How to navigate the new FAMLI paid leave requirements

In November 2020, Colorado voters approved the mandatory, state-administered paid Family and Medical Leave Insurance (FAMLI) program. As of 2024, all Colorado employers must ensure payroll deductions are being made for the program and, in most cases, accommodate a leave of absence for an employee taking leave. All Colorado employers should immediately ensure compliance for FAMLI leave.

Most Colorado employers—including those with seasonal employees—are now subject to the following changes:

• Effective Jan. 1, 2023, most Colorado employers are required to process payroll deductions for FAMLI.

• Effective Jan. 1, 2024, unless an employer affirmatively opts out by providing its own fully insured, state-approved paid leave program, most Colorado employees will be eligible to take paid sick and safe leave of up to $1,100 per week for up to 12 weeks. 

Payroll deductions and leave benefits

FAMLI is being funded through contributions by both employers and employees. Premiums are currently set to 0.9 percent of each employee’s wage—half paid by the employer and half paid by the employee. Only employers with 10 or more employees are responsible for the 0.45 percent wage share; all employees must be taxed the employee portion regardless of employer size. Beginning Jan. 1, 2025, the premium rate may increase, but it is capped by statute at 1.2 percent. The maximum weekly benefit to a covered individual is $1,100, which is not subject to Colorado income tax. The FAMLI division of the Colorado Department of Labor has published a calculator to estimate benefits depending upon an employee’s average weekly earnings.

The maximum leave in a rolling calendar year is 12 weeks, or 16 weeks if the covered individual has a serious health condition related to pregnancy or childbirth complications.

Notably, the term “employee” is broadly defined under FAMLI, allow self-employed individuals to opt in to the program by paying only an employee portion (0.45 percent of wages) and also permitting seasonal and temporary workers to make claims.

Covered employers

Virtually all employers with employees in Colorado are covered, with a few exceptions:

• Small employers (nine or fewer employees) are relieved of paying the employer portion of the premium.

• A complete opt-out is available for local governments.

• A limited “private plan exemption” is available to private employers if they provide a comparable plan and receive an approval from the agency.

Employee eligibility

Employees are eligible to make a claim for and receive paid family leave after they have earned at least $2,500 in wages within Colorado over a period of a year. That means that any employee is eligible, regardless of status, if they have earned $2,500 in wages from any job in Colorado during the base period before they apply for FAMLI benefits. The base period used to determine FAMLI benefit payments is roughly the year before a FAMLI leave period would begin. 

To determine whether an employer’s headcount subjects them to the employer portion of the tax, employers must count employees who worked 20 or more weeks during the previous calendar year, no matter how many days per week they worked. 

Handling employee claims

It is important to train all managers and supervisors on how to handle employees’ claims or notice. In cooperation with an employee’s provider, the FAMLI division alone will determine whether an employee is entitled to leave, the length of leave and the weekly benefit amount.

To avoid employees claiming retaliation, it is essential to remember that the leave is protected if the employee has been employed for six or more months, meaning the employee must be given their same or a similar job upon their return at the same rate of pay