By Liz Hartsel 

The Colorado Supreme Court recently issued a significant decision regarding overtime calculations under Colorado law, ruling that holiday incentive pay must be included in an employee’s “regular rate of pay” when calculating overtime. This decision stems from a case involving an Amazon warehouse employee in Colorado who argued that Amazon incorrectly excluded holiday incentive pay from overtime calculations in violation of the Colorado Wage Act. This ruling will have substantial implications for employers operating in Colorado. 

Case Background 

In this case, Amazon provided two types of holiday-related pay: 

• Holiday Pay: Paid at the regular hourly rate for designated company holidays, regardless of whether the employee worked. 

• Holiday Incentive Pay: Offered at one and one-half times the regular hourly rate for employees who worked on these holidays. 

Colorado wage and hour law requires overtime pay at one and one-half times the employee’s “regular rate of pay” for hours worked beyond 40 in a workweek. The plaintiff claimed that Amazon should have included holiday incentive pay in the regular rate of pay when calculating his overtime, as well as that of other company employees.  

The Court’s Decision 

The Colorado Supreme Court held that, under state law, holiday incentive pay is considered part of an employee’s “regular rate of pay” and must be factored into overtime calculations. Additionally, the Court noted that holiday incentive pay qualifies as a “shift differential” because it provides extra compensation for work performed during less desirable hours. 

The Court clarified that certain types of pay—like standard holiday pay for non-work hours—can be excluded from the regular rate of pay. However, holiday incentive pay compensates employees for working during these hours, thus meeting the criteria for inclusion in overtime calculations.  

What Employers Should Do Now 

• Employers should review their payroll practices immediately to ensure the inclusion of any holiday incentive pay provided to employees in their regular rate of pay for overtime calculations.  

• This case ruling could expose employers to similar unpaid overtime claims from current or former employees, so you should consult an employment law attorney right away if this may apply to your business.  

For further counsel on how to navigate this new ruling, please contact a member of Fortis’ employment law team.