You’re working a shift at a popular restaurant in downtown Denver. It’s one of those nights when the place is packed, and the work just doesn’t stop. The hours go by in a blur, and before you know it, you’re well past the 12-hour mark, exhausted. However, you’re still pushing through to make sure every customer leaves happy.
You’re clocking extra time, and with it, extra pay—but how does that actually work? Are there protections to make sure your hard work is fairly compensated?
Understanding Overtime Pay in Colorado
If you’ve been concerned about the Federal Law regarding overtime compensation and overtime eligibility this article is perfect for you. We’ll start by brushing the basics, followed by more of the Federal Fair Labor Standards, details of overtime payment, non-exempt employees, and the minimum wage exemptions.
What is Overtime Pay? Eligibility for Overtime Pay
That’s where Colorado’s overtime laws step in to protect workers like you. In Colorado, both state laws and federal guidelines under the Fair Labor Standards Act (FLSA) are set up to ensure that employees are compensated fairly for going above and beyond a standard work schedule.
Who is Eligible for Overtime Pay in Colorado?
Colorado law categorizes employees as either “exempt” or “non-exempt,” determining their eligibility for overtime pay. Non-exempt employees receive overtime pay (typically 1.5 times their regular rate) for hours exceeding 40 per workweek. Exempt employees are not entitled to this additional compensation.
A primary factor determining exempt status is salary. For 2024, the minimum salary threshold for exemption in Colorado was $1,057.69 per week or $55,000 annually.
Drawing Lines Between Exempt and Non-Exempt Employee
This substantial increase reflects a commitment to fair compensation. While crucial, salary is only one part of the determination. This higher threshold means more salaried employees may now qualify for overtime pay if they work over 40 hours weekly.
The law states that:
If you exceed 40 hours in a workweek or work more than 12 hours in a single day, you’re eligible for overtime pay—calculated at 1.5 times your regular rate.
This isn’t just a random number; it’s a safeguard built into the system to recognize and reward the extra energy and time you’ve committed.
This approach to overtime is especially relevant in fields like hospitality, healthcare, and retail, where long shifts and unexpected demands are the norm.
For an employee, this means that every hour of hard work—even in the busiest weeks or longest shifts—is acknowledged in a tangible way.
Colorado’s unique 12-hour rule, which activates overtime on a daily basis in addition to the weekly threshold, is particularly beneficial for workers with fluctuating schedules or unpredictable shifts. It ensures that long days get the pay they deserve, even if the overall hours in a week don’t go beyond 40.
Quick Overtime Pay Rates Calculations: Fair Labor Standards Act
How is Overtime Calculated in Colorado?
In Colorado, overtime pay is calculated to recognize the extra effort employees contribute beyond standard working hours. The overtime rate is set at 1.5 times an employee’s regular pay for any hours worked over 40 in a week or more than 12 in a single day.
This additional pay rate ensures that employees receive fair compensation for extended work periods, whether they’re putting in extra time during a single shift or consistently throughout the week.
The “regular rate of pay” includes not only base hourly wages or a salary but also certain bonuses and commissions.
What Does This Mean?
This means that if an employee earns variable pay, like performance-based bonuses or sales commissions, these are factored into the calculation, creating a fairer overall rate for overtime. Including these pay components ensures that workers in different roles, from hourly to commission-based, are compensated equitably.
Calculating Mandatory Overtime for Hourly Employees Per Colorado Overtime Laws
To meet Colorado’s legal standards, calculating overtime must be precise and transparent. Employers are responsible for ensuring that each calculation fully aligns with state and federal guidelines.
Inaccurate calculations can result in compliance issues for the business and reduced earnings for employees.
Colorado’s laws thus provide a safeguard, ensuring that employees are compensated in line with their contributions and that businesses maintain clear and accurate payroll practices.
Colorado’s Minimum Salary Threshold Increases (Year-by-Year)
Colorado’s annual increases to the minimum salary threshold for exempt employees have established a proactive approach to wage fairness, helping employees keep up with rising costs while guiding businesses to stay compliant with evolving labor standards. Here’s a thorough look at the state’s year-by-year salary threshold adjustments, along with key insights for employees and employers.
