Legal Alerts

Colorado Labor & Employment Law Developments – A 2021 Year-In-Review

Denver, Colo. (January 20, 2022) - The past year brought numerous changes to Colorado’s employment laws, including those governing the hiring process, wage and hour payments, and anti-discrimination protections. Lewis Brisbois’ Labor & Employment team is here to help you keep track of these new and notable changes and ensure compliance of your business’ operations. Below is a deeper dive into some of the bigger changes:

Minimum Wage

Effective January 1, 2022, the minimum wage in Colorado increased to $12.56, or $9.54 per hour for workers receiving enough in tips for their total pay to equal at least minimum wage. This minimum wage increase also applies to agricultural employees (except for range employees who must be paid a minimum weekly salary), as of June 2021’s Agricultural Labor Rights and Responsibilities Act.

Additionally, agricultural employees may also now be eligible for overtime pay in certain circumstances starting November 1, 2022. As to daily overtime, agricultural employees will remain exempt if certain requirements are met. Specifically, for days over 12 hours, the third paid rest period must be 30 minutes long instead of the typical 10-minute paid rest period to allow time for extra rest, eating, and drinking. For days longer than 15 hours, agricultural employees must receive an extra payment of at least one hour of the Colorado minimum wage. With respect to weekly overtime, the rules include a phased-in approach over several years, with the first requirements taking effect Nov. 1, 2022. The weekly overtime requirements will depend on seasonality of the employer.

There are some discrete exceptions to the new minimum wage increase. Minimum wages may be reduced by 15% for unemancipated minors, and by deductions allowed by the wage deductions statute, C.R.S. § 8-4-105. Furthermore, if a local government, or the federal government, has enacted a higher minimum wage than Colorado’s, covered work must be compensated at that higher wage. For those within Denver city limits, the minimum wage has increased to $15.87 per hour, effective January 1, 2022 as well.

Colorado also has a new exemption from minimum wage and overtime rules for highly compensated employees (HCE). This same type of exemption can be found under the federal Fair Labor Standards Act, but Colorado’s specifications are a little different. First, Colorado’s HCE exemption is more strictly limited to white-collar employees. To fall under the new Colorado HCE exemption, an employee must be one “whose primary duty is office or non-manual work.” Second, the salary requirements are higher than under the federal law. In 2022, the HCE exemption covers an employee who is paid at least $865.38 weekly, and $101,250 annually. The weekly and annual amounts will increase each year, with the annual amount rising to $112,500 in 2023 and $123,750 in 2024. After that, the amount will be adjusted annually for inflation.

Another related change was the passage of the Elimination of Subminimum Wage Employment bill. Previously, employers who held a special certificate from the U.S. Department of Labor were allowed to pay less than the minimum wage to employees whose are impaired by age, physical or mental disability, or injury. Beginning July 1, 2021, this law prohibits an employer from paying an employee whose earning capacity is impaired by age, physical or mental disability, or injury less than minimum wage if the employer does not hold a special certificate issued on or before June 30, 2021, by the U.S. Department of Labor that authorized the employer to pay wages below minimum wage to those employees. The law phases out subminimum wage employment for employers that hold a special certificate and, by June 30, 2022, requires each employer that holds a special certificate to submit a transition plan to the Department of Healthcare Policy and Financing Department detailing how the employer plans to phase out subminimum wage employment by July 1, 2025. Beginning July 1, 2025, employers will be prohibited from paying an employee with a disability less than minimum wage regardless of whether the employer was issued a special certificate.

As in previous years, it is important to note that the Colorado Overtime and Minimum Pay Standards Order (COMPS Order) posters must be displayed “in an area frequented by employees where it may be easily read during the workday.” If it is not physically practical to post the notice, which is becoming more prevalent with the work from home policies during the COVID-19 pandemic, the employer must provide a copy of the order or poster to employees within the first month of their employment and, upon request, must make it available to workers. Employers that attempt to minimize the effect of the posters or notices, including by communicating positions contrary to them, or discouraging the exercise of rights covered by them, will be deemed to be noncompliant with the posting and notice requirement. The updated posters can be found on the Colorado Department of Labor and Employment’s website.

Vacation and PTO Pay After Separation from Employment

On June 14, 2021, the Colorado Supreme Court issued a decision altering the treatment of vacation pay under Colorado’s Wage Claim Act. In the case, Nieto v. Clark's Mkt., Inc., 2021 CO 48, 488 P.3d 1140, 2021 Colo. LEXIS 423, 2021 WL 2414327 (June 14, 2021), the court disallowed “use it or lose it” vacation policies. The vacation policy at issue in the case provided that, in the event of an employee’s voluntary separation, any unused vacation time would be paid to the employee. In the event of termination, however, the employee would forfeit any right to vacation. The court decidedly rejected this type of policy and held instead that, “Although the [Wage Claim Act] does not create an automatic right to vacation pay, when an employer chooses to provide such pay, it cannot be forfeited once earned by the employee.”

The Colorado Wage Claim Act provides that, upon termination, all wages or compensation that are “earned, vested, determinable, and unpaid at the time of such discharge is due and payable immediately.” The Colorado Supreme Court has now clarified that the definition of wages or compensation includes vacation pay. Whether an employer calls it vacation pay, leave, or paid time off (PTO), the accrued time must be paid out upon termination of employment. Though employers are not required to provide paid vacation, if they do, the employer must pay out unused vacation upon separation from employment in accordance with the terms of any agreement (handbook, policies, contracts, etc.) between the employer and employee.

