How Does the Colorado Paid Family and Medical Leave Insurance Program Impact Colorado Employers?
In November of 2020, Colorado voters approved Proposition 118 by 57.75%, which amended Colorado law by creating a paid family and medical leave insurance program (FAMLI). The FAMLI program is administered by a new division known as the Division of Family and Medical Leave Insurance under the Department of Labor and Employment (the “Division”).
The program, enacted under C.R.S. §8-13.3-501 et seq., requires employers and employees in Colorado to contribute payroll premiums, in a 50/50 split, in order to finance the payment of family and medical leave insurance benefits beginning January 1, 2023.
The new program will then allow eligible employees up to 12 weeks of paid family and medical leave insurance benefits starting January 1, 2024. All employers operating within the State of Colorado must comply with the new law, including those employers not physically located in Colorado but excluding those very limited employers who fall under an exemption.
What Should Employers Expect, Starting January 1, 2023?
Premiums
The new law requires that employers remit payroll premiums starting on January 1, 2023. Only employers with 10 or more employees are required to pay 50% of the premium required under that law.
Employers may deduct the employees’ 50% of the premium from an employee’s wages. Employers would then remit the full 100% of the premium required under the new law to the Family and Medical Leave Insurance Fund (the “Fund”).
An employer with less than 10 employees may deduct up to 50% of the premium from an employee’s wages and is only required to remit 50% of the premium required under the law to the Fund. Employers are able to choose to pay the employee’s portion of the premium.
From January 1, 2023 through December 31, 2024, the premium amount is nine-tenths of one percent (0.90%) of wages per employee. After 2024, the new premium amount will be set by the Director of the Division.
Notice of the Program
Employers will be required to post the program notice in a prominent location in the workplace. Additionally, employers will need to notify employees of the program, in writing, upon hiring and upon learning of an employee experiencing an event that triggers eligibility.
The Division will provide employers with these required publications.
An employee is a “covered individual” and eligible for benefits if the employee:
Has earned at least $2500 in wages subject to premiums during the person’s base period or alternative base period;
Meets the administrative requirements of the new law and enacted regulations; and
Submits an application with the Division with a claim for benefits.
A covered individual may only request leave for one of the following reasons:
Because of a birth, adoption or placement through foster care, is caring for a new child during the first year after the birth, adoption or placement of that child;
Is caring for a family member with a serious health condition;
Has a serious health condition;
Because of any qualifying exigency leave; or
Has a need for safe leave.
Wages shall include:
“wages” as defined under C.R.S §8-70-141;
Other compensation including board, lodging, payments in kind, and/or other benefits provided as compensation for services performed by employees, including but not limited to domestic and agricultural employees;
Any reasonable value of remuneration payable in any medium other than cash (either determined by the Division or the value in a written contract);
Commissions, payment on piecework basis, or bonuses earned for labor or services in accordance with the terms of any agreement between an employer and employee; and
Tips/gratuities and services charges if the employer exercises significant control over the amount and distribution of those tips/gratuities and service charges.
The following are exempt from wages:
Per-diem or mileage reimbursements; or
Amounts of payments made by the employer on behalf of the employee into other insurance or annuity accounts.
Leave and Employment Protection
Any covered individual who has been employed with an employer for at least 180 days prior to the commencement of their paid family and medical leave shall be entitled to be, upon return from that leave:
Restored to the position held by the covered individual when the leave commenced, or
Restored to an equivalent position with equivalent employment benefits, pay, and other terms and conditions of employment.
Employees are not entitled to:
The accrual of any seniority or employment benefits during any period of leave, or
Any right, benefit, or position of employment other than any right, benefit, or position to which the employee would have been entitled had the employee not taken the leave.
Employers are also required to maintain any health care benefits the employee had prior to taking such leave but the employee can still be required to continue to pay their portion of the premiums as required prior to the commencement of the leave.
Denial of Benefits or Retaliation by the Employer is Prohibited
An employer shall not interfere with, restrain, or deny exercise of, or the attempt to exercise, any right protected under the new FAMLI statute. Nor shall the employer take any retaliatory personnel action or otherwise discriminate against an employee because the employee took advantage of their benefit rights under this new law.
Furthermore, an employer may not count leave taken under this act as an absence that may lead to or result in discipline, discharge, demotion, suspension, or any other adverse action. Any agreement that limits an employee’s right under this statute is considered void.
Ongoing Rulemakings and Proposed Regulations
There are still many questions that have not been answered as to how this program will be implemented and administered. Currently, there are multiple rulemakings taking place which will enact regulations that will hopefully provide greater certainty to employers with regard to this new statute.
However, if these regulations are finalized as proposed, the regulations will require burdensome wage reporting by the employer to the Division on a quarterly basis. Employers will also likely be required to register as an employer with the State prior to January 1, 2023.
Next Steps for Colorado Employers
Given the complexity and uncertainty of this new law, employers should reach out to their employment or business attorneys to make sure they are prepared to be in compliance starting January 1, 2023.
Business attorneys should be tracking the implementation of the new regulations and can help update any internal policies of an employer that may be required for compliance. Once again, this would be a great time to have your attorney review your entire employee handbook for compliance with the new employment laws in Colorado.
Need Help Ensuring Compliance with Colorado’s New FAMILI Law?
Our Colorado legal experts can walk you through the new requirements, review and draft any internal policies, and keep your company apprised of any new regulations that will impact your compliance.
