Although Colorado voters enacted the Paid Family & Medical Leave Insurance (short, FAMLI) program by referendum in November 2020, the program was recently challenged in Court while the first round of draft Regulations was being crafted. This challenge put the program temporarily in jeopardy.
Colorado construction company Chronos Builder LLC had contested the program on the grounds that the sliding scale funding scheme was an unconstitutional "added tax or surcharge" on income that was not "taxed at one rate" and would thereby violate the state's Taxpayer Bill of Rights (TABOR).
However, Colorado's Supreme Court ruled Tuesday that the Paid Family and Medical Leave Insurance Act was not an income tax law and that the premium collected was a fee to fund specific services rather than a tax collected to defray general government expenses.
This ruling clears a potentially significant hurdle toward implementing the FAMLI program.
So, what will the FAMLI program provide to working families starting January 2024?
Overview of the FAMLI Program
Last month, Colorado released the first round of draft regulations for this new, state-mandated benefit that CO employers will need to provide to their employees beginning January 1, 2024. The FAMLI Program will enable eligible employees to take job-protected paid leave for any of the following reasons:
- Bonding with a new child during the first year following birth, adoption, or placement of the child.
- Caring for a family member with a serious health condition.
- Military exigencies (e.g., to make arrangements for deployment).
- "Safe Leave" to address domestic violence or sexual assault.
- As well as caring for their own serious health condition.
Employees may be able to take up to 12 weeks of paid leave and may receive an additional 4 weeks of FAMLI leave due to pregnancy or childbirth-related complications for a total of 16 weeks.
FAMLI provides partial wage replacement benefits to a maximum of $1,100 per week in 2024 and beginning in 2025, the maximum weekly benefit will be 90% of the state average weekly wage. Employees can estimate their premium and benefits through the Colorado Department of Labor and Employment's (CDLE's) Premium & Benefit Calculator.
Any private employer with at least one employee in Colorado must provide paid family and medical leave insurance (FAMLI) to its eligible Colorado employees.
While participation in the FAMLI program is mandatory for private employers, local government employers may choose to participate in the program, or decline to participate in FAMLI after an affirmative vote of the local government governing body to do so. The voting process must occur before January 1, 2023. The Colorado FAMLI Division put together a great summary of local government requirements in a pre-recorded webinar here.
While FAMLI benefits begin on January 1, 2024, premiums are due under the program starting January 1, 2023. Subscribe here to stay up-to-date on FAMLI details.
Private Paid FAMLI Plans
Employers may provide these benefits through a private FAMLI plan -- through a carrier like ShelterPoint*, once they have a plan approved by the Division of Insurance, or by self-insuring -- instead of the state plan. But the private plan must be at least as generous as the state plan, while also offering the same rights, protections, and benefits as the state plan. Employees may be required to contribute to the private plan, but can't contribute more than what the employee would have contributed under the state plan.
The CO Department of Labor & Employment (CDLE) will be offering a two-part series on private plans. The first webinar will be on August 31, 2022; the second webinar, which includes a live Q&A session, will be held on September 27, 2022. If you miss this webinar, you can access a recorded version from the Employer Webinars page.
ShelterPoint specializes in private plan options for statutory benefit programs, so subscribe here to stay updated on private plan developments for FAMLI.
What do Employers Need to Do Now to Prepare for the FAMLI Program?
As an employer, you will want to address the following:
- Post the CLDE FAMLI poster in a prominent place at your worksite – you can access a printable copy on the FAMLI Division's website here.
- Register with the FAMLI Division (when the employer portal goes live)
- Get ready for FAMLI payroll deductions to start on January 1, 2023 -- required to pre-fund the program before benefits become effective
- Rules for private plans have not been released yet – once out, circle back to decide whether a private plan is the right option for you.
Please be sure to subscribe to our updates on Colorado's FAMLI program to stay in the know on additional employer requirements as they become available!
This blog post is for informational purposes only and is not an offer of coverage or intended to provide legal counsel. Please consult with an appropriate professional for legal and compliance advice. Any information is based on the applicable statutes and regulation, and may change as regulations evolve or Colorado issues guidance regarding its paid Family & Medical Leave Insurance (FAMLI) regulations.
*The ShelterPoint family of companies operates under the “ShelterPoint” name strictly as a marketing name, and no legal significance is expressed or implied. The ShelterPoint family of companies consists of ShelterPoint Life Insurance Company, a NY-domiciled carrier, with principal office in Garden City, NY, and its wholly-owned subsidiary ShelterPoint Insurance Company, a FL-domiciled carrier, depending on the state. ShelterPoint is a registered service mark.