Colorado’s new overtime protections will expand to more workers, more quickly

But the effective date of the state's new, higher OT income limits will be pushed back to 2021

Construction workers show support for expanded overtime protections outside of the Colorado Department of Labor and Employment on Dec. 16, 2019. (Photo by Forest Wilson)
Construction workers show support for expanded overtime protections outside of the Colorado Department of Labor and Employment on Dec. 16, 2019. (Photo by Forest Wilson)

Colorado’s new wage protections giving more workers earning higher incomes the right to overtime will go into full effect later than originally proposed, but will expand on a faster timeline.

The new overtime rule, also known as the Colorado Overtime and Minimum Pay Standards Order, was finalized Wednesday and will increase the industries covered by overtime and work-break standards. Right now, overtime protections apply to workers in four industries: retail and service, health and medical, customer support and food and beverage. Under the new rule, all private-sector workers will qualify, unless their industry or duty is specifically exempted. Among those who do not, for example, are administrators, executives, scientists, interstate drivers and software engineers. A full list of the exempted workers can be found at the top of the rule

Starting in July, the annual income limit to qualify for overtime in Colorado will be reset to match the new, federal threshold of $35,568, which went into effect at the beginning of this year. So, qualified workers earning less than that threshold are entitled to overtime of 1.5 times their hourly base pay for every hour over 40 hours worked per week or over 12 hours in a day. Colorado’s sync with the federal level is an interim move to give employees state protection for wage disputes, said Scott Moss, director of the Colorado Department of Labor and Employment’s Division of Labor Standards and Statistics. 

But Colorado’s overtime cap is then set to surpass the federal cap, jumping to $40,500 a year starting in January 2021. That’s six months later and $2,000 lower than what was originally proposed and represents an accommodation to business interests. The state also compromised with labor by putting gradual increases in the annual wage cut-off threshold on a faster timeline. In 2024, the state’s cap for overtime pay will rise to $55,000, two years earlier than the draft rule proposed. After that, the cutoff will be tied to inflation and should reach the originally proposed cap of $57,500 by 2026, Moss said

The agency began dusting off its 22-year-old wage and overtime rules for an update nearly a year ago, holding more than 50 meetings and poring over 1,300 comments on the proposed changes, including those received in public hearings, said Cher Haavind, chief communications officer for CDLE. 

With new higher thresholds for overtime pay, employers will be facing a choice: pay qualified employees earning less than the cap overtime when they earn it or raise wages over the threshold. Overtime, Moss told lawmakers in a hearing last week, should be the exception, not the rule. The purpose of overtime pay, he argued, is to discourage employers from requiring employees to work consistently long hours, which can be harmful to health, and to encourage a more equitable distribution of the workload.

Tyler Jaeckel, director of policy and research at the Bell Policy Center, said that the center would have liked to see an even higher salary cap and quicker phase-in, but that the new rule is a step in the right direction. 

“Colorado joins the few states across the country to actually make significant progress on this issue,” he said. 

As expected, and despite calls from advocates and labor representatives, one big group left out of the new overtime protection is Colorado’s agricultural workers. The debate over whether they should be covered was fierce and played out in part on the online public comment portal on the rule.  

Jenifer Rodriguez, managing attorney at Colorado Legal Services Migrant Farm Workers Division, wrote that agricultural workers should not only be included in overtime protections, but “agricultural workers should be entitled to paid meal and rest breaks.” 

“The COMPS Order, if properly applied to all agricultural employers, would simply require agricultural employers to pay their workers living wages,” Rodriguez wrote. “This requirement will not have any impact on family-run farms that rely on the work of family members for their success. Instead, it would require that those who hire labor do so in a fair and equitable way.”

Terry Fankhauser, chair of the Colorado Agricultural Council, cited the unique nature of the agricultural sector, where commodity prices fluctuate and profit margins are thin.

“Like Colorado’s ski industry that is seasonal in nature and today enjoys a partial exemption from overtime requirements, many sectors of Colorado’s agriculture industry are also seasonal,” he wrote in a public comment. “Unlike the ski industry, construction industry, or restaurant industry, however, each of which can raise the price of a lift ticket, the contract price of constructing a new home, or the cost of a meal served, agricultural producers are almost entirely unable to pass on increased production and labor costs.”

The rule does grant agricultural workers on all farms with employees a 10-minute paid break for every four hours of work — a change from the draft proposal, which left out smaller farms. All other private-sector workers who are not explicitly left out of the rule will also be entitled to that mandatory paid break. 

Moss said the agency decided against extending overtime protections to agricultural workers because federal law exempts them. Some states including California and New York, do have overtime protections for farm workers. But, Moss said, more do not and CDLE sought a compromise between advocates for agricultural workers and business by offering paid breaks. He added that Colorado’s minimum wage of $12 per hour, which he said many agricultural workers receive, also goes beyond the federal minimum wage of $7.50 per hour. 

Michael Cortés, executive director of the Colorado Latino Leadership Advocacy & Research Organization, called the choice to exclude agricultural workers “very disappointing.” 

“We still have work to do and our primary recourse at this point is, I assume, either legislation or legal action in the courts,” he said. 

Also of concern to some groups is the effect of the salary threshold on small businesses in rural areas of the state. Colorado Association of Home Builders CEO Ted Leighty said the association recommends a different threshold for workers outside of the metro areas. However, the updated rule does not include a separate pay scale for urban and rural employees. Leighty did not immediately respond for comment.  

CDLE’s website received more than 200 comments between the last public hearing on the rule in mid-December and the cutoff at the end of the year, pushing the agency to postpone finalizing it until Wednesday. 

The new overtime and work-break protections will start for the newly protected workers on March 16, after a review by the Attorney General and filing with the Secretary of State. The salary cap changes will start in July. The entire list of comments can be found on the rulemaking portal of the CDLE website.