September 12, 2019
Authored by: Anthony George
Colorado employees are pushing back against the recent decision allowing use-it-or-lose vacation policies in Colorado.
In Nieto v. Clark’s Market, Inc., 2019 COA 98 (Colo. App. June 27, 2019), a division of the Colorado Court of Appeals held that the Colorado Wage Claim Act does not prohibit employers from imposing conditions on the right to be paid for accrued but unused vacation upon termination. In that case, the employer’s policy provided that terminating employees would not be paid for accrued but unused vacation if they were discharged or if they resigned with less than two weeks’ notice. The Court held that the Wage Claim Act only requires payment of vacation that has been “earned in accordance with the terms of any agreement” and that employers and employees may agree to impose conditions on payment for accrued but unused vacation. Therefore, under Nieto, use-it-or-lose-it vacation polices are now permissible in Colorado.
Not surprisingly, employees (and their lawyers) are pushing back, focusing on two unanswered questions in the Nieto decision.
Seizing upon the word “agreement” in the statute, some employees contend that Nieto applies only to actual contracts between the employer and the employee and not to policies unilaterally imposed by the employer. The Court in Nieto expressly declined to address this issue because neither party had raised it. While individual vacation agreements with each employee would be unwieldy and impractical in most cases, employers should at least consider ensuring that all employees have received a copy of the vacation policy –