The Colorado employee separation process is complex—especially if you have workers in more than one state. State laws regarding employer obligations and employee rights can vary significantly.
This employee separation checklist and guide provides a helpful overview of final paycheck requirements, separation notices, severance agreements, employee termination, and withdrawing registration to do business in the state.
Colorado Employee Separation Checklist
- Provide final paycheck
- Issue separation notice
- Execute severance agreement
- Report termination
- Withdraw registration to do business
1. Final Paycheck Requirements in Colorado
Colorado law mandates that employers pay employees promptly upon separation. If an employee is terminated, payment must be made immediately. If the employer’s accounting unit is not operational at the time of termination, payment is required within 6 hours of the unit’s next regular workday. For off-site accounting units, the paycheck must be delivered within 24 hours to the work site, local office, or the employee’s last-known mailing address. Employees who resign must be paid by the next regular payday.
Final pay must include all earned, vested, and unpaid wages, including any unused vacation time (Colo. Rev. Stat. § 8-4-101). If payment isn’t made within 60 days by other means, it must be provided at the work site, local office, or mailed to the employee. Employers who fail to comply may face penalties, including additional wages or up to 125 percent of unpaid wages. There are increased penalties for willful non-payment.
2. Firing Employees in Colorado
Firing employees in Colorado is subject to at-will employment laws and exceptions. Employers must provide a Separation Notice to all employees who leave their job, detailing the availability of unemployment insurance.
This notice must include information such as the eligibility requirements for unemployment benefits, how to file a claim, necessary claim-filing details, and how to check the status of a claim. Colorado provides a standard form for this notice, which includes all the required personal and employment details.
Furthermore, Colorado employers with fewer than 20 employees who offer group health insurance must notify separated employees of their right to continue coverage under the state’s COBRA law within 10 days of separation.
This notice is required for employees who have been covered by the employer’s health plan or a similar plan for at least six months before separation. The notice must explain the right to continue coverage, the cost and payment details, and the consequences of not making timely payments.
3. Severance Agreements in Colorado
When employers in Colorado execute claims releases with employees, they must explicitly list the claims being released under both federal and state law. In Colorado, the state law claims that may be released are all those under Colorado’s minimum wage and overtime laws, the Colorado Equal Pay for Equal Work Act (C.R.S. §§ 8-5-101 et seq.), Colorado Family Care Act (C.R.S. § 8-13.3-201), Colorado Pregnant Workers Fairness Act (C.R.S. § 24-34-402.3), Colorado Anti-Discrimination Act (C.R.S. §§ 24-34-601 et seq.), and the Creating a Respectful and Open World for Natural Hair (CROWN) Act.
Employers should take care to ensure that the release of claims only waives claims that arose prior to the agreement’s effective date, instead of future claims.
Finally, organizations must remember to review applicable federal laws. For example, the NLRB’s recent decision and subsequent guidance from its General Counsel have limited the use of non-disparagement and confidentiality provisions in severance agreements.
4. Reporting Employee Termination in Colorado
For employees with an Income Withholding for Support Order (“IWO”), employers are required to report the termination to the child support agency, court, or attorney that issued the IWO as soon as possible. You can register for online reporting with the Federal Office of Child Support Enforcement here.
Employers can also report an employee’s termination physically by completing the Notification of Employment Termination or Income Status section of the IWO and fax or mail it to the child support agency that issued it. Be prepared with the following information:
- Employee Name
- Employee Case Identifier
- Last Known Home Address
- New Employer Address (if known)
- Date of Employee Separation
5. Withdraw Registration to do Business in Colorado
If separating from your last Colorado employee results in an end to doing business in Colorado, you can formally withdraw its registration to do business in that state by submitting the proper form to the Secretary of State. For-Profit Corporations, Non-Profit Corporations, and Limited Liability Companies (LLCs) must file a Statement of Foreign Entity Withdrawal.
Colorado requires these forms to be filed electronically via the Secretary of State’s online portal. Instructions for doing so can be found here.
Stay Compliant with Colorado Employee Separation Requirements
Staying on top of Colorado employee termination laws is the key to mitigating risk and complying with all state and federal laws.
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Looking for employee separation laws for a different state? Our interactive map makes it easy to find all employee termination requirements by state.
