Intro to Colorado Labor Laws

The Colorado Department of Labor and Employment has adopted COMPS Order #40 (the “Order”), updating regulations under the Colorado Wage Act and increasing employer compliance obligations. The changes expand the definition of “employer” to include certain individuals with at least a 25% ownership interest. Crucially, this creates a presumption of personal liability for unpaid employee wages. To avoid this status, minority owners must affirmatively prove they have "fully delegated" all day-to-day operational authority to another party. The Order further allows local governments with higher minimum wages to authorize larger tip credits, and require employers to maintain additional records related to vacation and paid sick leave accrual and usage.

Colorado also amended Wage Protection Rules affecting how sick leave pay must be calculated under the Healthy Families and Workplaces Act, particularly for employees with multiple pay rates or commission-based compensation. In addition, the state adopted final rules under the Colorado Youth Employment Opportunity Act, expanding documentation, wage, and job-duty requirements for employers that hire minors.

Employers should review wage and hour practices, update leave tracking, and pay rate calculations to ensure they are in compliance with these updated requirements.

Colorado has expanded the state’s Family and Medical Leave Insurance (FAMLI) program to include Neonatal Care Leave, providing a vital new benefit for parents with infants in intensive care. This update allows eligible employees to receive up to 12 weeks of paid leave for the duration of a NICU stay, which can be taken in addition to the standard 12 weeks of parental bonding leave. The benefit is available per infant and applies to biological, adoptive, and foster parents, as well as those acting in a parental role. 

Employers should review and update their leave policies and employee handbooks to include Neonatal Care Leave.

On May 16, 2025, HB25-1312 was signed into law expanding protections for transgender individuals by banning deadnaming and misgendering. Further, the law expands protections for when an individual makes a request to go by a chosen name in relation to any protected characteristic so long as the name is not offensive or is made for frivolous purposes. Employers should review their policies and practices to ensure they’re updated to reflect the updated protections.

Starting this summer, the Colorado Artificial Intelligence Act (CAIA) will require employers using artificial intelligence (AI) in hiring and employment decisions to implement safeguards against discrimination. Employers will be required to implement a formal AI risk management program that includes annual bias audits, impact assessments, and clear disclosures to any employee and job candidate impacted by AI-driven employment decisions.

Employers, including those using AI tools from third-party vendors, must ensure their systems do not result in discriminatory outcomes. Employers will want to work closely with their legal counsel to review their AI-driven processes to remain compliant.

Colorado has passed a new law that increases penalties on employers for wage and hour violations under the Colorado Wage Act. The law now grants the Division of Labor Standards and Statistics the authority to publish the names of employers found to have willfully violated the law—for example, refusing to pay earned wages, misclassifying employees as independent contractors, or ignoring state wage orders after being warned. The law also increases penalties for misclassifying employees as independent contractors.  A willful violation now carries a $5,000 fine, which increases to $25,000 for a second violation within five years. The penalties can be waived if the employer pays all claimed wages within 14 days of an administrative claim.

Colorado recently passed a law that will expand employees’ choice of doctors under Workers' Compensation insurance starting in 2028. Under the new law, employers must notify employees that they can choose their own doctor from the list of level I or level II accredited physicians published by the Division of Workers' Compensation (DOWC). Employers should also update any workplace injury policies that currently require employees to use a doctor selected by the employer.