You would adjust the opacity. 1 is full color while 0 is invisible.
Example:
INT. Background - DAY with KISS to 1.000 100 100 in zone 1 at layer 2
&overlay KISS opacity 0 in 0 #Right now you can not see the overlay, though you’ll probably still see it on web previewer.
CHARACTER
I could kiss you!
&overlay KISS opacity 1 in 1 #The kiss overlay fades in in 1 second while the kiss action is used.
@CHARACTER is kiss