A Guide to Colorado PEO Services

Working with a professional employer organization (PEO) can help Colorado businesses streamline HR operations and maintain compliance with state labor laws. By delegating administrative tasks to a PEO, finance and HR teams can focus on key strategic initiatives.

Learn more about the role of PEOs and their advantages for Colorado businesses below.

How PEOs support Colorado businesses

A partnership with a PEO involves a co-employment arrangement, where the PEO takes on certain employer responsibilities and liabilities while the client retains control over its workforce. Once a business chooses to work with a co-employer, it signs a written contract called a Client Service Agreement or CSA. This contract makes both entities (client company and PEO) legal co-employers and outlines the responsibilities of both parties.

PEO responsibilities can include:

• Managing payroll
• Ensuring compliance with labor laws and regulations
• Benefits management
• Conducting work authorization checks
• Performing pre-employment screenings, such as background checks, reference checks, and drug testing

Client company responsibilities can include:

• Coaching and supporting employees
• Assigning tasks and responsibilities
• Evaluating performance and providing feedback
• Monitoring and measuring productivity
• Determining the duration of employment contracts
• Ensuring employees have appropriate working conditions and equipment

Benefits of partnering with a Colorado PEO

Outsourcing HR and payroll processes offers several advantages for businesses operating in Colorado:

Increased efficiency

A PEO’s expertise allows businesses to streamline HR functions without expanding internal teams. This setup can be more cost-effective than managing these processes in-house. PEOs also offer advanced HR tools that automate payroll, tax filings, and benefits enrollment, saving additional time.

Access to expertise

Startups and small businesses often lack the budget for dedicated HR experts or the resources to handle compliance risks. PEOs provide access to specialized knowledge, helping businesses mitigate errors that can lead to penalties and stay compliant while competing with larger organizations.

Affordable employee benefits

Through a PEO, businesses can access affordable benefits packages typically available only to larger companies. PEOs negotiate group rates for health insurance, retirement plans, and more, enabling small businesses to offer attractive benefits without straining their budgets.

See also: How to Select an Employee Benefits Provider in 9 Steps

Compliance management

Navigating Colorado’s evolving employment regulations can be challenging. A PEO helps businesses stay compliant by providing guidance and managing potential risks, including handling legal intricacies like workers’ compensation disputes or wage-and-hour compliance.

Payroll, labor, and employment laws in Colorado

Payroll laws in Colorado

Colorado businesses must comply with payroll regulations to avoid penalties and maintain compliance:

Minimum wage requirements: Employers must pay a minimum wage of $14.42/hour in 2024, with tipped employees earning $11.40/hour. Businesses must also follow higher local wage standards if applicable. In 2025, Colorado’s minimum wage will be $14.81/hour if no local minimum wage applies, with tipped employees earning $11.48/hour.

Colorado’s local minimum wages for 2025 include:

• Denver City/County: $18.81/hour
• City of Edgewater: $16.52/hour
• Boulder County (only unincorporated areas): $16.57/hour
• City of Boulder: $15.57/hour

See also: US Minimum Wage: A Guide for Employers

Overtime pay: Employees are entitled to overtime wages under Colorado law. Employers must ensure overtime pay aligns with wage agreements and meets legal requirements without improper deductions.

Pay transparency: Colorado's Equal Pay for Equal Work Act requires employers to announce job openings and promotions to employees, include pay ranges and benefits in postings, and maintain job and wage records for two years after employment ends. Amendments effective January 2024 also require disclosing selected candidates and providing guidance for future opportunities. Non-compliance can result in fines up to $10,000.

See also: Pay Transparency Laws in the US – A Definitive Guide

Breaks and rest periods: Employees working more than five hours must receive a 30-minute unpaid meal break unless they cannot be relieved of duties, in which case the break must be paid. Employees also get a 10-minute paid rest period for every four hours worked.

