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Payroll Outsourcing in Colorado: New Laws and Requirements
Payroll outsourcing in Colorado means a provider running payroll under Colorado rules: state withholding (flat 4.4%), new hires reported within 20 days, and a discharged employee's final pay immediately. Within 24 hours if the payroll unit is off-site. BEG manages it for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
What a Colorado payroll actually has to get right
General information for 2026, not legal advice. Deadlines and rates change; confirm with the Colorado agency before acting.
| State income tax on wages | Flat 4.4% |
|---|---|
| Pay-frequency law | At least monthly |
| New hire reporting deadline | 20 days (federal default) |
| Final paycheck, discharge | Immediately. Within 24 hours if the payroll unit is off-site. [Colo. Rev. Stat. 8-4-109] |
| Final paycheck, resignation | By the next regular payday. |
| Accrued PTO at separation | This state treats accrued PTO as earned wages and prohibits use-it-or-lose-it forfeiture, so unused PTO generally must be paid out at separation. |
| 2026 minimum wage | $15.16. Denver sets a higher local minimum [DOL state minimum wage table] |
| Overtime rule | Daily over 12 and weekly over 40 |
| Paid sick and family leave | Paid sick leave required; FAMLI paid family leave active |
| Continuation coverage under 20 employees | Colorado State Continuation Coverage (Continuation Privileges), up to 18 months. group health benefit plans issued to employers with 20 or fewer employees (small employers not subject to federal COBRA) [Colo. Rev. Stat. section 10-16-108 (Continuation privileges)] |
Registrations and filings a provider handles in Colorado
Colorado taxes wages (flat 4.4%), so a Colorado employer carries a state withholding account and a state deposit schedule on top of the federal one, plus a separate Colorado unemployment insurance account with quarterly wage reports, and new hire reports due within 20 days (federal default).
Where Colorado diverges from the federal baseline
Pay frequency: at least monthly. The run calendar is set to that rule at implementation so a schedule change never becomes a wage claim.
Overtime in Colorado is not the simple weekly rule. Daily over 12 and weekly over 40. Timekeeping has to feed payroll at the day level, not the week level, or the premium is calculated wrong on every long shift.
Separations are the deadline most likely to be missed in Colorado. On discharge the final check is due immediately. Within 24 hours if the payroll unit is off-site, which means an off-cycle run the same day rather than waiting for the next scheduled payroll. On resignation: by the next regular payday. Full detail on the Colorado final paycheck rules page.
Leave: paid sick leave required; FAMLI paid family leave active. Paid sick leave accrual and balances are tracked per employee in payroll, and the balance shows where Colorado requires it. The Colorado paid family and medical leave contribution is a payroll line item with its own rate, wage cap and remittance, and any private-plan election has to be reflected in the deduction setup. See the Colorado paid sick leave page for the accrual mechanics.
What BEG managed payroll includes for Colorado employers
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum and no setup fee. Colorado withholding and unemployment registration, quarterly and annual state filings, new hire reporting within 20 days (federal default), final-pay runs on the Colorado deadline, and year-end W-2s are all inside that price. Live in 3 to 5 business days from signing.
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Frequently Asked Questions
Does Colorado have state income tax withholding?
Yes. Colorado taxes wages (flat 4.4%), so every employer with Colorado employees registers a state withholding account, withholds from each check and remits on the state's deposit schedule alongside federal deposits.
When is a final paycheck due in Colorado?
On discharge: immediately. Within 24 hours if the payroll unit is off-site. On resignation: by the next regular payday. This state treats accrued PTO as earned wages and prohibits use-it-or-lose-it forfeiture, so unused PTO generally must be paid out at separation. Source: Colo. Rev. Stat. 8-4-109.
How often must Colorado employers pay employees?
Colorado pay-frequency rule: at least monthly. A payroll provider sets the run calendar to that rule at setup, so the schedule is never the thing that creates a wage claim.
How fast must new hires be reported in Colorado?
Colorado requires new hire reporting within 20 days (federal default). That matches the federal default, and the report goes to the Colorado new hire directory, not the IRS.
Does Colorado require paid sick leave or paid family leave?
Paid sick leave required; FAMLI paid family leave active. Because Colorado mandates paid sick leave, payroll has to track accrual and balances per employee and show them where the statute requires. Colorado also runs a paid family and medical leave program funded through payroll contributions, so the contribution line and any private-plan election are part of every run.
What is the Colorado minimum wage in 2026?
$15.16. Denver sets a higher local minimum. Overtime in Colorado: daily over 12 and weekly over 40.
What does managed payroll cost for a Colorado business?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum and no setup fee. Colorado withholding, unemployment filings, new hire reports and year-end W-2s are included, not add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Wage and Hour Division
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