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According to federal law, employees should be paid for every hour worked, including extra hours. However, some U.S. states, including Colorado, have enacted reforms that go beyond the mandates prescribed by federal law.
These laws protect employees’ rights to fair pay and may attract steep consequences for employers who don’t abide by them. Every employer and employee in Colorado should understand their roles and rights in the system to protect their interests and avoid litigation.
In this article, you’ll learn the key aspects of Colorado’s overtime laws and how they compare to federal regulations. We’ll also offer a few practical tips for compliance and avoiding common pitfalls.
Ready to dive in? Here we go…
Understanding Colorado Overtime Laws
Most employees in Colorado receiving an hourly wage are also entitled to overtime pay at a rate of 1.5 times their hourly wage for every extra hour worked above 40 in a week.
These rates also apply to employees who work more than 12 hours a day for all hours worked over the overtime limit.
Who Is Eligible for Overtime Pay?
Generally, any Colorado employee who earns less than $455 a week ($23,660 annually) and works in a non-exempt industry is eligible for overtime pay.
That said, Colorado overtime eligibility requirements are set, managed, and enforced by the federal Fair Labor Standards Act (FLSA). The stipulations in the FLSA on overtime laws state:
- Employees cannot average hours worked in two or more weeks when calculating overtime pay.
- Employers cannot alter an employee's workweek or work hours when paying overtime for work done over 12 consecutive hours a day.
- If an employee works in two or more positions at different pay rates, their overtime pay should be based on the pay for the position in which the overtime occurs or the average pay rate of each position.
Which Professions Are Exempt From Colorado Overtime Pay?
Some jobs are not protected by federal and Colorado overtime laws. These professions include:
Executive Employees
To be classified as an executive employee, you must be salaried and employed in a full-time position responsible for managing two or more employees.
You must also spend 20% of your time on other responsibilities, or 40% of your time in a retail environment.
Administrative Employees
Administrative employees are typically full-time employees whose primary duties are non-manual and related to management policies, business operations, or training activities.
They also don’t spend over 20% of their time doing activities not stipulated in their job description.
Professional Employees
To be classified as a professional employee, your primary duties must require extensive education and advanced knowledge.You must also be salaried and expected to use discretion and judgment in your intellectual capacity.
Outside Sales Employees
Employees in outside sales positions are typically tasked with making sales or taking orders outside of their employer’s main workplace.
To be covered as an outside sales employee, you must be salaried or paid on a commission basis. You must also not spend more than 20% of your time performing other work-related duties that aren’t sales-related.
Other exempt roles include:
- Driver helpers
- Property managers
- Casual babysitters
- Companions
- Domestic workers employed by family members or households
- Interstate drivers
Calculating Overtime Pay
According to Colorado overtime pay laws, hourly employees should be paid at a rate of 1.5 times their regular pay for all hours worked over:
- 40 hours per week
- 12 hours per day
- 12 consecutive hours of work, regardless of starting or ending times
Similarly, salaried employees’ overtime pay is gauged by the number of hours they work in excess of 40 hours a week. This means they get 1.5 times their regular pay for all extra work hours.
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Comparison with Federal Overtime Laws
Colorado overtime laws are quite similar to federal overtime laws. They offer the same provisions and, in some cases, provide greater employee protections.
For instance, besides setting a 40-hour cap on overtime pay eligibility, Colorado overtime laws also cover salaried employees and employees working more than 12 hours a day.
Over the years, these laws have profoundly impacted both employers and employees in Colorado. For instance, while they weaken employers’ power over employees, they also increase stability in the workplace by reducing threats of protests, strikes, and sit-ins.
Despite imposing additional costs on employers, these overtime laws also help sustain a higher standard of living for employees, resulting in increased job satisfaction and employee morale, which is good for business.
Common Misconceptions and Pitfalls
Despite the FLSA’s efforts to sensitize employers and employees to overtime laws in Colorado, employers still have and make a few common misconceptions and pitfalls. While some employers may not intend to make these mistakes, they’re still liable to litigation, which may result in steep fines and other consequences.
