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Nobody ever said running a business was a walk in the park. As an employer, you have a lot of balls in the air, and compliance is just one of them. One really, really important one that, if dropped, could cost you a whole lot of money.
In addition to federal regulations, each state has their own share of employment laws that business owners need to be aware of. Here, we’re highlighting some of these key state-specific requirements and laws, and offering guidance to help you keep up.
Bear in mind, this list is not comprehensive, and there may be local or industry-specific employment requirements that your business needs to comply with. It’s best to consult with counsel to ensure compliance with all applicable laws, as Justworks does not provide legal advice.
Payroll Tax Accounts
Because Justworks reports state unemployment taxes on behalf of customers who utilize Justworks’ PEO services, employers will need to close their Colorado unemployment and withholding accounts prior to joining the Justworks platform. Linked here are the steps you’ll need to take: Colorado - State Unemployment Insurance
Recruiting & Hiring Practices
Pay Transparency and Salary History
Employers in Colorado are prohibited from inquiring about applicants’ salary histories and cannot use such information when making employment decisions. Furthermore, employers are required to include compensation range and available benefits on all internal and external job postings, with limited exceptions. The law covers employers with at least one employee in Colorado and extends the requirement to disclose compensation range and available benefits to positions that may not be filled in Colorado.
Colorado Department of Labor and Employment (DLE): Equal Pay for Equal Work Act, Part 2
Ban-the-Box
Employers in Colorado are prohibited from inquiring about an applicant’s criminal history on an initial application and from including on an application or job advertisement that a candidate with a criminal history should not apply for the position. Exemptions may apply in limited circumstances, including where required by law.
Colorado DLE: Colorado Chance to Compete Act
Credit History Ban
Employers with 4 or more employees may not request a credit report for any candidate or employees, and may not use such findings as the basis for any employment actions. This is subject to limited exceptions, included where required by law and where such information is “substantially related” to the individual’s position in the business.
Colorado DLE: Employment Opportunity Act
Drug Testing
Colorado does not have a state-wide restriction on drug testing at this time, but employers should be mindful of the legal use of drugs in Colorado and how that impacts their internal policies and decisions.
The city of Boulder has a drug testing ordinance that restricts many employers' ability to conduct screenings on prospective and current employees, with limited exceptions. In either case, the employer must adopt a written policy with specific requirements to be shared in advance of any test. Current employees may only be tested if an “individualized reasonable suspicion” exists. Candidates may only be screened if they are the single finalist for the position, and all finalists for that position are tested in the same way.
Mineral*: Colorado Drug and Alcohol Testing
Independent Contractors
When classifying workers as employees or independent contractors, there are a few things to consider, including the different tests that apply under different federal and state employment laws, and potential penalties and other liabilities for misclassifying employees as independent contractors. Certain state laws apply tests that are more stringent than the guidance provided by federal agencies, such as the IRS and Department of Labor, to apply in conjunction with federal laws.
You can read our general Help Center article on contractors, and view information on how to determine if someone is a contractor or employee in Colorado in the relevant section at the link below.
Colorado DLE: Independent Contractors
Pay & Benefit Requirements
Colorado has minimum wage and overtime requirements in excess of the federal requirements. Colorado also has additional pay and other requirements to be met in order for employees to be considered exempt from minimum wage and overtime laws.
The localities in Colorado, listed below, have a higher minimum wage than at the state level. Where both laws apply to an employee based on worksite, the aspects of each law that most favor the employee should be followed. Minimum wages in these localities are always changing, and this list is always growing. The very best way to ensure compliance with all applicable laws is to consult with legal counsel.
- Denver
- Boulder County (unincorporated areas)
- Edgewater
Colorado law requires employers to pay employees at the overtime rate, unless otherwise exempt, when certain hours-worked thresholds are reached. Overtime rate is defined here as one and a half times (1.5x) the employee’s regular rate of pay. An employer is required to pay overtime in Colorado when an employee works:
- More than 40 hours in a workweek; or
- More than 12 hours in a workday; or
- More than 12 consecutive hours, regardless of workday.
Employers must calculate overtime for (i) working more than 12 hours in a workday or (ii) working more than 12 consecutive hours (regardless of workday) and pay overtime wages based on whichever approach provides a greater benefit to the employee, and then add any additional hours that were not counted in that calculation but resulted in weekly overtime.
Read more about how Justworks calculates overtime requirements in Colorado here.
Mineral*: Colorado Minimum Wage and Overtime*
Colorado DLE: Minimum Wage
Colorado DLE: Overtime
Colorado DLE: Exemptions
Meal and Rest Laws
If a Colorado employee works a shift longer than 5 hours, they must receive a meal break of at least 30 minutes, occurring after the first hour ends and before the last hour begins. The break must be duty-free to the extent possible, and where not possible, the employee must be able to consume a meal of their choice and get paid for an on-duty meal period. Employees must also receive a paid 10-minute break for each 4-hour period of work, occurring in the middle of the 4-hour period.
