COMPS Order Comes with Compliance Challenges

Overtime and minimum wage rules now in effect with some last-minute changes

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Colorado’s new overtime and minimum wage standards took effect March 16, bringing some major changes along with a few lesser-known requirements and last-minute updates employers might not be aware of.


One of the biggest changes is that the latest Colorado Overtime and Minimum Pay Standards Order covers all private employers, with just a few exemptions. Previous COMPS orders only covered four industries: retail and service, food and beverage, health and medical, and commercial support service. 

The expanded coverage means a lot more employees are going to have to start paying attention to the COMPS rules, said Sherman & Howard member Brooke Colaizzi. Previously, only companies that clearly fell into those four industries tended to take note of the state standards, she added.

“I’ve found that over the years, a lot of my clients tended to ignore the state wage orders because they were limited compared to the [Fair Labor Standards Act],” Colaizzi said. “And that’s clearly not the case anymore.”

The other major change is the addition of a minimum salary threshold for an employee to be exempt from overtime pay. While Colorado’s threshold for July-December will be $35,568, the same as the federal minimum under the FLSA, the threshold will rise by about $5,000 every year until 2024. After that, it will be adjusted for inflation annually. 

Colaizzi expects some employers to be caught off guard by the new rules, which were finalized in late January. “I think a lot of employers and companies had their budgets set for 2020 before they realized that there very well could be an additional cost for exempt employees,” she said.

EASILY OVERLOOKED

While the expanded industry coverage and salary thresholds were the headline changes in the COMPS order, there are other updates employers need to get up to speed on.

As before, hourly workers are entitled to a 10-minute rest period for every four hours worked. But now, if an employee is denied that 10-minute break, the employer must pay the employee for an additional 10 minutes. 

“This is a real compliance nightmare for employers, because timekeeping systems are not designed to be used for clocking in and out for such a short period of time,” said Martine Wells, shareholder at Brownstein Hyatt Farber Schreck. 

“Employers have to sort of follow their employees around and impose schedules and supervision to ensure that their employees are getting these 10-minute rest periods,” she said, adding the new rule is different from federal requirements and those of most other states. 

Failure to provide breaks will not only be a violation of the COMPS order but will also be considered failure to pay wages, Colaizzi said, “which then implicates the wage demands and causes of action… under the Colorado Wage Act.”

Additionally, the COMPS order defines “time worked” to include any pre- or post-shift tasks that take longer than a minute, including clean-up, security and safety screening, clocking in or out and waiting around for decisions and assignments. 

This new rule also creates a compliance headache for employers, according to Wells. For example, an employee might be required to sign in on a computer terminal at the beginning of each shift. 

But if that process takes more than a minute, the employer will have to figure out how to remain in compliance and avoid lawsuits. They might have to switch to a time card system or add time to each employee’s paycheck to cover the extra time worked.  

“I think the rest period requirement and the ‘time worked’ definition reflect that, while the agency is doing its best to try to protect workers, particularly low-wage workers, these regulations are divorced from the operational realities for employers,” Wells said. 

 Employers who haven’t paid attention to COMPS in the past might overlook the order’s requirements for postering and handbooks, according to Wells. All private employers must display a COMPS poster in the workplace and include a copy of the COMPS order or poster in any employee handbooks or manuals. They might also need to have employees acknowledge in writing they received the COMPS materials. 

Finally, Wells highlighted three new updates published March 16 that weren’t subject to the rulemaking. They include a clarification that Colorado’s joint employer requirements apply under state wage and hour law, and not the narrower federal joint employer standard adopted by the Department of Labor in January. The other last-minute changes include reduced employer obligations for information on earnings statements and an additional overtime exemption for certain Medicaid-funded caretakers.

COMPS AND COVID-19

The coronavirus crisis poses challenges for COMPS compliance. Even under the best of times, working from home can be complicated for non-exempt workers and their employers, Colaizzi said. Employers need to be able to track hours accurately and make sure everyone is taking their breaks, but there’s no easy way to do this when everyone is working remotely. 

Companies are also having to get up to speed on COMPS while juggling a host of new workplace challenges. “My hope would be that everybody, including the [Colorado Department of Labor and Employment], understands that employers are in an unprecedented position right now, and that there would be a lot of leeway given in terms of enforcement,” Colaizzi said.

On March 16, the CDLE’s Division of Labor Standards and Statistics granted a month-long grace period to comply with some of the requirements. Certain violations of the rules may be deemed “non-willful” if they are remedied by April 16, and employers have until then to comply with requirements for posters and handbooks. Statute requires the division to investigate any claims, but its direct investigations team will hold off on launching its own investigations into violations of new COMPS rules until April 16.

Wells said the leniency measures don’t go far enough. “The state provided what I call administrative half measures that are short of suspending enactment or enforcement, which is what I think is appropriate during this unprecedented time when we’re seeing entire industries obliterated,” she said. 

— Jessica Folker

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