’s salary can be reduced if an exempt employee takes a full day off for personal reasons, other than sickness or accident. Again, the employee must perform no work during the day.
Sick days - Salary can be reduced for absences of a full day for sickness or disability if the employer has a bona fide sick leave policy and the employee has exhausted all leave under it.
Military leave, jury duty or witness leave - An employer may make deductions if an employee is serving in the military, on jury duty, or will be a witness in a court proceeding for an entire workweek and performs no work for the employer during the week. If the employee performs any work during the workweek, he or she must be paid for the entire week, but the employer can offset any amounts the employee received for his jury, military, or witness services.
Significant discipline - Reductions for time off due to discipline cannot be made unless the employee has engaged in violations of safety rules of major significance (for instance, smoking around explosives) and the deduction is for one or more full days. For non-significant safety violations or non-safety related discipline, an employer can take a deduction from the employee’s salary if the employee is suspended for an entire workweek and no work was performed in the workweek.
Partial-day absences under FMLA - Generally, an employer may not deduct partial day absences under any circumstances. An employer may, however, deduct a proportionate amount from the pay of an exempt employee who takes intermittent or reduced schedule leave under the FMLA. The deduction may be made for full or partial days missed.
Absences in the initial or final week of employment - Because an employer need only pay for the time an exempt employee actually worked during the first and last week of employment, an employer may prorate salary in those weeks.
If an employer makes improper deductions from salary, it may lose the exemption if the facts show it did not intend to pay its employees on a salary basis.
An isolated or inadvertent partial-day deduction will generally not jeopardize the exemption except in the workweek for which it was taken. However, if the error is repeated or systemic, the exemption could be lost on far broader scale. For instance, if an employer regularly sends nonexempt, salaried employees home early for lack of work and then deducts the partial day absences from their salaries, the employer is engaging in a repeated and widespread, although inadvertent, violation of the law. Those employees will not be properly paid on a salary basis and will not be considered exempt from overtime laws. The likely outcome is that all employees in that job category will be considered non-exempt for the time period that the policy existed (subject to the statute of limitations).
An employee can be exempt under the executive exemption from the minimum wage and overtime provisions of FLSA law if the employee is paid a salary of at least $684 per week and the employee meets the following additional criteria:
Primary duty - The employee’s primary duty is to manage the enterprise in which he or she is employed or to manage a customarily recognized department or subdivision.
Supervision - Customarily and regularly directs the work of two or more full-time employees or an equivalent number of part-time employees (for instance, four part-time).
Authority - Has the authority to hire or fire other employees. Or his or her suggestions and recommendations as to hiring, firing, promotion or other change of status are given particular weight.
The executive employee exemption also includes any employee who owns at least a bona fide 20% equity interest in the enterprise in which he or she is employed. In addition, the exemption includes an employee who is in sole charge of an independent establishment or a physically separated branch establishment and who meets all other criteria for the executive exemption.
The administrative exemption applies to an employee who is paid at least $684 per week on a salary basis who meets the following criteria:
Primary duty - The employee’s primary duty is to perform office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers, or serves administrative functions in a school system, educational establishment or institution, or of a department or subdivision of such facility, in work directly related to the academic instruction or training procured on the premises.
Discretion - Regularly exercises discretion and independent judgment with respect to matters of significance. This means the employee compares and evaluates possible courses of conduct, and then makes a decision and acts on that decision after the various possibilities have been considered. That decision must be made freely without direction or supervision. “Matters of significance” refers to the level of importance or consequence of the work performed.
Examples of administrators include:
Examples of non-administrators include:
The professional exemption, which includes both learned professionals and creative professionals, applies to an employee who is paid at least $684 per week on a salary or fee basis. However, teachers, lawyers, and physicians are exempted from the salary requirement and have their own duty requirements for this exemption.
Professional employees must spend their primary duty in the performance of professional work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction.
A prime characteristic of professional work is that the employee applies specialized knowledge or talents with discretion and judgment. Mechanical or routine work is not considered professional work.
The professional exemption employee must be engaged in work that is predominantly intellectual and varied, as opposed to routine mental, manual, mechanical, or physical work. This test applies to the type of thinking which must be performed by the employee in question.
