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Top Tips: Complying with Colorado’s Wage Claim Act

All employers have dealt with and will continue to deal with employee terminations–whether it be the employee who quits or the employee who is let go.  There are many loose ends that must be tied up when termination occurs.  Under Colorado law, one such loose end is compliance with Colorado’s Wage Claim Act.  A failure to comply with the Act can result in the imposition of penalties against the employer should the terminating or terminated employee bring suit under the Act.  It is therefore imperative that employers make sure they comply with the Act.  Some tips for ensuring compliance include:

  • If the employee is being terminated by the employer, the employer must have the employee’s final paycheck ready on the date of termination.
  • If the employee is quitting his/her employment, the employer must have the employee’s final paycheck on the employer’s next regular payday.
  • The final paycheck must include all amounts that the employee has earned as of the last date of employment, including all accrued and unused vacation/personal time, and any earned, vested and determinable bonuses or commissions.  Keeping appropriate and precise records of time worked and accrued time off on an on-going basis is crucial to meeting this obligation, as is documenting how and when commissions and bonuses are earned and payable.
  • Deductions from the final paycheck may include only certain limited items such as applicable taxes; court ordered garnishments; amounts loaned to or advanced to the employee pursuant to a written agreement; amounts to cover replacement costs due to theft by the employee if a report has been filed with law enforcement; amounts previously authorized by the employee for deductions; and amounts of money or the value of property entrusted to the employee but which the employee failed to return.

If this or any of our communications raise any questions, please contact any member of the Spencer Fane Labor & Employment Group