Workers’ Comp & Employment FAQ
With over 25 years in the HR field, we’ve heard a lot of questions. To make things more clear, we’re happy to share the answers to some frequently asked questions.
Workers’ Comp FAQ
The following answers were provided by Pinnacol Assurance, the largest workers’ compensation carrier in Colorado.
Does my business need a workers’ compensation policy?
Colorado law requires any business with one or more employees to carry workers’ compensation or workmans’ compensation insurance. Sole proprietors and partners in a business are not considered employees and are not required to be covered on a policy.
Corporate officers and members of limited liability companies who are active in the company are considered employees, but they may be eligible to exempt themselves from coverage. They must meet certain statutory conditions to reject coverage. For information on other exemptions, please refer to Pinnacol Assurance’s Employer’s Guide to Workers’ Compensation or contact the Division of Workers’ Compensation.
What happens if my business doesn’t have a workers’ compensation policy?
Employers have sole responsibility to provide insurance for their employees. If a company is unlawfully uninsured at the time of an injury, the employer must pay all statutory medical and disability benefits for the injured employee and an additional 50 percent of all temporary, permanent, and disfigurement benefits.
If you don’t provide a policy, you may find yourself in the crosshairs of a workers’ comp lawyer. Typically, such attorneys will try to get more than just the medical bill covered. Most Colorado workers’ comp attorneys will seek damages for factors that affect the household and not just the employee. Colorado workmans’ compensation rules say an employee cannot sue an employer for additional damages if they have a policy.
What government posters must I display in the workplace?
Both the federal government and individual states require that certain posters be displayed in the workplace.
For federal requirements please visit this page, which includes an interactive application that will show you which posters are required by law for your business.
State of Colorado requirements can be viewed here.
What is the Colorado minimum wage, and how do I download the required Colorado minimum wage poster?
The minimum wage in Colorado is $12.56 per hour as of January 1, 2022. Colorado reviews and revises this figure annually, based on the consumer price index (CPI) for the Denver Metro Area. Be sure to print and display a new poster each year. Remember, it must be displayed in a location frequently viewed by all employees, such as a break room. Please be informed about both the federal and the state minimum wage—you must pay the higher of the two.
The Colorado minimum wage poster can be downloaded here.
What records must I keep regarding my employees?
It is important that you maintain records for payroll, time sheets, employee files, and other information. Each of these has a specified mandated retention period that can last for many years. All of this varies by state.
The Colorado minimum wage poster can be downloaded here.
How long do I need to keep time records?
According to the Department of Labor and the Fair Labor Standards Act, you must retain three years of employee time records.
When do I need to pay overtime to my employees?
Laws differ from state to state, but in all states, employees must receive overtime pay for hours worked over 40 in a workweek. In Colorado, overtime also must be paid for hours worked over 12 in a workday.
Can I exclude paying overtime to my employees if we have an agreement?
No. Employees are not allowed to waive their rights to fair wages under the Fair Labor Standards Act, regardless of an agreement or contract. All non-exempt employees must be paid overtime for hours worked in excess of 40 per week. Please note that individual states may have additional requirements.
Are salaried employees exempt from overtime?
It depends. Paying a salary to someone does not always qualify them as an exempt employee. If an employee is salaried but not exempt, the employee’s hours must still be tracked and overtime must be paid. For more information on exempt status qualifications, please contact StaffScapes or visit the Department of Labor webpage.
Can I pay my nonexempt employees on a salary basis?
Yes. However, their hours must be tracked and they must receive overtime pay for hours worked over 40 in a workweek. Individual states may have additional requirements. In Colorado, overtime also must be paid for hours worked over 12 in a workday.
How do I determine if my employee is exempt from minimum wage and overtime?
The U.S. Department of Labor outlines specific requirements that must be met to be eligible for exempt status. More information can be obtained here.
I pay my non-exempt employees commission or piecework. Do I have to pay overtime?
Yes. You are required to track time worked on a time card and pay overtime for hours above 40 per workweek. Individual states may have additional requirements. In Colorado, overtime also must be paid for hours worked over 12 in a workday.
How often do I have to pay my employees?
Wages must be paid on a regular basis and at least monthly. Colorado requires that all employees be paid within 10 days of the last day of the pay period. Laws of other states may be different.
Can I ever hold back an employee’s paycheck?
Under Colorado law, no. The sole exception is if there has been criminal behavior by the employee that has been reported to the authorities.
If you have filed a police report and pressed charges, Colorado law allows you up to 10 calendar days to conduct an audit after termination before remitting a final paycheck. If criminal charges are not filed within 90 days or the employee is found not guilty in a court of law and charges are dismissed, the employee is entitled to recover any withheld amounts. Individual state laws may differ. Currently, there is no federal law covering this issue.
What type of deductions can I make to my employees’ paychecks? Do I have to obtain written authorization from the employee for deductions?
According to the Department of Labor, employers are allowed to withhold standard payroll deductions such as taxes, insurance, 401k contributions, elective benefits and garnishments and similar court ordered deductions. Other deductions may be eligible if agreed upon in advance and documented in writing. These could pertain to loan repayments, pay advances, goods or services, equipment, property and union dues.
When is an employee’s final paycheck due?
This is subject to state law. Currently in Colorado, if the employee resigns, their check may be issued on the next normally scheduled pay date. If an employee is terminated and your payroll department is located on-site, you must issue the check at the time of termination. If the payroll department is not regularly scheduled for operation at the time, the check must be issued within six hours of the start of the next workday. If your payroll department is located off-site, you must issue the check within 24 hours of the next workday.
If federal and state wage laws differ, which should I use?
Generally, you must follow whichever one benefits the employee the most. However, if only one law is enacted, either federal or state, you must follow that guideline.
What is the youngest age for employment?
According to federal law, no individual under the age of 14 is allowed to perform any work covered by the Fair Labor Standards Act. Individuals aged 14-15 may participate in non-hazardous and non-manufacturing jobs, subject to limitations on the number of hours worked. There are no hourly restrictions for individuals aged 16-17; however, they are not allowed to work in industries that are considered hazardous. There are no restrictions for employees aged 18 and above.
Each state can have its own separate child labor laws, so be sure you’re in compliance with the laws of those states you operate in.
Do I have to provide breaks?
Not according to federal law. However, Colorado mandates a 10-minute break for every four hours worked. In addition, a 30-minute unpaid lunch break is minimally required for employees working more than five consecutive hours. Laws of other states may differ.
My employees are claiming only enough tips to bring them up to minimum wage. Is this enough?
No. All tips in excess of $20 per month must be reported to you as the employer. All tip earnings, regardless of the monthly amount, must be claimed as income and taxed accordingly. For more information, please visit here.
Do I have to pay my employees for meetings, lectures, training, travel time, waiting time or on-call time?
Generally the answer is yes. However, individual circumstances affect compensable time. Please contact StaffScapes for guidance.
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