Colorado voters approved Proposition 118 in 2020, authorizing a state-run paid family and medical leave insurance (FAMLI) program. 

The FAMLI program will provide paid leave for employees to take care of themselves and their families during circumstances that pull them away from their jobs — growing their families or taking care of loved ones with serious health conditions. FAMLI will start providing benefits Jan. 1, 2024. Premium contributions begin in January 2023, however, so it’s time for employers to prepare. Here are some questions and answers to consider:

How does FAMLI interact with the Colorado Healthy Families and Workplaces Act or federal Family Medical Leave Act? FAMLI does not replace HFWA or FMLA leave. FAMLI focuses on providing paid leave for serious health conditions. HFWA’s focus is broader. It includes paid sick leave for preventative care and pandemic-related school closures. FMLA only requires unpaid leave. FAMLI leave will run concurrently with FMLA leave and provide partial wage replacement for serious health conditions.

Which employers must participate in FAMLI? FAMLI applies to employers who employ two or more employees in Colorado. Employers who employ fewer than 10 employees must remit 50 percent of the full premium contribution and may deduct that portion from employee wages. Employers with 10 or more employees will make the full contribution, half of which may come from employee wages. Employers required to make the full contribution may choose to contribute the full premium on behalf of the employee and not take wage deductions. As a general rule, employee wages are subject to premiums for all services performed within Colorado whether or not the employer is located in Colorado. But there are a couple of exceptions to participating in FAMLI.

Which employers may opt out of FAMLI? First, local governments may opt out of FAMLI. A local government is a county, city and county, city or town whether home rule or statutory; a school district; a special district; or other political subdivision of the state. But opting out requires a vote of the local government’s governing body before Jan. 1. If the local government doesn’t communicate in writing with the FAMLI division, it must remit contributions until it takes action to opt out. But if the local government doesn’t opt out before premium contributions start in 2023, it can’t withdraw later without giving employees a 180-day notice. It’s important for local governments to take action now if they don’t wish to participate in FAMLI.Second, employers who offer qualifying short-term disability plans or other market plans may opt out. The state is still developing regulations on qualifying private plans. The regulations could be issued at any time.  But the division expects to see private market plans that will offer similar benefits to employees for employers to purchase in place of the FAMLI program, much as is the case with ACA-compliant health plans. Employers exploring private options to satisfy FAMLI should consult their insurance professionals now.

How much is the contribution? The contribution is 0.9 percent of wages, shared equally by the employer and employees if the employer has 10 or more employees. Smaller employers will collect only the employee’s share of the contribution. The state FAMLI website includes a calculator to help determine premiums.

I’m a self-employed independent contractor. Can I participate in FAMLI? Yes, self-employed persons may opt in to FAMLI and pay 50 percent of the premium required for an employee on that individual’s income from self-employment.

When do employers pay premiums? Starting on Jan. 1, employers must make premium payments four times a year no later than the last day of the month immediately following the end of the calendar quarter for which the premiums have accrued. Each payment must include all premiums for wages paid in all payroll periods that end within the calendar quarter.

Should we change our employee handbook? Before the end of the year, employers subject to FAMLI should amend their employee handbooks to provide information on the FAMLI program — or private short-term disability plans if that’s how they’ll offer benefits. Clear language detailing what employees should expect will avoid miscommunication. The state has promised to publish later this year suggested language to explain payroll deductions and incorporate into handbooks. The Employers Council also will publish sample handbook language. Consulting or enterprise memberships include a handbook review. Handbook reviews should be sent by email to handbookreview@employerscouncil.org.

Do employers need to register for FAMLI? Yes. The Colorado Department of Labor and Employment will begin accepting registrations from employers this fall. Any employer taking deductions and making premium payments is required to register. Likewise, any employer opting to provide benefits through short-term disability plans must apply for that exception with the FAMLI division and provide required documentation. For those not using short-term disability plans, employers should be ready to make wage deductions beginning Jan. 1.

It’s time to make and act upon important decisions. 

For more information on FAMLI, visit the state website at https://famli.colorado.gov. Consulting and enterprise members of the Employers Council may call to discuss the program with a human resources professional or lawyer.