March 10, 2022

Colorado Issues New Guidance on Prohibition Against Forfeiture of Earned Vacation or PTO

A series of recent developments in Colorado law have made it clear that employers are prohibited from causing employees to forfeit earned vacation time. A compilation of recent developments and the Colorado Department of Labor and Employment’s current position are contained in Interpretive Notice & Formal Opinion (INFO) #14, which explains that: 

  1. Employees must be paid all earned vacation pay when their job ends.
  2. No employment policy or agreement can waive or forfeit earned vacation at any time.
  3. All paid leave which can be used at the discretion of the employee is considered “vacation pay” subject to the non-forfeiture rules.

It is important to remember that no Colorado employer is required to provide paid vacation or paid time off to employees (beyond that required by the Colorado Healthy Families and Workplaces Act). However, if an employer does provide such a benefit, once earned, it cannot be forfeited.  

INFO #14 provides a good summary of vacation pay rules, helpful examples, and current requirements. We highly recommend employers review it promptly.  

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