Effective January 1, 2023, regulations under Colorado’s Healthy Families and Workplaces Act (HFWA) will again change how employers calculate the rate of pay when employees use paid sick and safe leave and/or public health emergency leave. Although employers might welcome certain changes to the pay rate calculation rules, the fact is that these new regulations amount to the third time that Colorado’s Department of Labor & Employment (CDLE) has revised the pay rate calculation rules since the HFWA first took effect in mid-2020. Thus, pay rate calculations under the HFWA are a moving target, making compliance a challenge.
Statutory Pay Standards: Under the HFWA, paid leave must be paid at the “same hourly rate or salary”—which does not include overtime, bonuses, or holiday pay—and with the same benefits, including health care benefits, the employee normally earns during hours worked. Additionally, the HFWA expressly establishes how to calculate the rate of pay when employees earn commissions:
- “For employees paid on a commission basis only, ‘same hourly rate or salary’ means a rate of no less than the applicable minimum wage.”
- “For employees paid an hourly, weekly, or monthly wage and also paid on a commission basis, "same hourly rate or salary" means the rate of pay equivalent to the employee's hourly, weekly, or monthly wage or the applicable minimum wage, whichever is greater.”1
Regulatory Pay Standards: We first recap the evolution of the pay rate calculation rules, concluding with how CDLE instructs employers to calculate the paid leave rate of pay in 2023.
Next Steps: With little time before the revised rate of pay rules take effect on January 1, 2023, employers should consider how they can, as promptly as practicable, align their payroll rules with Colorado’s latest HFWA rules to ensure employees receive the rate of pay the HFWA requires.
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