PEO Services for Colorado

PEO Guide for Colorado: Leave, Payroll & Compliance

Navigating Colorado’s employment laws and HR management can be challenging. A Professional Employer Organization (PEO) handles tasks like payroll, benefits, and compliance. This guide covers everything you need to know about using a PEO in Colorado.

Famous Photo Of Colorado Landmark
Iconic Image Of Colorado

Capital City

Denver

Timezone

MST

(

UTC -7

)

Paid Leave

Sick leave, voting leave, jury duty and family and medical leave

Income Tax

4.40%

Employer Tax

11.75%

Leave The hiring to a local expert

Hire in Colorado with ease—our experts handle employment and compliance for you.

Enquire Now

What is a PEO in Colorado

A PEO in Colorado serves as a co-employer, handling essential HR functions like payroll, benefits, and compliance while your business maintains control over operations and decision-making. This arrangement allows companies to focus on growth while reducing the administrative burden and legal risks associated with HR.

By partnering with a PEO in Colorado, businesses can simplify HR, stay compliant with state regulations, and offer competitive employee benefits, all while focusing on growth. Whether you're a startup or an established company, a PEO helps you navigate Colorado’s complex employment landscape.

Mandatory Requirements when Partnering with a PEO in Colorado

In Colorado, it’s mandatory for all employers, including those partnering with PEOs, to have valid workers’ compensation insurance. Failure to do so is a criminal offense with potential fines up to $100,000 USD as per Colorado Labor Code, section 3700.

Benefits Of Using a PEO In Colorado

Payroll Processing and Compliance. A PEO manages payroll processing, tax withholdings, and filings with Colorado state agencies, ensuring compliance with state tax laws and employment regulations.

Benefits Administration. PEOs offer access to comprehensive employee benefits packages, including health insurance, retirement plans, and other perks that help attract and retain top talent in Colorado.

Workers’ Compensation. PEOs ensure your business complies with Colorado’s workers’ compensation requirements, handling claims and minimizing risk.

HR and Legal Compliance. PEOs bring expert HR support, making them especially valuable for small businesses. With constantly changing Colorado labor laws, a PEO offers guidance on employee handbooks, harassment prevention, terminations, and safety regulations, ensuring your business stays compliant.

Employment Laws and regulations in Colorado

A PEO (Professional Employer Organization) is an excellent solution for small businesses in Colorado to manage HR, payroll, and compliance with the state's complex labor laws.

Colorado has some of the most stringent regulations around minimum wage, overtime, paid sick leave, and employee classification, which can be overwhelming for small businesses without dedicated HR resources.

Here’s a brief overview of some key laws and regulations specific to Colorado.

Colorado Employment Laws

A PEO helps businesses comply with both federal and Colorado-specific labor laws, which can be complex and frequently change.

  • Minimum Wage: Colorado's minimum wage is $14.42 per hour statewide, with higher rates in certain cities like Denver ($18.29), Boulder County ($15.69), and Edgewater ($15.02). Employers must pay the highest applicable rate based on the work location. 
  • Overtime: Colorado follows federal overtime rules, which require 1.5 times the employee’s regular rate for hours worked over 40 in a week.
  • Sick Leave: Under the Healthy Families and Workplaces Act, employees earn one hour of paid sick leave for every 30 hours worked, up to a maximum of 48 hours per year. 
  • Meal and Rest Breaks: Employees are entitled to a 30-minute meal break for shifts over 5 hours and a 10-minute paid rest break for every 4 hours worked. 

Payroll Laws In Colorado

  • Payroll Schedule: Most Colorado employers pay employees biweekly or semimonthly, though no specific schedule is mandated by law.
  • Tax Compliance: Employers contribute 3.05% to state unemployment insurance and 0.45% to Family and Medical Leave Insurance (FAMLI), with additional rates for established businesses. 

Benefits Laws In Colorado

PEOs offer Colorado employers access to competitive benefits, like health insurance and retirement plans, often at reduced costs. Through programs like Colorado SecureSavings, small businesses can provide employees with retirement savings options without employer contributions.

Additional requirements and enforcement in Colorado

  • Workplace Safety: Colorado adopts OSHA regulations to ensure safe work environments.
  • Workers’ Compensation: Workers' compensation insurance is required, with rates depending on job classification. 
  • Enforcement Agencies: Colorado’s Department of Labor and Employment (CDLE) enforces labor laws and employment standards. 
  • Overlapping Laws: In cases where state and federal laws overlap, the most employee-friendly law generally applies.

