What Is an Exempt Employee in Colorado? [2025 Guide for Employers & Recruiters]

Are you an hiring manager or into recruiting in Colorado? yes? Then, it's crucial for you to understand the different classifications of employees on your team. One of the most important distinctions is between exempt and non-exempt employees.

In Colorado, exempt employees are those who are excluded from certain wage and hour provisions of the Fair Labor Standards Act (FLSA)—notably overtime pay and minimum wage protections. While Colorado follows federal FLSA standards, it also enforces its own state-specific rules, including stricter salary thresholds.

This complete guide covers everything you need to know about exempt employees in Colorado—from legal requirements to real-world examples, compliance risks, and FAQs.

Table of Contents

1. What Is an Exempt Employee? 
2. Key Requirements for Exempt Status in Colorado
3. Recent Legal Updates & Salary Thresholds (2025)
4. Types of Exempt Employees
5. Benefits of Exempt Status
6. Disadvantages of Exempt Status
7. Compliance Tips for Employers
8. Common Misclassifications and Legal Risks
9. Exempt vs. Non-Exempt Employees: Comparison
10. Real-World Examples of Exempt Roles
11. Industry-Specific Guidance
12. How to Determine Exempt Status
13. Frequently Asked Questions (FAQs)
14. Key Takeaways

What Is an Exempt Employee?

An exempt employee is someone who is not entitled to overtime pay or minimum wage protections under the Fair Labor Standards Act (FLSA). Colorado, while adhering to FLSA rules, imposes additional requirements that employers must meet.

Exempt employees are typically salaried and perform higher-level job duties, such as management or specialized professional work.

Key Requirements for Exempt Status in Colorado

To be considered exempt under Colorado labor laws, employees must meet all three of the following criteria:

1. Salary Basis: The employee must be paid on a salary basis, receiving a fixed amount each pay period regardless of hours worked or performance.

2. Minimum Salary Threshold: As of 2025, exempt employees in Colorado must earn at least $1,086.25 per week or $56,485 annually—higher than the federal minimum.

3. Job Duties Test: The employee’s primary duties must fall under one of the exempt categories: executive, administrative, or professional.

4. Independent Judgment and Discretion: Exempt employees must regularly exercise independent judgment on significant work matters.

Recent Legal Updates & Salary Thresholds (2025)

Colorado increases its minimum salary threshold for exempt employees annually. The latest update (as of January 1, 2025) is:

• Colorado: $1,086.25/week or $56,485/year
• Federal: $1,128/week or $58,656/year

Employers must comply with the higher threshold. So in most cases, the Colorado salary laws take precedence over federal law.

Note: These thresholds increase yearly, so stay updated with the Colorado Department of Labor and Employment (CDLE) and the Fair Labor Standards Act for new rules.

Types of Exempt Employees

Exempt job categories based on job duties and responsibilities are:

Executive Exemption

• Manages departments or teams
• Supervises at least two full-time employees
• Has input on hiring/firing decisions

Administrative Exemption

• Performs office or non-manual work
• Directly supports business operations or management policies
• Exercises discretion and judgment

Professional Exemption

• Performs work requiring advanced knowledge
• Typically needs specialized education (e.g., doctors, architects, lawyers)

Benefits of Exempt Status

Salary Stability: Fixed pay allows for predictable income and easier financial planning.
Professional Growth: Exempt roles often come with more responsibility, offering pathways to leadership.
Greater Autonomy: Exempt employees have more control over how they manage their tasks and time.

Disadvantages of Exempt Status

• No Overtime Pay: Exempt employees do not receive additional pay for working over 40 hours/week.
• Higher Workload: Leadership or specialized roles often come with more responsibility and time demands.
• Colorado on-call pay laws: May be required to work evenings, weekends, or be on call without additional compensation.

Compliance Tips for Employers

• Regularly review job descriptions against FLSA and Colorado standards
• Track annual Colorado salary exempt thresholds
• Use a job duties checklist for proper classification
• Consult legal or HR professionals before changing classifications
• Maintain clear records of exempt status justifications

Common Misclassifications and Legal Risks

Examples of illegal classification include:

• Classifying hourly workers as exempt
• Calling someone a “manager” without real managerial duties

Real Case: In 2023, a Denver-based company was fined for misclassifying customer support reps as exempt—paying over $250,000 in back wages.

Real Example

In 2023, a Colorado tech startup paid $250,000 in back wages after misclassifying marketing associates as exempt.

Exempt vs. Non-Exempt Employees: Comparison

Real-World Examples of Exempt Roles

• Executive: Operations Manager, Regional Director
• Administrative: HR Manager, Compliance Officer
• Professional: Software Developer, Data Scientist, Civil Engineer

Industry-Specific Guidance

Healthcare

• Exempt: Physicians, Nurse Practitioners
• Non-Exempt: Medical Assistants, LPNs

Tech

• Exempt: Software Engineers, Product Managers
• Non-Exempt: Tech Support, QA Testers

Education

• Exempt: Teachers, Professors
• Non-Exempt: Administrative Assistants, Lab Technicians

How to Determine Exempt Status

Step-by-Step Process:

1. Verify the salary basis
2. Check if the Colorado minimum salary for exempt employees is met
3. Review job duties to ensure alignment with FLSA categories
4. Ensure the employee uses independent judgment
5. Reassess classification annually or with any role change

Frequently Asked Questions (FAQs)

Q1. Can you be hourly and exempt?
Yes, but only in limited roles (e.g., IT roles earning $27.63/hour). Most exempt roles are salaried.

Q2. Can an hourly employee be exempt in Colorado?
In rare cases (like specific computer roles), but not common.

Q3. Do Colorado salaried employees get overtime?
Only if they are non-exempt. Salaried exempt employees do not.

Q4. What is a salary exempt employee?
One who is salaried and not entitled to overtime pay, based on role and earnings.

Q5. What is the Colorado exempt salary threshold for 2025?
$1,086.25 per week or $56,485 annually.

Key Takeaways

• Exempt employees in Colorado are held to stricter standards than federal law.
• Employers must meet both salary thresholds and job duties tests to classify someone as exempt.
• Misclassification can lead to major legal and financial penalties.
• Stay current on Colorado salary laws, especially thresholds and on-call pay rules.

Whether you're hiring new employees, conducting audits, or reviewing job descriptions—knowing the difference between exempt and non-exempt status is critical to maintaining compliance and supporting a fair workplace.