Primary duty - Spends more than 50% of the workweek engaged in professional work that is intellectual and varied rather than routine, manual, mechanical, or physical.
Lawyers and physicians - Under federal law, lawyers and physicians are excepted from the salary requirement and have their own duty requirements for this exemption. Lawyers and practicing physicians will continue to be excepted from the salary requirement under the new DOL rules.
Teachers - Under federal law, teachers are excepted from the salary requirement.
Education - Requires advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study. A four-year degree may fulfill the requirement. An associate’s degree will not.
Discretion - Exercise discretion and independent judgement.
Examples of learned professionals include the following (provided the professional has attended a four-year accredited institution in their field):
Creative professionals perform work in creative fields including music, writing, acting, and the graphic arts. The employee must perform work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor as opposed to routine mental, manual, mechanical or physical work.
The computer employee exemption applies only to a highly-skilled employee who is compensated on a salary or fee basis at a rate of not less than $27.63 per hour (or approximately $57,460 per year), and whose primary duties consist of one or more of the following:
Computer employees can also be either professional or administrative employees if they are paid on a salary. Employees whose computer-related duties are directly related to management policies and the implementation of business operations, may be exempt as administrative employees.
For the outside sales employee exemption to apply, the employee must be customarily and regularly engaged away from the employer’s place of business or away from an in-home office in making sales or obtaining orders for services or the use of facilities. Outside sales must be the employee’s primary duty. There is no salary requirement for this exemption.
Under the rule for highly compensated employees, an employee with a total annual compensation of at least $107,432 per year is considered exempt if all of the following are true:
The white-collar exemptions under Colorado law are similar, though not identical, to the white-collar exemptions under the FLSA. The Colorado law applies to employers, which means any entity employing any person in Colorado, with some exceptions. Most significantly, the law does not apply to the state or its agencies or entities, or county and city governmental entities. Independent contractors are not considered employees.
If an employer is subject to both Colorado law and the FLSA, then the employer should separately evaluate whether its employees are exempt under each law. For instance, if a particular employee would be considered exempt under the FLSA but not under Colorado law, then the employer must treat that employee as non-exempt in order to comply with Colorado law. There are four principal white-collar exemptions under Colorado law, which mirror the FLSA:
An administrative employee under Colorado law is a salaried individual who:
An executive employee under Colorado law is a salaried employee:
A professional employee under Colorado law is a salaried individual employed in a field of endeavor who has knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study. The professional employee must be employed in the field in which they are trained to be considered a professional employee.
Note: The requirement that a professional employee must be paid on a salary basis does not apply to doctors, lawyers, teachers and employees in highly technical computer occupations earning at least $27.63 per hour.
Employees in certain highly technical computer-related occupations may be exempt if they are paid a salary or hourly compensation who:
For an employee to qualify as exempt under the administrative, executive/supervisor or professional exemption under Colorado law, the employee must be paid a salary and that salary must be at least the level listed below and sufficient for the minimum wage for all hours in a workweek.
Weekly overtime exempt salary
(and rounded annual equivalent)
January 1, 2021
$778.85 per week ($40,500 per year)
January 1, 2022
$865.28 per week ($45,000 per year)
January 1, 2023
$961.54 per week ($50,000 per year)
January 1, 2024
$1,057.69 per week ($55,000 per year)
January 1, 2025
The 2024 salary adjusted by the same CPI as the Colorado minimum wage
Note: The above salary schedule does not apply to the following professionals who are exempt from the requirement of a salary under federal wage law:
doctors, lawyers, and teachers who qualify as exempt under the professional exemption need not receive any particular salary or hourly pay to be exempt
employees in highly technical computer-related occupations must receive at least the lesser of:
the applicable salary in the schedule above
hourly pay that is at least $28.92 in 2022, adjusted annually by the CPI thereafter
An outside sales employee under Colorado law is any person employed primarily away from the employer’s place of business or enterprise for the purpose of making sales or obtaining orders or contracts for any commodities, articles, goods, real estate, wares, merchandise, or services. Such outside sales employee must spend a minimum of 80% of the workweek in activities directly related to their own outside sales.
