CDLE provides guidance on personal paid leave

Almost one year has passed since the Colorado Supreme Court declared that employers must pay accrued but unused vacation time upon separation of employment. Colorado employers should consider the current landscape of employer policies concerning vacation pay and paid time off (PTO) in light of recent Colorado Department of Labor and Employment (CDLE) guidance.

Nieto refresher

The case of Nieto v. Clark’s Market, Inc. presented the Colorado Supreme Court with a prime dispute to decide whether Colorado employers may implement policies that could, under certain conditions, prohibit payment of earned but unused vacation time when an employee is separated from employment. The issue rested on the court’s interpretation of the Colorado Wage Act (CWA).

On one hand, the CWA’s definition of “wages” includes in relevant part “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.” On the other hand, the CWA provides that any agreement “purporting to waive or to modify” employee rights under the Act is void.