The Colorado Supreme Court ruled that holiday incentive pay must be included in the calculation of the regular rate of pay [Hamilton v. Amazon, No. 24SA12 (Colo., 9-9-24)]. In this case, holiday incentive pay was additional compensation for any work the employee did on a company holiday. It was paid at one and a half times the employee’s hourly rate for any hours worked. The employer did not include holiday incentive pay in the calculation of overtime.
Holiday Incentive Pay Is Compensation, Shift Differential
The court explained that holiday incentive pay should be included in overtime calculations for two reasons. First, holiday incentive pay falls within the plain meaning of “all compensation paid to an employee.” The regular rate of pay includes all compensation, and, therefore, holiday incentive pay should be included in the calculation of the regular rate of pay.
Second, the court ruled that holiday incentive pay is a shift differential. Holiday incentive pay is a higher wage for “undesirable” hours. Here, those hours were company holidays. Colorado law requires that shift differentials be included in the calculation of the regular rate of pay.
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Lia Coniglio, Esq., is Managing Editor of PayState Update and Senior Manager of State Payroll Information Resources for PayrollOrg.
