FAQs on Issuing Final Pay / Termination Checks in Colorado
In the State of Colorado, employers must follow wage laws when issuing final pay and termination checks.
Final Pay FAQs
- Do I have to issue a final paycheck within a certain timeframe following the employee's departure?
- Can I deduct the value of unreturned company property from final pay?
- Do I need to deduct benefits from final pay?
- Can I deduct the remaining balance of an employee loan from final pay?
- Do I have to pay out accrued vacation balances to terminated employees?
- What should I do if an employee claims they lost their final paycheck?
- What information must I provide to employees upon separation?
Do I have to issue a final paycheck within a certain timeframe following the employee's departure?
In Colorado, the timeliness of final pay depends on the situation. If an employee resigns or quits, it is acceptable to pay their last check with the next regular payroll cycle.
If an employee was terminated, you should issue payment at the time of discharge. However, exceptions are allowed if an in-house accounting/payroll processor is not scheduled to be available at the time of discharge. In this case, the termination check should be available to employee no later than 6 hours after the start of next regular workday. In addition, if the accounting/payroll processor is offsite (such as ASAP), you have up to 24 hours to issue the final paycheck after the start of the service provider's next workday.
Delivery location for termination checks may be the worksite, the employer's local office, or to the employee's last known mailing address if postmarked timely.
For more information, review the CO Department of Labor & Employment's (CDLE) guidance on final pay.
Can I deduct the value of unreturned company property from final pay?
Yes. Per CDLE, if a terminated employee fails to return company property that was entrusted to them during their employment, 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 in accordance with C.R.S. 8-4-109.
Do I need to deduct benefits from final pay?
Yes. You should reconcile the employee's portion of health, dental & supplemental insurance premiums to ensure their last month of coverage was properly accounted for prior to issuing payment. Retirement plans (e.g., 401(k) & Simple IRAs) have rules that generally require employers continue to withhold any elected amounts an employee requested.
Can I deduct the remaining balance of an employee loan from final pay?
If your organization granted a loan or advance to the employee, you can withhold the balance from their final pay. We strongly encourage employers have a signed loan agreement in place that speaks to this circumstance in case a dispute arises.
Do I have to pay out accrued vacation balances to terminated employees?
Yes. Colorado labor law classifies vacation pay as wages or compensation. Therefore, you will need to issue payment of any accrued and unused vacation balances upon separation, regardless if the employee resigned or was terminated.
What should I do if an employee claims they lost their final paycheck?
In general, employers do need to reissue a paycheck that is claimed as lost, even if it's the employee's fault for losing the check.
Employees must be paid for all time worked in accordance with the Fair Labor Standards Act (FLSA), as well as Colorado wage laws. Until the employee has cashed their check, they technically have not been paid. Therefore, if an employee loses the paycheck before cashing it, the employer is obligated to reissue a check to them.
Prior to reissuing the paycheck (or connecting with your ASAP Account Manager to request a reissue), contact your bank to put a stop payment on the lost check so it cannot be cashed if it's eventually found. You can also issue final pay via direct deposit to ensure the payment is received.
What information must I provide to employees upon separation?
Upon separation, Colorado employers are required to provide former workers with a written notice regarding unemployment compensation. This notice, which can be an electronic or hard copy, must include a statement about the availability of unemployment benefits to eligible workers, as well as where to file a claim, details required for filing, and a contact to follow-up on claim status. As of May 25, 2022, this notice must also include the following information:
- Employer's name and address;
- Employee's name and address;
- Employee's ID number or the last four numbers of their SSN
- Employee's start date
- Date of last day worked
- Year-to-date earnings
- Wages for the last week the employee worked; and
- Reason the employee separated from the employer
Disclaimer: This information is provided as a self-help tool and does not constitute legal or financial advice. Laws, regulations and lending products are changing daily and decisions as to whether or how to use this information and/or what actions to take are solely those of the employer. The providers of this information disclaim any and all responsibility and liability for its accuracy, completeness or fitness for your particular business purposes.