Amazon is not violating Colorado law by failing to include a specific category of employee labor – working on holidays for time-and-a-half pay – into its calculation of overtime, a federal judge ruled earlier this month.

U.S. District Court Chief Judge Philip A. Brimmer dismissed a proposed class action lawsuit against the retail giant, brought by an employee of an Amazon warehouse in Aurora. The company calculated it would be liable for nearly $9.2 million in penalties alone if the judge were to find the company violated the Colorado Wage Act.

Instead, Brimmer determined Colorado law to be silent about how employers should treat “holiday incentive pay” when calculating overtime and, therefore, plaintiff Dan Hamilton had no claim to the $143.54 he alleged Amazon had personally shorted him.

“Mr. Hamilton’s response does not identify a Colorado statute or regulation requiring employers to include premiums for working on holidays when calculating an employee’s regular rate of pay and does not cite any caselaw in support of such a requirement,” Brimmer wrote in a March 3 order.

The lawsuit involved the calculation of overtime compensation using the “regular rate of pay.” If an employee works 40 hours in a week at $20 an hour plus an eight-hour shift that pays $25 per hour, the base compensation would be $1,000. The regular rate of pay would be the base compensation divided by total hours worked, or $20.83 per hour.

The employee would also receive overtime pay, amounting to time-and-a-half the regular rate, for every hour over 40 hours. Therefore, the eight-hour shift would result in an extra $83.32 in overtime.

Hamilton took issue with Amazon’s treatment of holiday incentive pay. Although the company paid time-and-a-half for employees who chose to work on holidays, he alleged Amazon did not include such shifts when calculating the regular rate of pay, thus lowering his overall compensation for overtime work.

He filed a lawsuit in Arapahoe County asserting Amazon violated the Colorado Wage Act, and named as a class of plaintiffs all hourly Amazon employees in Colorado who worked on a company holiday from January 2019 to the present. Hamilton sought back wages for the class and penalties under Colorado law.

Amazon transferred the lawsuit to federal court, estimating there were 10,006 employees who would fall into the class and that the penalties alone could amount to $9.19 million.

The state’s wage regulations, issued by the Colorado Department of Labor and Employment, note that “shift differentials” must be included in calculating an employee’s regular rate of pay. However, “holiday pay,” meaning compensation for holidays where an employee need not show up to work, may be excluded.

Holiday incentive pay is not explicitly called out in the state’s regulations as either a shift differential or holiday pay. Hamilton contended the holiday incentive pay should be treated like a shift differential and be included in the calculation.

Amazon seized upon the federal Fair Labor Standards Act in arguing that Colorado law does not require anything different than its federal counterpart, in which time-and-a-half pay for working holidays is not part of the regular rate calculation.

“If the Colorado legislature or the Colorado Department of Labor and Employment intended to make Colorado the only state in the country that requires employers to include holiday premium pay in its regular rate calculation, while exempting holiday pay, they would have said so,” Amazon’s lawyers wrote. “Instead, the CDLE published a series of regulations excluding holiday pay from the regular rate.”

Brimmer agreed with the company. Neither the Colorado Supreme Court nor the Court of Appeals has answered whether incentive payments for those who work on holidays are part of the regular rate calculation.

“Amazon’s exclusion of HIP from the regular rate of pay complies with the FLSA,” Brimmer wrote. “Because Colorado law is silent on the topic of holiday premium pay, Amazon’s practice of following the FLSA is not a violation of Colorado law.”

Brimmer declined Hamilton’s request to send the legal question to the state Supreme Court for a ruling. Hamilton has since appealed Brimmer’s dismissal to the U.S. Court of Appeals for the 10th Circuit.

The case is Hamilton v. Amazon.com Services, LLC.