Colorado’s Paid Family and Medical Leave Insurance Act
On November 3, 2020, Colorado voters approved Proposition 118, passing into law the Paid Family and Medical Leave Insurance Act (“PFMLA” or the “Act”). The Act creates a state-run insurance system for family and medical leave benefits that will provide up to 16 weeks of paid leave per year. Through a new payroll tax, employers will be responsible for paying half the premium for these benefits. Individual employees will pay the other half of the premium.
Until now, most employees have been eligible for family or medical leave of up to 12 weeks under the federal Family Medical Leave Act. However, leave under the federal program is without pay. Colorado’s plan, effective January 1, 2024, will provide paid leave benefits to employees drawn from Family and Medical Leave Insurance (“FAMLI”) system. The Act will also ensure job restoration so that employees who take leave will be entitled to return to the same or an equivalent position with the same seniority level.
FAMLI will cover individuals who have worked for an employer for at least 180 days and earned at least $2,500 in wages. Employees can receive 12 weeks of benefits annually for the following:
- The birth, adoption, or placement through foster care of a child;
- A serious health condition;
- To care for a family member with a serious health condition; or
- For any qualifying necessary leave, including military service, or safe leave due to domestic violence.
The employer must also provide an additional four weeks of leave in the event of any medical complications.
Under the Act, employers cannot take disciplinary or retaliatory action against employees who use paid leave. If an employee feels aggrieved by retaliation or a reduction in employment rights, they may have the right to pursue a civil action in court. Employers are potentially liable for both damages and equitable relief in such suits. On the flip side, if an employee tries to willfully deceive or make false statements to access benefits, they are subject to punitive measures.
As a Colorado roofing contractor, you can opt to use a private insurance plan to comply with your employer obligations under the Act as long as it provides the same rights, benefits and protections for employees as the state-run plan. However, if your private plan does not adhere to the law’s statutory requirements, the government can fine you up to $500 per violation.
Employers with less than 10 employees are exempt from paying the matching premiums. Those who are self-employed can opt into the program and pay only the premium’s employee portion. Local governments may also opt out, but their employees may opt back in under certain circumstances.
If you are an employer, you will want to understand both the fiscal and logistical requirements of the new program. The plan will assess the new payroll tax to fund the new program beginning January 1, 2023. Initially, the premium amount is 0.9% of wages per employee until December 31, 2024.
After that time, the new Division of Family and Medical Leave Insurance will set premiums, which could increase the tax calculation to fulfill the program’s mandate. However, increases are limited by law not to exceed 1.2% of wages per employee. Premiums will also be assessed up to the social security tax limit.
The program calculates paid leave by comparing the employee’s wages to the state’s average weekly wage, which would fall somewhere between 65% and 90% of the individual’s wage. The maximum weekly benefit would be 90% of the state’s average weekly wage, but any leave taken in 2024 will be capped at a weekly benefit of $1,100.
In creating this state-run insurance program, Colorado joins a small group of states with family and medical leave insurance. Others include California, Massachusetts (starting July 2021), Connecticut (beginning February 2022), New York, New Jersey, Rhode Island, Oregon (beginning January 2023) and Washington. Washington, D.C. also offers paid family leave.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.