(1) An employer shall not make a deduction from the wages or compensation of an employee except as follows:
(a) Deductions mandated by or in accordance with local, state, or federal law including, but not limited to, deductions for taxes, Federal Insurance Contributions Act (FICA) requirements, garnishments, or any other court-ordered deduction;
(a.5) Deductions for contributions attributable to automatic enrollment in an employee retirement plan, as defined in section 8-4-105.5, regardless of whether the plan is subject to the federal Employee Retirement Income Security Act of 1974, as amended;
(b) Deductions for loans, advances, goods or services, and equipment or property provided by an employer to an employee pursuant to a written agreement between such employer and employee, so long as it is enforceable and not in violation of law;
(c) Any deduction necessary to cover the replacement cost of a shortage due to theft by an employee if a report has been filed with the proper law enforcement agency in connection with such theft pending a final adjudication by a court of competent jurisdiction; except that, if the accused employee is found not guilty in a court action or if criminal charges related to such theft are not filed against the accused employee within ninety days after the filing of the report with the proper law enforcement agency, or such charges are dismissed, the accused employee shall be entitled to recover any amount wrongfully withheld plus interest. In the event an employer acts without good faith, in addition to the amount wrongfully withheld and legally proven to be due, the accused employee may be awarded an amount not to exceed treble the amount wrongfully withheld. In any such action the prevailing party shall be entitled to reasonable costs related to the recovery of such amount including attorney fees and court costs.
(d) Any deduction, not listed in paragraph (a), (a.5), (b), or (c) of this subsection (1), that is authorized by an employee if the authorization is revocable, including deductions for hospitalization and medical insurance, other insurance, savings plans, stock purchases, supplemental retirement plans, charities, and deposits to financial institutions;
(e) (I) A deduction for the amount of money or the value of property that the employee failed to properly pay or return to the employer in the case where a terminated employee was entrusted during the employee's employment with the collection, disbursement, or handling of such money or property, but only after providing notice of the deduction as specified in subsection (1)(e)(II) of this section.
(II) The employer has ten calendar days after the termination of employment to:
(A) Audit and adjust the accounts and property value of any items entrusted to the employee before the employee's wages or compensation shall be paid as provided in section 8-4-109. This is an exception to the pay requirements in section 8-4-109. The penalty provided in section 8-4-109 shall apply only from the date of demand made after the expiration of the ten-day period allowed for payment of the employee's wages or compensation.
(B) Provide notice to the employee that the employer is deducting from the employee's wages or compensation the amount of money or the value of property that the employee failed to properly pay or return to the employer, which notice must include a written accounting specifying the amount of money or the specific property that the employee failed to pay or return, the replacement value of the property, and, to the extent known, when the money or property was provided to the employee and when the employer believes the employee should have paid the money or returned the property to the employer.
(III) After an employer provides the notice required by subsection (1)(e)(II)(B) of this section and makes a deduction from the wages or compensation of an employee, if the employee, within fourteen days after the employer provides the notice, pays the money or returns the property that was the basis for the deduction, the employer shall pay the employee the amount of the deduction within fourteen days after the employee pays the money or returns the property to the employer.
(IV) If, after auditing and adjusting the accounts and property value of any items entrusted to the employee pursuant to subsection (1)(e)(II)(A) of this section and providing notice pursuant to subsection (1)(e)(II)(B) of this section, it is found that any money or property entrusted to the employee by the employer has not been properly paid or returned to the employer as provided by the terms of any agreement between the employer and the employee, the employee is not entitled to the benefit of payment pursuant to section 8-4-109, but the employee's claim for unpaid wages or compensation shall be disposed of as provided for by this article 4.
(2) Nothing in this section authorizes a deduction below the applicable minimum wage.
Source: L. 2003: Entire article amended with relocations, p. 1855, � 1, effective August 6. L. 2010: (1)(a.5) added and (1)(d) amended, (SB 10-035), ch. 3, p. 33, � 1, effective January 1, 2011. L. 2022: IP(1) and (1)(e) amended, (SB 22-161), ch. 370, p. 2627, � 6, effective January 1, 2023. L. 2025: (2) amended, (HB 25-1001), ch. 228, p. 1040, � 2, effective August 6.
Editor's note: (1) This section is similar to former � 8-4-101 (7.5) as it existed prior to 2003, and the former � 8-4-105 was relocated to � 8-4-103.
(2) Section 10(2) of chapter 228 (HB 25-1001), Session Laws of Colorado 2025, provides that the act changing this section applies to conduct occurring on or after August 6, 2025.
Cross references: For the Federal Insurance Contributions Act, see 26 U.S.C. � 3101 et seq.; for the federal Employee Retirement Income Security Act of 1974, see 29 U.S.C. � 1001 et seq.
8-4-105.5. Automatic enrollment in retirement plans - relief from liability - conditions - definitions. (1) (a) (I) An employer that provides automatic enrollment in an employee retirement plan is not liable for the investment decisions made by the employer on behalf of any participating employee with respect to the default investment of contributions made for that employee to the plan if:
(A) The plan provides the participating employee at least quarterly opportunities to select investments for the employee's contributions among investment alternatives available under the plan;
(B) The participating employee is given notice of the investment decisions that will be made in the absence of direction from the employee, a description of all the investment alternatives available for employee investment direction under the plan, and a brief description of procedures available for the employee to change investments; and
(C) The employee is given at least annual notice of the actual default investments made of contributions attributable to the employee.
(II) The relief from liability of the employer under this subsection (1) extends to any employee retirement plan official who makes the actual default investment decisions on behalf of participating employees.
(b) Nothing in this subsection (1) modifies any existing responsibility of employers or other plan officials for the selection of investment funds for participating employees.
(2) As used in this section:
(a) Automatic enrollment means an employee retirement plan provision under which an employee will have a specified contribution made to the plan, equal to a compensation reduction, that will be made for the employee unless the employee affirmatively elects, in accordance with the federal Pension Protection Act of 2006, Pub.L. 109-280, either not to have any compensation reduction contributions or a compensation reduction contribution in an alternative amount.
(b) Employee retirement plan means a plan described in sections 401(k) or 403(b) of the federal Internal Revenue Code of 1986, as amended; a governmental deferred compensation plan described in section 457 of the federal Internal Revenue Code of 1986, as amended; or a payroll deduction individual retirement account plan described in sections 408 or 408A of the federal Internal Revenue Code of 1986, as amended.
Source: L. 2010: Entire section added, (SB 10-035), ch. 3, p. 33, � 2, effective January 1, 2011.
Cross references: For the federal Internal Revenue Code of 1986 referenced in subsection (2)(b), see title 26 of the United States Code.