At least quarterly, the Colorado Department of Labor and Employment (CDLE) sends newsletters to employers who file unemployment insurance tax forms. If you don’t read these newsletters, you should reconsider.

A recent newsletter offered useful information about  Colorado-mandated employee sick leave accrual. 

In 2021, businesses with 15 or fewer employees had to provide public heath emergency (PHE) leave, but were exempt from providing accrued leave. Almost everyone with employees is now required to comply with 2022 regulations and requirements. 

There could be exceptions, such as sole-owner businesses. Ask your accountant or tax professional or contact the CDLE for guidance. 

According to the CDLE, all Colorado employers, regardless of size or industry, are required to provide accrued paid sick leave and public health emergency leave to their employees under the Colorado Healthy Families and Workplaces Act (HFWA).

Here are the highlights of PHE/HFWA requirements for 2022:

All employees accrue an hour of paid sick leave per 30 hours worked, up to 48 hours in a calendar year. You may allow employees to accrue leave at a faster rate and in greater amounts if you choose.

If you have a paid time off (PTO) policy or collective bargaining agreement that covers the same conditions or needs at the same pay rate and with no tougher requirements than HFWA, you comply with the 2022 requirements.

For COVID-related sick leave:

Colorado’s 80-hour COVID 19-related PHE leave continues as long as a COVID-related emergency remains declared by a federal, state or local public health agency and both federal and state emergencies remain in effect. The right to HFWA COVID-related leave continues until four weeks after all applicable public health emergencies end or are suspended.

PHE leave is available for a range of COVID-related needs, not just confirmed cases. Those needs include illness with COVID symptoms, quarantining or isolating due to COVID exposure, COVID testing,  vaccinations and side effects, inability to work due to health conditions that could increase susceptibility or risk of COVID and COVID-related needs of family. You can’t require documentation from employees to show leave is for COVID-related needs.

What are the consequences of non-accrual or non-compliance?

Since you could be treating this requirement as an unfunded obligation — just maintaining the obligated accrued hours in some form of spreadsheet — you could have a serious problem if one of your employees gets sick or meets any other qualifiers for PHE/HFWA paid time off or leave.

As with non-payment of unemployment insurance or other payroll taxes, you could face steep fines and penalties and possibly legal action if you’re unable to cover HFWA, PHE or COVID leave requirements.

If you’re considering paying employees via 1099 to avoid this obligation, think again. And please consult first with your attorney or tax advisor.

Leave must be paid at the same pay rate employees earn during time worked. Moreover, leave can’t be counted against employees as absences that could lead to firing or other actions.

Consider putting an emergency staffing plan into place or developing an arrangement with a staffing agency to provide short-term or interim staff. Perhaps you’ve maintained good relationships with former or retired employees and could tap them to help cover absences.

Funding accrued leave is essential if you face a situation in which you’re paying sick leave and having to replace the sick employee. This funding is especially important if your cash flow is normally tight and the fill-in employee or temporary contractor needs to be paid at a higher rate on a 1099.

The preceding is intended for informational purposes. Each business situation is unique. Contact your attorney, tax advisor or the CDLE for advice. For additional information visit the website located at https://cdle.colorado.gov/hfwa.