In 2025, Colorado enacted a series of employment law changes affecting wage and hour, leave entitlements, restrictive covenants, anti-discrimination protections, and AI. Some of these changes have already taken effect, and some will take effect in 2026. These legislative developments introduce new compliance obligations and heightened risks for employers, so Colorado businesses should stay informed and may wish to proactively review workplace policies and procedures.
Colorado Wage Act Amendments
Effective Aug. 6, 2025, HB 25-1001 amended the Colorado Wage Act (CWA) in several key respects, summarized below.
- Individuals owning or controlling at least 25% of a business are now liable under the CWA—unless they can prove full delegation of their authority to control day-to-day operations—broadening the definition of “employer” under the CWA.
- Colorado employers are now subject to automatic fines for misclassifying workers as non-employees (e.g., independent contractors) where the misclassification affects wage and hour or reporting obligations under the applicable laws, ranging from $5,000 for a first willful violation up to $50,000 for repeat, unremedied violations (to be increased on Jan. 1, 2028, and every two years thereafter to adjust for inflation), in addition to any other relief ordered; previously, no such automatic fines applied.
- The jurisdiction of the Colorado Department of Labor and Employment (CDLE) to investigate wage complaints claiming up to $7,500 (exclusive of penalties and fines) increases to $13,000 per employee (exclusive of penalties and fines) beginning July 1, 2026, through Dec. 31, 2027 (and increasing every two years thereafter by at least $1,000 or more if necessary to account for inflation).
- The CDLE is now required to:
– Publish citations, determinations, and written opinions finding violations of the CWA and the names of employers involved (including individuals now expressly considered an employer, as described above) on its website.
– Report willful violations unremedied within 60 days of such finding to certain licensing, registration, permitting, and other credentialing authorities. The CDLE may report all other violations to such authorities if it chooses.
- If an adverse action occurs within 90 days of an employee’s or other worker’s exercise of a protected activity related to wage and hour rights (such as filing a complaint or raising concerns in good faith about compliance), that timing may, without more, be sufficient to find retaliatory intent; there was no such prior bright-line guidance in the CWA.
- Employees may now seek equitable relief, including “to deter future violations and prevent unjust enrichment,” in addition to other remedies provided in the CWA.
- The law clarifies that payroll deductions cannot reduce wages below the state minimum wage (as opposed to the federal minimum wage).
- Attorneys’ fees recovery for employers is now limited to those cases the court finds to be “lacking substantial justification” (as opposed to the employee failing to recover a sum greater than that tendered by the employer, which was the prior standard).
Lastly, the amendments offer a new, one-time waiver from penalties for an employer’s failure to pay claimed wages or compensation within 14 days after a written demand if the employer pays all claimed wages or compensation within 14 days of the employer receiving an administrative complaint for the same wages or compensation. This waiver is unavailable for repeat offenders within five years. Prior to this amendment, if an employer did not pay to an employee all wages due within 14 days of an initial written demand, such penalties—the greater of two times the amount of the unpaid wages or compensation or $1,000 (or the greater of three times or $3,000 for willful violations)—were automatic without the opportunity of waiver once an official complaint was filed.
Statute of Limitations Clarification for Colorado Minimum Wage Act Claims
The Colorado Supreme Court rejected an attempt to create a six-year statute of limitations for Colorado Minimum Wage Act Claims (CMWA). In By the Rockies v. Samuel Perez, No. 25CO56 (Colo. Sept. 15, 2025), the Court confirmed that, consistent with the CWA, C.R.S. §§ 8-4-101, et seq. and the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (FLSA), a two-year statute of limitations (or three-year, for willful violations) applies to employees filing a wage claim under the CMWA, C.R.S. § 8-6-101, et seq. The Court emphasized harmony between Colorado’s wage laws, the CWA, and the CMWA, as well as Colorado’s recordkeeping requirements related to wages, and the administrative filing requirements under the regulatory scheme all favored such a reading. For more background on the Colorado Supreme Court’s ruling, see prior GT Alert here.
FAMLI Neonatal Intensive Leave
SB 25-144 amended Colorado’s Family and Medical Leave Insurance (FAMLI) law, introducing two changes effective Jan. 1, 2026. First, employees with newborns receiving care in a neonatal intensive care unit (NICU) will be eligible for up to an additional 12 weeks of paid FAMLI leave for the duration of such NICU care—on top of the existing 12 weeks of bonding leave—allowing covered parents to take up to 24 weeks of paid leave in these circumstances. Second, the law reduces FAMLI premium rates from 0.9% to 0.88% of employee wages starting in 2026, with future rates set annually by the FAMLI Division director, capped at 1.2%.
Noncompete Law Amendments
SB 25-083 brought changes to Colorado’s noncompete statute, C.R.S. § 8-2-113, particularly impacting healthcare providers and minority business owners, effective Aug. 6, 2025.
