The hallmark CO Supreme Court ruling in Nieto v. Clark’s Market, Inc., 488 P.3d 1140 (Colo. 2021) when an employer chooses to provide vacation pay, it cannot be forfeited once earned. All vacation pay that is earned must be paid upon job separation. Accordingly, any policy or agreement stating employees forfeit earned vacation under any circumstance is void. Despite this clear holding, I continue to see employer handbooks or contracts that continue this practice. Employers may legally cap vacation where it doesn’t continue to accrue, but whatever is earned at year end must roll over to the next year. Be aware that “PTO” may be deemed “vacation pay” depending on the policy language. Employees who leave employment must be paid all earned and accrued vacation pay in the final paycheck. Employers should have your Handbook be reviewed yearly for compliance.
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