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Colorado Law on Vacation Time Payout – Prohibits Forfeiture, Must be Paid Out

The Colorado Department of Labor has resolved any doubt as to the answer to the common question (asked by both workers and employment law attorneys in Colorado): Can an employee be forced to forfeit their unused vacation time? The answer is No…even if there is a signed agreement that says otherwise. 

While Colorado labor laws do not require employers to provide vacation or holiday pay for time that is not worked (same as federal law), if vacation benefits are provided, they may not be taken away from workers for any reason, and any unused accrued vacation pay balance must be paid out when an employee leaves the company (more favorable to workers than federal law).

Agreements to Forfeit Vacation Pay Are Not Valid

The issue of mandatory payout of unused vacation pay under Colorado law was clarified, effective December 19, 2019, making clear that workers’ vacation benefits can’t be forfeited when they leave a company.  The Colorado DOL resolved any doubts as to when and if employers could impose policies that caused departing workers to lose their accrued but unused vacation time – they can never do so and must always pay out accrued but unused vacation leave to departing employees, even if they had signed agreements allowing for such forfeiture if they are fired or if they fail to give two weeks’ notice.

This type of legal protection against “use it or lose it” or “conditional payment” policies that cause  workers to forfeit accrued vacation time is relatively uncommon. It is not required under federal labor laws, and similar protections are not provided under most state labor laws. In this, and numerous other respects, Colorado wage laws provide greater protections and benefits to workers in the state.  

Have a Claim for Lost Vacation Pay?

If you have lost the value of your unused vacation pay when you left a company, you may have a claim to recover the value of your accrued but unused vacation time. Because of the strict time limits imposed by the labor laws, procrastination can be costly. If you have any doubts as to whether you have received proper compensation for your unused vacation time, contact the experts at The Lore Law Firm for a free and confidential review.

Call 1-866-559-0400 or submit your information using our convenient Case Evaluation form for a FREE and CONFIDENTIAL review of your circumstances – because time is money.

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