Final Pay for a Terminating State Employee

Authority

• §24-30-201(1)(e), C.R.S. (Authority to Manage Financial Affairs of the State) 
• §24-30-202(1) and (8.5), C.R.S. (Authority to Control Expenditures and Make Electronic Payments) 
• §24-50-104(8)(a), C.R.S. (Payment of Salaries) 
• 1 Code of Colorado Regulations (CCR) 101-1, State of Colorado Fiscal Rules, Chapter 9, Rule 9-4 (Final Pay for a Terminating State Employee)
• §8-4-105(1)(e), C.R.S. Colorado Wage Act - Not Applicable to the State as an Employer

Applicability

Agencies shall follow this procedure when:

• A State Employee voluntarily terminates employment with the State, with or without giving final notice; or 
• A State Agency or Institution of Higher Education terminates a State Employee (involuntary separation).

Definitions

• Termination: separation of an employee from the state by resignation, retirement, layoff, dismissal, or death.
• Voluntary Termination: an employee terminates employment with the state, with or without giving notice.
• Employee Voluntary Separation Agreement: Settlement Agreement between a State Agency or Institution of Higher Education and a State Employee setting forth the terms of the employee’s voluntary separation from state employment. 
• Involuntary Termination: the state as an employer terminates employment with the State Employee.
• Deceased: the employee dying while employed with the state.

Final Pay

Depending upon the termination type, final pay shall be available to the terminating State Employees as follows:

• Voluntary Termination - When a State Employee terminates employment with the state, with or without giving notice, final payment shall be made no later than the employee’s next regular pay day, unless the payroll is already processing for that pay day, in which event it shall be made no later than the following regular payday;
• Employee Voluntary Separation Agreement - See State Controller Procedure, Settlement Agreements and Taxation;
• Involuntary Termination - When a State Agency or Institution of Higher Education terminates a State Employee, final payment shall be made within three (3) business days of the date of termination. The 24-hour pay provision of §8-4-109, C.R.S., does not apply to public sector employees; and
• Deceased - See State Controller Procedure, Payroll Procedure Deceased Employee CHOP Check

Asset Recovery or Fair Market Value Collection

Subject to any requirements imposed by the Fair Labor Standards Act, a State Agency or Institution of Higher Education shall deduct any amounts a State Employee owes the State from that employee’s final pay.

• Amounts owed by a State Employee includes any unpaid payroll overpayments, unpaid expense overpayments, unpaid travel advances, and any other unpaid items incurred by the State for the benefit of the employee.
• A State Employee shall return any State laptop, tablet, cellphone or other electronic devices to the State Agency or Institution of Higher Education within one business day of the date of termination.
• If the employee refuses, the State Agency may pursue any applicable remedies to recover the equipment or value of the equipment not returned:
  • State Agency or Institution of Higher Education shall deduct the fair market value of any State asset that the State Employee fails to return to the State within one (1) business day of the date of termination from that employee’s final pay;
  • A State Agency or Institution of Higher Education shall deduct from the fair market value of a State asset returned by the employee upon termination any damage to the asset beyond ordinary wear and tear; and
  • If the State Employee’s final pay is insufficient to cover the amount the State Employee owes the State, then the State Employee shall be liable for the remaining outstanding balance.

Agency Responsibility

• When an employee is onboarded, it is a State Agency’s or Institution of Higher Education’s responsibility to ensure that an employee understands the liability of assets not returned to the department upon separation. 
• When an employee is off boarded, the Appointing Authority, or their delegate, exchanges information with an employee before separating from state service which should include a list of assets and how they should be returned. This information exchange can occur by email, in person, or virtual meeting, and should be followed up in writing. 
• The State Agency or Institution of Higher Education will have ten (10) calendar days after an employee's separation to:
  • Determine that the money or property wasn't returned; and
  • Determine the value of that money or property; then
  • Provide notice to the employee.
  • ​When an employee quits without notice or is terminated, the retrieving of the worker’s laptop and other company equipment is the responsibility of the State Agency or Institution of Higher Education’s HR team.

Agency Responsibilities, Payroll

• The State Agency or Institution of Higher Education, as the employer, has the burden of showing that it is permitted to make a deduction or claim a credit.
• The State Agency or Institution of Higher Education must follow the written and published asset collection procedures established by their agency’s policies.
• If a terminated employee does not return all state-owned property within one (1) business day of the effective date of their separation, the employee's supervisor shall notify the Agency's Payroll to ensure that the fair market value of the property is withheld from the employee's final paycheck, as required by Fiscal Rule 9-4.
• The State as an employer can deduct the cost of missing company property from an employee's final paycheck under certain conditions: 
  • The employer must meet the conditions of the theft deduction provision;
  • The employee is classified as a nonexempt worker under the Fair Labor Standards Act (FLSA);
  • The deduction does not reduce the employee's average hourly wage below the minimum hourly wage during a workweek; and
  • The deduction does not cut into any overtime pay owed to the employee.

 State Controller Policies

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