Understanding Colorado’s Future Statewide Insurance Program
Proposition 118, also known as the Paid Family and Medical Leave Insurance Act (PFMLIA), mandates all Colorado employers to create and provide paid leave programs for their covered employees. On January 1, 2023, PFMLIA will be administratively defined and collect premiums, while benefits will kick in for eligible individuals on January 1, 2024. PFMLIA operates like insurance, being funded by collecting “premiums” from the following entities and has a similar structure to the Affordable Care Act:
All employers, which are defined under PFMLIA as any person engaged in
commerce or an industry or activity affecting commerce and:
- Employs at least one person for each working day during 20 or more calendar workweeks in the current or immediately preceding calendar year
- Pays wages of $1,500 or more during any calendar quarter in the preceding calendar year
- Acts, directly or indirectly, in the interest of an employer with regard to any of their employees
- Is a successor in interest of an employer that acquires all of the organization, trade, or business or substantially all of the assets of one or more employers
- Self-employed persons, including independent contractors, sole proprietors, partners, and joint venturers who elect into PFMLIA
- Local government employers, although they may decline participation in the family and medical leave insurance program in the form and manner determined by the director by rule
Before we discuss PFMLIA benefits, you must know that such benefits only apply to covered individuals who meet the following requirements:
- Is caring for a new child during the first year after birth, adoption, or foster placement
- Is caring for a “family member” with a “serious health condition”
- Has a “serious health condition”
- Has a “qualifying exigency leave”
- Needs “safe leave”
With this information in mind, PFMLIA provides the following benefits to covered individuals:
12 weeks of paid leave in a calendar year
- Those with a “serious health condition” related to pregnancy complications or childbirth complications are entitled to an additional four weeks of paid leave
- Weekly benefits for paid leave, which is the portion of the covered individual’s average weekly wage that is equal to or less than 50% of the state average weekly wage and shall be replaced at a 90% rate
- Weekly benefits for paid leave, which is the portion of the covered individual’s average weekly wage that is more than 50% of the state average weekly wage and shall be replaced at a rate of 50%
- Intermittent and incremental leave that is not payable until at least eight hours of leave were accrued
- Equivalent benefits, pay, and other terms/conditions of employment for those who have been employed by a covered employer for a least 180 days before taking leave
- Maintained healthcare benefits during the leave period
It’s worth mentioning that the maximum weekly benefit is 90% of the state average weekly wage but beginning before January 1, 2025, the maximum will be $1,100 for paid family and medical leave.
How Does PFMLIA Work with Other Policies?
It will benefit both employees and employers to understand how PFMLIA operates with other policies. For instance, paid leave taken under PFMLIA qualifies as leave taken under the Family and Medical Leave Act (FMLA). As such, an employer can require PFMLIA leave to be taken concurrently or otherwise coordinated with payments made or leave allowed under the terms of a disability policy, including a disability policy under an employment contract or a separate allocation of time off for the sole purpose of paid leave under PFMLIA.
When it comes to paid time off (PTO) such as accrued vacation or sick leave, employers are not allowed to require employees to use accrued vacation, sick, or other contracted PTO before using PFMLIA benefits. However, an employer and employee may arrange a mutual agreement in which the employee uses any accrued vacation leave, sick leave, or other PTO while receiving PFMLIA benefits unless the aggregate amount they receive would exceed their average weekly wage.
What Are the Costs of PFMLIA?
To best prepare for the benefits under PFMLIA, employers should know the numbers. An employer must pay a premium equal to 0.9% of an employee’s wage to the PFMLIA fund beginning January 1, 2023. From 2025 onward, however, the PFMLIA agency director will set the premium based upon the prior year’s costs/expenditures, but the premium shall not exceed 1.2%.
In addition, employers and self-employed individuals who elect into the program will be subject to the following costs:
- Employers with 10 or more employees shall pay 100% of the premium to the fund, but may deduct 50% of the premium from their employees’ wages
- Employers with fewer than 10 employees shall pay 50% of the premium to the fund, which may be deducted entirely from their employees’ wages
- Self-employed individuals who elect into the program shall pay 50% of the premium to the fund
How Can CO Businesses Prepare?
With all of this information in mind, it is in the best interests of Colorado businesses to plan for the execution of PFMLIA. Our attorneys advise businesses to consider the following:
Begin budgeting for increased labor costs that will be incurred beginning
January 1, 2023
- Look out for additional taxes that may be passed to supplement the fund
- Periodically check on the Department of Labor to see what regulations have been passed to administer the PFMLIA
- Check with an attorney to ensure that your employee handbook is up to date and that policies and procedures are in place to mitigate administrative and civil liability
Do You Have Questions? We Have Answers.
Our Colorado lawyers at Feldmann Nagel Cantafio & Song PLLC are well-aware that the PFMLIA can be confusing to understand, especially since it is the first statewide insurance program benefitting covered individuals who must leave work to care for a new child or family member with serious health conditions, or have serious health conditions themselves and are unable to work as a result.
To learn more about the PFMLIA, please contact us at (888) 458-0991 to schedule a free consultation!