2021: Setting the New Baseline at $40,500 Annually
In 2021, Colorado introduced a new standard for salaried employees by establishing a minimum threshold of $778.85 per week, or $40,500 per year. This change marked a significant step, intended to provide salaried workers across various sectors with a more livable wage. The goal was to address early inflation pressures and set a baseline that better aligned with the cost of living.
2022: Strategic Increase to $45,000 Annually
The following year, Colorado increased the threshold to $865.38 per week (or $45,000 annually). This 10% rise responded to ongoing economic pressures, allowing salaried employees to keep pace with gradually rising living costs. For many employers, it meant reassessing employee classifications to ensure that salaried roles met the new exempt criteria, prompting necessary updates to pay practices.
2023: Addressing Economic Shifts with $50,000 Annually
In 2023, Colorado raised the threshold again to $961.54 per week or $50,000 per year. This increase was particularly relevant amid higher inflation rates, ensuring salaried employees could maintain their purchasing power despite rising costs of essentials. For businesses, the adjustment called for reviewing payroll practices and ensuring salaries met the new exempt criteria, helping prevent salary erosion due to economic fluctuations.
2024: Moving to $55,000 Annually to Reflect Cost-of-Living Increases
In 2024, the minimum salary threshold for exempt employees increased to $1,057.69 per week, totaling $55,000 annually. This jump is part of Colorado’s commitment to ensuring fair wages. Rising expenses for housing, healthcare, and other essentials have made this threshold essential for improving financial security among salaried workers. For employers, this means restructuring budgets or reclassifying roles to stay compliant with the new requirements.
Looking Ahead: 2025 and Beyond
With another increase anticipated in 2025, Colorado employers should prepare for further adjustments to payroll and exempt employee classifications. Keeping up with these changes is crucial for businesses to maintain compliance and retain talent in a competitive market.
Employees, too, should stay informed of these shifts, as those earning below the threshold may be eligible for overtime, depending on their job duties.
Salaried Employees and Overtime Pay: Are Salaried Employees Eligible for Overtime Pay?
In Colorado, the rules surrounding overtime pay for salaried employees are important for both employers and employees to understand. These regulations ensure fair compensation and compliance with labor laws.
1. Eligibility for Overtime Pay
Salaried employees earning less than the minimum salary threshold may be eligible for overtime pay. This threshold is established by Colorado law and varies each year. If an employee’s salary falls below this threshold, they may not qualify for exempt status, meaning they can receive overtime pay for hours worked beyond the standard limits.
2. Example Case: The Impact of Misclassification on Overtime Pay
To illustrate the real-world consequences of employee misclassification, let’s consider the case of Alex, a former sales manager at a company in Colorado. In 2023, Alex earned $45,000 per year, which was below the state’s minimum salary threshold of $50,000 for exempt employees.
Despite this, the company mistakenly classified Alex as exempt, meaning they were not eligible for overtime pay even though they frequently worked more than 40 hours a week.
Alex regularly devoted 50 to 60 hours each week to managing a sales team, especially during peak seasons. Alex believed that their hard work and long hours were contributing to the company’s success and expected that they would be compensated accordingly.
However, upon learning about the minimum salary threshold increase, Alex realized they had been misclassified and sought legal advice.
Now, Alex is suing the employer for $90,000 in back pay and damages. This amount includes not only the unpaid overtime wages for the additional hours worked but also potential penalties for misclassification.
Clarification on Other Exemption Criteria
It’s important to note that even if an employee earns over the $55,000 minimum salary threshold in Colorado, they might still be eligible for overtime pay. This eligibility hinges on whether their job duties align with the exemption criteria established by state and federal laws.
Job Duties Matter
The classification of an employee as exempt or non-exempt is not solely determined by their salary. If an employee’s job duties do not meet the specified criteria—such as primarily engaging in executive, administrative, or professional tasks.
They may still qualify for overtime pay, regardless of their salary level. Employers should carefully assess the actual responsibilities and functions of their employees to ensure proper classification.
For a detailed breakdown of the differences between exempt and non-exempt status, including specific job duties and salary requirements, you can refer to the HR Branches’ blog on Exempt vs. Non-Exempt Status.
We recommend learning more about these standards before moving any further to ensure fair labor practices and ensure that non-exempt salaried employees get what they deserve.
Employee Rights and Employer Obligations
Understanding employee rights regarding overtime pay and the corresponding obligations of employers is crucial to maintaining a fair workplace. Both parties must be aware of their responsibilities and entitlements to ensure compliance with labor laws.
Employee Rights to Overtime Pay
Employees have specific rights and job duties when it comes to overtime compensation, which are protected under Colorado labor laws and the Fair Labor Standards Act (FLSA). These rights as per the Federal Labor Laws include:
1. Right to Overtime Compensation
Hourly Employees are entitled to receive overtime pay at 1.5 times their regular rate of pay for hours worked beyond:
40 hours in a workweek
12 hours in a single workday
This entitlement ensures that employees are compensated fairly for the extra hours they contribute to their jobs.
2. Right to Accurate Record-Keeping
Employees have the right to expect that their employers maintain accurate records of their work hours and wages paid, including any overtime compensation.
Proper record-keeping helps protect employees’ rights by providing a transparent account of their earnings and hours worked. This documentation is essential for addressing any disputes regarding pay.
3. Right to Report Violations
Employees have the right to report any violations of overtime laws without fear of retaliation from their employers. This protection ensures that workers can advocate for their rights and seek fair compensation without the threat of negative consequences, such as job loss or disciplinary action.
Employer Obligations
To uphold these employee rights, employers have several key obligations:
Ensure Compliance with Overtime Laws: Employers must accurately classify employees and comply with state and federal overtime regulations to avoid misclassification and ensure eligible employees receive their rightful compensation.
Maintain Accurate Records: Employers are required to keep accurate and detailed records of hours worked and wages paid. This includes tracking overtime hours and ensuring that employees are compensated accordingly.
Provide a Safe Reporting Environment: Employers should foster an environment where employees feel safe to report any concerns regarding wage violations or misclassifications. This includes implementing anti-retaliation policies to protect employees who come forward.
Penalties and Remedies
Understanding the potential penalties for failing to pay overtime in Colorado is crucial for both employers and employees. These penalties serve to enforce compliance with labor laws and protect workers’ rights.
Penalties for Failing to Pay Overtime in Colorado
Employers who neglect to pay overtime wages face serious consequences, which can include:
Financial Penalties
1. Fines
Employers may incur significant fines for violations of overtime pay laws. These fines can vary depending on the severity and frequency of the violations.
2. Back Pay Awards:
Employers may be required to compensate employees for unpaid overtime wages, which can accumulate over time, leading to substantial financial liabilities.
3. Damages:
In some cases, employers may also be liable for additional damages, such as liquidated damages, which can double the amount owed to the employee.
4. Criminal Charges:
In severe cases, persistent violations or intentional misconduct may lead to criminal charges against employers, further escalating the legal consequences.
5. Legal Costs
Employers may also be responsible for covering the attorney’s fees and court costs incurred by the employee if they are found to have violated overtime laws. This additional financial burden can make it even more costly for businesses that fail to comply.
Remedies for Employees
Employees have several avenues available to recover unpaid wages if they believe their overtime rights have been violated:
Filing a Wage Claim: Employees can file a wage claim with the Colorado Department of Labor and Employment (CDLE). The CDLE investigates wage claims and can help employees recover unpaid overtime wages.
Pursuing Legal Action: Employees also have the option to pursue legal action in court to recover unpaid wages. This route allows for the possibility of seeking damages, attorney’s fees, and any other compensation owed.
Next Steps for Employees and Employers With Bourassa Law Group
If you have questions about your entitlement to overtime pay or believe your employer is not complying with Colorado’s labor laws, don’t hesitate to take action.
Contact Bourassa Law Group today! Their team of experienced attorneys is dedicated to helping you navigate the complexities of labor laws and ensuring that you receive fair compensation for your efforts.
Don’t wait until it’s too late! The sooner you reach out, the sooner you can secure the compensation you deserve. Your rights matter, and Bourassa Law Group is here to advocate for you. Take the first step toward ensuring your rights are protected!
Schedule your consultation today
1-800-870-8910