Easily manage employment in Colorado

Payroll management in Colorado

Colorado has a dynamic economy driven by industries such as technology, energy, tourism, and agriculture. With unique payroll regulations, including a higher minimum wage, strict overtime laws, and state-specific tax requirements, employers in Colorado must ensure compliance with both state and federal payroll laws. Understanding these regulations is essential to avoid penalties and maintain smooth payroll operations.

Payroll breakdown in Colorado

Employers in Colorado must adhere to various payroll regulations, including minimum wage laws, state income tax, and unemployment insurance contributions. Below is a breakdown of key payroll components:

Minimum wage and overtime

• Minimum Wage: As of 2024, Colorado’s minimum wage is $14.42 per hour for non-tipped employees and $11.40 per hour for tipped employees. Some municipalities, such as Denver, have higher minimum wages.
• Overtime Rules:
• Employees must be paid 1.5 times their regular rate for hours worked beyond 40 hours in a workweek or 12 hours in a single workday, whichever is greater.
• Double time is not required under Colorado law.

State income tax

• Colorado has a flat income tax rate of 4.4% for all employees.
• Employers must withhold state income tax and remit it to the Colorado Department of Revenue.

Unemployment insurance (UI) tax

• Employers must contribute to Colorado’s Unemployment Insurance (UI) program, managed by the Colorado Department of Labor and Employment (CDLE).
• The wage base for UI tax in Colorado is $20,400.
• UI tax rates vary based on an employer’s experience rating and range from 0.75% to 10.39%.

Paid Family and Medical Leave Insurance (FAMLI)

• As of 2024, Colorado requires employers and employees to contribute to the Family and Medical Leave Insurance (FAMLI) program.
• The total contribution rate is 0.9% of an employee’s wages, split evenly between employers and employees.
• FAMLI provides paid leave benefits for eligible employees needing time off for medical or family-related reasons.

Workers’ compensation

• Colorado law requires all employers to carryworkers’ compensation insurance , regardless of the number of employees.
• This insurance covers medical expenses and lost wages for employees injured on the job.

Payroll tax filing and payment deadlines

• Employers must register for a Colorado Withholding Account Number with the Colorado Department of Revenue.
• State withholding tax returns must be filed quarterly or annually, depending on employer classification.
• UI tax reports must be submitted quarterly to the Colorado CDLE.
• Payroll tax payments can be made electronically through Colorado Revenue Online.

Quick facts: Important considerations for employers

• Local Minimum Wage Differences: Some Colorado cities, including Denver, have higher minimum wages than the state rate.
• Final Paycheck Rules:
• If an employee is terminated, employers must provide the final paycheck immediately.
• If an employee quits, the final paycheck must be provided on the next scheduled payday.
• New Hire Reporting: Employers must report new hires to the Colorado State Directory of New Hires within 20 days.
• Paid Sick Leave:
• Under the Healthy Families and Workplaces Act (HFWA), employers must provide one hour of paid sick leave per 30 hours worked, up to 48 hours per year.
• Payroll Recordkeeping: Employers must maintain payroll records for at least three years to comply with state and federal laws.
• Right-to-Work Status: Colorado is not a right-to-work state, meaning employees can be required to join or pay fees to a union if applicable.

Run payroll in Colorado with Remote

Managing payroll in Colorado requires careful attention to state-specific regulations, including minimum wage laws, paid family leave, and payroll tax requirements. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

For businesses looking to simplify payroll management, Remote’s payroll solutions provide automated payroll processing, tax filing, and compliance support tailored to Colorado’s regulations. With Remote, employers can focus on business growth while ensuring accurate and hassle-free payroll operations.

To see just how easy global payroll can be, book a demo today.