Although no Colorado law requires private sector employers to provide employees with vacations, paid or unpaid, most employers do offer their employees some version of vacation. For employers who do offer vacations, vacation time must be given in accordance with any existing company policy, collective bargaining agreement, or employment contract. Thus, it is important for employers to remember that if they “promise” vacation, they may be legally bound to provide it—and that a binding promise does not require embodiment in a formal employment contract.
Colorado courts have ruled that, under some circumstances, an employer's assurance of paid vacation time, whether made in an employee handbook, given orally, or simply understood as a matter of consistent practice, may constitute an implied contract, which is binding and enforceable.
Colorado law states that wages include vacation pay earned under any agreement with the employer. If an employer provides paid vacation for an employee, the employer must pay the employee for all accrued and unused vacation time if the employee resigns or is terminated (CO Rev. Stat. Sec. 8-4-101).
Employers are free to devise their own system for vacation accrual. There are several different commonly used options:
• On a monthly basis
• On a pay-period basis
• Upon completion of a 6-month or 12-month period
It is important to be clear and unambiguous when drafting such policies; any vagueness in the policy is likely to be construed against the employer. If the policy is intended to ensure that employees work the entire accrual period to earn their vacation days, it should state clearly ...