Colorado’s paid sick leave law creates new obligations that catch many employers off guard. Miss the accrual calculations or job protection requirements, and you face penalties that start at $50 per violation. But these can increase significantly for willful or repeated violations, including additional fines and legal consequences. What’s worse, the complexity multiplies when coordinating state sick leave with FMLA, local ordinances, and existing PTO policies.
Fortunately, this guide breaks down Colorado’s requirements into actionable steps. From understanding the $2,500 eligibility threshold to implementing proper tracking systems, you’ll learn what needs to be done before your next payroll cycle. Along the way, we’ll cover accrual rates, usage rules, and the recordkeeping that keeps you compliant during enforcement audits.
Key Takeaways:
- Employees earn 1 hour of paid sick leave per 30 hours worked, with eligibility kicking in after earning $2,500 in wages over four quarters
- Job protection applies after 180 days of employment, preventing retaliation for legitimate leave usage
- Employers must track accruals, maintain three years of records, and post required notices or face escalating penalties
Overview & Purpose of the Colorado Paid Sick Leave Law
Colorado’s Healthy Families and Workplaces Act (HFWA) fundamentally changed sick leave requirements statewide. Unlike previous voluntary policies, the law now requires all employers, regardless of size, to provide paid sick leave that employees accrue through hours worked.
The implementation rolled out strategically in phases. First, accrual requirements began January 1, 2021 for employers with 16+ employees. Then smaller employers joined January 1, 2022. While this phased approach gave businesses time to update payroll systems and policies, many still scrambled to catch up.
Behind these requirements lies a simple goal: reducing workplace illness transmission while supporting family caregiving needs. After all, when employees can’t afford unpaid time off, they work sick or leave family members without care. Colorado’s solution provides guaranteed paid leave that accumulates predictably.
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HFWA Coverage & Eligibility Requirements
Understanding who qualifies for Colorado paid sick leave prevents costly misclassifications and coverage gaps down the line.
To start, employees become eligible after earning $2,500 in wages subject to Colorado unemployment insurance premiums over the previous four completed calendar quarters. This threshold captures most regular employees while excluding very limited part-time workers. Importantly, the calculation looks backward from the current quarter, updating as wages accumulate.
Meanwhile, job protection against retaliation begins after an employee has completed 180 days of continuous employment. Leave taken before this period is not guaranteed job protection. Before this milestone, employees can use accrued leave but lack protection against termination. However, after 180 days, taking legitimate sick leave cannot trigger discipline, demotion, or firing. Moreover, this protection extends to good-faith leave requests, even if later denied.
As for coverage scope, the labor law covers nearly all Colorado employees, including part-time, temporary, and seasonal workers. Independent contractors remain exempt, though misclassification carries severe penalties. Additionally, agricultural workers, certain government employees, and workers covered by collective bargaining agreements may have different rules.
CO Paid Sick Leave Accrual, Caps & Usage Rules
Colorado’s accrual system requires precise tracking and clear policies to maintain compliance throughout the year.
Here’s exactly how the accrual formula works:
- Employees earn 1 hour of paid sick leave per 30 hours worked
- Accrual begins on the first day of employment
- Maximum accrual caps at 48 hours per year
- Employers must allow unused sick leave to carry over from year to year without limit, but they can limit the amount of leave an employee uses in a calendar year to 48 hours.
- Alternatively, employers can front-load 48 hours instead of tracking accrual
Beyond the numbers, employees can use leave for their own health needs, caring for family members, or addressing domestic violence impacts. Preventive care counts too, including routine check-ups and vaccinations. Plus, mental health treatment receives the same protection as physical illness.
Of course, notice requirements depend on whether leave is foreseeable. Planned appointments require advance notice per company policy. On the other hand, emergency situations only require notice as soon as practical. Best of all, employers may require documentation, such as a doctor’s note, only for absences of four or more consecutive workdays. Documentation cannot be required for shorter absences.
Coordination with Other Leave & Pay Policies
Integrating Colorado sick leave with existing policies creates administrative complexity that trips up even experienced HR teams.
For instance, FMLA and Colorado paid sick leave may run concurrently when eligibility overlaps. However, each law has distinct purposes and requirements, and employers must coordinate compliance with both. An employee recovering from surgery might use Colorado sick leave for pay while FMLA protects their job. Essentially, the leaves serve different purposes—one provides pay, the other provides extended protection.
Similarly, employers with generous PTO policies might assume they’re already compliant. Not necessarily. Even unlimited PTO plans need careful structuring to ensure compliance. PTO policies cannot restrict an employee’s right to use Colorado paid sick leave. ‘Use-it-or-lose-it’ PTO policies and denial of sick leave despite accrued PTO violate the law, even if PTO is unlimited.
Furthermore, payment calculations follow regular wage rates, including shift differentials and non-discretionary bonuses. Tipped employees receive at least minimum wage. Commission-based workers, meanwhile, use average earnings calculations. Getting these calculations wrong inevitably leads to wage claims and penalties.
CO Compliance, Recordkeeping & Notices
Documentation requirements extend far beyond simple time tracking—and for good reason.
At minimum, employers must maintain records of hours worked, sick leave accrued, and leave used for at least four years to comply with Colorado law. These records need sufficient detail for enforcement audits. Specifically, include dates, hours, reasons for leave (general categories, not medical details), and any denials with justification.
