Colorado Supreme Court – Case of the Week Jun 17, 2021
The Colorado Supreme Court recently ruled in a case that impacts employers and their vacation pay policies. The Court ruled that even if a company policy purports to say earned vacation pay is forfeited when an employee leaves, that such forfeiture is not enforceable. Once earned, the employer has to pay it. See the linked case and summary below.
2021 CO 48. No. 19SC553. Nieto v. Clark’s Market. Statutes, Labor and Employment, Colorado Wage Claim Act, Vacation Pay, Nonwaiver of Employee Rights.
The Supreme Court considered whether, under the Colorado Wage Claim Act (CWCA), an employer must pay an employee’s earned but unused vacation pay upon separation from employment despite an agreement purporting to forfeit the employee’s right to such payment. Interpreting CRS § 8-4-101(14)(a)(III) and other provisions of the CWCA, the Court concluded that, although the CWCA does not create an automatic right to vacation pay, where an employer chooses to provide such pay, it cannot be forfeited once earned. Accordingly, the Court held that all earned and determinable vacation pay must be paid upon separation and that any agreement purporting to forfeit earned vacation pay is void.
The Court therefore reversed the Court of Appeals’ judgment affirming the dismissal of the employee’s wage complaint and remanded the case for further proceedings.
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