Colorado Voters Pass Proposition 118: Creating an Employer/Employee Funded Paid Family and Medical Leave Insurance Program

November 10, 2020 Advisory

On Election Day, Colorado voters passed Proposition 118, which creates a paid family and medical leave insurance program for most Colorado employees.[1] This program will be administered by the Colorado Department of Labor and Employment (CDLE), which will create new rules and regulations to govern the program. Commencing on Jan. 1, 2023, employers and employees will be required to contribute to a payroll premium fund to finance paid family and medical leave insurance benefits. Eligible employees will be allowed to take up to 12 weeks of paid family and medical leave insurance benefits annually beginning on Jan. 1, 2024. After the program has collected employer and employee contributions for one year, employees can begin receiving up to $1,100 per week for up to 12 weeks for qualifying reasons (starting in 2024). Proposition 118 also creates job protections for employees who take paid family and medical insurance leave.

Eligibility Requirements for Paid Family and Medical Leave

An eligible employee may take leave for the following reasons:

  • to care for their own serious health condition;
  • to care for a new child during the first year after the birth, adoption or placement through foster care of that child;
  • to care for a family member with a serious health condition;
  • when a family member is on active duty military service or being called to active duty military service; and
  • when the individual or the individual’s family member is a victim of domestic violence, stalking or sexual assault.

A “family member” is defined as the eligible employee’s child, parent, spouse, domestic partner, grandparent, grandchild, sibling or any individual with whom the employee has a significant personal bond that is like a family relationship. This definition is more expansive than the family member definition under the federal Family Medical Leave Act (FMLA). In addition, Colorado defines a spouse to include same-sex spouses. The maximum number of weeks an eligible employee may take paid leave in a year is 12 weeks, except that employees with a serious health condition related to pregnancy or childbirth complications may take up to an additional four weeks (16 weeks in total). Employees can take this leave intermittently.

Implementation of Paid Family and Medical Leave Insurance Fund

This insurance program will be funded by employer and employee payroll contributions into a new Family and Medical Leave Insurance Fund (Fund). The state will use money in the Fund to pay wage benefits to employees during their leave, similar to unemployment insurance. The amount an employee can receive during their leave is based on the employee’s average weekly wage (AWW). The majority of employees will become eligible to take paid leave after they have earned at least $2,500 in wages and will also become eligible for certain job protections after being employed with their current employer for at least 180 days. The required contribution to the insurance program will be based on 0.09%  of an employee’s wages, at least 50% paid by the employer; and 50% paid by the employee. The maximum amount of wages to which a premium can be charged for calendar year 2023 is estimated to be $161,700 per person, which limits the maximum annual premium to $1,455.

Employers Can Substitute Their Own Private Leave Plan

Employers can apply to the CDLE for approval for a private leave plan, if it complies with all of same rights, benefits and protections of the Paid Family and Medical Leave Act. If the CDLE approves the private leave plan, then the employer will not have to make contributions to the Family and Medical Leave Insurance Program. Importantly, the employee contribution to the private leave plan cannot exceed the employee contribution under the Family and Medical Leave Insurance program. 

Job Protection Requirements

Employers cannot discipline or take retaliatory actions against employees for requesting or using paid leave. Job protections are available for employees who have been employed at least 180 days with their current employer prior to taking leave. Eligible employees who return from paid leave are entitled to be reinstated to their same position or a position with equal seniority, status, employment benefits and pay. Employees are entitled to their health insurance benefits during their leave, but are required to pay their portion of the health insurance premium.

Currently, Colorado employers must comply with the FMLA and Colorado’s Healthy Families and Workplaces Act (effective Jan. 1, 2021), which will require Colorado employers with 16 or more employees to provide one hour of paid sick leave for every 30 hours worked, up to a maximum of 48 hours per year.

The following table from the Colorado 2020 Blue Book provides a simplified comparison of leave provisions:

If you have questions concerning the Paid Family and Medical Leave Insurance Fund, please contact the author or your regular Armstrong Teasdale attorney.

1The following individuals and organizations are not required to pay the premiums: employers with nine or fewer employees; self-employed individuals; local governments that decline participation in the program; and employers that already offer approved paid leave benefits.

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