Colorado Payroll Laws & Requirements

Colorado is the only state that trips all seven factors on our Payroll Complexity Score. Overtime counts by the day, rest breaks are paid, sick leave and FAMLI premiums apply statewide, and some cities set their own wage and withhold their own head tax. Final pay is due the moment someone is let go. That puts Colorado payroll at 5 out of 5. Most of the numbers sit in two orders the Department of Labor and Employment (CDLE) reissues every year, the COMPS Order and the PayCalc Order, so they move each January.

Minimum Wage in Colorado

The Colorado minimum wage is $15.16 an hour in 2026 and rises to $15.71 on January 1, 2027. The state constitution ties it to inflation, and CDLE announced the 2027 rate on August 13, 2026.

Several groups have a different rate:

• Tipped employees can be paid $12.14 an hour in 2026, with a tip credit of up to $3.02. In 2027 the tipped cash wage is $12.69.
• Denver pays at least $19.29, rising to $19.84 in 2027. Edgewater goes from $18.17 to $19.84, the City of Boulder from $16.82 to $18.17, and unincorporated Boulder County from $16.82 to $17.43.
• Exempt staff need a salary of at least $57,784 a year in 2026, set by the PayCalc Order.

The local rate follows where the work is done. A delivery driver based in Lakewood who spends a shift in Denver earns Denver's rate for those hours.

Overtime Rules in Colorado

COMPS Order #40, in effect since February 1, 2026, sets overtime under state law. Employees earn time and a half for hours over:

• 40 in a workweek,
• 12 in a workday, or
• 12 consecutive hours, even when the shift crosses into a new workday.

Whichever count pays more applies. A warehouse worker on a 6 p.m. to 8 a.m. shift works 14 hours straight. Split across two workdays, neither day passes 12, but Colorado still owes 2 hours of overtime.

The same order requires a 30-minute meal break for shifts over 5 hours and a paid 10-minute rest break for every 4 hours worked. A missed rest break means 10 extra minutes of pay. See how teams catch both in overtime compliance software.

Pay Frequency and Payday Rules in Colorado

Under C.R.S. 8-4-103, a pay period can't be longer than one calendar month or 30 days. Payday must fall no later than 10 days after the period closes. Weekly, biweekly, semimonthly and monthly schedules all work as long as they meet both limits.

Final Paycheck Deadlines in Colorado

The Colorado final paycheck law (C.R.S. 8-4-109) sets these deadlines:

• Employer ends the job: pay is due immediately.
• Payroll office closed at the time: within 6 hours of the start of its next workday, or 24 hours if payroll is handled off-site.
• Employee resigns: by the next regular payday.

Once the employee sends a written demand, the employer has 14 days to pay. After that, the penalty is the greater of 2 times the unpaid wages or $1,000, and 3 times or $3,000 if the violation was willful. A line cook owed $400 on termination can be owed $1,400 in total. Willful nonpayment over $2,000 can also be charged as felony theft.

Colorado Income Tax and Local Withholding

Colorado taxes wages at a flat 4.40%, the rate on the state's 2026 withholding worksheet. Check with the Department of Revenue for any TABOR adjustment, since that hasn't been confirmed for 2026.

Colorado payroll taxes also include:

• FAMLI premiums of 0.88% of wages in 2026, shared between employer and employee. The rate drops to 0.86% in 2027.
• Unemployment insurance, employer-paid on the first $30,600 of each employee's wages in 2026.
• Occupational privilege taxes, a flat monthly head tax in four cities. Denver withholds $5.75 from employees earning $500 or more a month, and the employer pays $4.00. Greenwood Village is $2 and $2 above $250 a month, Glendale $5 and $5 above $750, and Sheridan $3 and $3.

Aurora repealed its occupational privilege tax on January 1, 2025, so remove it from any payroll that still withholds it. More on keeping local codes clean in what operators get wrong in payroll tax management.

Payroll Record Retention in Colorado

Employers must keep payroll records for at least 3 years after the wages were due, and longer while a wage claim is open. C.R.S. 8-4-103(4.5) and COMPS Order Rule 7.3 set that period.

Where Colorado Payroll Goes Wrong

Most errors come from setups that count only weekly hours, or rates that weren't updated when CDLE reissued its orders.

• Daily overtime: Overtime only triggers past 40 hours a week. What it costs: Unpaid overtime on every shift over 12 hours.
• Consecutive hours: A shift that crosses midnight is split into two workdays. What it costs: Missed overtime past 12 straight hours.
• Rest breaks: Missed 10-minute breaks aren't paid. What it costs: 10 extra minutes of pay per missed break.
• Local minimum wage: Denver or Edgewater hours paid at the state rate. What it costs: Back wages at up to $19.29 an hour.
• Exempt salary: Salaries not raised to the new PayCalc figure. What it costs: Exempt status lost, with overtime owed.
• Occupational privilege tax: Aurora still withheld, or Denver's skipped. What it costs: Refunds to staff, or city assessments.
• FAMLI: The old 0.9% rate still loaded. What it costs: Over-withholding on every paycheck.
• Final paycheck: Termination pay held for the next payday. What it costs: 2 times the wages or $1,000 after a demand.

Colorado payroll laws add penalties on top of the back wages for each of these, and under the Colorado Wage Act a willful underpayment can become a criminal case. Here's how to catch underpayment before it becomes wage theft.

What Changes in Colorado in 2027

• Jan 1, 2027 (confirmed): State minimum wage rises to $15.71, and the tipped cash wage to $12.69. Update every location before the first pay period that includes January 1.
• Jan 1, 2027 (confirmed): Local rates rise. Denver and Edgewater go to $19.84, the City of Boulder to $18.17 and unincorporated Boulder County to $17.43.
• Jan 1, 2027 (confirmed): FAMLI premiums drop to 0.86%. Change the rate before the first January run.
• Not yet final: COMPS Order #41 and the 2027 PayCalc Order. CDLE proposed both on September 30, 2026, with a hearing on November 2. The 2027 exempt salary threshold comes from these orders, so it isn't settled yet.
• Check before payroll: UI wage base and income tax rate. The 2027 wage base isn't published yet, and the income tax rate can shift with TABOR.

Running Payroll in Colorado Without Errors

Before each payday:

• Match each location's rate to the state, city or county minimum, including tipped rates.
• Test timecards for hours over 12 in a day and over 12 in a row, not only the weekly total.
• Pay 10 extra minutes for every missed rest break.
• Check that occupational privilege taxes match where each employee works, with Aurora removed.
• Confirm FAMLI is withheld at the current rate.
• Flag every termination in the period and confirm the final check went out on time.
• Check exempt salaries against this year's PayCalc threshold.