In November 2022, Colorado voters approved Proposition 118, a ballot initiative that establishes a statewide paid medical leave program. This new law, known as the Colorado Family and Medical Leave Insurance (FAMLI) program, provides eligible workers with up to 12 weeks of paid leave per year for reasons such as (1) caring for their own serious health condition; (2) caring for a family member with a serious health condition; (3) caring for a new child within the first year of birth, adoption, or placement of a foster child; (4) making arrangements for a family member’s military deployment; and (5) taking “safe leave,” meaning the employee or employee’s family member is the victim of domestic violence, stalking, sexual assault, or sexual abuse.
Most Colorado workers will be eligible for FAMLI; workers must have earned at least $2,500 in wages in the previous year and been employed for at least 180 days with their current employer. The FAMLI program will pay a portion of an employee’s regular wage, to a maximum benefit of $1,100 per week. Workers earning close to minimum wage could receive up to 90% of their usual paycheck. Utilizing the FAMLI Premiums and Benefits Estimator, a worker making $60,000 a year, or $1,153 a week, would receive approximately $847.03 a week, or around 73% of their pay. Through the FAMLI program, employers will not need to directly pay their employee(s) on leave. The program established a state fund that will pay out eligible employees. However, employers must remain compliant with certain benefits offered to employees under the FAMLI program, including:
- Leave: employers must permit eligible employees to take up to 12 weeks of leave for a qualifying reason, with an additional four weeks that may be available for complications during pregnancy or childbirth and serious health conditions;
- Flexibility: employers must permit employees to take leave continuously, intermittently, or in the form of reduced schedule, and such leave may be taken in increments as small as one hour;
- Continued Health Insurance Coverage: an employer must cover employees’ health insurance throughout the leave period, if such employer has established a health insurance plan;
- Job Protection: employers must not retaliate against an employee for taking leave, or otherwise prevent an employee from returning to their job after the leave is over.
The FAMLI program is funded by premiums set to 0.9% of the employee’s wage, with .45% paid by the employer and .45% paid by the employee. Utilizing the FAMLI Premiums and Benefits Estimator, an employee with a salary of $60,000 could expect their weekly paycheck to note a FAMLI Withholding of around $5 (deducted from their own salary) and a FAMLI Employer Match of around $5 (charged to the employer). If an employee is not seeing FAMLI deductions on their paycheck, it does not necessarily mean that they are ineligible for the FAMLI program. As of January 1, 2023, all employers with an eligible Colorado employee became responsible for deducting a portion of employee’s pay and submitting a matching amount to the state-run FAMLI program. However, employees will not be eligible for benefits until January 1, 2024.
It is important to note that FAMLI leave is not meant to be a full wage replacement for employees, but rather a partial wage replacement for employees with a serious personal or family matter to attend to. Employers and employees may mutually agree to supplement FAMLI benefits with sick leave or other paid time off (including paid maternity leave) in order to provide full wage replacement. Employees may also choose to use sick leave or other paid time off before using FAMLI leave, but they are not required to do so.
Private employers who do not participate in the FAMLI program may be subject to fines and penalties, so it is important that private employers carefully read up on their options and responsibilities under the FAMLI program. Generally, employers with ten or more total employees are required to participate in the FAMLI program with respect to each employee who resides in Colorado. For example, if an employer’s nationwide employee count is 100, and eight of such employees reside in Colorado, the employer would be required to withhold the applicable portion of the eight Colorado employees’ paychecks, and remit its own match for those eight employees. Employers with nine or fewer total employees are not required to match their employees’ share, but will need to withhold from each Colorado employee’s paycheck the employee’s share (0.45%) of premium payments on each such employee’s behalf and remit such withholdings to the FAMLI division each calendar quarter. It is important to note that although not all employers are required to contribute to the FAMLI program, each of their Colorado-based employees may be entitled to the benefits of FAMLI, unless the employer opted out and its own benefits program received approval from the FAMLI division for offering an equal or better benefits program.
The program also allows local government entities to opt out, as city employees and utility employees already receive similar short and long-term disability insurance benefits. To date, more than 80% of Colorado local governments have opted out, many stating that the FAMLI program merely replicates benefits their employees already receive. Nonetheless, employees of local governments that have opted out still can participate in the state program, such employees would just have to pay the entire premium of .9% of their pay, rather than a .45% payment with a .45% employer match.
The federal medical leave program, the Family Medical Leave Act (FMLA), currently provides unpaid, job-protected leave for employers with 50 or more employees. If FAMLI leave is used for any reason that also qualifies as leave under FMLA then the leave will also count towards yearly FMLA leave. Beyond what FMLA provides to workers, the FAMLI program further adds benefits to Colorado workers by providing paid, flexible, and protected leave options. However, many small businesses previously exempt from FMLA now worry about the FAMLI program’s impact on their bottom line. While other states have implemented similar programs, Colorado’s FAMLI program is unique in its funding structure and Colorado voters are fervently monitoring the solvency of the program in light of higher than expected opt-out percentages.