PTO not a panacea for employers under Colorado Wage Claim Act

Q         We recently did away with separate vacation and sick leave policies and replaced them with a PTO policy that covers both sick time and personal time. Do we need to cap our PTO days and pay out any accrued but unused PTO to a terminated employee?

A   PTO is usually a combination of vacation, sick, and/or personal leave. The Colorado Department of Labor and Employment's (CDLE) new regulation pertaining to vacation policies doesn't expressly address PTO. Thus, without further guidance on the subject, it's unclear whether the new regulation applies to PTO policies. Because neither the Colorado Wage Claim Act (CWCA) nor any CDLE guidance interpreting the Act expressly reference PTO, you may be tempted to implement PTO policies without maximum accrual caps and not to pay accrued but unused PTO to employees upon separation of employment.

Until there's agency or court guidance on the subject, however, you should proceed cautiously. The CDLE and/or the courts may ultimately determine PTO must be treated the same as vacation time under the CWCA—meaning it cannot be forfeited and must be paid out upon separation of employment.