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Colorado PTO payout law

The short answer

In Colorado, earned vacation pay counts as wages. If an employer provides paid vacation, it must pay all earned vacation at separation. Policies may cap accrual, but they may not forfeit any earned (accrued) vacation pay. (C.R.S. § 8-4-101(14)(a)(III), as quoted in Wage Protection Rules 7 CCR 1103-7, Rule 2.17 (effective February 1, 2026))

Last verified Sep 24, 2026 · How we verify every rule

General information, not legal advice. This page is for general information only and isn’t legal, financial or tax advice. Laws vary by state and change; check the official source or talk to a qualified professional about your situation. Every rule on this page links to its official source.

Unused vacation (PTO) at separation

Do you have to pay out unused vacation when someone leaves?Yes, alwaysVerified Sep 24, 2026 · 2 official pages from the same agency

In Colorado, earned vacation pay counts as wages. If an employer provides paid vacation, it must pay all earned vacation at separation. Policies may cap accrual, but they may not forfeit any earned (accrued) vacation pay. (C.R.S. § 8-4-101(14)(a)(III), as quoted in Wage Protection Rules 7 CCR 1103-7, Rule 2.17 (effective February 1, 2026))

““Vacation pay earned in accordance with the terms of any agreement. If an employer provides paid vacation for an employee, the employer shall pay upon separation from employment all vacation pay earned and determinable in accordance with the terms of any agreement between the employer and the employee.””

C.R.S. § 8-4-101(14)(a)(III), as quoted in Wage Protection Rules 7 CCR 1103-7, Rule 2.17 (effective February 1, 2026) · coloradosos.gov

“2.17.2 The “earned and determinable in accordance with the terms” provision does not allow a forfeiture of any earned (accrued) vacation pay”

Wage Protection Rules 7 CCR 1103-7, Rule 2.17.2 (edition effective January 1, 2025) · coloradosos.gov

coloradosos.gov · coloradosos.gov

What it means for an employer

  1. Put your vacation policy in writing, including what happens to unused time at separation.
  2. Check whether the state treats earned vacation as wages, which affects forfeiture ("use it or lose it") clauses.
  3. Pay any vacation owed with the final paycheck.

The federal default

“There are no federal laws regarding paid time off, and few state or local laws related to this policy.”

U.S. Department of Labor, Women's Bureau: Paid leave · dol.gov

State rules can add to the federal default. The Colorado rules above are the ones we verified; for anything not covered, ask the state labor office.

PTO payout: Colorado and its neighbors

StateUnused vacation paid out?
ColoradoYes, always
WyomingDepends on your policy
NebraskaNot verified
KansasNot verified
OklahomaDepends on your policy
New MexicoNot verified
ArizonaNot verified
UtahNot verified

Only verified rules are shown. "Not verified" means we have not checked that state's rule yet; open its rulebook for the official source.

Colorado employer rulebookEvery verified rule for the statePTO payout laws by stateOne row per state, with sourcesHow to fire an employee in your stateSteps and documentsAn employee resigned: what to do nextSteps and documents

Questions about Colorado PTO payout law

Do you have to pay out unused vacation when someone leaves in Colorado?

In Colorado, earned vacation pay counts as wages. If an employer provides paid vacation, it must pay all earned vacation at separation. Policies may cap accrual, but they may not forfeit any earned (accrued) vacation pay. (C.R.S. § 8-4-101(14)(a)(III), as quoted in Wage Protection Rules 7 CCR 1103-7, Rule 2.17 (effective February 1, 2026))

Sources (3)

Checked Sep 24, 2026 · How we verify every rule · Report an error