OT rules in state may be changed

Colorado workers shorted on pay at highest rate in U.S.

Something for Coloradans to ponder as they enjoy time off on Labor Day — they contribute more underpaid overtime than workers in any other state.

Federal law requires workers to receive time-and-a-half pay when they put in more than 40 hours a week — unless they receive a salary of more than $455 a week and have executive, administrative, professional or sales duties.

Doctors, lawyers and top executives are exempt. But so too are shift managers at hotels and restaurants, nonprofit staff, teachers and a host of other lower-paid workers on a salary.

Nationally, underpaid overtime averages $1.29 an hour or $2,700 a year, according to an analysis from Joblist, a job search engine. In Colorado, it averages $2.34 an hour or $4,867 a year in lost wages, the highest average of any state.

“Although Colorado could be home to a hard-driving work culture where employees are happy to go above and beyond for their employers, it is likely a complex combination of economic and social factors that are contributing to this situation,” said Corie Colliton, a project manager at Joblist.

Colorado workers clock 43.3 hours a week on average, the 10th-highest total in the survey. But they are also among the least likely to be entitled to overtime pay.

Workers in Wyoming average 45 hours a week, the most in the country,

but are covered by overtime rules at the third-highest rate. Of workers putting in more than 41 hours a week, 45.2% are entitled to overtime pay in Wyoming, while only 23% had that protection in Colorado, according to Joblist.

What that seems to indicate is that Colorado employers are using the exemptions allowed them under state and federal law to avoid paying overtime at a level unseen in other states.

For example, a fast-food worker earning minimum wage would receive overtime pay after 40 hours. But his or her shift manager, making a salary of $30,000 a year, could be asked to work 50, 60 or 70 hours a week with no additional compensation.

Pile on enough hours on someone earning a low salary and hourly compensation could even drop below the state minimum hourly wage. That is something the rules allow, and something that unions and labor advocates want to see change.

Updating the Minimum Wage Order

The Division of Labor Standards and Statistics, part of the Colorado Department of Labor and Employment, is looking at whether to update the Colorado Minimum Wage Order, which hasn’t had a major overhaul in two decades.

In a public hearing on the topic Wednesday in Denver, labor advocates pushed for two key changes. They want all industries covered under state rules, and they want a minimum salary cutoff for when overtime must be paid added.

“Workers need to be paid fairly for the work they do,” argued Marilyn Winokur, a Denver resident, formerly with the Colorado Industrial Areas Foundation. “It is not good for Colorado workers to be overworked and underpaid.”

Colorado, because it doesn’t have a minimum salary threshold, defaults to the federal Fair Labor Standards Act, which exempts workers making more than $23,660 a year from overtime pay if they have managerial, administrative, sales or professional duties.

Twenty years ago, the federal salary cut off was high enough to cover 62% of workers, said Nina Disalvo, an attorney with Towards Justice. Now, that figure is closer to 7% in Colorado.

“The 40-hour workweek is being eroded,” she said.

Both the Obama and Trump administrations have acknowledged that the overtime exemption threshold is too low and needs to be raised.

The Obama administration was looking at a cutoff of $47,476 a year until a federal judge in Texas blocked implementation of its proposed rule changes. The Trump administration issued a final rule in March that lifts the threshold to $35,308 a year starting in January.

Groups such as Towards Justice, the Bell Policy Center and the National Employment Law Project argue Colorado should set its own and higher threshold. They have proposed raising the bar to 2.5 times the state minimum wage.

That wage will rise to $12 an hour next year and then adjust with the pace of inflation after that. That would set Colorado’s overtime exemption at $62,400 a year for a full-time worker, significantly above the higher federal level.

If that happens, another 393,000 Colorado workers would come under overtime protection, estimates the Bell Policy Center.

Supporters argue putting more workers back under the 40-hour week would mean more time dedicated to raising children, more time for workers to exercise and improve their health, and more time for them to help out in the community.

Ben Hase, managing attorney for the Employers Council, said employers were preparing three years ago for the changes the Obama administration had proposed.

Some firms gave supervisors near the cut-off wage a raise to push them over, while others shifted assignments or reworked tasks to keep workers at 40 hours a week. What didn’t happen was a wave of hiring to cover the gap.

Given the size of the increase proposed, it is harder to know what will happen this time around, Hase said, adding that his hope is that the 2.5 multiple represents an opening stance and not where the division lands.

“It will be more expensive for business,” Hase said. “Employers will have to get used to more overtime.”

While the Employers Council doesn’t take a policy stance, he said it is important that all sides consider the economic realities on the ground in this tight labor market.

“Is it a good retention strategy to pay workers $25,000 a year and work them 80 hours a week?” Hase asked. Most employers would answer no.

Broader coverage

Right now, the state’s minimum wage order covers four specific industries: retail and service; food and beverage; commercial support service; and health and medical.

Entire sectors are left out, including construction, agriculture and much of manufacturing.

Backers of reforms to the order want every industry in the state covered, eliminating carve-outs or gray areas that require expensive legal battles to define.

Putting everyone under state rules would also allow all workers to qualify for state requirements like work breaks, which aren’t required under federal rules.

As things now stand, employers who provide overtime pay for salaried staff and promote work-life balance are put at a competitive disadvantage, said Jimmy Burds, chief financial officer at Colographics, who testified alongside labor groups.

“We support a broadening of the minimum wage order,” he said. “It levels the playing field.”

That was a sentiment echoed by several workers and union representatives in the construction industry.

Union shops that provide overtime pay and mandatory break times are at a disadvantage compared to nonunion shops that don’t, said Eddie Bustamante, political director for Laborers’ International Union of North America Local 720.