Exempt vs. Non-Exempt: How Colorado Employers Classify Employees

Can you put your office manager on a salary and stop tracking their hours? Does your shift lead count as a manager? Both questions come down to exempt vs non exempt status, and that status decides whether a role earns overtime. In Colorado, federal and state rules decide it at the same time: the federal Fair Labor Standards Act (FLSA) and Colorado's COMPS Order.

I wrote this post for the other side of the desk, the owner or manager deciding how to classify a role, rather than someone checking their own paycheck. I walk through the tests each law uses, Colorado's salary threshold for 2026, the assumptions worth double-checking and what to do if you find a role on the wrong side of the line. My post on Colorado wage and hour laws covers how overtime itself is calculated under the COMPS Order, so this one stays on classification.

The basics

"Exempt" means a role sits outside the overtime rules. Under the FLSA, the exemptions for bona fide executive, administrative, professional and outside sales employees remove a role from both the federal minimum wage and overtime requirements. Under Colorado's COMPS Order, an exempt executive, administrative or professional role is outside the order's core wage and hour rules. A non-exempt team member earns overtime when they work past the limits the law sets, whatever their title and however they're paid.

For the executive, administrative and professional exemptions, a role has to pass two tests, and it has to pass both:

• The salary test: the person is paid a set salary of at least the required amount, not an hourly wage or a day rate.
• The duties test: the work the person actually does fits one of the exemptions.

Paying a salary doesn't make someone exempt, and neither does a job title. CDLE, the Colorado Department of Labor and Employment, says being salaried, alone, is not enough for exemption, and that a job title alone doesn't establish one either: the salary and the actual duties decide it. The U.S. Department of Labor puts it just as plainly: job titles do not determine exempt status. A salaried team member who fails either test is non-exempt, which doesn't mean you have to move them to hourly pay, as long as overtime pay is added on top of the salary for their overtime hours.

When federal and Colorado rules both apply, you follow the one that sets the higher wage or the higher standard. That matters for classification, because CDLE says parts of Colorado's exemptions are narrower than the federal ones, and Colorado's salary threshold is higher. CDLE also reads the exemptions narrowly, and it's on the employer to prove "plainly and unmistakably" that a role is exempt.

The duties tests

Federal law and the COMPS Order each describe what exempt work looks like, and the descriptions overlap a lot. Colorado adds conditions in a few places, which is how a role can pass the federal test and still fail Colorado's. CDLE also says that when someone's duties change from week to week, the duties are assessed week by week.

Executive or supervisor

Under federal law, an exempt executive's primary duty is managing the business or a recognized department of it. They customarily and regularly direct the work of at least two full-time employees or the equivalent, and they either have the authority to hire and fire or their recommendations on hiring, firing and promotions are given particular weight.

Colorado adds a time test: the supervisor has to spend a minimum of 50% of the workweek on duties directly related to supervision. CDLE counts work like creating schedules, training, performance reviews, handling complaints, discipline and directing the team's work. "At least two full-time employees" means two people working 40 hours a week each, or the equivalent, so supervising four people who each work 20 hours a week also counts. CDLE's own example is a head chef who runs the kitchen and supervises the cooks: exempt in a week spent mostly supervising, and not exempt in a week spent mostly cooking on the grill.

A working lead who spends most of the week doing the same job as the rest of the team, with some scheduling on top, generally won't meet Colorado's version of this test.

Administrative

The federal test looks for a primary duty of office or non-manual work directly related to the management or general business operations of the employer or its customers, which includes exercising discretion and independent judgment on matters of significance.

Colorado's administrative exemption is narrower in ways CDLE spells out:

• Who they serve: the person must directly serve an executive and regularly do work that's important to that executive's decisions. Serving lower-level managers doesn't qualify.
• Client work: consulting with your customers about their own management or business operations isn't exempt administrative work in Colorado, unlike under federal law.
• Clerical work: someone who regularly does clerical or secretarial tasks, such as data entry, answering phones, ordering office supplies or taking notes, doesn't meet the exemption.

Independent judgment means the person compares options and makes a decision without needing further direction. Applying a manual or an established procedure isn't the same thing. An "office manager" title on its own tells you very little here, so look at how much of the week is decision-making for an executive and how much is keeping the front office running.

Professional

Both laws cover learned professionals, whose work requires advanced knowledge in a field of science or learning that's customarily gained through a prolonged course of specialized study, and creative professionals, whose work depends on invention, imagination, originality or talent in a recognized artistic or creative field. Colorado adds that the professional has to be employed in the field in which they were trained. CDLE also notes that if someone can qualify for the job with a bachelor's degree in any major they choose, the role doesn't meet the learned professional test. Doctors, lawyers and teachers whose duties qualify don't need to meet a salary minimum under either law.

