Under Colorado PTO rollover law, any vacation or paid time off you have earned but not used must carry into the next year. Employers cannot zero out your balance on December 31, cannot enforce a use-it-or-lose-it policy, and cannot make you forfeit accrued hours as a condition of employment. They can cap how high your balance climbs, but the cap has to be at least one full year’s worth of accrual. Sick leave is governed by a separate statute and rolls over up to 48 hours.
Earned Vacation and PTO Must Roll Over
Colorado’s Wage Protection Rules classify vacation pay as wages, not a discretionary perk.1Colorado Department of Labor and Employment. Wage Protection Rules 7 CCR 1103-7 Once you have worked the hours that earn a day of PTO under your employer’s policy, that day belongs to you the same way your paycheck does.
The Colorado Supreme Court settled the point in 2021 in Nieto v. Clark’s Market. The court held that vacation pay “is no less protected than other wages or compensation and, thus, cannot be forfeited once earned,” and that any agreement purporting to forfeit earned vacation is void under Colorado law.2Justia. Nieto v Clark’s Market, Inc Whatever a handbook or offer letter says, once the hours accrue, they carry forward.
Use-It-or-Lose-It Policies Are Illegal in Colorado
Because accrued vacation is a wage, a policy that erases unused hours at year-end is illegal wage forfeiture. The Colorado Department of Labor and Employment says so directly: an employer’s vacation policy “cannot cap how much already-accrued vacation pay carries over to the next year — because that does forfeit already-earned vacation.”3Colorado Department of Labor and Employment. INFO 3E – Payment of Earned Vacation upon Separation of Employment
This catches some employers off guard, particularly those bringing policies from states where use-it-or-lose-it is legal. The reason you didn’t use the time doesn’t matter either. If you chose not to take vacation, were too busy, or had requests denied, the hours still stay on your balance.
What Employers Can Legally Do: Accrual Caps
Colorado doesn’t require employers to let vacation stack up without limit. State law distinguishes between capping future accrual and stripping away what you already earned. Your employer can set a ceiling on total balance; once you hit it, you stop earning new hours until you use some down. The Wage Protection Rules require any such cap to be at least one year’s worth of accrual, so a policy granting 15 days a year cannot cap the balance below 15 days.1Colorado Department of Labor and Employment. Wage Protection Rules 7 CCR 1103-7
Here is the practical difference. A cap pauses earning until you use hours; the hours you already have stay put. A forfeiture policy takes hours away. The first is legal. The second is not, regardless of what the employer calls it.3Colorado Department of Labor and Employment. INFO 3E – Payment of Earned Vacation upon Separation of Employment
What Counts as PTO Under the Rollover Rule
The label on your leave benefit doesn’t decide whether the rollover rule applies. The legal test is whether you can use the time for any purpose at your discretion. If yes, it’s vacation pay under the Wage Act and gets the full protection: no forfeiture, mandatory rollover, and payout at separation.3Colorado Department of Labor and Employment. INFO 3E – Payment of Earned Vacation upon Separation of Employment
Several common leave types generally qualify:
- Combined PTO banks that mix vacation and personal time into one balance usable for anything.
- Personal days you can take for any reason without a qualifying event.
- Floating holidays you schedule at your own discretion.
Leave restricted to a specific qualifying event — sick time limited to health needs, bereavement, caretaking leave — is not vacation pay and follows different rules.
Unlimited PTO
Unlimited PTO sits in a gray zone. The Department of Labor takes the position that truly unlimited PTO is generally not payable at separation because the amount cannot be determined. If an employer calls a policy unlimited but in practice caps how many days you can actually take, the state may treat it as a limited, determinable benefit that must be paid out. Reality controls, not the label.3Colorado Department of Labor and Employment. INFO 3E – Payment of Earned Vacation upon Separation of Employment
Sick Leave Rolls Over Separately, Up to 48 Hours
Sick leave has its own statute and its own rollover rule. The Healthy Families and Workplaces Act requires every Colorado employer to provide paid sick leave, accrued at one hour for every 30 hours worked.4Colorado Department of Labor and Employment. Colorado Healthy Families and Workplaces Act Employees can earn and use up to 48 hours per year unless the employer sets a higher limit.
Unused sick leave carries into the next year, up to 48 hours. Even with the carryover, you still cannot use more than 48 hours in a single year unless your employer allows more.5Colorado General Assembly. SB20-205 Sick Leave for Employees The rollover exists so someone who gets sick in January isn’t starting the year at zero.
Two features separate sick leave from vacation. Sick leave can only be used for qualifying health reasons, and employers do not have to pay it out when you leave the job. Your sick leave balance disappears at separation. Your vacation balance does not.3Colorado Department of Labor and Employment. INFO 3E – Payment of Earned Vacation upon Separation of Employment
Rolled-Over PTO Gets Paid Out When You Leave
Because earned vacation never expires, your employer must pay out your full accrued balance when employment ends, no matter the reason. Fired, laid off, or quit without notice, the vacation hours are wages and the payout is mandatory.2Justia. Nieto v Clark’s Market, Inc
Timing depends on who ended the relationship. If the employer initiates the separation, all earned wages including accrued vacation are due immediately, with a short grace period if payroll isn’t running at that moment. If you resign, the payout comes on the next regular payday.6Justia Law. Colorado Code Title 8 – Section 8-4-109 The payout is calculated at your final rate of pay. Forty accrued hours at $30 per hour is $1,200 before taxes.
Any contract clause, handbook provision, or verbal agreement that tries to waive these rights is void and unenforceable.7Justia Law. Colorado Code Title 8 – Section 8-4-121 You cannot sign away the payout at hiring, even if you tried.
If Your Employer Ignores the Rollover Rule
If your employer wipes your balance at year-end, enforces use-it-or-lose-it, or refuses to pay out accrued vacation when you leave, you can file a complaint with the Colorado Division of Labor Standards and Statistics. Filing starts online through the Division’s portal.8Colorado Division of Labor Standards and Statistics. Welcome to the Division of Labor Standards and Statistics
Send a written demand to your employer before or alongside the complaint. Once you send that demand, the employer has 14 days to pay. If they don’t, the penalty is automatic: the greater of double the unpaid amount or $1,000. If the failure was willful, that becomes triple the unpaid amount or $3,000, whichever is more. A failure is automatically willful if the employer has been caught doing the same thing within the previous five years.9Colorado Department of Labor and Employment. Colorado Wage Act Revised August 6, 2025
Gather your records before filing: pay stubs showing your accrual rate, the written PTO or vacation policy from your handbook or offer letter, records of hours requested and denied, and your final pay stub if a separation payout is at issue. The stronger the paper trail, the faster the Division can evaluate the claim.