CDLE Aware of Ambiguity over ‘Vacation Pay’; Comment Period on COMPS Rules Now Open

An old punch-in clock for employee timecards
The Colorado Department of Labor and Employment is now accepting public comments on changes to the state’s wage and hour laws and plans to publish proposed rule changes on Sept. 30. / Image courtesy Joshua Olsen on Unsplash.

An official from the Colorado Department of Labor and Employment on Aug. 31 signaled the department is considering addressing one of the biggest questions left unanswered following the state Supreme Court’s June ruling on use-it-or-lose-it vacation policies: What counts as vacation time?

The Colorado Supreme Court on June 16 held that vacation pay, if an employer chooses to provide it, cannot be forfeited once earned. The court’s ruling banned use-it-or-lose-it vacation policies, but ambiguity remains about whether the decision extends to time off that isn’t called vacation time, such as PTO.

“It has come to our attention … that an employer can call [that] time ‘shmacation pay’ or ‘annual leave’ or something else,” said Michael Primo, director of operations and rules coordinator at the CDLE, during an Aug. 31 public hearing. “If it functions as vacation pay, it should be vacation pay. If it doesn’t, it doesn’t.” He added that if the time off is conditional, such as for illness or bereavement, “that would not count as vacation pay.”

Primo said he expects the CDLE will receive more claims from employees asking for vacation payouts and employers who say the claimed time isn’t vacation time. Vacation time isn’t defined in the statute or CDLE rules, he added.

However, the CDLE only recently started looking into the issue, and there “may or may not be anything substantive adopted, or anything adopted at all,” Primo said.

Primo made the comments during an Aug. 30 pre-rulemaking stakeholder meeting on wage and hour rules. The Division of Labor Standards and Statistics plans to publish proposed rules for Colorado Overtime and Minimum Pay Standards on Sept. 30 and will adopt final rules on Nov. 10. The public comment period on COMPS and other wage and hour rules is open and will remain open until Nov. 3. 

Only a handful of attendees shared comments on wage and hour rules during Tuesday’s meeting. One attorney raised concerns about a lack of clarity on the statute of limitations for complaints filed in court, rather than with the division. Another commenter, a representative of a non-profit music therapy provider, expressed concern over upcoming increases in the overtime thresholds for exempt employees and asked the division to consider exemptions for small organizations.

Starting in 2022, employees in most industries who earn less than $45,000 per year must be paid overtime if they work more than 40 hours a week or 12 hours a day, according to the current COMPS order. That threshold will rise to $50,000 in 2023 and $55,000 in 2024, after which it will be adjusted for inflation.

The CDLE will also propose rules on wage and hour issues and labor conditions in agriculture as required by the farmworkers’ rights bill that was signed into law on June 25. The division will publish proposed wage and hour rules for agriculture on Sept. 30 and proposed rules on heat illness and injury and workers’ access to service providers on Oct. 29. Public comments will be accepted on the wage rules until Nov. 3, while comments on labor condition rules will remain open until Dec. 20.

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