Computer and outside sales roles

Both laws exempt certain highly skilled computer roles, such as computer systems analysts, programmers and software engineers, whose work is systems analysis or designing, building and testing computer systems and programs. Colorado requires the person to spend a minimum of 50% of the workweek on those duties. Federal law accepts a salary of at least $684 a week or hourly pay of at least $27.63, while in Colorado the role needs either the exempt salary or hourly pay of at least $34.85 per hour in 2026.

For outside sales, federal law looks for a primary duty of making sales or getting orders or contracts, with the person customarily and regularly working away from your place of business, and it sets no salary minimum. Colorado requires the outside salesperson to spend a minimum of 80% of the workweek on activities directly related to their own outside sales.

Colorado's salary threshold

The federal salary level for the executive, administrative and professional exemptions is $684 per week, which is equivalent to $35,568 a year. Colorado sets its own level in the PAY CALC Order, the companion to the COMPS Order: $57,784 a year for 2026 ($1,111.23 a week). With the higher standard applying, Colorado's figure is the one that counts for a role in Colorado.

A coordinator whose salary sits between the federal and Colorado levels clears the federal test, although the same salary falls short of Colorado's, so in Colorado the role is non-exempt even if the duties fit an exemption. Your choices are to raise the salary to at least the Colorado level, if the duties genuinely qualify, or to treat the role as non-exempt and pay overtime.

The salary also has to work like a salary. Colorado uses the federal salary rules: the pay is a pre-set amount for a week up to a month, and it isn't reduced when the quality, quantity or hours of work vary. Up to 10% of the required salary can be paid through nondiscretionary bonuses, incentives and commissions, as long as they're paid annually or more often.

Colorado's threshold doesn't stay put. The COMPS Order indexes it every January 1 by the same inflation measure as the Colorado minimum wage, so it's worth checking CDLE's new figure against your exempt salaries before each new year starts.

Common misclassification mistakes

Check your own business for these assumptions:

• "They're on salary, so they're exempt": salary is only one of the two tests, and the duties have to fit as well.
• Going by the job title: titles like manager, coordinator or administrator don't settle anything on their own.
• Using the federal number: $684 a week is the federal level, and Colorado's level is far higher.
• Calling a working lead a supervisor: fewer than two full-time equivalents to supervise, or less than half the week spent supervising, means Colorado's executive test isn't met.
• Treating support work as administrative: a trusted, busy person who mainly handles phones, data entry and office supplies still doesn't meet Colorado's administrative test.
• Docking an exempt salary for slow weeks: if the person is ready, willing and able to work, you can't deduct for time when work isn't available, and federal guidance says an employer with an actual practice of improper deductions loses the exemption.
• Setting it once and never looking again: the Colorado threshold changes every January, and duties shift as a business grows.

Titles can hide what a job really is. One client of mine had several people under a single "admin" job title, a catch-all position without clear roles and responsibilities, and I helped break it into clearly defined roles with clear ownership and accountability. The result was a better understanding of who was doing what. A classification decision needs that kind of clarity, because you can't apply a duties test to a job nobody has defined.

What to do if you've misclassified someone

If you find a role on the wrong side of the line, don't panic, and don't quietly switch it without a plan either. I'd work through it in this order:

1. Review the role: look at what the person actually does week to week and what they're paid, then check both against the duties tests and Colorado's threshold. When job descriptions no longer match the work, I can help through Workforce Strategy, where the work usually includes an org chart with clear reporting lines and, sometimes, new or updated job descriptions to go with it.
2. Fix it going forward: if the role doesn't qualify, start recording hours and paying overtime. The team member can stay on a salary as long as overtime pay is added for overtime hours. If the duties qualify and only the pay falls short, raising the salary to at least the Colorado level is the other route.
3. Work out what's owed: overtime that should have been paid is unpaid wages. In Colorado, when CDLE finds an employer owes wages, it orders them paid, and while it may waive penalties or fines, it can't waive the wages themselves. If a team member sends a written demand, or CDLE sends a Notice of Complaint, paying everything owed within 14 days is what helps you avoid penalties.
4. Talk to the team member: explain the change plainly, what it means for their pay and timekeeping, and that it's about getting the classification right, not about their performance. I don't hand clients a template for this; I draft the actual communication, based on their business.
5. Bring in an employment attorney before any settlement: if back pay is involved, an attorney should look at it before you offer a settlement or ask anyone to sign anything about it. I stay in your corner through that part and consult with the attorney on your behalf.

If you'd like to talk through your own team's roles before January, contact me to book a consultation.