New Minimum Salary Threshold for Colorado Employers

The new minimum salary threshold requirement for exempt employees is particularly important to employers preparing for the new COMPS Order to become effective. The Colorado Department of Labor and Employment (CDLE) was contemplating raising the threshold to $42,500 on July 1, increasing every year thereafter on the first of the calendar year. However, after consideration, the CDLE adopted rules that raise the threshold for exempt employees to $35,568 starting on July 1, which mirrors the current exempt salary threshold under federal law.

This new threshold will remain in effect through December. It will increase again Jan. 1, 2021—to $40,500—and will continue to increase through to Jan. 1, 2024, up to $55,000. Thereafter, the threshold will adjust annually for inflation.

There are only two exceptions for the 2020 salary threshold: (1) non-profit employers with annual total gross revenue of under $50 million, and (2) for-profit employers with annual total gross revenue of under $1 million.

To avoid the need to pay overtime and maintain employees' exempt classification under the new Colorado law, it is important to note the new thresholds will exceed the current federal threshold. Colorado employers must pay the higher of the state or federal thresholds in order to retain their employees' overtime exemptions (i.e., you may need to pay the Colorado minimum after Jan. 1, 2021, because it will exceed the federal threshold after Jan. 1, 2021).

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