Additionally, you’ll need to handle these posting and notification obligations:
- Display the official Colorado sick leave poster prominently
- Include sick leave policies in employee handbooks
- Provide written notice of accrual balances (pay stubs work)
- Document policy distribution and employee acknowledgments
Employers are required to provide all employees with written notice of their rights under Colorado’s paid sick leave law at the start of employment and annually thereafter
Keep in mind that the Colorado Department of Labor and Employment conducts both complaint-driven and random audits. During these reviews, investigators examine recordkeeping, interview employees, and review policies and acknowledgements. Subsequently, violations trigger fines, back pay, and potential criminal charges for willful non-compliance.
Common HFWA Pitfalls
The most expensive mistakes come from misunderstanding the law’s nuances—yet they’re entirely preventable.
First, miscalculating accrual happens when employers forget overtime hours or exclude certain pay periods. Remember, every hour worked counts toward paid sick leave accrual, including overtime and travel time required by the employer. While manual tracking virtually guarantees errors, automated systems catch these details consistently.
Next, improperly denying leave often stems from requiring excessive documentation or questioning legitimate uses. For example, demanding doctor’s notes for two-day absences violates the law. Likewise, disciplining employees for emergency leave usage triggers retaliation claims. Therefore, train managers on acceptable and prohibited responses to leave requests.
Finally, retaliation takes many forms beyond termination. Reducing hours, changing shifts, or excluding employees from meetings after leave usage all constitute illegal retaliation. Since the 180-day job protection provision has teeth, violations bring individual liability for managers.
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HFWA Best Practices for HR & Employees
Clear communication prevents most compliance issues before they start. Your policy needs to spell out what employees can use sick leave for, including mental health days and preventive care. Keep the math simple: “You earn 1 hour of sick leave for every 30 hours worked, up to 48 hours per year.”
These policies only work if employees understand them. That’s why you need signed acknowledgments from every team member confirming they’ve received and understood your HFWA policy. This documentation protects you if disputes arise—employees can’t claim ignorance when their signature says otherwise.
Regular audits keep your systems accurate:
- Monthly spot-checks — Verify accrual calculations for random employees
- Annual carryover audits — Ensure hours transfer correctly at year-end
- Discrepancy reviews — Investigate when employees question their balances
- Documentation tracking — Monitor which employees have signed acknowledgments
Manager training requires the same documentation as employee policies. Every supervisor must understand protected uses, notice requirements, and retaliation prohibitions. When managers make mistakes that trigger investigations, training records demonstrate your good-faith compliance efforts.
Action Plan & Checklist
Start with a comprehensive policy review to identify gaps between current practices and HFWA requirements:
- Compare existing sick leave against HFWA minimums
- Identify missing elements in accrual, carryover, or usage rules
- Update policy language to meet all statutory requirements
- Prepare acknowledgment forms for employee signatures
Manual tracking becomes unsustainable as you grow. Automated payroll systems handle accrual calculations, caps, and carryover while maintaining audit trails. This shift from spreadsheets to software prevents calculation errors that lead to violations.
Your updated policy must include:
- Accrual rates — Clear explanation of the 1:30 ratio
- Eligible uses — All permitted reasons including mental health
- Notice procedures — Required timing for leave requests
- Anti-retaliation provisions — Protection against punishment for using leave
- Acknowledgment language — Statement that HFWA supersedes conflicting policies
Implementation requires systematic distribution and tracking. Send updated policies through established channels and set 30-day deadlines for acknowledgments. Track responses carefully—knowing who has and hasn’t signed helps you follow up effectively.
When employees refuse to sign, document their refusal while clarifying that HFWA requirements still apply. Similarly, conduct in-person manager training sessions rather than relying solely on written communications. Record attendance and comprehension to build your compliance documentation. These records become essential if investigations occur.
Ensuring CO Labor Law Compliance with Mosey
Colorado paid sick leave represents just one piece of the expanding compliance puzzle. As more states add similar requirements with different rules, manual tracking becomes impossible.
Moreover, the stakes keep rising. Colorado actively enforces sick leave violations, with penalties that compound quickly across multiple employees. In fact, one miscalculated accrual becomes dozens of violations when repeated across pay periods.
That’s where Mosey simplifies sick leave compliance management. Our platform tracks regulatory changes, monitors compliance deadlines, and alerts you when sick leave laws change in any state where you operate. From Colorado’s HFWA requirements to multi-state policy coordination, Mosey helps you stay informed and compliant as regulations evolve.
Ready to automate your multi-state compliance needs? Schedule a demo with Mosey to eliminate manual tracking, reduce compliance risk, and keep your business growing.
FAQ: Colorado Paid Sick Leave Laws
When does Colorado paid sick leave start accruing?
Colorado paid sick leave starts accruing on an employee’s first day of work. They earn 1 hour for every 30 hours worked, with no waiting period or probationary exclusion.
Can Colorado employers require doctor’s notes for sick leave?
Colorado employers can only require doctor’s notes for absences lasting four or more consecutive workdays. Requiring documentation for shorter absences violates HFWA and can result in penalties.
Does unused sick leave pay out at termination in Colorado?
Unused sick leave doesn’t pay out when employees leave in Colorado. However, if they return within six months, you must reinstate their previous balance immediately.
Are small businesses exempt from Colorado sick leave requirements?
Small businesses have no exemption from Colorado sick leave requirements. Every employer must provide paid sick leave, whether they have one employee or thousands.
