The Colorado Supreme Court a week ago placed an employee’s earned vacation time beyond the reach of the employer in the event that the employee is terminated. In the case of Nieto v. Clark’s Market, the state’s highest court overturned a lower court decision from 2019 and ruled that earned vacation time cannot be forfeited in the Centennial State. The issue stemmed from a 2015 ruling by the Colorado Department of Labor that company policies providing for the forfeiture of earned vacation pay were unenforceable under Colorado law. State law (Colorado Wage Claim Act) defined wages or compensation as including vacation pay earned in accordance with the terms of any agreement and it went on to specifically state that if an employer proved paid vacation for an employee, the employer shall pay upon separation from employment all vacation pay earned and determinable in accordance with the term of any agreement between the employer and the employee. The court’s decision is definitive – vacation pay forfeiture is not legal in Colorado. It does not address however, how an employer should treat paid time off (PTO) (as opposed to vacation pay) in the event of an employee’s separation of employment.