Notably, if leave is usable only when certain conditions are met or a future event occurs, it is not earned vacation and would not be compensable upon separation. Alternatively, leave that can be used with no additional conditions must be paid upon separation. Additionally, if earned leave time can be used for purposes other than vacation, it must be paid.

This change may require employers to update their vacations policies immediately. A policy that states vacation pay is forfeited upon separation is unenforceable and should be revised to avoid any related claims.

The Wage Claim Act allows for penalties when an employer withholds any wages (including vacation pay) that are “earned, vested, and determinable.” If an employer withholds accrued vacation pay, they could be forced to pay for both the previously unpaid vacation time and statutory penalties. The Employment Advice and Counseling Group at Lewis Brisbois can help advise on any necessary policy revisions.

Healthy Families and Workplaces Act

Unsurprisingly in the era of COVID-19, Colorado also passed changes to its sick leave laws. In 2021, employers with more than 15 employees were required to provide paid sick leave. As of January 1, 2022, the Healthy Families and Workplaces Act (HFWA) expanded covered employers to include all employers, regardless of size. All Colorado employers will be required to offer paid sick leave to both full-time and part-time employees. This paid sick leave includes COVID-19-related illness under the HFWA.

More specifically, 48 hours of leave per full-time employee must be provided during a calendar year (prorated for part-time employees). Employees will accrue one hour of sick leave for every 30 hours worked. Unused sick leave during a calendar year must be allowed to roll over to the next year. The employer can regulate how much sick time can be used in one calendar year if the employee has more than 48 hours available.

The Wage Protection Rules further clarified provisions of HFWA as follows:

• Bonuses do not need to be included in the HFWA pay rate;
• The HFWA rate of payment is determined based on "the employee's pay over the 30 calendar days prior to taking leave" (or the length of the employee's employment, if it is shorter);
• The HFWA pay rate for employees with variable hourly rates should be calculated by adding all the wages for the 30-day period, and then dividing that amount by the total number of hours worked for that period; and
• This rule is different from the regular rate of pay for overtime purposes; and
• Employees who are "on call," and do not have a contract that specifies otherwise, are not entitled to use paid leave unless the employer requests that the employee report to work or perform any other duties that would otherwise qualify as "time worked."

Finally, employers should make sure their record keeping is up to date. The HFWA specifies that employers must maintain and provide, upon an employee’s request, the current amount of paid leave the employee (1) has available and (2) has already used during the year, including paid sick and safe leave and any supplemental public health emergency leave.

Anti-Discrimination Statutes

On May 20, 2021, Governor Polis signed House Bill 21-1108, amending Colorado’s Anti-Discrimination Act (CADA) to create specific protections for the categories of “gender expression” and “gender identity.” This bill also provides additional clarity on the definition of “sexual orientation.” The new provisions provide:

• Gender expression is an individual’s way of expressing or displaying gender to the outside world, most typically demonstrated through appearance, behavior, and sartorial choice.
• Gender identity is an individual’s personal sense of their gender internally, irrespective of the gender associated with them by others.
• Sexual orientation includes an individual’s identity, or perceived preference, regarding attraction to other gender(s) and actions conforming thereof.

The statute explicitly prohibits discrimination against any individual for their gender identity and/or gender expression and includes both as protected categories in housing and employment practices. Further, though sexual orientation was already a protected category under CADA, the broadening of its definition should be noted. This expansion of CADA became effective on September 1, 2021. Additionally, anti-harassment training or other measures of notification may be necessary to ensure compliance.

In addition to housing and employment practices, the prohibition of discriminatory practices against gender identify and gender expression includes additional areas, which can be found here.

Standardized Health Benefit Plan – Colorado Option

By January 1, 2022, the Commissioner of Insurance in the Department of Regulatory Agencies was required to establish a standardized health benefit plan to be offered by health insurance carriers in the individual and small group markets. Though not strictly a new “employment law,” this new legislation mandates certain reductions of premiums for individual and small group plans by 15% by 2025. If these reductions are not achieved, the Commissioner of Insurance may establish carrier reimbursement rates for healthcare providers. Starting in 2023, the Colorado Option will be available to all Coloradans who buy their health insurance on the individual market (i.e., not from an employer) and small employers with less than 100 employees.

Hiring Preference for Veterans

Colorado enacted HB 21-1065 in June of 2021, which permits – but does not mandate – private employers to give preference in hiring to: (1) a veteran of the armed forces; (2) a member of the military reserves; (3) a veteran of the National Guard; or (4) a spouse of a disabled veteran or a service member killed in the line of duty. Under the law, a private employer that adopts a program which gives preferences to veterans or their spouses is afforded a rebuttable presumption that said employer is not participating in discriminatory or unfair labor practices. This provision requires that the eligible individual is “as qualified as other applicants for employment.” However, preference for the four aforementioned categories cannot be given on a case-by-case basis or occur spontaneously. Preferential policies for hiring veterans or qualifying military spouses must be in accordance with a written policy, implemented at least 14 days prior to a hiring decision. The policy must further be applied uniformly to all hiring decisions and individual applicants must be eligible for the position.

If you have any questions regarding these changes or whether they apply to your business, contact the author or editor of this alert. Visit our Labor & Employment Practice page for additional alerts in this area.

Author:

Charlotte A. Johnston, Associate

Editor:

Thalia S. Rofos, Partner
 

Related Practices

• Labor & Employment
• Traditional Labor
• Employment Advice & Counseling
• Executive Compensation & Employee Benefits
• COVID-19: Labor & Employment

Related Attorneys