What is FAMLI?

In the November 2020 election, Coloradans voted to approve Proposition 118, “paving the way for a state-run Paid Family and Medical Leave Insurance (FAMLI) program.”[i]  This program far exceeds the benefits provided under the federal Family and Medical Leave Act (FMLA), which allows eligible employees “to take unpaid, job-protected leave for specified family and medical reasons.”[ii]  Colorado’s new FAMLI program will ensure all workers in the state “have access to paid leave in order to take care of themselves or their family during life circumstances that pull them away from their jobs.”[iii]  Premiums will be funded through both employer and employee contributions.  Employees will “see a FAMLI premium deduction on their pay stubs” as soon as January 1, 2023.[iv]  Because the Colorado Department of Labor and Employment (CDLE) will need time to accumulate funds, the FAMLI program will not begin to provide benefits to employees until January 1, 2024.[v]

Who and What Does FAMLI Cover?

 Covered employees in Colorado may be full-time, part-time, or temporary employees, so long as they meet a threshold earnings requirement.[vi]  This threshold requires an individual earn at least $2,500.00 in wages during the “base period” or “alternative base period.”[vii]  The base period is “the first four of the last five completed calendar quarters immediately preceding the first day of the individual’s benefit year.”[viii]  The alternative base period is “the last four completed calendar quarters immediately preceding the benefit year.”[ix]

Individuals employed by the State of Colorado are covered by FAMLI, but local governments have the option to opt-out of the program.  However, if a local government does opt out, their employees still have the option to individually elect coverage under the FAMLI program.[x]  Employees may take up to 12 weeks of leave in a one-year period for numerous reasons including:

(1) caring for a child during the first year of its life following birth, adoption, or foster placement;

(2) caring for a family member with a serious health condition;

(3)  experiencing their own serious health condition;

(4) caring for military family needs after a family member is called for active duty; or

(5) for safe leave related to domestic violence, sexual assault or abuse, or stalking.[xi]

Employees will receive a percentage of their usual wages based “on a sliding scale (up to 90%), with low-wage workers receiving the highest percentage.”[xii]

How Will FAMLI Impact Employers?

Employers in Colorado should start preparing now to ensure they can comply with the FAMLI program requirements beginning January 1, 2023.  Employers must then begin deducting premiums to fund the program “in the form of a 0.9 percent payroll tax” split equally between the employer and employee, with each contributing 0.45 percent to the program.[xiii]  Employers can opt to pay the full amount as a benefit to employees if they so choose.[xiv]  Like with unemployment insurance, the state will pay FAMLI leave to employees directly, and the employer is not responsible for paying the salary or wages of an employee on FAMLI leave.[xv]

Employers with less than ten employees do not have to pay the employer portion of premiums.[xvi]  However, “[e]mployers with at least 10 employees in the first quarter of 2023 will need to pay the employer share of the premiums for all calendar quarters in 2023, even if they employ fewer than 10 employees in subsequent quarters of 2023.”[xvii]  Furthermore, employers with less than ten employees must still collect and remit their employees’ 0.45 percent share of premium payments through a payroll deduction.[xviii]  Employers will submit quarterly filings with “their share (if required) and their employee’s share of the premium through an online system” similar to how employers submit unemployment insurance premiums.[xix]

Employers are allowed to offer private plans to cover these benefits, but “the private plan must be at least equally as generous as the public plan, offering the same rights, protections and benefits.”[xx]  Employees can be required to contribute to a private plan, but they cannot be required to contribute more than they would contribute under the state’s FAMLI program.[xxi]  Employers are obligated to notify employees of FAMLI benefits when they are hired, post the CDLE’s FAMLI informational poster in a prominent location in the workplace, and remind employees of their FAMLI benefits if the employer learns of an event that would trigger coverage.[xxii]

Regardless of size, all employers must “register with the FAMLI Division before the first premium payment is due at the end of the first quarter of 2023.”[xxiii]  The FAMLI Division Director will “recalculate the premium rate every year past 2025 and determine if adjustments to the premium rate need to be made,” but as of now, Colorado law caps the premium at 1.2% of an employee’s salary or wages.[xxiv]  A headcount of employees “will be calculated once a year by counting the number of employees [employers] have on [their] payroll for a total of 20 or more calendar workweeks in the preceding calendar year.”[xxv]  In other words, employers with “ten or more employees who worked during 20 or more weeks in all of 2022 will be responsible for sending in the full 0.9% premium for all four quarters in 2023.”[xxvi]  However, “employers are responsible for deducting and remitting premiums for every employee as soon as they are hired,” and the 20-week system is only used for the annual headcount.[xxvii]