In addition to the “white collar” exemptions, both the FLSA and Colorado law carve out further employee exemptions from the wage and hours requirements. The following are categories of employees that are either totally exempt (exempt from minimum wage and overtime requirements), or partially exempt (exempt from overtime requirements only) from the Colorado law.
To the extent that Colorado law is more protective of employees than the FLSA, employers must comply with Colorado law. It is important for employers to remember that even if an employee is exempt from a requirement under either the FLSA or Colorado law, but not both, the employer must comply with the wage or hour requirement.
The following employees are exempt from minimum and overtime wages under Colorado law:
The following employees are exempt from the Colorado overtime provisions only:
In addition to the “white-collar” exemptions, both the FLSA and Colorado law carve out further employee exemptions from the wage and hours requirements. It is important for employers to remember that even if an employee is exempt from a requirement under either the FLSA or Colorado law, but not both, the employer must comply with the wage or hour requirement.
The following are some categories of employees that are either exempt from the minimum wage and/or overtime requirements of the FLSA laws. This is not an exhaustive list. The exemptions are many, but narrowly defined. An employer should consult an attorney if they feel their business may be exempt.
Independent contractors are not subject to FLSA laws.
Under federal law, only casual babysitters employed in the house of the child are exempt. Casual means “employment which is irregular and intermittent and which is not performed by an individual whose vocation is providing domestic services.” Therefore, a babysitter who works on other than a casual basis, must be paid the federal minimum wage rate, and overtime based on a rate not less than one and one half times the federal minimum wage rate.
Immediate family members of agricultural employers, some employees of small farm operators, certain hand harvesters, and certain employees principally engaged in the range production of livestock are exempt from state and federal laws.
Employees who want to volunteer time to their employer must meet all of the following criteria to be exempt from minimum wage and overtime laws:
Employers often view interns as a win-win for the company and the intern. The individual is able to receive substantive work experience, and the employer is able to utilize his or her services for free. The Department of Labor (DOL), however, looks deeper than simply an intern’s offer to work without pay when classifying the individual as an intern or an employee.
Internships in the “for-profit” private sector will most often be viewed as compensable employment, unless the six-part test (described below) relating to trainees is met.
Whether an internship or training program meets the exclusion depends upon all of the facts and circumstances of each such program. All six of the following criteria must be applied when making a determination:
If all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the act’s minimum wage and overtime provisions do not apply to the intern. Additionally, to qualify as exempt from the COMPS order under Colorado state law, an intern must be an enrolled student receiving credit for an unpaid work-study program or internship.
Generally speaking, the closer an internship program is to a classroom or learning experience versus the performance of the employer’s operations, the more likely that the WHD would classify the program as an internship program eligible for “unpaid” status.
If the employer would have hired additional employees or required existing staff to work additional hours had the interns not performed the work, then the interns will more likely be viewed as employees and entitled compensation under the FLSA. However, if the employer is providing job-shadowing opportunities that provide the intern the opportunity to learn certain functions under the supervision of regular employees and the intern performs minimal work, the activity is more likely to be viewed as an education experience.
The internship should be for a set amount of time, established prior to the start of the internship. Further, unpaid internships generally should not be used by the employer as a trial period for individuals seeking employment at the conclusion of the internship. If an intern is placed with the employer for a trial period with the expectation that he or she will then be hired on a permanent basis, that individual generally would be considered an employee under the FLSA and subject to wage and hour laws beginning with the period of training.
Payment of wages is generally governed under state law.
Under Colorado law, all employers must pay full and timely wages to their employees. An employer, for purposes of the law, means any entity employing any person in Colorado, with some exceptions. Most significantly, the law does not apply to the state or its agencies or entities, or county and city governmental entities.
On January 1, 2020, a law was enacted making it a felony to deny employees' wages. The law also eliminates the provision for employers filing bankruptcy. More information can be found at:
An employee, for purposes of the law, means any person performing labor or services for the benefit of an employer in which the employer decides when, where, and how much labor or services to be performed. Independent contractors do not qualify as employees for purposes of the law.
