Colorado Increases Minimum Wage and Requires Deductions Notice

The following changes to Colorado employment law apply as of January 1, 2023.

MINIMUM WAGE
Statewide
Colorado’s minimum wage will increase to $13.65 per hour. The minimum base wage for tipped employees will increase to $10.63 per hour.

The minimum salary for exempt executive, administrative, or professional employees will increase to $961.54 per week. (Interestingly, Colorado allows employers to round to the nearest dollar for the annual amount, which is $50,000 per year.) The minimum annual salary to use the “highly compensated employee” exemption will increase to $112,500. The minimum rate for exempt computer employees who are paid on an hourly basis will be $31.41 per hour.

Denver
Denver’s minimum wage will increase to $17.29. The minimum base wage for tipped employees will increase to $14.27 per hour.

NOTICE AT TERMINATION OF WAGE DEDUCTIONS
Generally, employers in Colorado must pay an involuntarily terminated employee their final wages immediately upon termination. However, there is an exception for when an employer and employee have an agreement for the return of money or other property and the money or property hasn’t been returned at the time of termination. Beginning in 2023, regardless of the terms of such agreements, employers will need to provide an employee with a specific notice before taking a deduction from their wages for failing to return the money or property. The notice must be provided no later than 10 days after termination and include all of the following:

• A statement that the employer is deducting from their wages the amount of money or value of property that the employee failed to return
• A written statement identifying the amount of money or the property the employee didn’t return
• The replacement value of non-money property
• When the money or property was provided to the employee, if known
• When the employer thinks the employee should have returned the money or property

If the employee returns the money or property to the employer within 14 days after the employer provides the notice, the employer must pay the employee the amount deducted from their paycheck within 14 days of getting the money or property back.

Note that Colorado law prohibits deductions for property damage and any deduction that would take the employee below minimum wage.