As for remote employees, “if the employer has more than ten TOTAL employees–even if they work outside of Colorado–the employer will still be responsible for sending in the full 0.9% premium once a quarter” for its Colorado-based employees.[xxviii]  National employers with employees spread throughout the country “will need to use their total employee headcount to determine its premium responsibility for its Colorado-based employers,” but will only be responsible for paying premiums for its Colorado-based employees.[xxix]  In other words, if a national employer has 15 total employees with eight employees based in Colorado, it will need to remit the full 0.9 percent premium for the eight Colorado employees, where a Colorado-based employer with eight employees would only need to remit the employee’s 0.45 percent contribution.[xxx]

Takeaway

Covered employers will be notified “of required premium amounts at the start of the month when the premium is due.”[xxxi]  Before the year’s end, employers should familiarize themselves with the FAMLI program’s requirements and calculate their premium liability (see premium and benefits calculator here).  Additionally, employers should update Human Resources and Employment Manuals, communicate with employees about the implications of the FAMLI program including the timeline of payroll deductions and benefit availability, register with the FAMLI Division, and prepare internal systems to collect the required premiums.  While there may be a learning curve with these new protocols, employers will be in good shape if they start preparing now and take time to familiarize themselves with their obligations under the new law.

Madison Miller co-authored and is a law clerk in Tyson & Mendes’ 2022 clerkship program.

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Sources

[i] Colorado Department of Labor and Employment, Family and Medical Leave Insurance Program (FAMLI), https://famli.colorado.gov/ (last accessed Oct. 10, 2022); see Colo. Rev. Stat.§ 8-13.3-501-524.

[ii] United States Department of Labor, Wage and Hour Division, Family and Medical Leave Act, https://www.dol.gov/agencies/whd/fmla (last accessed Oct. 10, 2022) (emphasis added).

[iii] Colorado Department of Labor and Employment, Family and Medical Leave Insurance Program (FAMLI), https://famli.colorado.gov/ (last accessed Oct. 10, 2022).

[iv] Id.

[v] Id.

[vi] Frequently Asked Questions: Colorado’s Paid Family and Medical Leave Insurance Program, A Better Balance (May 26, 2022), https://www.abetterbalance.org/resources/frequently-asked-questions-colorados-paid-family-and-medical-leave-insurance-program/.

[vii] Colo. Rev. Stat. § 8-13.3-503.

[viii] Colo. Rev. Stat. § 8-70-103(2).

[ix] Colo. Rev. Stat. § 8-70-103(1.5).

[x] Frequently Asked Questions: Colorado’s Paid Family and Medical Leave Insurance Program, A Better Balance (May 26, 2022), https://www.abetterbalance.org/resources/frequently-asked-questions-colorados-paid-family-and-medical-leave-insurance-program/.

[xi] Frequently Asked Questions: Colorado’s Paid Family and Medical Leave Insurance Program, A Better Balance (May 26, 2022), https://www.abetterbalance.org/resources/frequently-asked-questions-colorados-paid-family-and-medical-leave-insurance-program/.

[xii] Frequently Asked Questions: Colorado’s Paid Family and Medical Leave Insurance Program, A Better Balance (May 26, 2022), https://www.abetterbalance.org/resources/frequently-asked-questions-colorados-paid-family-and-medical-leave-insurance-program/.

[xiii] David C. Gartenberg & Carolyn Theis, Colorado Issues Regulations on Its Paid Family and Medical Leave Insurance Program, Society for Human Resource Management (May 18, 2022), https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/colorado-regulations-paid-family-and-medical-leave.aspx.

[xiv] Id.

[xv] Id.

[xvi] Id.

[xvii] Id.

[xviii] Colorado Department of Labor and Employment, Family and Medical Leave Insurance Program (FAMLI), Administrator Fact Sheet, https://famli.colorado.gov/sites/famli/files/documents/FAMLI-Employee-Toolkit-HR-Fact-Sheet-V2.pdf  (last accessed Oct. 10, 2022).

[xix] David C. Gartenberg & Carolyn Theis, Colorado Issues Regulations on Its Paid Family and Medical Leave Insurance Program, Society for Human Resource Management (May 18, 2022), https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/colorado-regulations-paid-family-and-medical-leave.aspx.

[xx] Id.

[xxi] Id.

[xxii] Id.

[xxiii] Colorado Department of Labor and Employment, Family and Medical Leave Insurance Program (FAMLI), Employers, https://famli.colorado.gov/employers (last accessed Oct. 10, 2022).

[xxiv] Colorado Department of Labor and Employment, Family and Medical Leave Insurance Program (FAMLI), Employers, https://famli.colorado.gov/employers (last accessed Oct. 10, 2022).

[xxv] Id.

[xxvi] Id.

[xxvii] Id.

[xxviii] Id.

[xxix] Id.

[xxx] Id.

[xxxi] Rich Glass & Katharine Marshall, Colorado moves forward on paid family and medical leave, Mercer Law & Policy Group (June 30, 2022), https://www.mercer.com/our-thinking/law-and-policy-group/colorado-moves-forward-on-paid-family-and-medical-leave.html.