The Colorado Wage Claim Act governs when and how wages are to be paid by employers in the private sector. Generally, wages must be paid both:
In addition, when an employee is terminated, he/she should receive payment on the date of termination for all wages earned as of that date; if the employer’s accounting unit is not operational at that time, wages are due not more than six hours after the start of the accounting unit’s next workday. If the employee resigns, wages are due on the next regular payday. Failure to pay wages at termination may result in not only liability for the wages due, but also penalties, and, in certain cases, costs and attorney fees.
In general, the FLSA considers time spent performing activities that are primarily for the employer’s benefit as compensable “hours worked,” while time spent primarily for the employee’s benefit is not. Below is an explanation of how this rule is applied to several specific situations.
When employees are idle during their regular workday because of interruptions beyond their control, the time spent waiting is counted as working time if it is unpredictable, short in duration, and controlled by the employer such that employees are unable to use that time for their own purposes. Below are a few examples of compensable waiting times:
Employees on duty 24 or more hours or who reside on the employer’s premises may agree in writing to have uninterrupted sleep time of up to eight hours per night deducted from hours worked. No reduction is permitted unless at least five hours of sleep are taken. Up to three hours of meal times also may be deducted. Persons who reside on the employer’s premises also may voluntarily sign agreements setting forth their work and non-work time on a fair and reasonable basis.
Whether on-call time is compensable depends on the extent to which the employee’s personal time is restricted. Carrying a beeper does not constitute hours worked, provided the employee is relatively free to come and go as her or she pleases, and the employee is given sufficient time to report (generally 20 to 30 minutes, depending on geographic population density) so that the employee can be free to use time to engage in personal activities while on call. The employee can be required to refrain from drinking alcoholic beverages during this period. Some restrictions may translate on-call time into hourly work, such as requiring an employee to stay at the worksite or placing an employee constantly on-call or frequently interrupting the on-call period.
Employers must maintain:
Employers are required to maintain payroll records showing the following information.
For all employees:
For employees subject to minimum wage and overtime provisions of the FLSA:
For exempt employees:
The principal risk to an employer in failing to maintain adequate or accurate employment records is that the employer will be held responsible for the information contained within such records. For instance, employee testimony as to hours worked generally will be believed in the absence of accurate records of such work. Courts and government agencies maintain that the employer can hardly complain about this consequence, since it could have been easily avoided by accurate recordkeeping.
Hours worked are all hours an employee is engaged to work, engaged to wait, or actually at work, whether or not authorized. Therefore, if an employee starts work early or works beyond the end of his/her shift, such work must be compensated, whether or not it was authorized or even necessary. Employees, however, may be disciplined for unauthorized or unnecessary work.
Employers may keep track of employees’ time in any method they choose. Employers, for instance, may use a time clock, have a timekeeper keep track of employees’ work hours, or tell their workers to write their own time on the records. Generally, any timekeeping plan is acceptable as long as it is complete and accurate.
While employers are not required to track the time of exempt employees, they may require such employees to track their hours the same as non-exempt employees, if desired.
Time clocks are not required but can be used to record hours worked. If time clocks are used, rounding practices may be used. If the rounding method is followed, employers must ensure that rounding will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked. Employers can round employee time to the nearest increment (five minutes or one tenth of an hour). The rounding must be done in a manner so that the employee does not lose hours worked over a period of time, and the employee is more likely to benefit from the rounding.
Effective January 1, 2022, the Colorado nonexempt minimum wage is $12.56 and employees covered by the Colorado law must receive the higher rate. The tipped employee minimum wage is $8.98 (see below).
In December of 2019, Denver joined a list of cities nationwide that have implemented local minimum wage laws. Effective January 1, 2022, the minimum wage that employees in Denver must receive is $15.87 per hour.
The minimum wage in Denver will then be adjusted annually for inflation beginning January 1, 2023, and every January thereafter.
Under the FLSA, employers with two or more employees engaged in interstate commerce or an annual gross sales volume of $500,000 must pay the minimum wage (see page 115, Coverage). Under Colorado law, any entity employing any person in Colorado, with some exceptions, must pay the minimum wage. Employers must pay the minimum wage to all nonexempt employees (see page 118, Exemption rules for minimum wage and overtime requirements). Independent contractors are not considered employees for purposes of the FLSA or Colorado minimum wage.
