Summary: A recent decision by the Colorado Supreme Court involving Amazon has fundamentally changed how employers should now calculate overtime pay when employees receive holiday incentive pay to avoid being in violation of state law. If you believe your employer is committing wage and hour theft, like overtime violations, reach out to an attorney for further guidance.
—–
In September 2024, the Colorado Supreme Court issued a landmark ruling that determined that the regular rate of pay as defined by state law must include holiday incentive pay when calculating overtime. The Court’s decision marked a notable departure from existing rules concerning holiday incentive pay under federal law. Moreover, this legal decision creates a new framework by which all private employers with holiday incentive pay policies must abide or face potential wage violation claims.
Colorado’s labor laws are more favorable to workers, yet highly complex, and many overtime violations may go unchecked without proper legal representation. If you believe that your employer has incorrectly calculated your overtime by failing to include holiday incentive pay or is engaging in other overtime violations, you should consult with a seasoned overtime attorney who can investigate the situation further and determine the best course of action.
The Origins of the Colorado Supreme Court’s Ruling
The origins of the Colorado Supreme Court’s ruling trace back to the initial case filed by the plaintiff, a worker at an Amazon warehouse in Colorado. His employer, Amazon, offered both holiday pay as well as holiday incentive pay. To better understand the case, here are some key details of Amazon’s pay structure and the claims:
- Amazon provided holiday pay to employees on company holidays based on their regular pay rate, even if they did not actually work that day
- Employees were only compensated for holiday incentive pay if they actually worked on those holidays
- Holiday incentive pay was calculated at one-and-a-half times the employee’s regular hourly rate
- The worker alleged in his lawsuit against Amazon that the company actually failed to pay all overtime he was owed when he worked on company holidays
- The worker’s reasoning was that Amazon neglected to calculate holiday incentive pay in his regular rate of pay
- He also asserted that these alleged overtime violations potentially affected thousands of other Amazon workers
Amazon responded that, similar to ordinary holiday pay, holiday incentive pay can be excluded from the regular rate of pay. The company made this argument partially on the basis of existing standards established by the federal Fair Labor Standards Act (FLSA).
While Amazon was successful in getting the complaint dismissed in the federal district court, it was appealed to the Tenth Circuit Court of Appeals. The Tenth Circuit then certified the question to the Colorado Supreme Court to determine whether or not state law includes or excludes holiday incentive pay from the calculation of the regular rate of pay for the purposes of overtime.
The Aftermath of the Colorado Supreme Court’s Ruling
Upon reviewing the Tenth Circuit’s request for clarification of this question as to the proper method of overtime calculations under Colorado law, the Supreme Court ruled that holiday incentive pay must be included in the regular pay rate for determining overtime. While Colorado law aligns with federal law in requiring employers to compensate employees at one-and-a-half times their regular hourly rate when they exceed 40 hours in a workweek, this specific ruling deviates from the method of overtime calculations prescribed by the FLSA.
However, states are permitted to enact their own requirements for overtime pay, so long as they are more favorable to workers. Following the Colorado Supreme Court’s ruling, it is now clear that the regular rate of pay must include all payments owed to an employee during the workweek, including shift differentials where the employee receives a higher wage because of working unfavorable hours (e.g., working on a holiday).
The Court determined that Amazon’s holiday incentive pay is part of the compensation that the law requires to be included in the regular rate when calculating overtime. The Tenth Circuit, which had posed the question to the Supreme Court, is also reviewing the prior dismissal of an overtime class action case brought by non-exempt hourly warehouse workers.
The Court’s ruling was not only a victory for the lead plaintiff, but now allows the class action case to move forward given the notable changes that now affect how Colorado employers must calculate overtime rates.
Contact a Colorado Wage and Hour Attorney
Proving an unpaid wages claim is no simple matter, but the Colorado Supreme Court’s recent ruling that holiday incentive pay must be included in overtime calculations significantly empowers workers facing unjust violations. If you believe that your employer is excluding incentive pay for overtime calculations, you could have a viable wage and hour claim to pursue.
A well-practiced attorney can guide you through the legal processes involved, compile evidence to support your claim, and navigate all procedures on your behalf. Your dedicated lawyer can also assist in collecting contracts, pay stubs, and other essential evidence for your case while adhering to the strictest standards of confidentiality to preserve your professional interests.
Contact us via chat or fill in the intake form below to set up your no-obligation free review.
