Colorado Paid Sick Leave (HFWA) for Small Employers: 1 Hour per 30 Worked, 48 Hours a Year
Colorado Paid Sick Leave (HFWA) for Small Employers: 1 Hour per 30 Worked, 48 Hours a Year
If you have employees in Colorado, the colorado paid sick leave employer rules apply to you. They are not optional, and they cover small businesses just as fully as large ones. Colorado's Healthy Families and Workplaces Act (HFWA), C.R.S. 8-13.3-403, has applied to employers since January 1, 2022. This guide covers what the law requires, how accrual works, where you have flexibility, and what you still need to confirm with state agencies.
Informational content only: This article is not legal or tax advice. Employment law depends on the facts, and rules can change. Talk with a qualified employment attorney or CPA before you finalize a leave policy or payroll setup, especially if you use contractors, union agreements, or pay structures that are not straightforward.
Who Must Provide Paid Sick Leave
HFWA covers every employer in Colorado. There is no small business exemption. The law's definition of employer follows section 8-4-101, so if you have employees, the obligation applies to you. Whether you have one part-time bookkeeper or a crew of ten, the baseline requirement is the same. Your business does not need to be large, incorporated, or profitable for the law to apply.
Your entity type does not change the obligation either. Whether you formed an LLC or a corporation with the Colorado Secretary of State, Business Organizations Division, the leave requirement attaches to the people you employ.
How Accrual Works
Employees earn at least 1 hour of paid sick leave for every 30 hours worked, up to 48 hours in a year. Accrual starts on the employee's first day of work, and employees can use leave as it accrues. A new hire does not have to wait months before the leave begins to build.
The table below shows how that math plays out for an hourly employee.
| Hours worked in the year | Paid sick leave accrued |
|---|---|
| 120 hours | 4 hours |
| 600 hours | 20 hours |
| 1,440 hours | 48 hours (annual cap reached) |
An employee working 40 hours a week reaches the 48-hour annual cap after about 36 weeks of work.
Salaried Employees Exempt From Overtime
Salaried employees who are exempt from overtime accrue leave as if they work 40 hours a week. That works out to about 1.33 hours of accrual per week (40 divided by 30). You do not need to track their actual hours to calculate leave. Confirm with CDLE how this rule applies to your particular pay practices if you are unsure.
Carryforward and the 48-Hour Use Limit
Unused leave carries forward. Up to 48 hours of unused leave rolls into the next year, so employees do not lose their entire balance each January 1. Leave beyond that carryforward amount is not required to carry over.
The carryforward rule and the use limit work separately. An employer does not need to allow more than 48 hours of leave use in a single year, even if the employee has a larger balance. Your written policy should state both points clearly so employees know what they can count on.
Front-Loading the Leave
You may front-load paid sick leave by providing the annual amount at the start of the year instead of letting it accrue each pay period. Front-loading can simplify tracking, which is useful for seasonal businesses or companies with high turnover. Before you choose it, check with CDLE on how front-loaded hours interact with carryforward and rehire rules, since the answer affects your payroll records.
Using an Existing PTO or Paid Leave Policy
You do not have to create a separate sick leave policy. If your existing paid leave policy meets the minimum accrual rate and allows the same uses HFWA requires, it satisfies the law. A general PTO bank can qualify if it meets both conditions.
Compare your handbook language against the statutory minimum before you rely on an existing PTO program. A policy that is generous on paper but restricts the permitted uses may not satisfy HFWA.
Payout at Separation and Rehire
HFWA does not require you to pay out unused leave when employment ends. If a former employee is rehired within six months, the previously unused leave is restored. This is a useful rule for seasonal and project-based businesses, but only if your records show when the employee separated and when they returned.
Put your separation and rehire policy in writing. Employees and managers should not have to guess what happens to a balance at termination.
Public Health Emergencies
When a public health emergency is declared, HFWA requires employers to supplement paid sick leave so that full-time employees have at least 80 hours available (C.R.S. 8-13.3-405). This is a significant jump from the standard 48-hour annual cap, so it can affect your budget and scheduling in a hurry.
Build an emergency plan before you need it. Confirm with CDLE how the supplement works, how it fits with your existing accrual and carryforward, and how to document the change for employees.
What to Confirm With CDLE
The Colorado Department of Labor and Employment (CDLE) administers the details that the statute does not settle in a single sentence. Before you finalize your policy, check with CDLE on:
- The pay rate employees receive while they use paid sick leave
- Any written notice of leave rights you must give employees
- Workplace poster requirements, including whether you must post in a specific format
- Any recordkeeping expectations for accrual, use, and carryforward
Do not rely on figures from third-party blogs or old handbook templates for these items. Get them from CDLE directly and date-stamp what you download.
Related Colorado Setup Items for Employers
Paid sick leave is one piece of a broader setup for an employer. Colorado has no general statewide business license, so your obligations depend on what you do and where you do it.
- Entity filing: File your Articles of Organization or Articles of Incorporation through the Colorado Secretary of State online filing system. Use the business search to check name availability.
- Tax account: If you withhold payroll taxes or collect sales tax, you will need an account with the Colorado Department of Revenue, Taxation Division. The state sales tax is 2.9% plus special district taxes, and services are generally not subject to state sales tax.
- FAMLI: Colorado's Family and Medical Leave Insurance (FAMLI) program is separate from HFWA. Check with the FAMLI Division about whether and how it applies to your business and your employees.
- City and county rules: Some cities and counties have their own labor or leave rules, and home-rule cities such as Denver, Aurora, Colorado Springs, Boulder and Fort Collins collect and license their own city sales tax. Check with your city or county before you finalize your policy.
Practical Steps for Small Employers
- Identify which employees are non-exempt and track their hours worked, since accrual is based on hours.
- Decide whether to accrue leave each pay period or front-load it at the start of the year.
- Write a policy that meets the statutory minimum and allows the uses HFWA requires, or confirm that your existing PTO policy qualifies.
- Set up a payroll or timekeeping system that tracks accrual, use, carryforward, and the 48-hour annual use limit.
- Confirm the pay rate, notice, poster, and recordkeeping requirements with CDLE.
- Document separation dates so you can apply the six-month rehire rule correctly.
- Prepare a plan for public health emergency supplements to 80 hours for full-time employees.
When to Get Professional Help
An employment attorney can review your leave policy against HFWA, especially if you have employees in more than one city, union contracts, or workers you classify as contractors. A CPA can help you set up payroll tax accounts and confirm how leave-related payments are treated for tax purposes. If you want general business guidance while you build your processes, the Colorado Small Business Development Center (SBDC) Network offers advising to small business owners.
Paid sick leave is not a one-time setup. Review your policy each year, check for changes in state guidance, and confirm any requirements that CDLE or your local government has updated since you last looked.