Voters in Colorado approved a Paid Medical and Family Leave Program that will begin providing benefits on January 1, 2024. This was the first time that voters had been asked to decide on a paid leave law in any state. Eight other states and DC have created similar programs in the last twenty years.
Employees and employers will begin paying into their new insurance program on January 1, 2023. The funding is being split evenly between employees and employers through a new payroll tax that has been initially set at 0.9% of an employee’s wages up to the limit of $161,700 per person. The percentage could grow to 1.2%. Employers with fewer than ten (10) employees will be exempt from paying the matching employer premiums. Individuals who are self-employed may opt into the program and would then only have to pay the employee premium.
Employees are generally covered if they earn at least $2,500 in wages that is subject to premium payments during an applicable period. The maximum weekly benefit is 90% of the state average weekly wage, except for 2024, during which the maximum benefit will be $1,100.
The plan will provide most employees in Colorado with up to twelve (12) weeks of partial pay and job security for various family and medical related absences from work plus four (4) additional weeks of paid leave if the worker has a serious health condition related to pregnancy or childbirth complications. Employees may take intermittent leave if their employer typically provides for intermittent leave in other company leave policies. Benefits are not payable until at least eight (8) hours of leave benefits are accumulated by the employee.
Qualifying reasons for Colorado paid leave include:
- Having a serious health condition;
- Caring for a family member with a serious health condition;
- Caring for a new child during the first year after birth, adoption, or placement;
- A need arising from a family member’s active duty service in the armed forces;
- Notice of impending call to active duty service; or
- When an individual or a family member is a victim of domestic violence, stalking, or sexual assault or abuse.
Job protection will be provided for employees who have been employed with their employers for at least 180 days prior to taking leave. After returning from paid leave, the employee will be entitled to return to their same position or an equivalent position (in regards to pay, benefits and other terms and conditions of employment). Health insurance may not be lost while out on paid leave but, the employee is required to continue to pay their portion of the health insurance premiums.
The new program also permits employers to require that any paid leave provided under the program run concurrently with any qualifying (unpaid) leave under the federal Family and Medical Leave Act (FMLA) and/or with any leave provided under any disability policy provided by the employer. However, employers may not require employees to use or exhaust any accrued vacation leave, sick leave, or other paid time off prior to or while receiving paid medical and family leave under the new program.
This program will be state-run and administered under a new Division of Family and Medical Leave Insurance within the Colorado Department of Labor and Employment. This newly created division will start to create premium collecting processes and administer the program. It will also determine and review claims as well as determine appeals of denied claims.
Employers in Colorado should begin to evaluate their own implementation timeline for this new payroll tax and prepare for the changes coming to your employees, your company and your policies.