April 12, 2021

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Everything Expectant Parents Need to Know About the New Paid Family and Medical Leave Insurance Program

Colorado became the ninth state in the country (plus Washington D.C.) to pass a paid family leave law on November 3, 2020—and the first to do so by ballot measure, not in a state legislature.

Colorado’s Paid Family and Medical Leave Insurance Act, (FAMLI) provides 12 weeks of leave, with an option for four more weeks for birth mothers with complications. Paid leave isn’t just for parents of new babies—there are a variety of reasons an employee can utilize the benefit, including caring for themselves or a relative.

The program is in its early stages of being set up, and will require both employers and employees to begin making payroll contributions starting on January 1, 2023. Benefits eligibility starts the following year on January 1, 2024.

Similar to programs in other states, eligibility is based on where people work, not live. An employee must have worked in Colorado and made at least $2,500 in the previous year, which can be combined between multiple employers.

“Colorado is the first state that is not on one of the coasts to provide a paid family and medical leave program, and the first to have been approved by voters,” said Jared Make, vice president of A Better Balance, who provided legal support and assistance for the coalition to pass paid family leave in Colorado. “Polling has shown that these programs have bipartisan support, and Colorado was the first time we were able to show that it was true—we were able to win really convincingly at the ballot.”

Here is everything you need to know so far about Colorado’s Paid Family and Medical Leave Insurance Act (FAMLI):

1. How many weeks of paid maternity leave do I get?

Colorado’s new paid family and medical leave insurance program provides 12 weeks of parental leave (maternity leave OR paternity leave) paid at partial salary to bond with a new child. Birth mothers experiencing any pregnancy-related condition or one connected to childbirth may qualify for an additional four weeks of paid leave.

Previously, Colorado had a state version of the unpaid federal FMLA, which extended the benefit to domestic partners, but did not provide any additional time off.

2. Who qualifies for the paid family leave?

People who are working and employed in Colorado and have made at least $2,500 in the previous year are eligible for the paid family leave—with the exception of federal government employees, as is true for all state paid leave policies. Local municipalities can also opt out of the benefit for their workers, but these details are still being worked out during implementation. “We really want these workers to have access to the benefit,” said Ashley Panelli, associate state director at 9-5 Colorado, the organization leading the effort to pass the issue for more than a decade.

The $2,500 in required wages can be compiled through multiple jobs of different durations. This is different from other paid leave laws, including FMLA, which require a certain duration at one place of employment to have eligibility.

3. How much will I be paid?

The lowest income workers, making less than the average weekly wage (AWW), will receive 90 percent of their wages.

To illustrate how this will work using 2021 numbers, those earning less than approximately $590/week (half of the state’s current average weekly wage) would receive 90 percent of their income, while those earning more would see their income replaced on a sliding scale.

The sliding scale in this program is set up so workers receive 90 percent of their average weekly wage up to an amount equal to 50 percent of the statewide average weekly wage (currently, that is about $590/week). And then workers earning above that amount receive 50 percent of their average weekly wage until they hit the cap of $1,100/week. This maximum benefit will be adjusted annually in subsequent years depending on changes to the state’s average weekly wage.

4. Can I take paid family leave for something other than a new baby?

Yes, the 12 weeks of paid family leave are available to recover from illness, accident or surgery, receive treatment for an illness, such as chemotherapy or dialysis, or care for a family member who is ill. Family members who have any exigency arising connected to active duty or call to military service, or need to care for a family member injured while serving in the military, are eligible for paid leave.

The Colorado Paid Family Leave law also provides up to 12 weeks of paid time off to cover “safe leave” for survivors of domestic violence, sexual assault or stalking.

5. Do I need to use all my leave at once?

No, you do not. For a new baby, foster child or adoption, the leave is available for up to 12 months after the qualifying event.

Paid leave benefits may be received for time off taken as consecutive days and weeks, but may also be received for time off taken intermittently in certain circumstances.

6. What if I foster, adopt or use a surrogate? Are those qualifying events?

Yes. Fostering a child, adopting a child or having a child via surrogate is a qualifying event eligible for the full 12 weeks of paid leave under Colorado law.

