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Colorado Releases Guidance and Regulations for Paid Family and Medical Leave Insurance Program

Back in 2020, the State of Colorado (CO) implemented their own Paid Family and Medical Leave Insurance Program (PFAMLI). Ultimately, the benefit program is not set to go into effect until January 1, 2024, but will require employers with at least one employee in CO, to provide up to 12 weeks of paid leave for any of the following reasons:

  • To care for an employee’s own serious health condition;
  • To care for a family member’s serious health condition;
  • To care for a new child, including adopted and fostered children, during the first year after birth, adoption or placement of the child;
  • To make arrangements for a family member’s military deployment;
  • To take “safe leave,” meaning, leave because the employee or employee’s family member is the victim of domestic violence, stalking, or sexual assault or abuse.

For employees taking leave as a result of pregnancy or childbirth-related complications, an employee is eligible to receive an additional four weeks of PFAMLI leave, increasing the total amount of leave to 16 weeks.

The paid leave benefits are provided directly through the program are not a complete wage replacement. Instead, a partial wage replacement is provided, based on the employee’s individual earnings, up to a maximum of $1,100 weekly.

Benefit Premium Deductions

The PFAMLI program is funded through payroll deductions that are split evenly between the employer and employee. This would mean that each party would roughly pay .45 percent of their payroll to fund the benefit. However, the state has indicated that employers do have the ability to fund 100 percent of the PFAMLI benefits as an added benefit to employees. Beginning on January 1, 2023, employers will need to begin deducting premiums for all CO employees, in the form of a .9 percent payroll tax.

It should be noted that, employers with less than ten employees are not required to pay the employer share of the premiums but are still required to deduct the required amounts from employee wages. Said payroll deductions must be collected and then submitted to the state, through an online system at the end of each quarter.

Interactions with Other Leaves

Not only will employers now have to navigate the complexities of PFAMLI, but they will also need to understand how the program will interact with other leaves of absence, including but not limited to the Federal Family and Medical Leave (FMLA), state-mandate paid sick leave, and company-provided paid time off:

  • Paid Sick Leave/Company-Provided Time Off: Employees are allowed to utilize any employer-provide time off benefits in conjunction with taking PFAMLI. Since the PFMALI only provides for a partial wage replacement benefit with the specified amount of time off, employees may utilize paid time off to earn 100 percent compensation while on leave.
  • Family and Medical Leave (FMLA): FMLA and PFMALI may run concurrently, where applicable. Employers will want to ensure that when applicable, leave is designated as both FMLA and PFAMLI to prevent employees from being able to “stack” leaves. Unlike FMLA, PFAMLI does not require that employees work for the minimum 1,250 hours or 12 months to be eligible for leave. In most situations, employees will become eligible to take PFAMLI after they have earned at least $2,500 while working in CO within the last four calendar quarters.

Notice Requirements

The CO DOL has released a poster that explains employee’s rights under the new program. Employers are required to put up the poster along with their other state and federal employment law postings, in a prominent location in the workplace. In addition, employers are required to provide notice to newly hired employees. Finally, upon discovering that a covered employee has experienced or is experiencing a qualifying event of the program, the employer must provide a reminder to the employee regarding the benefit availability.

Private Paid Family Leave Programs

Employers are allowed to provide a private paid family leave benefit to employees rather than participate in the state’s PFAMLI program. In order for an employer’s plan to be compliant, it must be equally as generous as the public plan, offering the same benefits, protections, and rights as the state plan. As of November 2023, employers may begin submitting their private plan proposals to the state. If approved, the employer may have employees contribute to the private paid family leave plan, rather than withhold premiums to fund the state-run PFAMLI program. If employees are required to contribute to an employer’s private plan, they cannot be required to contribute more than what they would have contributed through the state plan.

Next Steps for Employers

In order to prepare for the upcoming legislation implementation, employers should continue to remain privy to any further PFAMLI regulations and guidance that is issued by the state throughout the year. Prior to the end of 2022, employers should prepare to register with Colorado’s PFAMLI division and determine whether to provide a private paid family leave plan or opt into the state’s plan. Finally, employers will want to provide proper notification to employees of the impending payroll deductions that are set to begin as of January 1, 2023 and post the required notice within the workplace.

HR Works will continue to monitor this topic and provide updated information as needed.

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.