Colorado Overtime Laws

September 14th 2024

It is common for employees to work beyond their normal hours of work. However, according to Colorado Labor Laws, employers are required to compensate employees for their overtime.

In Colorado, you are entitled to time-and-a-half for every hour worked over 40 in a week.

This article will provide information to successfully navigate Colorado’s overtime regulations, whether you’re an employer aiming for compliance or an employee defending your rights.

This article covers:

Colorado Overtime Rates

Overtime law in Colorado is generally aligned with the federal Fair Labor Standards Act (FLSA). The majority of hourly employees in Colorado have the right to an overtime pay rate.

Overtime in Colorado is set at 1.5 times the regular hourly rate for work performed by an employee exceeding:

  • 40 hours per workweek
  • 12 hours per workday, or
  • 12 consecutive hours of work (regardless of the time started and ended)

Since the regular Colorado minimum wage is $14.42 per hour, this makes Colorado’s overtime minimum wage $21.63 per hour (1.5 times the minimum wage).

Overtime Entitlement in Colorado

According to Colorado overtime laws, overtime pay is required for any non-exempt employees.

Hourly employees who earn below $1,057.69 a week ($55,000 annually) and work in a non-exempt industry are entitled to overtime pay.

However, your overall eligibility for overtime pay will be based on what your job duties are as well as what type of business you are in.

Read more about Overtime Exceptions and Exemptions in Colorado.

Refusing to Work Overtime in Colorado

Colorado state laws do not mention mandatory overtime, so that’s where the federal Fair Labor Standards Act (FLSA) comes in.

According to the FLSA, mandatory overtime is allowed which means that employers are allowed to force their employees to work overtime hours. The federal law also allows employers to take disciplinary action against an employee who refuses overtime work.

“Compensatory Time” in Colorado

Compensatory time, or “comp time”, for non-exempt employees is not allowed for any employer covered under the Colorado Overtime and Minimum Pay Standards Order (“COMPS Order”) #38. 

Comp time is when an employee is given time off instead of receiving overtime pay. The rate for comp time is also at the rate of time-and-a-half.

Overtime for Tipped Employees in Colorado

A tipped employee in Colorado is entitled to overtime compensation. However, their minimum wage is lower than the standard state minimum wage.

Before we continue, it is important to understand what a tip credit is. 

A tip credit is a system that enables employers to pay tipped employees a lower minimum wage. Simply take the standard state minimum wage minus what the tipped employee is paid. 

In this case, the Colorado minimum wage is $14.42 and the minimum tipped employee wage is $11.40 which makes the tip credit $3.02. 

If a tipped employee works overtime hours, their overtime rate will be calculated based on the full minimum wage minus the tip credit. It is important to note that the tips earned are not included in the calculation.

    Overtime for Salaried Employees in Colorado

    Salaried employees entitled to overtime (check Overtime Exceptions and Exemptions in Colorado), must divide their salary by the number of hours that salary compensates for to get their regular rate to calculate their overtime rate further.

    If an employee’s salary covers less than 40 in a workweek, their regular rate will be added for every subsequent hour working up to the 40. Only after 40 hours will time-and-a-half be counted.

    If an employee’s salary covers 40 in a workweek, then time-and-a-half will be paid for any hours over 40.

    Overtime for Piece Rate in Colorado

    Under federal law, if an employee is paid on a piece rate basis, they are entitled to overtime at a rate of 1.5 for every overtime hour worked.

    Piece rate is when workers are paid by the unit performed (e.g. the number of tee shirts or bricks produced) instead of being paid based on time spent working.

    Calculating Overtime with Commission in Colorado

    Employees in Colorado who receive commissions are eligible for overtime at a rate of 1.5 times their regular hourly rate. Their regular hourly rate must include the commissions earned as well. However, they will only be given half of that rate for every overtime hour.

    For example, let’s say an employee works 45 hours a week at a rate of $10/hour and receives $100 in commissions for that week. We need to first calculate the new regular hourly rate.

    To do so:

    (Total hours x Hourly Rate) + Commission

    = (45 x 10) + 100

    = $550 (new regular hourly rate)

    Then, divide that by the total hours worked in the week.

    = 550 / 45

    =$12.22

    Now, to determine the overtime rate for the commissioned employees, we need to take that new regular hourly rate and halve it.

    $12.22 / 2

    = $6.11 (commissioned employees’ overtime rate)

    Since the employee worked an extra 5 hours in the week, that makes his overtime compensation $30.56 ($6.11 x 5 hours).

    The amount will vary according to the hours worked, hourly rate, and commission earned.

    Overtime Exceptions and Exemptions in Colorado

    Certain job categories, including executives, professionals, and administrative employees, are exempt from overtime pay depending on their job description and salary.

    In Colorado, the following employees are exempt from overtime pay:

    • Salespersons, parts persons, and mechanics: Those employed by automobile, truck, or farm implement (retail) dealers; salespersons employed by trailer, aircraft, and boat (retail) dealers. 
    • Commission Sales Exemption: This exemption is only applicable to employees of retail or service employers who receive more than 75% of their annual dollar volume from retail or service sales. 
    • Ski Industry Exemption: Employees of the ski industry performing duties directly related to ski area operations for downhill skiing or snowboarding, and those employees engaged in providing food and beverage services at on-mountain locations, are exempt from the 40-hour overtime requirement of this Wage Order. The daily overtime requirement of one and one-half the regular rate of pay for all hours worked more than 12 in a workday shall apply. This partial overtime exemption does not apply to ski area employees performing duties related to lodging. 
    • Medical Transportation Exemption: Employees of the medical transportation industry who are scheduled to work 24-hour shifts are exempt from the 12-hour overtime requirement provided they receive overtime wages for hours worked more than 40 hours per work week. 

    Statute of Limitations For Unpaid Overtime Claims in Colorado

    According to Colorado law, the statute of limitations for filing a complaint regarding overtime (or other unpaid wages) is 2 years.

    For willful violations, the statute of limitations is 3 years.

    Penalties for Not Providing Overtime Pay to Employees in Colorado

    In Colorado, employers can be fined by the Colorado Department of Labor and Employment (DOLE) for not providing overtime pay to their employees. Fines can go up to $1,000 per employee per day for each violation.

    The following are some other examples of penalties that may be imposed on an employer if an employee chooses to file a lawsuit:

    • Back wages for all overtime hours worked
    • Damages for emotional distress, inconvenience, and loss of wages
    • Attorney’s fees

    The DOLE also has the authority to issue a stop-work order if an employer has violated overtime laws. This means that the employer must put a stop to all work until the issue is resolved.

    Legal Cases Relating to Overtime Compensation in Colorado

    Below, we present law cases relating to fair overtime compensation for employees in Colorado: 

    1. Dairy Product Supplier Pays $100,000 in Back Wages to Employee

    In the case of Armani v. Maxim Healthcare Services, Inc., Gianni Armani filed a lawsuit against Maxim Healthcare Services (Maxim) for unpaid overtime compensation. Armani was a certified nursing assistant (CNA) employed under Maxim, a company that provided nursing and health-related services to injured, disabled, and other persons in need of care. 

    During his employment, Armani was regularly working more than 40 hours per week. However, Maxim only compensated him for the regular hours worked and did not provide overtime wages.

    Maxim argued that Armani was an exempt employee under the FLSA, which states that “domestic service employees” were not entitled to overtime pay. Maxim claimed Armani was a domestic service employee because he provided personal care services to the clients, such as bathing, dressing, and general upkeep.

    The court disagreed with Maxim’s arguments as it was found that Armani was not an exempt employee as he was not employed directly by the clients he was servicing but was employed by Maxim which was a for-profit staffing company.

    Ultimately, the court awarded Armani all the overtime back wages he was owed, plus interest as well as attorney’s fees for the lawsuit filed.

    Key lessons from this case:
    • Colorado courts will interpret the definition of “domestic service employee” in a way that is consistent with the purpose of the FLSA, which is to prevent workers from exploitation.
    • CNAs who work for for-profit staffing companies are not exempt from overtime pay.
    • Employees who work for staffing agencies may still be eligible for overtime pay, even if they provide personal care services.

    2. Court of Appeals Reverses $2M Lawsuit Against Healthcare Service Company

    In the case of Jordan v. Maxim Healthcare Services, Inc., Theresa Jordan filed a lawsuit against Maxim Healthcare Services (Maxim) for violating the Fair Labor Standards Act (FLSA). Jordan, certified nursing assistant (CNA) for Maxim, claimed that Maxim had failed to pay her, and other similarly situated employees, overtime wages. 

    The CNAs worked for Maxim as home healthcare aides. They often worked more than 40 hours a week but were only paid for their regular hours. They were not given overtime pay for any additional hours worked. 

    Maim argued that the CNAs were considered exempt from overtime due to the FLSA’s companionship exemption. This exemption applies to employees who provide companionship services to disabled or chronically ill individuals. 

    The court initially disagreed with Maxim’s argument as it was found that the CNAs did not meet the companionship exemption requirements. Settlement amounting to $2,015,253 for overtime back wages was set to be awarded to the CNAs.

    However, this decision was reversed by the Court of Appeals. The court found that Jordan and the other CNAs were employed by a third-party employer, which makes them exempt from overtime pay under Colorado law. 

    The case was remanded back to the district court and instructed to enter a ruling in favor of Maxim.

    Key lessons from this case:
    • The case emphasizes the importance of identifying the relationship between employees and their third-party employers to determine overtime eligibility.
    • This case highlights that a judgment can be reversed even if the initial ruling included a settlement amount.
    • Employees need to familiarize themselves with the specific exemptions that apply under both Colorado state and federal law as both can be used depending on the circumstances.

    3. FedEx Wins Lawsuit Against Employees Who Seek to Claim Overtime Back Wages

    In the case of Bachanov v. FedEx Ground, Andrew Bachanov filed a lawsuit against FedEx Ground (FedEx) for failing to pay its drivers overtime wages. Bachanov, a former FedEx driver, claims that he was not properly compensated for the overtime hours that he had worked. 

    FedEx argued that its drivers were considered exempt from overtime pay under the Colorado Minimum Wage Order that exempts drivers involved in interstate commerce. Bachanov claims that as a driver, he did not cross state lines as his role only included shipments within Colorado.

    There were conflicting interpretations on whether this exemption applied only to drivers transporting goods within Colorado but were engaged in interstate commerce. One interpretation considered the physical crossing of state lines while another considered the character of the shipment in nature (whether or not their work contributes to the overall interstate nature of the business).

    It was found that the nature of the shipment applies to this case. Meaning that even though Bachanov did not physically cross state lines, his work still contributes to the overall interstate nature of FedEx. Therefore, the drivers were considered exempt from overtime pay.

    Ultimately, the court ruled in favor of FedEx and dismissed Bachanov’s claims. The case has been dismissed.

    Key lessons from this case:
    • Colorado labor laws will consider the circumstances of each case to determine whether the transportation work qualifies as part of interstate commerce. 
    • Drivers performing intrastate (within a state) transportation that contributes to interstate commerce may still be considered exempt from overtime pay.
    • Employees need to be aware of any interpretations within a state that can influence their overtime eligibility.

    Learn more about Colorado Labor Laws through our detailed guide.

    Important Cautionary Note

    This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.