Colorado Voters Approve Paid Medical and Family Leave – What Does It Mean for Your Company?

Posted by: Karen Booher on November 18th, 2020

On Election Day 2020, Colorado voters approved the Paid Medical and Family Leave (PMFL) initiative – Proposition 118. PMFL creates a state-run paid family and medical leave insurance program that provides most Colorado employees with up to 12 weeks of partial pay and job security for various family and medical-related absences from work. An additional 4 weeks of paid leave is available if workers have a serious health condition related to pregnancy or childbirth complications.

Colorado legislators failed to pass a paid family and medical leave program during the 2020 legislative session and subsequently placed it on the November 2020 ballot after securing enough signatures in August 2020.

Who Pays for This? When Does It Take Effect? How Much Will It Cost?

The paid leave program will be funded through a new payroll tax split evenly between employers and employees, with a total tax liability of 0.9% of an employee’s wages (.45% each for the employee and employer). For example, a Coloradan making $50,000/year would pay $225 in annual premiums that would be matched by the employer. Employers and employees will begin paying into this new insurance program on Jan. 1, 2023, and benefits will be available to employees under the program beginning on Jan. 1, 2024.

Beginning in 2025, the premium amounts will be adjusted upward to account for the previous year’s claims and costs of administering the program. Notwithstanding any annual increases, the premium will be capped at 1.2% of each employee’s wages, in total (.6% each for the employee and employer).

Eligibility for Employees

• They must have worked at least 180 days; and
• They must have earned $2,500 in wages that were subject to PMFL premiums

Qualifying Reasons for Employees to Take Leave

• Birth of a child, or adoption or placement of a child through foster care.
• To care for a new child during the first year after birth, or during the child’s first year of adoption or foster placement.
• The employee has a serious health condition, or to care for a family member with a serious health condition.
• A need arising from a family member’s active duty service in the armed forces, or notice of impending call to active duty service.
• When an individual or family member is a victim of domestic violence, stalking, or sexual assault or abuse.

 Other Important Things to Know

• This leave program applies to Colorado employers with 10 or more employees, although employers with fewer employees may choose to pay premiums and be covered by PMFL. Businesses that already provide an equitable paid family and medical leave benefit may choose to opt-out.
• The new program will be administered under the auspices of a new Division of Family and Medical Leave Insurance within the Colorado Department of Labor and Employment. The Division will create processes for collecting premiums and administering the program, for determining and reviewing claims, and for permitting appeals of denied claims.
• Leave can be taken in increments of one hour, or shorter periods if that is consistent with the increments the employer typically uses to measure employee leave taken. However, benefits are not payable until the employee accumulates at least 8 hours of benefits.
• Beginning Jan. 1, 2024, employees may begin receiving up to a maximum of $1,100 each week for up to 12 weeks while taking leave.
• In 2024, when employees take paid leave under the PMFL, the portion of their average weekly wage will be paid based on a formula that provides a great percentage of pay to low earners. For example, an employee who makes:
  1. $500/week would be eligible to receive 90% of their normal wage, or $450/week, and a maximum benefit of $5,400/year.
  2. $1,000/week would be eligible to receive 77% of their normal wage, or $768/week, and a maximum benefit of $9,216/year.
  3. $1,500/week would be eligible to receive 68% of their normal wage, or $1,018/week, and a maximum benefit of $12,216/year.
  4. $2,000/week would be eligible to receive 55% of their normal wage, or $1,100/week, and a maximum benefit of $13,200/year.
  5. $3,000/week would be eligible to receive 37% of their normal wage, or $1,100/week, and a maximum benefit of $13,200/year.
• Each employer will be required to post the PMFL program notice in a prominent location in their workplace, and to notify its employees of the program in writing upon hiring and learning of an employee experiencing an event that triggers eligibility.

Important: this is only a summary of Colorado’s Paid Medical and Family Leave and is not meant to be comprehensive of all of the Leave’s provisions. All Colorado employers should consult with legal experts to ensure compliance.

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Sources:

1. Nov. 6, 2020, JacksonLewis, by Jacqueline R. Guesno and Kathleen A. O’Grady, “Colorado Voters Approve Paid Medical and Family Leave Initiative“.
2. Nov. 9, 2020, ASA Staffing Today, Holland & Hart LLP, Brad Williams, “Colorado Voters Approve Paid Medical and Family Leave Program“.