When the payout is due
Vacation pay is part of final wages: immediately on a firing (within 6 hours of next workday if payroll is closed, 24 hours if off-site), or by the next regular payday if the employee quits. Source: cdle.colorado.gov↗ (opens in a new tab)
What a written policy must say
You need not offer vacation. If you do, it can be in writing, verbal or by practice, and can set how much and how it is offered, but cannot forfeit earned vacation. Source: cdle.colorado.gov↗ (opens in a new tab)
Penalties
Unpaid within 14 days of a written demand, claim or lawsuit: wages plus the greater of 2x the unpaid amount or $1,000; if willful, the greater of 3x or $3,000. Source: cdle.colorado.gov↗ (opens in a new tab)
Recent changes
HB25-1001 (effective Aug. 6, 2025) lets the state waive the wage penalty if wages are paid within 14 days of an administrative claim, but not for a repeat within 5 years. Source: content.leg.colorado.gov↗ (opens in a new tab)
The law and where to check
The agency: Colorado Department of Labor and Employment, Division of Labor Standards and Statistics (opens in a new tab)
What federal law says
No federal law requires paid vacation or payout of unused vacation. These are matters of agreement between employer and employee, and state law. Source: U.S. Department of Labor↗ (opens in a new tab)
Vacation and PTO payout checklist for Colorado employers
A simple order of work, based on the rules above. It is not a legal checklist.
- Read your written vacation or PTO policy against the rules above.
- Make any forfeiture or cap rule clear and in writing, where your state allows it.
- Track each employee's accrued, unused balance.
- When someone leaves, pay any vacation owed with the final paycheck on time.
- Keep a record of the balance paid out.
- See our final paycheck guide for your state's deadline.
More Colorado employment law guides
- All Colorado employment laws
- Colorado final paycheck law
- Colorado paid sick leave law
- Colorado meal and rest break laws
- Colorado overtime law
- Colorado pay frequency law
- Colorado new hire reporting
- Colorado at-will exceptions
Vacation and PTO payout laws in other states
See every state on one page, or pick a state:
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
Sources
All official government sources, last checked October 19, 2026.
- https://cdle.colorado.gov/sites/cdle/files/info_%233e_payment_of_earned_vacation_upon_separation_of_employment_05.29.24.pdf
- https://cdle.colorado.gov/sites/cdle/files/Colorado%20Wage%20Act%20Revised%20April%2017%2C%202023%20%5Baccessible%5D.pdf
- https://content.leg.colorado.gov/sites/default/files/documents/2025A/bills/sl/2025a_sl_228.pdf
- https://www.dol.gov/general/topic/workhours/vacation_leave
Disclaimer: This guide provides general information based on publicly available official sources and is for information only. It is not legal, tax, payroll or employment-law advice and does not guarantee compliance with federal, state or local requirements. Rules can depend on your location, industry, contracts and other circumstances, and laws change. Always check the official source, the relevant government agency or a qualified professional before making a decision. MadyHR.ai accepts no responsibility for any action taken based on this page.
Last checked: . Every rule and source link on this page was checked against the official government source on this date. Laws change, so always open the source link before you act.