Labor laws in Colorado

Labor laws in Colorado protect workplace safety, union activity, and fair treatment of employees:

Unions and collective bargaining: Regulations vary by employment type:

• Private sector employees are covered by the National Labor Relations Act (NLRA) and Labor Peace Act (LPA)
• State government employees fall under the Colorado Partnership for Quality Jobs and Services Act
• County employees are governed by the Collective Bargaining by County Employees Act
• Other public employees are protected under the Protections for Public Workers Act

Workplace safety: Employers must comply with Colorado Overtime and Minimum Pay Standards Order (COMPS Order) #38, Agricultural Labor Conditions Rules, and whistleblower protection laws. Clear communication about workplace safety measures is essential.

Workers’ compensation: All employers in Colorado must provide workers’ compensation insurance, regardless of the number of employees. This insurance covers medical expenses, lost wages, and rehabilitation for job-related injuries or illnesses.

Employment laws in Colorado

Employment laws ensure fair treatment, prevent discrimination, and support workers during life events:

At-will employment: Colorado operates under at-will employment, allowing employers to terminate employees without cause or notice, as long as anti-discrimination laws are not violated.

Paid leave: Under the Family and Medical Leave Insurance (FAMLI) program, employees can take up to 12 weeks of paid leave annually for major life events, with extensions of up to 16 weeks for pregnancy-related complications. Both employers and employees contribute to the program.

Paid sick leave: The Colorado Healthy Families and Workplaces Act requires businesses to provide one hour of paid sick leave for every 30 hours worked, up to 48 hours annually. Additional leave is required during public health emergencies.

Discrimination and harassment: Discrimination based on protected classes is prohibited in employment, housing, and public accommodations. Employers must provide accommodations for disabilities and pregnancy-related conditions. Complaints must be filed within specific deadlines.

Jury duty: Employers cannot retaliate against employees for jury service. Regularly employed jurors must be paid their usual wages for the first three days of service, up to $50 per day, unless otherwise agreed.

Choosing the right PEO in Colorado

Selecting the right PEO for your business is essential for compliance and growth. Follow this step-by-step guide to make the best choice:

Define your business needs

Analyze inefficiencies in your HR processes and identify areas for cost savings. Determine which services you need from a PEO, such as payroll processing or compliance management. Consider how your needs may evolve as your business grows.

See also: Should You Use a PEO vs Payroll Provider? Benefits, Limitations, and Alternatives

Evaluate the value of services and benefits

Compare the services offered by PEOs, focusing on the quality and affordability of employee benefits packages. Assess how well their tools integrate into your operations, especially their software solutions.

Choose PEOs with a proven track record in Colorado. Verify their credentials through case studies and client testimonials. Since Colorado lacks PEO licensing requirements, thorough research is critical.

Free download: A Buyer’s Guide to PEO Services

Assess compliance and risk management capabilities

Look for a PEO that proactively tracks regulatory changes and communicates updates. They should offer robust compliance tools, such as Deel’s Compliance Hub, which helps businesses navigate evolving laws.

Check customer service and support

Ensure the PEO provides responsive support with dedicated account managers or teams familiar with your business. Fast, reliable assistance is critical for handling compliance or payroll issues.

Review and negotiate the contract

Carefully review contract terms, including responsibilities, fees, and exit clauses. Consult a legal expert if needed to confirm the agreement serves your business’s best interests.

Plan for implementation and transition

Work with the PEO to develop a transition timeline that includes meetings, data transfers, and software implementation. Communicate changes to your team, address concerns, and highlight the benefits of using a PEO.

See also: Checklist: How to Change PEO Providers

By following these steps and understanding Colorado’s regulations, your business can benefit from smoother HR processes, improved compliance, and a stronger foundation for growth.

Manage your Colorado, US, and global workers with Deel

Deel simplifies payroll and HR management, whether you hire employees in Colorado, across the US, or around the world.

Deel PEO takes care of payroll, HR, and benefits administration while ensuring state tax compliance and handling sensitive issues by providing:

• Expert payroll administration
• Access to benefit plans from leading carriers and benefits administration
• Free HRIS with onboarding, time off, expense, and provisioning features
• State-specific training, HR policies, and on-demand HR support
• Advanced tax and benefits compliance
• And more

Book a demo to learn more about using Deel PEO in Colorado.

*Provided by Deel PEO US, LLC, Deel Employment Services,