A Tangled Knot of Benefits

A Knot of Benefits

In part due to the COVID-19 pandemic and in part due to a political push to provide enhanced minimum benefits for workers, the federal government, the Colorado legislature, and, most recently, Colorado voters have approved multiple leave benefit laws that apply to the majority of Colorado employees. While the many different programs tie together to form a safety net for employees, the overlapping benefits pose a complex knot for employers to navigate. The most recent of these programs is the Colorado Family and Medical Leave Insurance (FAMLI) program takes effect in January 2023.

Proposition 118

Joining just a handful of other states, Colorado voters approved Proposition 118 in November 2020 creating a state-run insurance program to provide paid leave when Colorado employees to take leave for eligible reasons. Employers and their employees will begin paying into the insurance program on January 1, 2023, and benefits will be available to workers starting in January 2024.

FAMLI & FMLA Overlap

FAMLI will provide most Colorado employees with up to 12 weeks of job protected leave and partial wage replacement for various family and medical related absences from work. Similar to the Family Medical Leave Act (FMLA), the 12 weeks of job protected leave provided by FAMLI can be taken intermittently. Also like the FMLA, employees have job restoration rights to the position held before the leave began or an equivalent position.

Unlike the FMLA which requires employees to have worked for one calendar year to be eligible for the job protected leave benefit and to have worked 1250 hours, Colorado employees must only work for 180 days and earned at least $2,500 in wages (subject to FAMLI’s premiums) to be eligible both for the job protection and partial pay benefits. Qualifying reasons for paid leave under the new program are similar to those under the FMLA and include:

• Employee’s own 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;
• Dealing with a need arising from a family member’s active-duty service in the armed forces or notice of impending call to service; or
• Responding when an individual or a family member is a victim of domestic violence, stalking, or sexual assault or abuse.

Given the overlap between FMLA and FAMLI, employers should strongly consider requiring any paid leave provided under FAMLI to run concurrently with any qualifying (unpaid) leave under the FMLA.

Paid Benefits

Employees are eligible to receive paid leave benefits based upon a benchmark of the state’s average weekly wage. Generally speaking, the majority of Colorado employees will receive 65% – 90% of their wages according to a complicated formula that compares the employee’s wages to the Colorado average weekly wage. Benefits are capped at $1,100 a week, so low-wage workers will receive the highest share of their regular wages while higher wage earners will receive a lower proportion as they approach the cap.

Like the state unemployment benefit program, employers and employees will pay a premium to the state to fund the program. The payroll tax initially paid by employers and employees under FAMLI will be 0.9% of an employee’s wages in 2023, up to a $161,700-per-person wage limit. The total premium will be split between employers and employees such that each pays 0.45% of the employee’s wages as the program’s premium. 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, premiums will be capped at 1.2% of an employee’s wages.

Planning and Exemptions

Many employers have developed leave and wage replacement benefits that go above and beyond the baseline established by FMLA in 1993. These include such things as sick leave, vacation, paid time off, short and long term disability insurance, among other programs. Depending on the structure and benefits of these programs, Colorado employers may be exempt from FAMLI if their programs offer the same rights, protections, and benefits.

In the coming year, Colorado employers will want to watch the continued FAMLI rulemaking and tailor their policies and procedures to ensure they meet the requirements of Public Health Emergency, Leave, Colorado Healthy Families and Workplaces Act, Workers Compensation, Americans with Disabilities Act, FMLA, and Colorado’s domestic violence leave statutes. Lyons Gaddis will be closely monitoring these developments and will provide important updates as more information becomes available and regulations are published.