Therefore, it helps to fully understand overtime laws in the state to avoid potential litigation. Here are some of the most common pitfalls and misconceptions made by employers and employees in Colorado regarding overtime pay…
Unauthorized Overtime Justifies Unpaid Labor
One of the greatest misconceptions about overtime pay in Colorado is the notion that employers should not pay for unauthorized work.
Despite not clearly designating duties, employers are still legally required to pay for every hour of work done. Employees should not be financially imposed on because of their employers’ inability to plan schedules and designate duties.
Waiving Overtime Pay in Writing
While Colorado labor laws allow employers to waive certain benefits and workplace privileges as long as they’re in writing, this does not apply to overtime pay. Regardless of the basis for the waiver, it is not recognized by law and, therefore, not applicable.
This means that despite making their employees sign waivers on overtime pay, employers still have to pay overtime.
Calculating the Regular Rate of Pay Incorrectly
Overtime pay is directly tied to the regular rate of pay. Therefore, the regular pay rate must be calculated correctly to accurately determine overtime pay. According to the FLSA, a regular rate of pay is defined as any payment made to or on behalf of an employee.
FLSA guidelines also exclude certain types of payment from calculating an employee’s regular pay rate. For instance, discretionary bonuses, unused paid leaves, business expense reimbursements, and gift-based payments are excluded from the regular rate of pay calculations.
Any form of payment not included in the list of exceptions should be paid in full and considered when calculating employees’ overtime pay.
Exempting Salaried Workers From Overtime Pay
Most overtime pay regulations are primarily centered around hourly workers, who are entitled to overtime pay for all hours worked over 40 hours a week or 12 consecutive work hours per day.
However, some salaried employees are also entitled to overtime pay. Failure to recognize the various exemptions or generalizing all salaried workers as exempt may lead to noncompliance – employers must clearly understand set overtime regulations.
Best Practices for Compliance
Here are some best practices employers can emulate to comply with Colorado overtime laws:
Investing in Time-Tracking Software
This might sound redundant, but most businesses don’t realize the benefits of investing in time-tracking software. Time tracking software monitors time and attendance, allowing employers to track the total hours worked for each employee effectively.
These systems allow employees to clock in through biometric devices, central kiosks, or even on their own phones. Time-tracking software makes it easy to tell the number of employees present, how many hours they worked, and overtime, if any.
Most time tracking software also generates automatic reports, making it easy for the finance and HR departments to calculate overtime effectively.
Effective Schedule Management
Scheduling employees’ workloads and shifts effectively helps manage overtime by helping employers anticipate the possibility of overtime. It also helps prevent employee over-exhaustion, thus increasing productivity in the workplace.
Reports generated from employee shifts can also be used to prove overtime compliance.
Creating an Overtime Policy
Most employers try to create a balanced workload, which ensures employees’ workload isn’t overwhelming. However, if that doesn’t work, the most feasible solution is to create an overtime policy.
Overtime policies should include rules and guidelines regarding overtime approval and clearly stipulate what employees are expected to do in case of overtime.
Effective Employee Classification
One of the greatest pitfalls in managing overtime compliance is determining which employees qualify for overtime pay. As such, employers must classify employees effectively to avoid any confusion and potential litigation arising from compliance issues.
Employers can classify their employees effectively by constantly evaluating their roles and duties in the workplace. They can also consult experienced attorneys to help clarify any legal issues.
The Last Word on Colorado Overtime Laws
According to Federal and Colorado labor laws, all employees working more than 40 hours a week, earning less than $455 a week, or working more than 12 consecutive hours a day are entitled to overtime pay. However, the law also provides certain exceptions, including administrative and executive employees.
Failure to abide by overtime laws can attract steep penalties, including fines and litigation. Therefore, all employers in Colorado need to understand overtime laws thoroughly. They should also apply best practices to stay compliant and keep their employees motivated.
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