Colorado’s paid time off law works in three layers: every employer must provide paid sick leave, any vacation or PTO an employer chooses to offer becomes protected wages the moment you earn it, and a statewide insurance program called FAMLI pays partial wages during longer family and medical leaves. Employers are not required to offer vacation at all. Once they do, though, state rules sharply limit what they can take back.
Paid Sick Leave Every Employer Must Provide
The Healthy Families and Workplaces Act (HFWA), codified at C.R.S. ยง 8-13.3-401 and following, covers every Colorado employer regardless of size. You start earning sick leave on your first day at a rate of one hour for every 30 hours worked, capped at 48 hours per year.1Justia Law. Colorado Code 8-13.3-403 – Paid Sick Leave – Accrual – Carry Forward to Subsequent Year Unused hours roll into the next year, though your employer can still limit annual use to 48 hours.
The permitted reasons for using sick leave are broader than most workers assume. Covered situations include your own illness, injury, or preventive care; caring for a family member with the same; bereavement, including funeral attendance and related legal or financial matters; and issues arising from domestic abuse, sexual assault, or harassment affecting you or a family member, such as medical care, counseling, relocation, legal proceedings, and victim services. You can also use sick leave when a public health emergency closes your workplace or your child’s school, and when a school or care facility closes unexpectedly because of weather, power loss, or a comparable event, including when you need to evacuate your home.2Justia Law. Colorado Code 8-13.3-404 – Use of Paid Sick Leave
Your employer cannot make you find a replacement worker before taking sick leave. Documentation can be requested only if you miss four or more consecutive workdays, and any medical records you provide must be kept confidential. Counting sick leave use as an absence that leads to discipline, demotion, or termination is illegal. Each affected employee counts as a separate violation for fines and penalties, and a successful retaliation claim can result in reinstatement plus back pay.3Justia Law. Colorado Code 8-13.3-407 – Employee Rights Protected – Retaliation Prohibited
Vacation and PTO Are Earned Wages
Colorado does not require employers to offer vacation. But when they do, every hour you accrue becomes a legally protected wage. The Colorado Wage Act defines vacation pay as wages, and the Colorado Supreme Court reinforced that principle in Nieto v. Clark’s Market (2021), holding that earned vacation “cannot be forfeited once earned” and that any policy or agreement purporting to take it away is void.4Justia Law. Nieto v. Clarks Market, Inc. – 2021 CO 48
That ruling ended use-it-or-lose-it policies statewide. Once you perform the work that triggers an accrual under your employer’s plan, the time belongs to you. An employer can still cap the total amount of vacation you accumulate going forward, which stops unlimited stockpiling. What they cannot do is strip away hours you have already banked. A cap prevents new accrual once you hit a ceiling; a forfeiture takes away time you already earned. Colorado allows the first and prohibits the second.5Colorado Department of Labor and Employment. INFO 3E – Payment of Earned Vacation upon Separation of Employment
Combined PTO Banks
Many employers lump vacation, sick leave, and personal time into a single PTO bucket. Colorado allows this, but the combined bank has to satisfy every HFWA requirement, not just the ones that happen to overlap with vacation. According to the Division of Labor Standards and Statistics, a combined policy must meet the HFWA’s minimum accrual rate, cover every qualifying reason for sick leave, and follow the same rules on carryover, notice, documentation, and anti-retaliation. If the policy is more restrictive than the HFWA in any respect, the employer has to provide additional sick leave on top of the PTO.6Colorado Department of Labor and Employment. INFO 6B – Employer and Employee Rights and Obligations Under the Healthy Families and Workplaces Act
One consequence catches people off guard. If you use all your combined PTO on vacation and then get sick, your employer is not required to add more paid sick hours; you had them and spent them elsewhere. The exception is a declared public health emergency, when the employer must provide supplemental leave even if your PTO balance is zero.6Colorado Department of Labor and Employment. INFO 6B – Employer and Employee Rights and Obligations Under the Healthy Families and Workplaces Act
FAMLI: Paid Family and Medical Leave Insurance
Separate from anything your employer provides, Colorado runs a paid leave insurance program called FAMLI. Most employees and employers split a payroll premium, set at 0.88% of wages for 2026 (0.44% from each side). Employers with fewer than ten employees are not required to pay the employer share, though their workers still contribute. Self-employed workers and employees of local governments that opted out can choose to opt in.7Colorado FAMLI. Opting in to FAMLI
FAMLI pays up to 12 weeks of partial wage replacement per benefit year, with an additional four weeks available for serious health conditions related to pregnancy or childbirth complications. Qualifying reasons include:
- Your own serious health condition, such as recovering from an illness, injury, or surgery
- Caring for a family member with a serious health condition
- Bonding with a new child after birth, adoption, or foster placement
- Up to 12 additional weeks if your newborn is in neonatal intensive care
- Managing affairs related to a family member’s military deployment
- Safe leave for needs arising from domestic violence or sexual assault
Benefits use a sliding scale. Wages at or below 50% of the state average weekly wage are replaced at 90%; anything above that threshold is replaced at 50%, up to a maximum weekly benefit of $1,381.45.9Colorado FAMLI. Rules and Guidance Lower-wage workers replace a higher percentage of their income; higher earners hit the cap sooner. FAMLI benefits are in addition to any employer-provided PTO.
