In December 2019, the Colorado Department of Labor and
Employment, Division of Labor Standards and Statistics, issued a
final rule clarifying the statutory prohibition on "use it or
lose it" vacation time payouts. This rule, 7 CCR 1103-7 2.15,
begins by repeating the statutory definition of "vacation
pay" which is part of the definition of
"'[w]ages' or compensation":
"Vacation pay earned in
accordance with the terms of any agreement. If an employer provides
paid vacation for an employee, the employer shall pay upon
separation from employment all vacation pay earned and determinable
in accordance with the terms of any agreement between the employer
and the employee."
Previously, this definition created confusion and led to
contrary interpretations, including an unpublished Colorado Court
of Appeals opinion holding an employee could forfeit
vacation time according to the terms of an employment
agreement.