The federal tipped minimum wage is $2.13 per hour. Tipped employees are individuals engaged in occupations in which they customarily and regularly receive more than $30 per month in tips. Under the FLSA, employees who receive tips may be credited up to 40% of the statutory minimum wage per hour for tips received. The employer must be able to demonstrate the employee received at least the minimum wage for each hour of work when tips and direct wages are combined.
Similar to the FLSA, Colorado law also carves out a special provision for tipped employees, though the rate is higher at $9.54 per hour. The employer may consider tips as part of wages, but the employer still must pay at least $9.54 per hour in direct wages. Additionally, if an employee’s tips combined with the employer’s cash wage of at least $9.54 per hour do not equal the minimum hourly wage, the employer must make up the difference in cash wages. Employer-required sharing of tips with employees who do not customarily and regularly receive tips, such as management or food preparers or deduction of credit card processing fees from tipped employees, nullifies allowable tip credits towards the minimum wage. Such tips are the sole property of the employee unless the employer notifies each patron in writing that gratuities are shared by employees. Employers may, however, require employees to share or allocate gratuities on a pre-established basis among the employees of the business.
Under the FLSA, employers can hire individuals under age 20 and pay them at a rate of $4.25 per hour for the first 90 days of employment. After the initial 90-day period, the employee’s hourly rate must be increased to at least the current minimum wage. However, employers with employees subject to the stricter Colorado law must comply with that law (see below). Employers cannot take any actions against current employees, including a reduction of their hours or wages, in order to take advantage of the youth opportunity wage.
If an employer is covered by Colorado law, even if also subject to the FLSA, it may pay its un-emancipated minors under 18 years of age 15% below the current minimum wage less any applicable lawful credits, for all hours worked. This is higher than the FLSA minimum wage for minors. Employees subject to the Colorado law must be paid the higher rate. Youths in Colorado are also limited to certain permissible occupations and hours restrictions depending on age.
The FLSA also permits the employment of certain individuals at wage rates below the statutory minimum wage, so long as employers obtain certificates issued by the DOL including:
Under Colorado law, employees certified by the director will be less efficient in performance of their job duties due to a physical disability may be paid 15% below the current minimum wage excluding any applicable lawful credits, for all hours worked.
The FLSA does not limit either the number of hours in a day or the number of days in a week that an employer may require an employee to work, as long as the employee is at least 16 years old.
Colorado law provides different hourly protections for employees under the age of 16. For instance, minors under the age of 16 are not permitted to work during school hours except under a school release permit. After school they cannot work more than six hours unless the next day is not a school day. They are also not permitted to work from 9:30 p.m. to 5:00 a.m. unless the next day is not a school day, though there is an exception for babysitters, actors, models and performers.
Furthermore, such minors are not permitted to work more than 40 hours in a week or more than eight hours in any 24-hour period. In case of emergencies, which may arise in the conduct of an industry or occupation, employers may be authorized to allow a minor to work more than eight hours in a 24-hour period. In such emergencies the minor must be paid at a rate of one and one-half times his/her pay rate for each hour worked in excess of 40 hours in a week.
There is an exception for seasonal employment for the culture, harvest, or care of perishable products where wages are paid on a per piece basis. Under those circumstances a minor 14 years of age or older may be permitted to work hours in excess of the nighttime limitations described previously – but never in excess of 12 hours in any 24-hour period or 30 hours in any 72-hour period (except that a minor 14 years of age may work more than eight hours per day for no more than 10 days in any 30-day period). The overtime wage provision does not apply to employees covered under this exception. In addition to these hour requirements, employers should consult with the Colorado Department of Labor and Employment when hiring minor employees to ensure compliance with Colorado child labor laws.
Colorado law does not place any additional overtime limits on employees over the age of 16.
