New Rules for 2022 Governing Employee Compensation in Colorado

Author: Michael D. Drews

Guest Editor: Kiran Gupta

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December 3, 2021 9:00am


With a new year comes change in employment laws.  In Colorado, the Department of Labor and Employment finalized the changes to come on November 10, 2021.[i]  These changes will take effect on January 1, 2021.[ii]  Employers should keep these changes in mind as they head into 2022.


Highly Compensated Employee

Colorado Overtime & Minimum Pay Standards (“COMPS”) Order #38, like its predecessors, regulates wages, hours, working conditions, and procedures for all employers and employees for work performed within Colorado.[iii]  However, certain people are exempted from portions of the rules and regulations laid out by COMPS.  In 2022, employers should be on the lookout for a new category of exemption.  This new exemption means that these employees are exempt from all COMPS rules except for Rule 1, Rule 2, and Rule 8.

Under the new law, highly compensated employees are exempt from COMPS Rules as described above.  A highly compensated employee is:

(A) is paid annual wages of at least —

(1) weekly, the weekly salary for the executive, professional, or administrative exemption, as specified for the applicable year in the PAY CALC Order, and

(2) annually, two and one-quarter times the rounded annual salary for the executive, professional, or administrative exemption, as specified for the applicable year in the PAY CALC Order;

(B) customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee (as described in Rules 2.2.1-2.2.3); and

(C) whose primary duty is office or non-manual work … [detail omitted].[iv]


Vacation Pay

After the June ruling in Nieto v. Clark’s Market, Inc., it is no surprise there is a change to vacation pay rules.[v]  Per Nieto, accrued vacation pay cannot be forfeited.  The updated Wage Protection Rules take it one step further and define vacation pay in a way that widens Nieto’s impact:

“Vacation pay” is pay for leave, regardless of its label, that is usable at the employee’s discretion (other than procedural requirements such as notice and approval of particular dates), rather than leave usable only upon occurrence of a qualifying event (for example, a medical need, caretaking requirement, bereavement, or holiday).[vi]

This means all vacation pay – and therefore all paid leave – is treated the same and subject to Nieto’s ruling against forfeiture.



Employers should stay apprised of these and other changes coming in 2022 in their respective states.  Many states will see a diverse array of employment legislation becoming effective at various points in the new year.  It is important to ensure compliance with all new rules and regulations as they are published.



[i] Colorado Department of Labor and Employment, Colorado Overtime & Minimum Pay Standards (COMPS) Order, Colorado Department of Labor and Employment, (last updated Nov. 5, 2021).
[ii] Id.
[iv] Id.
[v] Nieto v. Clark’s Mkt., Inc., 2021 CO 48.
[vi] Wage Protection Rules, 7 CCR 1103-7.

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