Calculating Overtime in Colorado
In This Article
- Basic Overview
- What are the Penalties for Non-Compliance?
- How Should I Track and Calculate Overtime?
- Are There Overtime Rules for Salaried Employees?
- Is There a Reason Tipped Employee Overtime is Higher?
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
(i.e. starting one day & finishing after mid-night the next day) without regard to the starting & 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 Non-Compliance?
They can add up quickly, but in short up to $1,100 for each violation + back pay. 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 of former for up to two years or longer if the violation was deemed willful.
How Should I Track and Calculate Overtime?
While some organization may find it comfortable or common to have 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. Second, make sure you are retaining those records for sufficient amount of time to satisfy the recordkeeping retention requirements.
Are there Overtime Rules for Salaried Employees?
Yes. The common way employers get tripped up with OT issues is by establishing a set salary for their employees and assuming that this decision alone will satisfy the exemption clauses protecting employee’s right to overtime pay. Paying an employee a set salary each pay period doesn’t make them exempt from OT pay by default. To satisfy the requirements of an exempt from OT employee there are specific requirements, best practices for deductions from pay, and wage benchmarks that must be met (see FLSA advisor). To make matters more difficult, there are pending FLSA rules changes that may soon go into effect that for one would raise the earnings an employee would be required to receive per week to $921 before an employer could classify them as exempt.
Yes. The rate of overtime pay for employees receiving tip income should be based on the full minimum wage rate, not the lesser tipped minimum wage rate. For example; a Colorado tipped waiter in 2016 paid a base rate of $5.29/hour should be paid an OT rate of $9.445/hour. 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. To see the Colorado calculation examples on this matter; visit here.