Colorados FAMLI program

Starting in January 2023, employees and some employers are required to participate in the Colorado FAMLI program. Passed in November of 2020, the new Family and Medical Leave Insurance program is a state-run program that provides family and medical lease to Colorado employees who have paid into the system, much like unemployment insurance.

 Overseen by the Colorado Department of Labor and Employment, the FAMLI program gives employees up to twelve weeks of paid time off to care for themselves or family members that are experiencing a medical or family situation that is covered under the program. Some examples of instances which are covered under the FAMLI program are the need for time off for an extended illness, to care for a newly adopted child, or to prepare for a military deployment. There are other circumstances that will also qualify for paid time off so employees and employers will need to evaluate each set of circumstances to determine eligibility.

The program is to be paid for by payments made into the system by employees and in most cases, contributions from employers as well. For the first two years of the program, a fee is paid on the 0.9% of wages. After two years, the amount may go up but is capped at 1.2% of wages; however, this amount may be changed depending on the needs of the program and whether a change is approved by the legislature. The fee is totally covered equally by the employee and the employer.

All employees are required to pay into the system unless they are federal employees, local government employees of an entity that has opted out of the program, their employer has agreed to pay the employee’s share into the program on behalf of the employee, or the employee is a “self-employed” individual as defined under Colorado state law. Self-employed individuals may opt into the system but are required to make payments for three years once they have opted into the system to ensure that they do not opt-in only to receive benefits and then opt-out after receiving them.

Some employers are also required to pay on behalf of their employees into the system. For employers with more than 10 employees that are not exempt as listed above, employers will be required to pay into the FAMLI program unless they have an internal program that meets the qualifications as required by CDLE. For employers with less than 10 employees, only the employee portion is required. At this time, the number of employees that a company employs does include employees who work both in Colorado and in other locations, but payment into the system is only required for Colorado based employees.

It will remain to be seen how this will affect Colorado small business owners. As a small business attorney, I see many instances where small businesses in places throughout the state (whether they are Denver-based small businesses or from smaller communities like Breckenridge-based small businesses or Greeley-based small businesses) are already struggling with the cost of employees. For those based in the larger areas, the prevailing (or in some cases, mandated) hourly rate of employees may start as high as $17.29 an hour, not counting any required additional payments of federal taxes, unemployment insurance, and workers’ compensation. For small businesses, they will now be required to keep open positions for anyone that takes leave under the FAMLI program and, if they choose to offer health insurance, will be required to continue to make payments for the health insurance at the same level they did while the person was employed. So, on top of missing an employee and either having to find someone (who may need training) for the period while the person is gone, a small business may also be required to pay health insurance and, for many small business owners, this may create a situation where they can no longer hire individuals when their profits were slim to begin with. For employees, it does help (especially those that work at larger companies that may be able to go the three months without the person’s help) give some assurance that they can take time off without missing as much of a paycheck (as the FAMLI program may not pay out at 100% of the employee’s pay as if they were working). However, for the small businesses on the margins, it may create a situation where they no longer hire or are much pickier about those that they do. If you are a small business, I’d love to hear your thoughts about the FAMLI program below!

If you need help figuring out how the FAMLI program fits into your Colorado small business, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Small Business Lawyer. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

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