On November 4, 2020, Colorado voters passed Proposition 118, generating Paid Family and Medical Leave obligations for all employers in the state. The plan mandates that employers provide 12 weeks of leave for Colorado employees, plus an additional four weeks in the event of medical complications. Below are the key points employers need to know about this innovative new law, and the timeline for implementation:

Leave benefits are scheduled to start by 2024.

Starting January 1, 2024, an employee can take paid family and medical leave, and receive family and medical leave insurance benefits while taking leave.

They will be eligible for such leave and benefits if they have earned a minimum of $2500 at their job, and need leave for:

–        birth of a child,

–       a serious health condition,

–        care for a family member with a serious health condition,

–        safe leave due to domestic violence.

An employee may take intermittent leave if the employer typically provides for intermittent leave in its policies. However, benefits are not payable until the employee accumulates a minimum of eight hours of Family and Medical Leave Insurance benefits.

Employers’ duties commence earlier than 2024.

Colorado employers will have several steps to take before the 2024 start date. Beginning January 1, 2023, each employer must remit a payroll tax to the fund to provide for these benefits with the tax being paid 50/50 by the employer and employee. From January 1, 2023 to December 31, 2024, the total payroll tax amount will be 0.9%.

After January 1, 2025, the Director of the fund will set the premium amount based on a percentage of employee wages and at a rate to fund 135% of the benefits paid during the prior calendar year. Businesses with fewer than 10 employees would be exempt from the employer premium, and companies could apply to use a private leave program instead of participating in the statewide program if the company meets set criteria approved by the Division of Family and Medical Leave Insurance within the State Department of Labor.

The amount of leave insurance benefits is determined based on a comparison of the employee’s average weekly wage and the state average weekly wage. The portion of an employee’s average weekly wage that is equal to or less than 50% of the state average weekly wage is replaced at a rate of 90%; and the portion of the employee’s average weekly wage that is more than 50% of the state average weekly wage is replaced at a rate of 50%. The maximum weekly benefit is 90% of the state’s average weekly wage, except any leave taken in 2024 has a maximum weekly benefit of $1100.

Additional Changes Resulting from The New Law: 

The initiative further guarantees an employee cannot be fired while on leave if they have been on the job for at least 180 days. Similar to the federal Family and Medical Leave Act, an employee must be restored to an equivalent job upon returning from leave.

Employers are further prohibited from retaliating against employees for using this leave. Employers can require that leave taken under the state program run concurrently with any leave taken under the federal Family and Medical Leave Act.

To administer this fund and collect the tax, the initiative creates a Division of Family and Medical Leave Insurance within the State Department of Labor. This Division is responsible for establishing the fund and providing notice to the regulated community regarding payment of tax of filing for claims prior to January 1, 2023.

What Should Employers Do Now? 

Colorado employers should be proactive in creating a timeline for implementing this new payroll tax. You will need to communicate this new policy to your employees and provide for procedures related to implementing this initiative. We encourage you to work with your employment law counsel to develop the best practices to integrate this new law into your existing obligations, and to use the time between now and the date the law kicks in to prepare for the significant changes to come.

The author of this article, Mary Policky, is an Employee Benefits Advisor at RSS Insurance. Mary has 20+ years of experience in the health insurance industry and is passionate about helping her clients find coverage that meets their needs.

Mary Policky: mpolicky@rss-insurance.com, 303-429-3561 ext. 109

Please feel free to contact Mary or any member of our team with questions you may have about the new paid family and medical leave employer obligations. We are here as a resource to you.



Sources: The Denver Post, 9 News, Denver 7,  ballotpedia, Fast Company