Colorado — Termination

Colorado follows the employment-at-will doctrine. In the absence of a contract to the contrary, neither an employer nor an employee is required to give notice or advance notice of termination or resignation, and neither party is required to give a reason for the separation. The Colorado Supreme Court recognized at-will employment in Continental Airlines Inc. v. Keenan, 731 P.2d 708 (Colo. 1987), and noted that certain exceptions may apply to the presumption of at-will employment.

The Colorado Department of Labor and Employment identifies several common exceptions: (1) anti-discrimination laws prohibit termination based on disability, race, creed, color, sex, age, religion, sexual orientation, national origin, and ancestry; (2) public policy exceptions bar termination for filing a workers' compensation claim, bringing or threatening a lawsuit, serving on a jury, engaging in lawful off-duty activities, refusing to commit perjury, or whistleblower situations; (3) implied or express contracts, including employer policies that constitute a contract, must be followed; and (4) union contracts typically contain provisions governing the termination process.

Source: Colorado Department of Labor and Employment — Termination

Colorado imposes strict, separation-type-dependent deadlines for final wage payment under the Colorado Wage Act, codified at C.R.S. § 8-4-109. The timing rules turn on whether the separation is by the employer's volition (involuntary termination) or the employee's volition (resignation).

Involuntary termination — immediate payment rule

When an employer terminates an employee—whether by discharge or layoff—all wages earned, vested, determinable, and unpaid at the time of discharge are due and payable immediately. C.R.S. § 8-4-109(1)(a). This is the default rule; payment is due at the moment of separation. Colorado is one of the most employee-favorable jurisdictions in the country on this point, requiring near-instant settlement of final wages.

Two narrow exceptions apply when the employer's accounting or payroll unit is not regularly scheduled to be operational at the time of discharge:

• On-site payroll office: If the accounting unit responsible for drawing payroll checks is not regularly scheduled to operate at the time of termination, the employer must make final wages available to the employee no later than six hours after the start of the accounting unit's next regular workday. C.R.S. § 8-4-109(1)(a).

• Off-site payroll office: If the accounting unit is located off the work site, the employer must deliver the final paycheck no later than twenty-four hours after the start of the accounting unit's next regular workday, to one of three locations selected by the employer: (a) the work site, (b) the employer's local office, or (c) the employee's last-known mailing address. C.R.S. § 8-4-109(1)(a).

The Division of Labor Standards and Statistics confirms that mailing of final wages is acceptable if the postmark falls within the specified time periods—for example, an off-site-payroll employer may mail the final check via regular mail so long as it is postmarked no later than twenty-four hours after the start of the accounting unit's next regular workday.

Voluntary separation — next-regular-payday rule

When an employee quits or resigns, the employer must pay all wages or compensation earned and unpaid at the time of separation by the next regular payday. C.R.S. § 8-4-109(1)(b). There is no immediate-payment obligation when the employee initiates the separation. The Division of Labor Standards and Statistics interprets "quit or resigned" to include situations where an employee has not shown up for work as scheduled; this is a timing-rule policy solely for purposes of § 8-4-109 and does not govern other agencies' determinations of employment status.

Ten-day audit exception for entrusted property

Section 8-4-105(1)(e) permits an employer to delay final payment for up to ten calendar days after termination in order to audit and adjust accounts when the separated employee was entrusted during employment with the collection, disbursement, or handling of money or property and the employer needs to verify that all amounts have been properly paid or returned. This exception does not eliminate the immediate-payment rule but allows a brief window for reconciliation; the employer must provide written notice and comply with the deduction requirements of § 8-4-105. The employer may then deduct from the final paycheck the value of unreturned property or unaccounted-for money.

What final wages must include

Colorado law treats earned vacation time as wages. Employers must pay out all accrued, unused vacation at separation regardless of the reason for termination—including termination for cause—and regardless of any "use-it-or-lose-it" policy the employer may have attempted to implement. The Colorado Supreme Court has held that once vacation is earned and vested, it becomes compensation that cannot be forfeited by employer policy. Sick leave, by contrast, is not required to be paid out at separation under Colorado's Healthy Families and Workplaces Act unless the employer's policy provides otherwise.

Final wages also include all regular wages earned through the last day worked, as well as commissions or bonuses that are determinable at the time of separation. Commissions or bonuses that cannot be calculated at termination may be paid on the regular schedule once they become calculable, provided the employer clearly documents this in a written compensation agreement.

Penalty framework

An employer who refuses to pay final wages in accordance with § 8-4-109 or § 8-4-103(1)(a) is subject to the penalty provisions of C.R.S. § 8-4-109(3). After the employee, the employee's designated agent, or the Division of Labor Standards and Statistics sends a written demand for payment, the employer has fourteen days to pay the full amount of earned, vested, and determinable wages. If the employer fails to pay within that fourteen-day window, penalties accrue. Employers should note that the Division's notice of a wage complaint filed by an employee satisfies the written-demand requirement.

Source: Colo. Rev. Stat. § 8-4-109 (2024) Source: Colorado Department of Labor and Employment — Final Pay