Colorado DLE: Rest & Meal Periods
Nursing Mothers Act
In addition to requirements under Federal law, under Colorado law, Employers with one or more employees must allow employees reasonable time, which may be paid or unpaid, to express breast milk under the Workplace Accommodations for Nursing Mothers Act. Employers must also make reasonable efforts to provide a room or convenient location, other than a restroom stall, to do so in private.
Mineral*: Colorado Lactation Accommodations
Colorado DLE: Workplace Accommodations for Nursing Mothers
State Retirement Program
The Colorado Secure Savings Program requires employers with 5 or more employees to offer a qualified retirement savings plan to their employees. Employers may opt into the state plan, or they may qualify for an exemption if they already offer a plan equal to or greater than the state plan.
You can read more about state retirement programs at the link below.
Leave
Paid Sick Leave
Under Colorado’s Healthy Families and Workplaces Act (HFWA), most Colorado employers are required to offer up to 48 hours of paid sick and safe leave to Colorado employees. The Help article below details additional requirements of this law.
Bereavement Leave
As of August 7, 2023, the paid sick leave law under the Colorado Healthy Families and Workplaces Act allows employees to take protected leave to “grieve, attend funeral services or a memorial,” or address “financial and legal matters that arise after the death of a family member.”
Vacation
Employers are not required to offer vacation benefits in Colorado, but if they choose to do so, earned vacation is considered wages and cannot be forfeited at year end nor upon separation. All unused, earned vacation must either be used or paid out. This means that “use-or-lose” policies and carryover caps are prohibited in Colorado and any policy indicating otherwise is superseded by this requirement.
Colorado DLEt: Vacation
Paid Family and Medical Leave
Under Colorado's paid Family and Medical leave Insurance (FAMLI) program will allow employees to take up to 12 weeks of job-protected time off with partial wage replacement, for certain qualifying reasons. Employer and employee contributions set to begin January 1, 2023, and benefits will be available to those eligible to use beginning on January 1, 2024. The Justworks Help article below has additional details, and will contain more information as this program continues to be developed.
Colorado Paid Family and Medical Leave
Colorado DLE: Family and Medical Leave Insurance Program
Colorado Family Care Act
Colorado’s Family Care act expands upon the federal Family and Medical Leave Act (FMLA) by expanding the group of family members for whom employees in Colorado may take medical leave when the family member has a serious health condition to include a person to whom the employee is related by blood, adoption, legal custody, marriage, or civil union or with whom the employee resides and is in a committed relationship. Note that leave that qualifies under the CFCA. but not FMLA, cannot be counted against an employee’s FMLA leave bank .
Mineral*: Colorado Family and Medical Leave
Harassment & Discrimination
In addition to protections under Federal law, Colorado law prohibits employment discrimination based on membership in any protected class by employers covered under Colorado's anti-discrimination laws. Most Colorado employers are covered under these state anti-discrimination laws.
Colorado Department of Regulatory Agencies: Discrimination
Mineral*: Colorado Discrimination and Harassment Compliance
Colorado Pay Parity
The Colorado Equal Pay for Equal Work Act prohibits employers from paying employees of different sexes differently for substantially similar work and includes many other provisions, including the pay transparency requirements and salary inquiry prohibitions described in the Recruiting & Hiring Practices section of this guide. In addition to the impacts on pay and hiring practices, the act also requires employers to keep records of job descriptions and internal compensation history until two years after the end of employment.
Colorado General Assembly: Equal Pay For Equal Work Act
Fact Sheet: Equal Pay for Equal Work Fact Sheet
Training
Though not required, employers are encouraged to take all steps necessary to prevent discrimination, including through training opportunities. To provide additional support in this area, Justworks has teamed up with EVERFI to offer customers free access to a suite of harassment prevention and inclusion training.
Separation
Colorado employers should familiarize themselves with specific compliance issues and certain key considerations for separating employees. The Help article below further details compliance considerations when separating an employee in Colorado, such as notice requirements and requirements around final wages (including the requirement to pay out accrued, unused vacation time).
Terminating an Employee - Colorado
Colorado DLE: INFO: Payment of Earned Vacation upon Separation of Employment
Business Closings and Layoffs
The Federal WARN Act imposes certain notice and other obligations on covered businesses before conducting large-scale business closures, layoffs, or relocations. Colorado employers who may be required to file notice can do so with the state’s Department of Labor and Employment. For more information, visit the links below.
U.S. Department of Labor: Worker Adjustment and Retraining Notification (WARN) Act Advisor
Colorado DLE: Worker Adjustment & Retraining Notification
Notes
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Disclaimer
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.