FAMLI is not the same as the federal Family and Medical Leave Act. FMLA provides up to 12 weeks of unpaid, job-protected leave, but you qualify only if you have worked for your employer at least 12 months, logged at least 1,250 hours in the prior year, and work at a location where the employer has 50 or more employees within 75 miles.10U.S. Department of Labor. Fact Sheet 28 – The Family and Medical Leave Act Many Colorado workers, especially those at smaller employers, qualify for FAMLI but not FMLA. When both apply, the leave periods run at the same time; your employer can require you to use accrued PTO concurrently with FMLA, but cannot force you to substitute PTO for FAMLI benefits.
What Happens to Your PTO When You Leave
All earned and unused vacation must be paid out as part of your final wages when employment ends. This applies whether you were fired, laid off, or quit. Sick leave does not require payout at separation unless your employment agreement specifically provides for it.11Colorado Department of Labor and Employment. Colorado Wage and Hour Rights and Responsibilities
Deadlines are strict. If your employer fires you, your final pay is due immediately. When the payroll office is closed at the time of discharge, the employer has until six hours after the start of its next business day, or 24 hours if the payroll office is offsite. If you quit, payment is due on the next regular payday.12Justia Law. Colorado Code 8-4-109 – Civil Penalties These rules are tighter than federal law, which sets no specific deadline for final paychecks.
A lump-sum vacation payout is classified as supplemental wages for federal tax purposes. Employers withhold a flat 22% for federal income tax on the payout, rather than using your regular withholding rate. If your total supplemental wages for the year exceed $1 million, the rate on the excess jumps to 37%.13Internal Revenue Service. Publication 15 (Circular E), Employers Tax Guide Colorado state income tax and FICA also come out of the payout. The flat federal rate often over- or under-withholds relative to your actual bracket, and the difference sorts itself out when you file.
If Your Employer Doesn’t Pay
The Colorado Wage Act gives you real leverage when a paycheck comes up short. Start by sending a written Demand for Payment, which opens a 14-day window for the employer to pay.14Colorado Department of Labor and Employment. Demand for Payment of Wages Miss that deadline, and the employer owes an automatic penalty on top of the wages: the greater of double the amount owed or $1,000. If you can show the failure was willful, the penalty rises to the greater of triple the amount owed or $3,000. Refusal counts as automatically willful when the employer has been found to have withheld the same type of wages within the prior five years.12Justia Law. Colorado Code 8-4-109 – Civil Penalties
If the demand letter doesn’t resolve things, you can file a Labor Standards Complaint with the Colorado Division of Labor Standards and Statistics. The form is available on the Department of Labor and Employment’s website as an online submission or a printable PDF, and there is no filing fee.15Department of Labor & Employment. Worker Complaints and Employer Responses The Division reviews employment records, verifies the amount owed, and can send the case to mediation. If it confirms a violation, it issues an order for the back wages plus the statutory penalties. The process can take weeks or months depending on the employer’s responsiveness, but the penalty structure gives most employers a strong reason to pay before it gets that far.