Colorado Family and Medical Leave Insurance
On November 3, 2020, Colorado voters approved Proposition 118 which creates a state-run Paid Family and Medical Leave Insurance (FAMLI) program for Colorado workers. The FAMLI program will ensure that all Colorado workers have access to paid leave when a qualifying life event occurs. This includes the need to bond with a new child, providing care for one’s self or a loved one who is suffering a serious illness, addressing safety needs related to domestic violence, sexual assault and stalking, or respond to military deployment and other military family needs. Covered workers will now be able to take up to 12 weeks paid leave (with an additional 4 weeks for qualifying pregnancy or childbirth complications) with a weekly maximum up to $1,100, depending on their earnings.
An employer with at least one employee in Colorado is required to provide paid family and medical leave to its eligible Colorado employees. The program structure is similar to unemployment insurance in that the state will pay employees directly when they are approved for FAMLI leave. Employers are not responsible for paying an employee’s salary or wages when they are on FAMLI leave but will be required to continue providing any health benefits to the employee that they were receiving prior to taking FAMLI leave regardless of how long the employee has been employed. Employers are also required to continue making previously established employer contributions to those health benefits while the employee is on FAMLI leave. Eligible employees will be able to apply for benefits beginning January 1, 2024. To be considered eligible for FAMLI leave an employee must have earned at least $2,500 in the state of CO within the last 4 quarters.
Funding* for this program will begin January 1, 2023 through employer and employee contributions and will help build the fund. Employers with 10 or more employees will be required to contribute at least 50% of the premium and may deduct the remaining 50% from employees wages. Employers with less than 10 employees are not required to contribute and may pass 100% of the premium on to the employee. Note: Employers with at least 10 employees in the first quarter of 2023 will need to pay the employer share of the premiums for all calendar quarters of 2023 even if they employ fewer than 10 employees in subsequent quarters of 2023. Collection of the funds will be similar to how most employers submit unemployment insurance: the employer will pay the total premium through an online system at the end of each quarter.
An employee’s wages will be subject to FAMLI premiums if:
- The employee’s work is performed entirely within Colorado;
- The employee performs work both within and outside of Colorado, but the work performed outside of Colorado is incidental to the employee’s work within Colorado, or is temporary or transitory and consists of isolated transactions; or
- The employee’s work is not primarily localized in any state, but some work is performed in Colorado, and one of the following is true:
- The employer’s base of operations is in Colorado, or if there is no base of operations, the place from which the employee’s work is directed or controlled is in Colorado; or
- Neither the base of operations nor the place from which some part of the work is directed or controlled is not in any state in which part of the employee’s work is performed, but the employee’s individual residence is in Colorado.
A Short (or Long) Term Disability plan is not an approved replacement for state disability coverage, even if the plan has richer benefits. Insurance carriers are currently working to put these plans together. The state of Colorado recognizes that these private plans will not be available to employers before 2023 which is when employers must begin paying FAMLI premiums. The state of Colorado also recognizes that employers who intend to have an approved plan in place and effective by January 1, 2024 should not have to contribute funds to the state plan if they are receiving benefits elsewhere. Employers who intend to meet their FAMLI obligation through a private plan must apply for and obtain a private plan exemption for the FAMLI Division in accordance with forthcoming Private Plan Rules. Employers who apply for a private plan exemption will be subject to an administration fee. The FAMLI Division will reimburse an employer for premiums paid towards the state fund minus the required administration fee if the employer has an approved private plan with an effective benefits date of no later than January 1, 2024. Once the approved plan is in effect, the employer is no longer required to submit premiums or wage reports to the FAMLI Division but must continue to maintain internal records in accordance to forthcoming Private Plan Rules. Employers with approved private plans effective after January 1, 2024 will not be eligible for reimbursement of premiums. Employers may begin applying for a private plan exemption beginning November, 2022 through October 31, 2023.
FH Insurance believes it is critical to keep you, the employer, informed and up to date on developments which will shed more light on the FAMLI program. As new guidelines are established, we will continue to pass that information on to you. If you have any questions, please do not hesitate to contact one of our FH Insurance Team members. You may also visit CO FAMLI for Employers for information.
*contribution rate has been set at 0.9% of an employee’s wages, capped at the annual Social Security maximum (2022: $147,000 /year max) adjusted and indexed annually but cannot exceed 1.2%