Labor & Employment Law Daily Wrap Up, EXPERT INSIGHTS—Salary Thresholds and Minimum Wage for 2025, (Jan 17, 2025)
Law Firms Mentioned:Fairfield and Woods
Organizations Mentioned:Fairfield & Woods, PC | U.S. Department of Labor
By Colin A. Walker of Fairfield and Woods
Happy new year everyone! We hope you had a wonderful holiday season and are off to a good start in 2025.
Every new year brings changes, and in the world of employment law, that means we need to see what the Depart of Labor is up to. No big surprises, but there are a few things we need to be aware of.
As it does every year, the Colorado Department of Labor and Employment (CDLE) issued its Calculation of Adjusted Labor Compensation order, known as the “Pay Calc Order.” The Pay Calc Order sets forth a number of requirements regarding the amounts employers are required to pay their employees depending on the position and the work performed. Here are some of the more important ones:
Minimum Wage: $14.81 per hour. This applies pretty much across the board. Please note, however, that some municipalities have adopted higher minimum wages for employees in their communities. For example, the minimum wage in Denver is $18.81 per hour. In Boulder in 2025, the minimum wage is $15.57 per hour.
Minimum Wage for Tip Credit: $11.79 per hour. For employees who regularly and customarily receive tips, employers may be able to take a “tip credit” against a portion of the minimum wage. This, of course, is customary in the restaurant and similar industries. Employers should be careful, however. The requirements for taking the tip credit are complicated and it is easy to run afoul of them. Again, some municipalities have adopted higher minimum wages.
Minimum Salary for Exempt Employees: $56,485 per year. Employees who meet certain requirements may be exempt from the minimum wage and overtime requirements of Colorado and federal law provided that they are paid by salary of at least a certain amount. The minimum salary for exempt employees in Colorado for 2025 is $56,485 per year. Please note, however, that the employee must satisfy all other requirements of the exemption, sometimes referred to as the “duties test.” Again, this is complicated, and employers should be careful.
Highly Compensated Employee Threshold: $127,091. This relates to a number of issues including a specific exemption for employees paid a salary of at least this amount, which involves a simpler duties test. In addition, the compensation thresholds for enforceability of covenants-not-to-compete are based on this (to have an enforceable non-compete, the employee must earn at least $127,091 annually; for a non-solicitation of customer agreement, the employee must earn at least 60% of this amount annually, or $76,255).
On a related subject, there is also a salary threshold under the Fair Labor Standards Act (FLSA), which is nearly identical to the salary threshold discussed in the third bullet point above. Employers must pay whichever applicable threshold is higher (state or federal). In 2024, the U.S. Department of Labor adopted a rule which would have made the federal threshold higher than the Colorado threshold ($58,656). However, in June of 2024, a federal court struck down the rule, resulting in the federal salary threshold reverting to the amount prescribed in the previous rule, $35,568. It now remains to be seen what the Department of Labor Under the Trump Administration will do. While it seems unlikely that it will adopt a salary threshold higher than Colorado’s, if it does, employers in Colorado will have to pay the higher federal salary to their exempt employees.
The new year will surely bring other exciting and interesting developments. We will do our best to keep track of them and to discuss them on this blog. Best wishes for a happy, healthy, and prosperous 2025!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Colin A. Walker
Fairfield and Woods
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Suite 2600
Denver, CO 80202
United States
Tel.: +1 303 830 2400
E-mail: kgoebel@fwlaw.com
URL: www.fwlaw.com/
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Attorneys: Colin A. Walker (Fairfield and Woods).
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