The FLSA requires payment of an overtime premium for all hours worked in excess of 40 in a workweek, except where the employee is exempt from the FLSA’s overtime requirements. Hours that are paid, but not worked, do not count as hours worked under the FLSA. Examples include:
absences due to:
The overtime pay rate is one and one-half times the employee’s regular rate of pay. All compensation must be included in computing an employee’s regular rate, unless specifically excluded by the FLSA. An employee’s regular rate is calculated by dividing the employee’s total weekly compensation by the total hours worked during the workweek. For instance, if an employee works 40 hours in one workweek and receives $550 (which includes regular hourly pay at $13 per hour for four, eight-hour weekdays, plus weekend differential), his regular rate is $13.75. The FLSA includes the following payments in regular rate computation:
The FLSA excludes the following payments from the regular rate computation:
Employers often want to enforce a “no overtime without prior authorization policy” to control costs. However, such a policy will not prevent employees from being entitled to overtime compensation. In such cases, employees should be told that working unauthorized overtime will lead to discipline (but not non-payment). If employees continue to perform unauthorized work, they should be paid for it and disciplined appropriately (up to and including termination).
While neither meal or rest periods are required under the FLSA, Colorado law requires that employees be given compensated 10-minute rest (break) periods for each four hours of work or major fraction thereof, which should be given, as far as practicable, in the middle of each four-hour work period. These rest periods are not to be deducted from the employees’ wages.
Furthermore, employees are entitled to an uninterrupted and “duty free” meal period of at least 30 minutes when the scheduled work shift exceeds five consecutive hours of work. The employees must be completely relieved of all duties and permitted to pursue personal activities for the period to qualify as a non-work, uncompensated period of time (which also complies with the FLSA’s provision that off-duty meal periods need to be at least 30 minutes long in order to not constitute hours worked). When the nature of the business activity or other circumstances exist that make an uninterrupted meal period impractical, the employee must be permitted to consume an “on-duty” meal while performing duties. Employees must be permitted to fully consume a meal of choice “on the job” and be fully compensated for the “on-duty” meal period without any loss of time or compensation.
Nursing mothers must be provided with reasonable break time to express breast milk under both federal and Colorado law. If an employee is covered under both laws, the employer must follow the law that provides the greater protection to employees.
Under federal law, an employer must provide reasonable break time for an employee to express breast milk for her nursing child for one year after the child’s birth each time such employee has need to express the milk. The location provided must be a place, other than a bathroom, that is shielded from view and free from intrusion from co-workers and the public. Only employees who are not exempt from the overtime pay requirements of the FLSA (that is, employees who are eligible for overtime compensation) are entitled to breaks to express milk under federal law. Further, an employer that employs fewer than 50 employees may not be subject to the FLSA break time requirements, if such requirements would impose an undue hardship.
Under Colorado law, public and private employers who have one or more employees must provide reasonable unpaid break times or permit an employee to use paid break time, mealtime, or both, each day to allow the employee to express breast milk for her nursing child for up to two years after the child’s birth. An employer must make reasonable efforts to provide a room or other location in close proximity to the work area, other than a toilet stall, where an employee can express breast milk in privacy. However, an employer is not required to make an effort that would impose an undue hardship on the operation of the employer’s business. Before an employee may pursue litigation for a violation of this law, there must be non-binding mediation between the employer and the employee.
The child labor, minimum wage, and overtime provisions of the FLSA are enforced by the Wage and Hour Division of the DOL. Government investigators have authority to inspect and copy an employer’s records, to interview employees, and to otherwise make determinations of FLSA violations. Based on the results of such DOL audits, the Secretary of Labor, or an individual employee or a group of employees, may sue an employer to collect past due minimum wages or overtime compensation.
The statute of limitations to collect past-due wages is two years for ordinary violations and three years for willful violations.
Under federal law, liquidated (pre-determined) damages in an amount equal to back wages found due are available as a remedy, plus attorneys’ fees and costs. An injunction is also possible in court cases brought under the act by the Secretary of Labor. Attorneys’ fees can be recovered in successful private actions. Civil fines of up to $2,203 can be assessed by the DOL for each repeated or willful violation.
Under Colorado law, a prevailing employee is entitled to wages and possibly reasonable attorneys’ fees. In situations that do not involve claimed deductions for theft by an employee, the employee is entitled to either:
If the employee is able to show that the employer’s failure to pay was willful, the penalty can be increased by 50%. For purposes of the provision, evidence of a judgment against an employer within the prior five years for failure to pay wages is admissible as evidence of willful conduct.
