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New Paid Family and Medical Leave Program Passes in Colorado

After multiple years of attempts by the Colorado legislature to pass a paid family and medical leave law in the state, advocates instead presented the issue directly to voters. On November 3, 2020, passed with around 57% of voters supporting the measure.

Beginning in 2024, Colorado employees will be entitled to up to 12 weeks of paid family and medical leave (PFML) to be used for:

• Birth or adoption of a child;
• An employee’s own serious health condition (birth mothers are eligible for an additional 4 weeks of PFML for complications from pregnancy or childbirth);
• Caring for a family member with a serious health condition;
• Qualified military exigency; or
• “Safe leave” for victims of sexual assault, domestic violence or abuse, and stalking.

PFML benefits will paid by the state, and the program will be funded by a new payroll tax with contributions from both employers and employees. For employers with 10 or more employees, these “premiums” will initially be set at 0.9% of employees’ wages, with 0.45% paid by the employer and 0.45% paid by the employee. Employers with less than 10 employees will be exempt from making the employer contributions, but their employees will still be required to pay 0.45% of wages. The initiative also created a new Division of Family and Medical Leave Insurance (DFMLI) to collect these premiums and administer the program.

The benefits paid to employees will be based on a percentage of each employee’s usual wages, with a maximum weekly benefit of $1,100 for 2024. Employees will be eligible for benefits once they have earned at least $2,500. Additionally, employees that have worked for their employer for at least 180 days will be protected from termination during PFML. If an employee’s PFML also qualifies as leave under the federal Family and Medical Leave Act, the two leaves will run concurrently.

Employers and employees will be required to begin paying premiums in 2023, and benefits will be available to employees beginning in 2024. Employers will also have the option to comply with these requirements through a private PFML plan rather than the state-run program by applying for approval through the DFMLI.

Because this ballot initiative was originally submitted to the state prior to the passage of Colorado’s Healthy Families and Workplaces Act (HFWA), further guidance may be needed to clarify how the PFML program will interact with the new requirement for employers to offer paid sick leave under the HFWA. In the meantime, employers will have over two years to begin preparing for the program’s implementation and can read a synopsis from Fisher Phillips .

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.

This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.