Proposition 118 Passes in Colorado: The Family and Medical Leave Insurance (FAMLI) Program | JD Supra

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In November 2022, Colorado voters approved Proposition 118, a ballot initiative establishing a statewide paid medical leave program. This new law, known as the Colorado Family and Medical Leave Insurance (FAMLI) program, gives eligible workers up to 12 weeks of paid vacation each year for reasons such as (1) taking care of their own serious health conditions; (2) caring for a family member with a serious health condition; (3) caring for a new child within the first year of the birth, adoption, or fostering of a foster child; (4) make arrangements for a family member’s military deployment; and (5) take “safe leave,” meaning that you or an employee’s family member is a 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 prior year and have been employed for at least 180 days with their current employer. The FAMLI program will pay a portion of an employee’s regular wages, up to a maximum of $1,100 per week. Workers earning close to minimum wage could receive up to 90% of their regular paycheck. Using the FAMLI Premiums and Benefits Estimator, a worker earning $60,000 a year, or $1,153 a week, would receive approximately $847.03 a week, or about 73% of his or her pay. Through the FAMLI program, employers will not have to pay their employees on leave directly. The program established a state fund that will pay eligible employees. However, employers must remain compliant with certain benefits offered to employees under the FAMLI program, including:

  • StartEmployers must allow 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 medical conditions;
  • Flexibility: Employers must allow employees to take vacation on a continuous, intermittent or short-time basis, and such vacation may be taken in increments of up to one hour;
  • Continuous health insurance coverage: an employer must cover employees’ health insurance for the entire period of leave, if that employer has set up a health insurance plan;
  • Labor protection: Employers must not retaliate against an employee for taking time off or otherwise prevent an employee from returning to work after time off.

The FAMLI program is funded by bonuses set at 0.9% of the employee’s wages, with 0.45% paid by the employer and 0.45% paid by the employee. Using the FAMLI Premiums and Benefits Estimator, an employee with a salary of $60,000 could expect his weekly payslip to note a FAMLI withholding of approximately $5 (deducted from his salary) and a FAMLI Employer Match of approximately $5 (deducted from of the employer). If an employee does not see FAMLI deductions on their paychecks, this does not necessarily mean that they are not eligible for the FAMLI program. Effective January 1, 2023, all employers with an eligible Colorado employee became responsible for deducting a portion of the employee’s wages and sending a matching amount to the state’s FAMLI program. However, employees will not be eligible for benefits until January 1, 2024.

It is important to note that FAMLI leave is not intended as 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 leave (including paid maternity leave) in order to provide full wage replacement. Employees may also choose to use sick leave or other paid leave before using FAMLI leave, but 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 their options and responsibilities under the FAMLI program. In general, employers with ten or more total employees are required to participate in the FAMLI program with respect to each employee residing in Colorado. For example, if an employer’s nationwide employee count is 100 and eight of those employees reside in Colorado, the employer would be required to withhold the applicable portion of the salaries of the eight Colorado employees and pay their match for those eight employees. Employers with a total of nine or fewer employees are not required to pay their employees’ share, but will be required to withhold from each Colorado employee’s paycheck the employee’s share (0.45%) of premium payments on behalf of each such employee and pay such deductions to the FAMLI division each calendar quarter. It is important to note that while not all employers are required to contribute to the FAMLI program, each of their Colorado-based employees may be eligible for FAMLI benefits, unless the employer has opted out and their benefits has received approval from the FAMLI division to offer 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 percent of Colorado local governments have opted out, many saying the FAMLI program merely replicates the benefits their employees already receive. However, local government employees who have opted out can still participate in the state program, such employees would only have to pay the full premium of 0.9% of their wages, rather than a 0.45% payment with an employer match. 0.45% work.

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 taken for any reason that also qualifies as leave under FMLA, the leave will also count towards the FMLA annual leave. In addition to what FMLA offers workers, the FAMLI program adds further benefits to Colorado workers by providing flexible, protected, and paid leave options. However, many small businesses previously exempt from FMLA are now concerned about the impact of the FAMLI program 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 program’s creditworthiness in light of higher-than-expected waiver rates.

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