Where an employer claims a wage deduction for wage theft by an employee, the employer is required to file a report of the theft before making the deduction. The employer can be liable for a penalty of up to three times the amount withheld if the employee could show the employer acted without good faith. If criminal charges are not filed by the law enforcement agency or the employee is found not guilty in a court of law, then the employee can recover the amount withheld plus interest.
Willful FLSA violations (those violations in which a court finds an employer knew or should have known that pay practices were in violation of the FLSA) can result in criminal prosecution. First-time offenders are subject to a fine not to exceed $10,000. Second-time offenders are subject to a fine and a maximum prison term of up to six months.
The FLSA is very complex and involves numerous detailed regulations. In addition, DOL investigators are quite experienced. Moreover, in the last few years, litigation for failure to pay overtime compensation has increased dramatically, with companies collectively paying out more than one billion dollars annually to resolve these claims, often brought as collective actions, which involve claims by numerous employees as a result of a single improper pay practice. It is extremely important that employers consult an attorney at the earliest stage of any potential lawsuit or DOL audit involving wage and hour laws. Keep in mind that the information contained in this chapter only addresses a portion of the relevant laws and regulations related to wage and hour laws.
The Colorado Department of Labor and Employment also has enforcement provisions, which allow the Department to:
Furthermore, employers who willfully refuse to pay or falsely deny the amount of a wage claim can be punished by a $300 fine and up to 30 days of imprisonment.
On April 13, 2017, Governor Hickenlooper signed the Wage Theft Transparency Act into law, which took effect immediately. The Act makes “wage theft” violations in Colorado, including nonpayment of wages or overtime compensation, public record and subject to records requests under the Colorado Open Records Act.
The act clarifies that information obtained by the Colorado Department of Labor and Employment (CDLE), relating to a finding by the CDLE that an employer violated Colorado’s wage laws, is not confidential and shall be released to the public or made available for use in a court proceeding, unless the director of the division makes a determination that the information includes specific information that is a trade secret.
Prior to the passage of the act, Colorado law prohibited the release of such information on the basis that it could reveal a trade secret. The act, however, requires that the requested information be made public unless the CDLE determines it includes specific trade secret information. Before releasing information relating to a wage law violation, the CDLE is required to notify the employer of the potential release. The employer then has 20 days to provide the CDLE with documentation that the information, or specific matters included in the information, constitutes a trade secret. If the Executive Director of the CDLE determines the information is a trade secret under the Colorado Uniform Trade Secrets Act, it must treat the information as confidential and not subject to a records request. If the information is not deemed a trade secret, however, it becomes public record and may be available to business competitors, job applicants and others.
While the act changes nothing in Colorado’s substantive wage and hour laws, employers should revisit their practices and policies to ensure they are in compliance with Colorado and federal law to avoid any possibility that violations may become public record in the future.
The equal pay provisions of the FLSA provide that persons performing jobs requiring equal skill, effort, and responsibilities at the same establishment may not be paid different wage rates based upon their sex. (Colorado has a similar law prohibiting discriminatory wage practices based on sex.) Differences may be based upon seniority and a bona fide merit system. This statute is enforced by the Equal Employment Opportunity Commission (EEOC). Recently the EEOC has increased enforcement of this act to bring wages of women more in line with those of men.
The Equal Pay Act (EPA) has the same statute of limitations – two years for ordinary violations and three years for willful violations – as the FLSA. Liquidated (pre-determined) damages are also available to claimants where the employer is unable to prove its actions were taken in good faith.
The Lilly Ledbetter Fair Pay Act (Ledbetter Act) further expands protection to employees with pay claims. Unlike the EPA, the Ledbetter Act covers more than just gender discrimination – it also protects against discrimination in pay based on race, color, religion, national origin, age, and disability.
The Ledbetter Act further provides that an unlawful employment practice occurs “each time wages, benefits, or other compensation is paid, resulting in whole or in part from a [discriminatory] decision or other practice.” So, if an employee believes that she was denied a promotion as the result of a discriminatory practice, each paycheck she receives after that decision will now trigger the start of a new 180-day period within which she may file a claim of discrimination. If an unlawful employment practice has occurred, the employee may be entitled to recover back pay for up to the two-year period before the charge was filed.
