One of the quieter Election Day stories out of Colorado is one that will have a significant impact on employers. Voters approved Proposition 118, the “Paid Family and Medical Leave Insurance Act.” Colorado joins 12 other states in providing paid family and medical leave to a broad swath of workers. The changes are dramatic: virtually every employer will be required to provide up to 16 weeks of family and medical leave, much of which is job protected, and many employers will be required to contribute to payroll premiums to fund the program.
The Paid Family and Medical Leave Insurance Act will impact more Colorado employers and employees than the federal Family and Medical Leave Act of 1993 (“FMLA”), which requires covered employers to provide 12 weeks of unpaid leave to eligible employees for specific qualifying reasons. Starting on January 1, 2024, Colorado’s law permits “covered individuals” to take paid family and medical leave. “Covered individual” is defined broadly to include any person who either earns $2,500 in wages during a base period or opts in to the fund, meets requirements to take leave, and submits a claim for benefits. Workers who are self-employed (including independent contractors, sole proprietors, partners, and joint venturers) or work for local government may opt in to the program. Generally, any person or entity that employs at least one person is considered an employer for purposes of the Paid Family and Medical Leave Insurance Act (only the very smallest employers, defined as any employer that has not employed at least one person in at least 20 calendar weeks of the current or last calendar year or who did not pay at least $1,500 in wages in every quarter in the preceding calendar year, are exempted).
Colorado’s law permits leave under more circumstances and for more time than the FMLA. Like the FMLA, the Paid Family and Medical Leave Insurance Act provides up to 12 weeks of leave if a covered individual has a serious health condition, is caring for a family member with a serious health condition, is caring for a new child, or requires leave due to a military exigency. In addition, a covered individual may take up to 12 weeks of “safe leave,” related to stalking, domestic violence, and sexual assault, and an additional 4 weeks of leave due to pregnancy or childbirth complications. Leave taken for reasons not covered by the FMLA does not satisfy an employer’s obligations under the FMLA. Under the new state law, employees employed at least 180 days before leave begins are entitled to job protection and reinstatement in the employee’s or an equivalent position. Employers must continue health insurance benefits during the period of leave. Employers may not require employees to exhaust accrued paid vacation, sick time, or paid time off before or during paid family and medical leave, although employees may agree to take accrued paid leave while using paid family and medical leave so long as doing so does not result in the employee receiving more than his or her average weekly wage when the insurance benefit and employer’s payment are combined.
Leave is paid through an insurance fund. Payroll premiums will be assessed at .9% of an employee’s wages starting on January 1, 2023 and, starting in 2025, could rise to as much as 1.2% of an employee’s wages. Employers with at least 10 employees must pay at least half of the payroll premium. Payroll premiums are assessed on wages up to the social security tax limit. An employee’s benefits while on paid family and medical leave are calculated as 90% of the covered individual’s wages up to and including the state average weekly wage plus 50% of the covered individual’s wages above that state average weekly wage. In 2024, weekly benefits are capped at $1,100, which is predicted to be 90% of the state average weekly wage for 2024. Employers may apply for approval to meet their obligations under the new law through a private plan, so long as the private plan provides all of the same rights, protections, and benefits.
Employers are prohibited from retaliating against employees for exercising their rights under the Paid Family and Medical Leave Insurance Act and may not consider paid family and medical leave an “absence” for purposes of taking any adverse action.