Earned vacation in Colorado is wages — and wages must be paid at separation.
Colorado courts have ruled that earned, unused vacation is wages — and like all wages, must be paid out at separation. Employer handbooks that say otherwise don't override this. Whether termination is voluntary or involuntary, accrued vacation is owed.
Accrued Vacation Payout at Separation
Calculates accrued vacation balance × hourly rate at the moment of termination workflow start. Includes the amount in the final paycheck calculation, regardless of voluntary or involuntary termination.
What the rule does when termination kicks off final pay.
The hero card configuration: Block on close without payout, Critical showing the exact amount.
When HR closes the offboarding workflow, Teambridge blocks the close if accrued vacation × rate hasn't been included in final pay. "Cannot close: vacation payout missing from final pay."
Within 1 minute of termination, Teambridge surfaces accrued vacation balance × current pay rate. The amount is locked from edit.
Deploy vacation payout in your Teambridge.
Tell us about your workforce. We'll spin up vacation tracking and termination payout — alongside the other 17 Colorado policies — in a sandbox tenant.
Once accrued, vacation is wages.
The Colorado Supreme Court's 2021 ruling in Nieto v. Clark's Market definitively established that vacation, once earned under the employer's policy, becomes wages and cannot be forfeited.
What counts as accrued vacation
Any vacation that has been earned under the employer's policy, regardless of whether the employee has used it. Pure 'use-it-or-lose-it' arrangements are unenforceable for accrued, vested time.
Calculation method
Accrued hours × current hourly rate. For salaried workers, the calculation derives an hourly rate from the salary.
Teambridge tracks vacation as wages, not as a reservation.
Most systems treat vacation balances as future-time reservations. In Colorado, that misses the legal reality: vacation balances are wages owed.
Vacation accrues per the policy.
On every clock-out, vacation accrues per the employer's policy (e.g., 1 hour per 40 worked, or frontloaded annual amount). The balance is visible to workers.
Balance × rate calculated immediately.
When termination workflow opens, Teambridge captures the accrued vacation balance × current hourly rate. The amount is added to final pay calculation.
Vacation cashout is a line in final pay.
The final paycheck includes a 'Vacation cashout' line equal to balance × rate. Cannot be removed by HR or payroll without explicit override.
Workflow can't close without vacation payout.
Like wage payout, the offboarding workflow blocks completion until vacation payout has been processed. Surfaces the amount and the regulatory basis.
Still evaluating? Get a free Colorado compliance audit.
Send us your existing Colorado scheduling and pay configuration. Our compliance team returns a written audit within 5 business days — every Colorado-specific exposure ranked by risk and back-pay liability.