Final Paycheck/Termination Checks
In this article
- Timeliness of Final Payment/Termination Check
- Deductions from Final Payments
- Benefit Deductions from Final Termination Check
- Deducting for Employee Loan Balances
- Pay Out of Accrued Vacation Balances
In the State of Colorado, there are certain labor laws to be aware of as it relates to final employee paychecks.
Timeliness of Final Payments/Termination Checks
- If an employee resigns or quits, it is acceptable for them to receive their last payment with the next regular payroll cycle.
- If an employee was terminated by the employer, the employer should issue payment at the time of discharge. However, exception are allowed when the employer's accounting/payroll unit/person, is not scheduled to be open at the time of discharge. In this case the payment should be made available to employee no later than 6 hours after the start of next regular workday. In addition, if the employer's accounting/payroll unit is off-site (such as ASAP), the employer has additional time. In this case, the employer should furnish the payment no later than 24 hours after the start of the accounting unit's (ASAP's) next workday. Delivery location can be the work site, the employer's local office, or to the employee's last known mailing address if postmarked timely. View the exact language here.
Deductions from Final Payments
If an employee fails to return company property which was entrusted to them, the employer may take 10 calendar days from termination to audit and account for the property value of the items entrusted to the employee before final wages are paid. According to the CO-DOL and ruling C.R.S. 8-4-109
Benefit Deductions from Final Termination Checks
Employee portion of Health, Dental & Supplemental Insurance premiums should be reconciled to insure the employee's last month of coverage was properly accounted for prior to issuing payment. Retirement plans (401K & Simple IRA's) have rules that generally require employers continue to withhold any elected amounts an employee may have requested.
Deducting for Employee Loan Balances
If an employee was granted a loan or advance from the company, employers can withhold the amount from the employee's final payment. However, an employer would be well advised to have a signed loan agreement in place that speaks to this circumstance. This would certainly help if a dispute were to arise.
Pay Out of Accrued Vacation Balances
Colorado labor law requires employers issue payment of any accrued & unused vacation balances upon separation whether the employee resigns or terminated.