The Ledbetter Act is deemed to have become effective on May 28, 2007, and applies retroactively to all pending claims of discrimination after that date.
On April 10, 2014, President Obama signed two documents that placed additional requirements on federal contractors with regards to equal pay. First, he amended Executive Order 11246 to include a non-retaliation provision. Under the revised Order, federal contractors are prohibited from retaliating against any employee or applicant because the individual “inquired about, discussed, or disclosed” his/her (own) compensation to another employee or applicant. The Order does not affect an employer’s ability to prohibit employees from disclosing the compensation of co-workers.
Employers may make deductions from the pay of non-exempt employees when:
Wage garnishment occurs when an employer withholds a portion of an employee’s earnings for the payment of a debt as the result of a court order or other equitable procedure. Employers are prohibited from discharging an employee because his/her earnings have been subject to garnishment for any one debt.
Under federal law, the maximum amount of an individual’s disposable earnings (earnings after statutory withholding) that can be subjected to garnishment is the lesser of:
25% of disposable earnings for that week
30 times the federal minimum hourly wage ($7.25 as of July 24, 2009 x 30 = $217.50) in effect at the time the earnings are payable.
The intent of these restrictions is to save a certain amount of the earnings for the wage earner. The above restrictions do not apply to any debt due for a state or federal tax, child support or alimony, or any order of a bankruptcy court under Chapter 13 of the Bankruptcy Act. Up to 50% of a worker’s disposable earnings may be garnished for child support or alimony if the worker is supporting another spouse or child, or up to 60% if the worker is not.
Colorado law has amended its wage garnishment laws to 20% of disposable income or 40 times the minimum wage (whichever is less), but there are many nuances and special exemptions in the law. Employers must notify employees of garnishment within seven days of the court approved garnishment and 14 days before garnishment can take effect. Employers are advised to seek the advice of counsel if they are unsure how much they can legally garnish from an employee’s wages. Between federal and Colorado law, an employer must apply whichever law is the most restrictive and results in the smallest garnishment.
An assignment of wages is an agreement between an employee and a creditor, under which the employee agrees to let the creditor collect part of his or her wages from each paycheck in order to repay a debt.
The wage assignment must be in writing; signed by the employee; include the names of all the assignees; and state the total amount of money to be deducted from the employee’s pay and the repayment schedule.
An assignment must be accepted in writing by the employer in order to be valid and employers are not legally obligated to accept wage assignments. Many employers refuse to accept them because of the added payroll responsibilities associated.
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About the Contributors
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An HR audit -Snapshot- Colorado
An introduction - feature of the HR Library
Background checks — Colorado
Benefits — Colorado
Celebrating in the workplace — Colorado
Child labor — Colorado
Compliance thresholds — Colorado
Disabilities and reasonable accommodation — Colorado
Disaster planning — Colorado
Discipline — Colorado
Discrimination — Colorado
Diversity, equity and inclusion in the workplace — Colorado
Family and medical leave — Colorado
Federal contractors and affirmative action — Colorado
Health insurance continuation coverage — Colorado
Health insurance portability and privacy — Colorado
Health insurance reform — Colorado
Immigration — Colorado
Independent contractors — Colorado
Marijuana — Colorado
Military leave — Colorado
Other types of leave — Colorado
Pandemic Preparedness — Colorado
Performance evaluations — Colorado
Personnel files — Colorado
Plant closings and mass layoffs — Colorado
Policies and procedures manuals — Colorado
Politics in the workplace — Colorado
Privacy rights — Colorado
Public Employers — Colorado
Recruiting and hiring — Colorado
Restrictive covenants and trade secrets — Colorado
Safety and health — Colorado
Social media — Colorado
Technology and the Internet — Colorado
Telecommuting — Colorado
Temporary, leased and franchise employees — Colorado
Termination — Colorado
Unemployment insurance — Colorado
Unions — Colorado
Wages and hours — Colorado
Whistleblower protections — Colorado
Workers' compensation — Colorado
Workplace harassment — Colorado
Workplace investigations — Colorado
Workplace violence — Colorado