Premiums for state’s first paid family leave program begin in the new year
The FAMLI program creates a statewide fund to finance employee leave
Colorado’s first paid family and medical leave insurance program, known as FAMLI, will begin collecting premiums from employers and employees in January 2023. The state-run program will build up its fund balance over the course of the year and begin providing benefits in January 2024, covering between 12 to 16 weeks of paid leave per year for participating employees.
All private employees and most employers in Colorado are required to participate in the program starting next month. Each employee will contribute 0.45% of their income, automatically deducted from their paycheck, to the fund, and employers with 10 or more employees are required to match the 0.45% contribution for a total of 0.9%. Rates may go up in 2025 after an evaluation of the program’s costs but cannot rise higher than 1.2% in total.
If an employer already has or plans to adopt a privately-funded paid family leave program that provides equal or greater benefits than the FAMLI program by January 2024, it can be approved for exemption later in the year and will be reimbursed for program payments.
Government employers were allowed to decide whether to opt into the FAMLI program or not. All of the government entities in Eagle County have voted to opt out this first year since each offers comparable or better paid leave without requiring contributions from employees. Government employees are still allowed to enroll in the FAMLI program if they prefer the state benefits to what they are currently offered.
Self-employed workers and contractors can also choose to participate in the program but are not required to. Small employers — defined as employing nine or fewer people — are exempt from having to match the employee’s contribution, but are still required to register for the program in January.
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“The program will ensure Colorado workers have access to paid leave when they face life circumstances that force them to choose between earning a paycheck or taking care of themselves or their family,” the FAMLI website reads. “Using simple payroll deductions, employers and employees will contribute to the fund that will give more Coloradans wage replacement benefits during life circumstances that pull them away from their jobs.”
Erin McCuskey, the economic resiliency manager for Eagle County, is one of the people supporting local businesses through this transition and spreading the word about the requirements. She said that the state is anticipating a long onboarding process, and will be enforcing compliance throughout 2023. Consequences for noncompliance have not been determined, but those who do not register and begin payments in January will be on the hook for back pay.
How FAMLI will work
Once funded, the FAMLI program will enable all Colorado employees to take up to 12 weeks off for qualifying situations including care for a new child, care for a serious health condition for themselves or a family member, making arrangements for a family member’s military deployment or addressing the immediate safety needs and impact of domestic violence or sexual assault. Those who experience pregnancy or childbirth complications may receive an additional four weeks.
The amount of pay that an employee can receive during this time varies depending on their salary and is capped at a maximum of $1,100 per week. According to the FAMLI 101 Presentation from the Department of Labor and Employment, lower-wage earners — those making $500 a week — will earn 90% of their weekly salary, while higher-wage earners can expect a smaller percentage of coverage with the cap in place.
Approval and distribution of paid leave in these scenarios will be administered through the state, not the employer, and employers cannot take disciplinary or retaliatory action against employees for requesting or using paid leave. Regular paid time off for vacations and short-term sick days will go through employers as usual.
Details on how this approval process will take place have not yet been released, but a FAMLI customer service representative named Chance (representatives are not allowed to give out their full names) said there will likely be a review board at the state level that approves and denies time-off requests within the FAMLI program umbrella.
“I’m pretty sure there will be a form that you submit for the reason that you need time off and then it will go in front of a review board and they’ll make their determination,” Chance said.
While employers will have to deal with the loss of skill and knowledge of the individual on leave, they will retain the employee’s salary during that time. These “vacancy savings” can then be used to hire part-time or contract workers to meet the business’s needs or enhance pay for employees who are taking on heavier workloads or working overtime to supplement the output of the employee who is on leave.
A new approach to paid leave
Colorado is now one of 12 states, plus the District of Columbia, to implement state-administered paid family leave in the United States. California was the first state to do so in 2002, and the FAMLI website highlights the success of that program, citing a study in which 87% of California businesses have reported no losses due to paid leave and 9% have reported cost-saving measures from retaining employees.
The creation of the FAMLI program was approved by Colorado voters in 2020 when Proposition 118 passed with 57.75% of the statewide vote. The win was even more decisive in Eagle County, where 58.77% of voters approved the measure. Data from that year, cited by the Colorado Families First campaign, showed that 80% of Coloradans had no access to paid leave and that 2.6 million Coloradans would benefit from the implementation of the program.
“Paid family leave plans haven’t historically been very competitive even amongst large corporate companies,” McCuskey said. “Even a majority of larger employers are making adjustments to their plans — expanding eligibility, covered reasons and adjusting waiting periods. Most Eagle County employers, and especially smaller ones, will likely opt for FAMLI.”
The Department of Labor and Employment is aware that the program is a substantial shift away from the status quo when it comes to offering and administering paid leave, and has a helpline available on weekdays to answer any questions related to the program in addition to information materials at famli.colorado.gov.
McCuskey, who is also the regional director of the Northwest Colorado Small Business Development Center, recommends that people utilize the center’s free business consultants to help adapt to FAMLI and other changes impacting businesses in the state.
“It’s a mindset shift for most of us who have grown up in this culture where nothing is really given to you,” McCuskey said. “There’s just a big shift happening in how we value our workers and structure our workforce.”
To reach the FAMLI helpline, call 1-866-263-2654 from 8 a.m. to 4 p.m. Monday through Friday. To register for a free business consultation with the development center, visit northwestsbdc.org.