Looking to hire employees in Colorado?

Check out our comprehensive state hiring guide.

  • check-mark

    Understand employer tax implications and payroll requirements.

  • check-mark

    Review state specific employment laws and regulations.

  • check-mark

    Get insights on payroll, benefits, and employee classification.

How to Choose the right PEO in Colorado

Selecting the right PEO in Colorado is essential for navigating the state's intricate labor laws while ensuring compliance and efficiency. Follow these key steps:

  1. Focus on Colorado-Specific Experience. Ensure the PEO has expertise in navigating Colorado’s labor laws. This includes understanding nuances like mandatory sick leave, wage orders, and workers’ compensation requirements.
  2. Service Flexibility. Choose a PEO that offers flexible services tailored to your business size and industry. Colorado’s regulations can vary by sector, so a PEO with industry-specific knowledge is valuable.
  3. Track Record and Compliance History. Research the PEO’s compliance history to ensure they have a proven track record of helping businesses avoid penalties and stay compliant with Colorado’s complex employment laws.
  4. Consider Employee Benefits. A PEO can offer access to more affordable and comprehensive employee benefits, which are crucial for attracting and retaining top talent in Colorado’s competitive job market.
  5. Assess Customer Service. Responsive customer service, dedicated human support teams (not AI), and robust HR technology are key factors in ensuring a smooth partnership with the PEO. It’s important to find a partner who supports your people, when they need it most.
By following these steps, you can select a PEO that aligns with your business goals and ensures compliance with Colorado’s complex labor regulations. For more detailed insights, check out Playroll’s Guide to Employment in Colorado.

Back to Top

Copied to Clipboard

Woman with glasses
Woman with glasses

Take your business to new places

Employer of Record for Colorado

  • hire icon Hire employees without entity setup.
  • handshake icon Full compliance, we assume 100% liability.
  • gift icon Handle local payroll and benefits seamlessly.
  • headphones icon 24/5 responsive real-human support.
  • money icon Transparent pricing, no hidden fees.

FAQS

FAQs About PEO Services in Colorado

How does a PEO help with Colorado labor law compliance?

A PEO ensures compliance with Colorado’s wage and hour laws, tax requirements, and employee classification rules, reducing legal risks for businesses.

Are PEOs regulated in Colorado?

Yes, PEOs operating in Colorado must comply with state regulations and are often certified to provide services within the state’s legal framework.

Can a PEO help small businesses in Colorado?

Absolutely. PEOs are especially beneficial for small and mid-sized businesses in Colorado, as they provide access to competitive benefits and ensure compliance with complex labor laws. Also, partnering with a PEO allows small businesses to offer their employees access to big-company benefits plans they’d likely otherwise struggle to afford.

Can a PEO help with compliance in Colorado?

Yes, a PEO can help with compliance in Colorado. One key area where a PEO provides support is with minimum wage laws, which vary significantly by state, and sometimes even by county or city. For example, as of 2024, 30 states and Washington, DC, have minimum wages above the federal rate, ranging from $8.75 to $17.00 per hour. PEOs stay updated on these changes and ensure your business remains compliant, especially if you have a distributed workforce.

Here are other ways PEOs assist with compliance in Colorado:

- Payroll regulations: A PEO helps with proper worker classification, filing tax forms, managing payroll taxes, and adhering to wage and hour laws, such as overtime regulations.

- Benefits laws: PEOs ensure compliance with state-specific and federal benefits regulations, including laws related to COBRA, FSAs, HSAs, and other benefit programs.

- Labor laws: A PEO can manage workers’ compensation, ensure compliance with Equal Employment Opportunity (EEO) laws, display required labor posters, and support OSHA inspections.

By partnering with a PEO, you reduce the risk of costly fines and penalties related to non-compliance, as they handle complex regulations for you.

What happens if I want to terminate my relationship with a PEO in Colorado?

With Playroll PEO, you can switch on and off the PEO any time you want, moving seamlessly onto our workforce management platform. All your data and integrations stay intact in your account.

Playroll makes growing your team in Colorado effortless. Ready to start?

The HR Platform built to scale your global team.