When employment ends, no matter the circumstances, payroll timing becomes critical, especially in Colorado.
Final pay is not just a routine closing step; it is one of the most time-sensitive wage obligations employers face. A delay that feels minor internally can quickly shift into a wage issue once statutory deadlines apply, particularly under stronger wage enforcement that took effect in 2025.
Key Takeaways for Colorado Employers
- Final pay deadlines in Colorado are strict and time-sensitive.
- Timing depends on how employment ends.
- Late or incomplete final pay is treated as unpaid wages.
- Unpaid wages fall into Colorado’s wage enforcement framework.
- Enforcement is handled through the Colorado Division of Labor Standards and Statistics.
What Final Pay Means Under Colorado Law
Final pay refers to the last wages an employee is legally entitled to receive when employment ends. This includes all compensation earned through the employee’s final day of work.
Depending on the circumstances, final pay may include regular wages, earned overtime, accrued vacation or PTO if treated as earned wages under the employer’s written policy, and other compensation required by agreement.
Colorado treats these amounts as wages once they are earned. If they are not paid on time, they are considered unpaid wages under the Colorado Wage Act.
Final Pay Deadlines in Colorado Depend on How Employment Ends
Journey Payroll & HR’s Chief Operating Officer, Lina Freed, states “We have found many of our clients, and Colorado employers in general, are surprised by how strict Colorado’s final pay rules can be. That is why we strive to educate and support our clients in these situations.”
If an employee is terminated or laid off, final pay is generally due immediately at separation, subject to limited exceptions, including the accounting-unit exception that allows payment by the next regular workday.
If an employee resigns, final pay is due on the next regular payday.
This distinction matters. Many payroll systems are designed to process pay on scheduled cycles, not to issue immediate or off-cycle checks. When separation events aren’t flagged quickly, final pay deadlines can be missed before anyone realizes there’s a problem.
What Must Be Included in Final Pay and Where Employers Miss It
Under Colorado law, specifically the Colorado Wage Act (C.R.S. § 8-4-101 et seq.), final pay must include all earned and determinable compensation through an employee’s last day of work.
- Regular wages for hours worked
- Overtime already earned
- Commissions or bonuses that are earned and determinable
- Accrued vacation or PTO if the employer’s written policy treats it as earned wages
- Any other compensation that meets the statutory definition of wages
Where employers most often miss the mark is not in the definition, but in the execution.
Overtime may not yet be calculated, PTO balances may be applied inconsistently with written policies, commissions may be earned but not processed before separation, or manual checks may be delayed due to internal approvals.
When earned compensation is omitted or delayed beyond statutory deadlines, it becomes an unpaid wage issue under the state’s enforcement framework.
What Changed: Why Final Pay Errors Matter More in Colorado Now
Colorado strengthened wage and hour enforcement authority through House Bill 25-1001, signed into law in May 2025 and effective August 6, 2025, reinforcing how unpaid wages are handled at the administrative level.
When final pay is late or incomplete, it is treated as unpaid wages under the Colorado Wage Act. That classification matters because unpaid wages can now move more directly into the state’s enforcement process.
Expanded enforcement tools allow the state to:
- Handle larger wage claims administratively
- Apply statutory penalties when wages are not paid on time
- Increase transparency around certain violations
- Escalate unresolved matters
The definition of final pay did not change. The enforcement environment around unpaid wages did.
Where Final Pay Breakdowns Actually Start
Final pay issues rarely begin in payroll. They begin with communication gaps.
A termination decision may not reach payroll immediately. A PTO balance may not be reviewed until after separation. A manager may assume the payroll team can “adjust it later.” These small disconnects are often what cause deadlines to be missed.
In Colorado, separation triggers an accelerated wage timeline. When internal communication lags behind that timeline, payroll risk increases, even if the wages are ultimately paid.
How Final Pay Is Enforced in Colorado
Final pay enforcement is administered by the Colorado Division of Labor Standards and Statistics, which is responsible for enforcing the Colorado Wage Act and handling wage complaints across the state.
When final wages are not paid on time, employees may file a wage complaint with the Division. The agency reviews documentation, notifies the employer, evaluates whether wages were owed under statute, and issues a formal determination if a violation is found.
Enforcement mechanisms may include:
- Administrative wage claims handled directly by the state
- Statutory penalties applied to unpaid wages
- Orders requiring payment of wages and applicable fines
- Public posting of certain violations under state transparency provisions
Final pay disputes do not automatically require a civil lawsuit. The state has the authority to adjudicate qualifying wage claims through its administrative process.
Journey Payroll & HR works directly with Colorado employers on payroll processing, wage and hour compliance, and separation pay procedures under both state and federal law. Learn more at JourneyPayrollHR.com.
Why This Matters for Local Businesses and What to Do About It
Most final pay issues do not arise from intentional noncompliance. They typically begin with operational breakdowns: a termination decision made outside payroll hours, a PTO balance not reconciled before separation, or a manager assuming payroll can “correct it next run.”
Under the current enforcement structure, those routine breakdowns carry more risk than they once did. Once wages are late, they are treated as unpaid, and unpaid wages move into the state’s administrative enforcement process.
For employers, the solution is procedural, not reactive.
Colorado businesses should ensure that:
- Separation procedures trigger immediate payroll notification
- PTO payout policies are clearly documented and consistently applied
- Off-cycle checks can be processed when required
- Managers understand final pay timing rules
Proactive system alignment is significantly less disruptive than responding to a wage complaint after the fact.
About the Source
This article was prepared by Journey Payroll & HR, a Colorado-based payroll and human resources firm that helps employers navigate wage and hour compliance, worker classification, payroll processing, and state-specific employment laws. It is provided for educational purposes and reflects Colorado wage-and-hour enforcement as of 2025–2026.