At the end of 2020, Colorado (CO) voters voted in favor of creating a statewide paid family and medical leave insurance program (“CO FAMLI” or “program”). The program will provide CO employees with up to 12 weeks of job-protected, partial pay for family and medical leave related absences and up to 16 weeks of paid leave if workers have a serious health condition related to pregnancy or childbirth complications. Pursuant to the program’s implementation and rulemaking timeline, the CO Department of Labor and Employment (CDLE) have released initial regulations. This article reviews what we have learned so far about the implementation of this new program.
Colorado FAMLI Implementation Timeline
|1/1/2022||Deadline for Release of CO FAMLI Regulations|
|1/1/2023||Employee Payroll Contributions Begin|
|1/1/2024||Eligible Employees Can Start Applying for Benefits|
Brief Overview of CO FAMLI
- The program applies to any employer that employs at least one person in the state of CO;
- The program is funded through premiums in the form of a payroll deduction split evenly between employers and employees (initial amount is set at 0.9% of an employee’s wages);
- Employers with 10 or more employees must contribute at least 50% and may deduct the remaining premium from employee wages. Employers with fewer than 10 employees will be exempt from the employer contribution to the program but will remain responsible for collecting and remitting employee contributions to the state;
- Employers and employees will begin paying into the program on January 1, 2023, and benefits will be available to employees beginning on January 1, 2024;
- Qualifying reasons for CO FAMLI include leave for the employee (or when providing care or assistance to a family member) for a serious health condition, for the birth or adoption of a child, military exigency and safe leave;
- The maximum benefit is 12 weeks with the exception of complications related to pregnancy or childbirth, in which case an additional 4 weeks are provided.
Rulemaking Updates from the CDLE
The CO CDLE has released additional information on the following:
- Employers Calculate their Size Using the Federal Family and Medical Leave Act Threshold – The rules state that employer size for purposes of an exemption to the employer premium contribution (less than 10 employees) is determined using the same method as the federal Family and Medical Leave Act. This means that:
- The employer counts the number of employees in 20 or more calendar workweeks in the current or preceding calendar year;
- Any employee whose name appears on the employer’s payroll will be considered employed each working day of the calendar week, and must be counted whether or not any compensation is received for the week;
- Employees on paid or unpaid leave, including sick or medical leave, leaves of absence, disciplinary suspension, etc. are counted as long as the employer has a reasonable expectation the employee will later return to active employment; and
- A corporation is a single employer rather than its separate establishments or divisions.
- CO PFMLI Contributions Apply to Employees that Work in Colorado – CO FAMLI generally applies based on where an employee works, regardless of residence. Specifically, the rules clarify that an employee’s wages will be subject to premiums for all services performed within CO where:
- The employee’s entire service is performed within CO; or
- The employee’s service is performed both within and outside of CO, but the service performed outside of the state is incidental to the employee’s work within CO— for example, is temporary or transitory in nature and consists of isolated transactions; or
- Services are not localized in any state, but some of the services are performed in CO, and either
- The base of operations is in CO, or if there is no base of operations, then the place from which services are directed or controlled is in CO, or
- The base of operations or place from which some part of the service is directed or controlled is not in any state in which part of the service is performed, but the individual’s residence is in CO.
- Amount of Premium Contribution – Beginning January 1, 2023, FAMLI contributions will be 0.09% of an employee’s covered wages up to the Social Security contribution limit. This amount will be split equally between employees and employers with more than 10 employees. The rules also clarify that while employers with fewer than 10 employees will be exempt from the employer contribution to the program they remain responsible for collecting and remitting employee contributions to the state. (Rule 1.5.5 (B)(2)) Beginning in 2025, the state may adjust the contribution rate (up to 1.2% of wages) annually based on the funds balance and benefit usage rates.
- Definition of Wages for Purposes of CO FAMLI Premiums – The CDLE rules define wages on which premiums will be based to include the following: salary or hourly wages and other compensation, which may include tips (in some circumstances), commissions, lodging, and payments in kind (non-exhaustive list, see rule for more detail) (Rule 1.5.3).
- Quarterly Premium Contributions – Beginning in 2023, employers will be required to remit quarterly premium contributions by the end of the first month after each calendar quarter. CDLE will make available a schedule of due dates and instructions for remitting premiums. Employers with an approved private plan exemption will not be subject to a premium liability. (Rule 1.5.5(A))
- CO FAMLI Webpage
- Employer Webinars
- Frequently Asked Questions
- CO FAMLI Rulemaking
- CO Department of Labor and Employment
- Sequoia Foreword: Colorado Votes In a Paid Family and Medical Leave Insurance Program
Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2022 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved