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Last week, the Colorado Supreme Court issued a highly anticipated decision, finding that the “regular rate of pay” under Colorado law does include holiday incentive pay for purposes of calculating overtime. The Tenth Circuit, which is reviewing the dismissal of a statewide overtime class action case brought by a group of non-exempt hourly warehouse workers, had asked the state’s Supreme Court to answer this question as it relates to Colorado wage and hour law. The Supreme Court’s ruling allows that case to proceed, and it significantly impacts how Colorado employers calculate overtime rates for employees not exempt from state overtime requirements.

Background

The Supreme Court’s decision comes in Hamilton v. Amazon.com Services LLC, a case pending in the Tenth Circuit Court of Appeals. The plaintiff in that case is a former warehouse employee who received holiday incentive pay during his employment, which entitled him (and other employees) to one and one-half times their regular hourly pay rate when working on a company holiday.

Under the Colorado Overtime and Minimum Pay Standards Order (COMPS Order), Colorado employers are required to pay overtime to non-exempt employees at a rate of one and one-half times an employee’s “regular rate of pay” when, as relevant here, the employee works more than 40 hours in a week. Rule 1.8 of...

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