First, noncompete and non-solicitation covenants are now void for physicians, advanced practice registered nurses, certified midwives, and dentists. For more background on Colorado’s legislative action restricting physician non-compete agreements, see our prior GT Alert here.
Second, for minority owners (those with less than 50% ownership) who received their equity as compensation for services, the permissible duration of a non-compete restriction now must not exceed a number (which constitutes the permissible duration, in years) calculated by the total consideration received by the individual from the sale divided by the average annualized cash compensation received by the individual from the business, including income received on account of their ownership interest during the preceding two years or during the period of time that the individual was affiliated with the business, whichever period of time is shorter. No such formula existed under the prior version of the statute, which broadly exempted restrictive covenants related to the sale of a business from its purview.
Kelly Loving Act (Transgender Protections)
HB 25-1312 (the Kelly Loving Act) established legal protections for transgender individuals. As applicable to employment, effective May 16, 2025, the Act includes “chosen name and how the individual chooses to be expressed” as forms of gender expression protected by the Colorado Anti-Discrimination Act (CADA). The term “chosen name” for purposes of CADA is defined as a name that an individual requests to be known as in connection to the individual’s disability, race, creed, color, religion, sex, sexual orientation, gender identity, gender expression, marital status, familial status, national origin, or ancestry, so long as the name does not contain offensive language and the individual is not requesting the name for frivolous purposes.
Local Tip Offset
Effective Jan. 1, 2026, HB 25-1208 allows local governments with minimum wages higher than the Colorado minimum wage to utilize the Colorado tipped minimum wage. Currently, no more than $3.02 per hour in tips may be used to offset a local government’s tipped minimum wage. HB 25-1208, however, affords local governments more flexibility in setting tipped minimum wages, so long as the tipped minimum wage is not lower than the Colorado tipped minimum wage. For example, the city of Denver (with an increased tipped minimum wage of $16.27 in 2026) may allow a tipped minimum wage of $12.14 (the Colorado tipped minimum wage for 2026), although that rate reflects a tip offset of more than $3.02.
Rising Wages: Proposed State and Local Wage Increases
The CDLE has adopted changes to the regulations that implement Colorado’s wage statutes, the Publication And Yearly Calculation of Adjusted Labor Compensation Order (PAY CALC Order), which include the following increases for 2026:
- Colorado minimum wage from $14.81 per hour to $15.16 per hour;
- Colorado tipped minimum wage from $11.79 per hour to $12.14 per hour;
- The executive/supervisor, administrative, and professional employee income threshold from $1,086.25 weekly/$56,485 annually to $1,111.23 weekly/$57,784 annually; and
- The highly-compensated-employee (HCE) income threshold from $127,091 annually to $130,014 annually.
The HCE income threshold applies not only to the HCE exemption, but also to noncompete and non-solicitation agreements. Specifically, only an HCE may enter into a noncompete covenant under Colorado law, and only a worker who makes at least 60% of the HCE threshold may enter into a non-solicitation of customers covenant under Colorado law.
Relatedly, at the local level, the following minimum wages will apply for 2026 (as compared with the federal minimum wage, which remains stagnant at $7.25 per hour):
- Boulder (city and county): $16.82 per hour
- Denver: $19.29 per hour
- Edgewater: $18.17 per hour
Colorado Anti-Discrimination in AI Law Updates
SB 25B-004 deferred implementation of Colorado’s Artificial Intelligence Act (SB 24-205) five months to June 30, 2026. The delay aims to give Colorado lawmakers more time to consider substantive amendments during the 2026 regular legislative session, starting in January 2026. Though the legislature has considered changes since Gov. Jared Polis signed the law in May 2024, lawmakers have not yet agreed on any major changes. It remains to be seen whether the legislature will reach consensus, as stakeholders have debated changes for over a year.
Even if the legislature agrees to amendments in the spring, the attorney general’s office would have little time between the session’s scheduled adjournment in May 2026 and the current June 30, 2026, effective date to promulgate rules. Likewise, employers would have a tight timeline to prepare for compliance with updated requirements, unless the legislature also agrees to further changes to the law’s implementation date.
Still, the extended June 30, 2026, effective date gives businesses more time to assess and develop their compliance strategy, while leaving open the possibility that some of the law’s compliance requirements may be refined or removed entirely. We previously wrote about the May 2024 passage of the law and its requirements.
If the law becomes effective, employers that have integrated AI tools into hiring and related employment processes – a practice that has permeated many industries – may see an impact.
Considerations for 2026 and Beyond
With these updates, Colorado employers face an evolving regulatory landscape that demands careful attention to wage practices, leave policies, restrictive covenants, anti-discrimination and anti-retaliation measures, and technology use. Employers may wish to monitor legislative developments and implement proactive compliance strategies aimed at mitigating risks and enhancing continued adherence to state’s requirements.