Colorado Wage and Hour Rules Update

By Dana Holle, GovDocs Associate Counsel,
Employment Law and Compliance
Published Jan. 25, 2024

GovDocs Associate Counsel and contributing author, Dana Holle, offers expert insight into the recent updates to Colorado’s Wage and Hour Rules.

In addition to Colorado’s annual minimum wage update on Jan. 1, 2024, the state’s new wage and hour rules also went into effect at the start of the year. Following the same rulemaking process as its minimum wage increases on Nov. 9, 2023, Colorado’s Division of Labor Standards and Statistics (“Division”) passed a handful of changes to its wage and hour rules, or what they call the Colorado Overtime and Minimum Pay Standards Order (“COMPS Order”). These changes included updates to its tip requirements, time worked standards, and corresponding labor law poster.  

What is the Colorado COMPS Order? 

The COMPS Order comprises of rules that regulate minimum wage, overtime, meal and rest periods, gratuities, uniforms, and recordkeeping requirements for employers operating in Colorado. The COMPS order is updated at least annually and often in tandem with the minimum wage rate updates at the end of the year. 

As of Jan. 1, 2024, the new COMPS Order #39 is now in effect, and highlighted below are four key updates for employers:  

2024 COMPS Order #39 Poster Update 

When Colorado passes its newly amended COMPS Order, it also releases an updated labor law poster. This poster, usually available in late December, includes information on minimum wage, overtime, time worked, exemptions, and several other labor law requirements. The new version, referred to as the 2024 COMPS Order #39 poster, is available now, and employers are required to display the poster in an area frequented by employees where it is easily read during the workday.  

The GovDocs Update Program is currently shipping an updated Colorado state poster out to impacted locations.  

Tipped Employees 

Colorado updated its rules so that employees are now considered “tipped employees” when they regularly receive more than $1.64 per hour in tips averaged over any pay period, replacing the previous $30 per month tip threshold. The Division found the $30 threshold to be “out of date.”   

The state also amended its tip-pooling rules. Specifically, tipped employees are eligible for tip pools and credits – whether or not they receive tips directly – when they perform significant customer-service functions during their contact with customers. The amended rule impacts the following occupations:   

  • Servers 
  • Bussers 
  • Counter personnel who serve customers 
  • Sushi or teppanyaki chefs similar to counter personnel 
  • Service bartenders, bartender assistants or barbacks similar to bussers
  • Sommeliers who explain, bring, and serve the wine to customers 
  • Bellhops

Regular Rate of Pay 

For clarification on its overtime rate requirements, Colorado updated its “regular rate of pay” rule to expressly exclude tips from regular rates. According to the Division, this was its interpretation of the rule prior to the amendments, indicating that “a tipped minimum wage employee’s overtime rate is at 1.5 times minimum wage, not 1.5 times the sum of minimum wage plus their tips.” However, due to federal law expressly excluding tips from regular rates along with several employee inquiries and complaints, the Division amended the rule to try and resolve any additional confusion. 

Time Worked 

Colorado’s “time worked” rule and “one-minute” standard were amended so that employers must compensate for time worked, except for tasks completed in “less than one minute,” when balanced with the following newly adopted factors under the federal de minimus test:  

  • The difficulty estimating or recording time 
  • The aggregate amount of compensable time 
  • Whether the activity was regularly performed 

This is an update from the previous “one minute or less” standard, with the Division asserting that “[t]he purpose of the one-minute rule always was to exclude tasks measured in seconds, rather than minutes.” 

Managing Updates to Wage and Hour Rules 

Colorado, as well as several other state and local jurisdictions, consistently revise their minimum wage rates and requirements, keeping multi-state employers on their toes to ensure minimum wage compliance.  

Due to the complexities of Colorado’s labor laws and regulations, employers must review the updated wage and hour rules, adjust their policies as needed, and ensure the updated labor law poster is displayed at the workplace. Employers, especially those with employees in several different states, should consider implementing a minimum wage solution to maintain compliance with changes to minimum wage laws.  

This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.

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