Colorado Updates Rules on Calculating Pay Rate for Paid Leave

02/03/23

Author: ADP Admin/Wednesday, February 1, 2023/Categories: Compliance Corner

Colorado’s Department of Labor and Employment (CDLE) has issued updated rules on how employers must calculate the rate of pay when employees use paid sick leave and public health emergency leave under the Healthy Families and Workplaces Act (HFWA).

The Details:

Under the HFWA, leave must be paid at the same rate and with the same benefits, including health benefits, as the employee normally earns during hours worked, not including overtime, bonuses or holiday pay. Leave must be paid on the same schedule as regular wages. The CDLE continues to revise the rules on how to make this calculation.

The latest changes took effect January 1, 2023. Under the latest rules, employers will no longer be required to use a calculation like the one used for determining an employee’s regular rate of pay for overtime purposes.

Rules Effective Through 12.31.22

Rules Effective 1.1.23

The HFWA pay rate:

Must be at least the applicable minimum wage; and
Must be calculated using the same rules applicable to calculating an employee’s “regular rate” for overtime purposes, except that:

The HFWA pay rate:

Must be at least the applicable minimum wage;
Must be calculated based upon the employee’s pay over the 30 calendar days prior to taking leave;
Must include any set hourly or salary rates, shift differentials, tip credits, and commissions; and
Must not include overtime, bonuses or holiday pay.

Next Steps:

Ensure paid sick leave and public health emergency leave under the HFWA is paid out in accordance with the updated rules. This includes but is not limited to the required 30-day look back period.

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Colorado Updates Rules on Calculating Pay Rate for Paid Leave