Colorado: Add New Vacation Pay Requirements to the List of Wage and Hour Changes

In addition to the bevy of wage and hour changes we previously reported on, the Colorado Department of Labor and Employment (DLE) adopted its proposed rule concerning vacation pay. Generally speaking, Colorado employers have been required to pay out an employee’s accrued, unused vacation pay upon separation of employment; but a June 2019 Court of Appeal case said that employers could place restrictions on such payments as part of their workplace policies or agreements.

In response to that decision, the newly released regulation amends the state’s Wage Protection Act. It prohibits employers from maintaining a “use it or lose it” policy that requires employees to forfeit accrued, unused vacation. Employers are permitted to cap the amount of earned vacation hours earned from the previous year, so long as any carry over policy does not forfeit any of the earned amount.

Note that while forfeiture of earned vacation is now prohibited, Colorado employers are not required to provide vacation in general. Employers are still able to make decisions about vacation, such as whether to offer paid vacation at all, amount available, and accrual method and cap.

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