Employment/HR Law Issues Dominate the Headlines
By Michael Santo, COSHRM Legislative Director and Managing Attorney at Bechtel & Santo
Is it just me, or does it seem like you can’t open the newspaper, your email, etc. these days without seeing some new employment/HR law matter splashed across the headlines? To me, it seems like every day brings another such headline.
The Colorado Department of Labor issues a new Statement of Basis, Purpose, Specific Statute Authority, and Findings (i.e., new minimum wage and salary threshold for 2025). This CDLE publication proposed Colorado’s new minimum wage and the new salary basis threshold for 2025. With respect to the new minimum wage, the CDLE identified that because the Denver-Aurora-Lakewood Consumer Price Index (“CPI”) came in at a 2.7% increase, the CDLE was proposing to establish the 2025 minimum wage at $14.81 per hour, which is up from the current minimum wage of $14.42.
Using that same CPI increase, the CDLE proposed that the minimum salary basis for exempt employees in 2025 should be $56,485.00, which is up from the current amount of $55,000.00. This proposed amount would be under the expected federal amount of $58,656.00 for 2025 under the Fair Labor Standards Act. So, if the CDLE’s proposed amount is the amount used by Colorado, and assuming that the federal salary threshold isn’t overturned by a federal court before the end of the year, this would mean that Colorado employers would need to meet the federal amount ($58,656.00), not the state amount ($56,485.00), starting on January 1, 2025. In short, if an employer pays an employee the state amount, instead of the federal amount, an employer would not be able to establish that the employee is exempt from overtime because it would be under the relevant salary threshold.
And speaking of the Fair Labor Standards Act…
Earlier this summer, the United States Supreme Court agreed to hear the case of E.M.D. Sales, Inc. v. Carrera. This case involves the issue of what evidentiary standard courts should use when determining whether an employer has established that an employee meets one of the FLSA’s duty-basis tests. As you know, for an employee to be exempt from receiving overtime, the employer must establish that the employer paid the employee at least the relevant salary amount (see above) and that the employee meets one of the FLSA’s duty-basis tests (e.g., executive, administrative, professional, making wreaths principally out of evergreens, etc.)
Courts have traditionally held that when determining the duty-basis test, courts should use the “preponderance of the evidence” test, which means, in essence, that the majority of the evidence supports the decision. But in Carrera, the Fourth Circuit Court of Appeals determined that was too low of the standard and that organizations must establish that the employee met one of the FLSA’s tests by the clear-and-convincing standard, which carries a greater burden than the preponderance of the evidence test. If the Supreme Court chooses to follow the 4th Circuit, employers are going to have a much more difficult time establishing that employees meet the duty-basis test at issue because they will need to meet the clear-and-convincing standard instead of the preponderance-of-the-evidence standard. A decision on this matter is expected sometime in 2025.
And speaking of how employers should calculate overtime pay…
Recently, the Colorado Supreme Court opined on the very specific question regarding whether a holiday incentive paid by an employer to an employee should be treated as an incentive that needed to be included in the employee’s regular rate for overtime rate calculations. As you know, an employee’s overtime rate is not just based on the employee’s hourly rate, but includes other amounts paid by an employer. This amount is referred to as the employee’s “regular rate”, and it’s the regular rate that an employer must use to calculate overtime pay.
This case stemmed from an employee suing Amazon in federal court claiming Amazon did not calculate the employee’s overtime correctly because Amazon did not include a 1 ½-time incentive provided to the employee for working on a holiday in that overtime calculation. The federal court requested that the Colorado Supreme Court provide an opinion on this issue since the case involved an issue under the Colorado Overtime and Minimum Pay Standards Order.
In response, the Colorado Supreme Court held that holiday incentive pay must be included in an employee’s regular rate of pay when determining the employee’s pay for overtime calculations. The Supreme Court based its decision on language in COMPS that identifies that an employee’s “regular rate”
includes all compensation paid to an employee, including set hourly rates, shift differentials, minimum wage tip credits, non-discretionary bonuses, production bonuses, and commissions. (Emphasis added.)
In essence, the Colorado Supreme Court determined that the holiday incentive pay provided by Amazon was like a shift differential or a nondiscretionary bonus; both of which must be included in an employee’s regular rate under COMPS. This decision does not impact employers not covered by COMPS (e.g., governmental entities).
In sum, organizations must ensure that an employee’s regular rate includes all compensation identified in COMPS when calculating overtime.
And don’t forget a new U.S. Supreme Court decision regarding discrimination claims.
In a discrimination, harassment, or retaliation lawsuit, the employee must prove that the employer subjected the employee to an “adverse employment action.” But what amounts to an “adverse employment action”? In the past, court opinions required an employee to prove that the employer subjected the employee to a “significant” change in working conditions that produced a “material employment disadvantage.”
However, recently, the U.S. Supreme Court lowered what an employee needed to prove to establish an adverse employment action. See Muldrow v. City of St. Louis, 601 U.S. 346 (2024). In Muldrow, a female police officer filed a lawsuit against the city alleging sex discrimination because she was transferred to a less prestigious position in the force. This transfer was lateral and had the same pay as her previous position. Because there wasn’t a significant change, the lower court dismissed the officer’s lawsuit.
Ms. Muldrow appealed, and the Supreme Court held that an employee “need show only some injury respecting her employment terms or conditions” (i.e., not that the impact was “significant”). In short, the action must make an employee worse off, but the action does not have to make the employee “significantly” worse off.
Based on this decision, employers are encouraged to train their employees and supervisors in anti-discrimination and anti-harassment policies and practices. Additionally, any allegation of discrimination, harassment, or retaliation based on a protected classification should be reported in the company’s complaint repository and investigated under the requirements in Colorado’s POWR Act.
Keeping up on the ever-changing employment/HR landscape requires constant diligence. After all, it’s safe to say that these will not be the last employment/HR decisions coming our way for the remainder of 2024 and in 2025.
Questions? Email info@coshrm.org