7. Who is included in taking time off for family members?

Colorado gives a wide range of people who are considered family: anyone in your family, or anyone that has a “family-like” relationship or significant personal bond with the employee. The expanded definition of family “has become more evident with the pandemic; a lot of biological families are separated right now, for a number of reasons, so who we turn to for care is our network of loved ones,” said Make.

8. How is the benefit paid for?

Colorado’s paid leave benefit is paid for by both employer and employee contributions.

Beginning January 1, 2023, both employers and employees will pay a small payroll tax into the insurance fund, each paying 0.45 percent (0.90 percent total) of an employee’s wages for the initial two years of the program. After that two-year period, the state may adjust the premiums, up to 1.2 percent total. “The overall structure is that workers and employers split the cost 50-50. Employers can cover more if they want to,” said Make.

9. Can my employer opt out of the program?

Businesses with fewer than 10 employees are not required to contribute the employer half of the premium, but their employees are still eligible, and those employees still contribute the 0.45 percent payroll tax. “This is a cost absorbed by the entire program, but it’s a cost break for the small businesses,” said Make.

Employers of any size can opt their entire staff out of the program only if they offer an equal or better private program, regulated and authorized by the state, at no additional cost to their employees. However, Make anticipates that employers are likely to use the state program and find it most efficient.

Panelli said that the opt-out clause in other states with similar legislative language is typically for a small percentage of employers who are typically much larger corporations with huge employee sizes that already have these programs in place. “Most businesses find that the state social insurance model is cheaper and easier.”

10. If my company pays for some portion of leave, can the state law cover the rest up to 100 percent of my salary?

An employer will always be able to top off wages, and there are no restrictions to be able to coordinate your leave with your company to get to 100 percent wages.

11. Is the leave pay taxed?

Colorado’s paid family leave benefit is exempt from state taxes. However, state paid leave benefits may be subject to federal taxes.

“As of now, the best we know based on what the IRS has put out in the past is that Colorado benefits may be subject to federal income taxes, but further clarity on the IRS’s treatment of paid leave benefits for all programs would be very helpful,” said Molly Weston Williamson of A Better Balance, via email.

12. What do I have to do to get the money? How am I paid?

Because benefits do not begin until 2024, Colorado still has time to set up their benefits system for paid family leave, which will be a new division housed in the state’s Department of Labor. Details are still to come on how claims will be submitted and processed.

13. Are there any monetary caps on the benefit annually or during one’s lifetime?

There is no annual or lifetime cap; the reimbursement benefits are capped at $1,100/week, which is 90 percent of the state’s Average Weekly Wage. As the AWW goes up, so will the benefit cap.

14. Do I still receive my benefits and job protection while I’m out?

Yes, similar to federal FMLA, the paid leave benefits in Colorado come with job protection and the ability for an employee to keep their benefits, provided they have been employed with the same employer for 180 days.

“Everyone can have access to the benefit from day one. If you go to a job, something happens, day one, you get sick, you can start applying for the benefit. But the job protection kicks in after 180 days,” said Panelli. For people who work multiple jobs, the job protection is only available for any job the employee has had for 180 days.

15. What about self-employed and freelancers, do they qualify for paid leave?

Yes! Under the Colorado paid leave law, people who are self-employed or freelancers can receive the exact same benefit, provided they opt into paying the employee portion of the benefit. Currently, there is no minimum time period to have been enrolled before utilizing the benefit if there is a qualifying need, but the person must commit to paying into the system for three years.

16. How has COVID-19 changed anything on the Colorado Paid Leave plan?

Though COVID-19 is not anticipated to shift any of the implementation timelines for the Colorado paid family and medical leave, Make does feel that COVID-19 highlighted a caregiving crisis in this country, and kept the issue top of mind as the ballot initiative was passed in November 2020.

“It showed just how much enthusiasm there was for this policy that it qualified for the ballot during the pandemic,” Make said. “[We had] a socially distant collection of signatures, single use pens, being people distant. It was not an easy task to qualify while this was unfolding.”

17. Where do I go if I have more questions?

Currently there is no website with comprehensive details about the Colorado paid leave program, but Panelli encourages anyone with specific questions to contact her directly through the 9-5 Colorado website.