This article addresses specific compliance issues around terminating employees in Colorado. If you'd like to know how to terminate an employee within Justworks, please visit Terminating Employees.
Colorado law requires that employees be paid their owed wages at the time of termination if termination is involuntary. If an employee resigns, then the final pay can be paid out with the next regular payroll via direct deposit or otherwise.
Employers are also required to pay out any accrued, unused vacation to Colorado employees. All vested vacation must be paid to the employee as wages, at the final rate of pay.
For an involuntary termination, best practice is to provide employees with a physical check for all outstanding wages upon termination. It is possible to schedule this final check in advance to be paid via direct deposit on the termination date, but can be tricky for a variety of logistical reasons. All funds paid via physical check should be recorded in Justworks for tax purposes.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.