Colorado’s New Employment Regulations Provide More Protections to Employees During the Pandemic

Michell Pacheco

Associate Editor

Loyola University Chicago School of Law, JD 2022

Colorado Overtime and Minimum Pay Standards Order (“COMPs Order”) #37 has replaced COMPS Order #36 (2020), which substantially expanded coverage in meals and break requirements, minimum wage and overtime requirements to almost every private employer in Colorado. The changes are designed to provide consistency between minimum wage, overtime and paid sick leave standards under the new Colorado Healthy Families and Workplaces Act (“HFWA”). Some changes include increasing Colorado’s minimum wage, making exemptions to COMPs #37 more stringent, and continuing paid sick leave benefits through 2021 due to the pandemic. These new employee-friendly adjustments have been adopted and became effective on January 1, 2021.

Background on COMPs Order #36

COMPs Order #36 mandated that almost every employer in Colorado provide meal and rest breaks to their employees. Previously, only a handful of industries were required to provide meals and breaks to their employees. Additionally, COMPs Order #36 set Colorado’s minimum wage at $12 per hour. It also required that employees receive overtime at one and a half times their regular pay rate for work beyond forty hours in a week.

New order – COMPs Order #37

COMPs Order #37 significantly expands on the previous COMPs order. It essentially provides more protections to employees for all private-sector work unless an industry employer or employee is exempted from the Order. Most industries are now required to provide meals and breaks to their employees. Such a requirement was not as stringent in previous COMPs orders. This is a new initiative from the Colorado Department of Labor and Employment (“CDLE”), emphasizing the agency’s focus on enforcing a stricter wage and hour regime than the one that currently exists under federal law. In fact, the CDLE chose to omit the Federal Fair Labor Standards Act (“FLSA”) from the “incorporation by reference” section in COMPs #37. This likely shows that the CDLE does not intend the FLSA interpretations to inform the interpretation of COMPS #37. Accordingly, this could affect future legal arguments that cite to federal law since the new Order clarifies that it does not intend to follow the FLSA.

Changes in exemptions to meals and breaks requirements in COMPs Order #37

Even if an employer or employee is exempt from complying with COMPs Order #37, CDLE has added requirements to certain exemptions, which could make it harder for certain employees to qualify for the exemptions. For example, CDLE has added additional requirements to the “administrative employee” exemption, which will likely make it more challenging to meet. COMPs #37 clarifies that the administrative employee must only serve “an” executive instead of “the” executive, which previously implied that the administrative employee was required to serve the chief executive or president. This change makes the exemption more flexible.

However, CDLE has also added a new requirement to this exemption. Previous orders only required the administrative employee to regularly exercise independent judgment and discretion in matters of significance. The new Order requires both the executive and administrative employee to exercise independent judgment and discretion in matters of significance. This exemption is the only one that requires an analysis of the subject employee’s duties and those of the executive he or she serves. The new requirement could significantly impact employers as now they must ensure that an executive has proper duties and authority over their employees for the exemption to apply.

CDLE has also added the “exercise independent judgment and discretion” language from the administrative exemption to the “professional employee” exemption. Previous orders did not require such discretion from employees to meet this exemption. Similarly, this could make it harder to qualify for the exemption. Although there is an additional restriction to this exemption, CDLE has also added additional language that will likely favor the journalism and entertainment industries in Colorado. COMPS #37 broadens this exemption to incorporate the federal “creative professional” exemption, covering employees with “invention, imagination, originality, or talent in recognized fields of artistic or creative endeavors.”

Changes in the Wages Protection rule allows access to 80 hours of virus leave in 2021

Lastly, the new rules adopted by CDLE allow Colorado employees to access up to 80 hours of paid leave for coronavirus-related needs as of January 1, 2021. On July 14, 2020, Colorado’s governor signed into law the new HFWA, which required all Colorado employers to provide the emergency paid leave set out in the federal Emergency Paid Sick Leave Act through December 31, 2020, regardless of how many employees they had. The HFWA also established the requirement for Colorado employers with sixteen or more employees to provide paid sick leave to their employees beginning January 1, 2021.

The new rules clarify that the sixteen-employee coverage threshold depends on the total number of employees within the United States, regardless of how many employees are in Colorado. Thus, the HFWA would cover an employer with only one employee in Colorado and fifteen employees outside the state beginning on January 1, 2021. Notably, this threshold is only in effect for 2021; the HFWA applies to all employers starting 2022.

The new rules also clarify the HFWA by adding language that gives employees access to up to eighty hours of supplemental paid sick leave as of January 1, when an initial public health emergency declaration or an amendment, extension, or reinstatement of an earlier public health emergency declaration is instituted. The rule states that the extra eighty hours of supplemental paid sick leave available January 1 can be accessed only once, regardless of whether the virus-related public health emergency is amended, extended, restated, or prolonged. Further, the new rule clarifies that the eighty hours of supplemental paid sick leave available as of January 1 are distinct from the eighty hours of virus-related leave available in 2020 under federal paid leave rules that expired on December 31.

 Implications of the new rules

While the United States Department of Labor has implemented business-friendly rules, Colorado has veered in the opposite direction. These rules are employee-friendly and will have a notable impact on Colorado’s private sector businesses in 2021.