Calculating Overtime in Colorado
In This Article
- Basic Overview
- What are the Penalties for Overtime Pay Non-Compliance?
- How Should I Track and Calculate Overtime?
- Are There Overtime Rules for Salaried Employees?
- Why is Overtime Pay Higher for Tipped Employees?
Colorado labor laws specify that employees earn overtime pay paid at 1.5x their base rate of pay when one of these situations occur:
- After an employee has worked more than 40 hours in a workweek
- After working more than 12 hours in a day
- After working more than 12 consecutive hours (e.g., starting one day and finishing after midnight the next day) without regard to the starting and ending time of the workday (breaks/meals time excluded)
If multiple situations apply, whichever calculation results in the greater payment of wages should be applied.
What Are the Penalties for Overtime Pay Non-Compliance?
In short, overtime non-compliance penalties can be up to $1,100 for each violation plus back pay; these penalties can add up quickly. If an employee files a claim against you, the agency is obligated to investigate and the burden will be on you to provide payroll records for at least 3 years and time card records for at least 2 years for all your employees. Keep in mind, a complaint can be filed by any employee current or former for up to two years or longer if the violation was deemed willful.
How Should I Track and Calculate Overtime?
While some organizations may allow employees to simply report their hours worked at end of a pay period, this can lead to inadvertent neglect in terms of compliance. We recommend using an automated timekeeping software that will auto-calculate hours based on your state’s rules. If you don’t use one ASAP’s timekeeping solutions, make sure the one you use is set up correctly for Colorado and/or any state you have employees. In addition, make sure you are retaining employee timekeeping records to satisfy the FLSA recordkeeping retention requirements.
Are There Overtime Rules for Salaried Employees?
Yes. The most common way employers get tripped up with overtime issues is by establishing a set salary for their employees and assuming that this decision alone will satisfy the exemption clauses protecting employees' right to overtime pay. Paying an employee a set salary each pay period doesn’t make them exempt from overtime pay by default. Determining employee exemptions from overtime can be tricky and we recommend referring to the FLSA Advisor for the most up-to-date information.
The rate of overtime pay for employees receiving tip income should be based on the full minimum wage rate (less tip credit), not the lesser tipped minimum wage rate. For example, a Colorado tipped server in 2019 paid a base rate of $8.08/hour (minimum wage for tipped employees) should be paid an OT rate of $13.63/hour ($11.10 non-tipped employee minimum wage x 1.5 = $16.65 - $3.02 tip credit). ASAP's restaurant customers likely have noticed this as our systems provide two sets of pay types for hourly employees. These distinctions help us auto-calculate this deviation from the standard rate 1.5x OT calculations. If you have any questions about how to use/enter those hours, please let us know. Check out the CDLE Overtime Calculations page for more examples.