Payroll deductions for family leave program begin in January

Colorado employers need to begin making payroll check deductions beginning Jan. 1, 2023, for the voter-approved Family and Medical Leave Insurance program.

The program will expand access to paid family leave.

While workers in Colorado have had access to family leave for health and other emergencies in their families, many times it was unpaid.

The new FAMLI program will require employers and employees to contribute to a statewide fund that will pay workers when they need family leave. While deductions start in January, paid leave benefits will come a year later in January 2024 after the fund has built up a balance.

The fund will assist workers who need to be away from their jobs for things such as taking care of a new child, taking care of a sick family member or preparing for a family member’s military deployment, according to information provided by the Colorado Department of Labor and Employment.

Most workers but not all are affected by the new law, approved by voters in 2020. Employers with nine or fewer workers are not required to pay the employer share, but their employees through payroll deduction are required to pay premiums toward the program. Governments can opt out of the program if they choose. 

Program details, as provided by CDLE, are:

• Employers are required to notify employees of payroll deductions by posting the Required Program Notice by Jan. 1, 2023.
• While premium deductions begin in January, the first payment that employers need to make to CDLE isn’t due until April 30, 2023. (A 30-day grace period will be offered before the first payment is considered late).
• Employers, and the third-party administrators who serve them, will be able register on FAMLI.colorado.gov once the new My FAMLI+ Employer portal launches in the coming weeks. Employers must register before the first quarterly premium payment is due.
• Employers and their employees both fund the FAMLI program, with employers paying at least 50% of the cost. Premiums are set to 0.9% of the employee’s wage, with 0.45% paid by the employer and 0.45% paid by the employee.  Premiums may be adjusted in future years but are capped by law at 1.2%.
• Small employers with nine or fewer employees aren’t required to cover the employer share of premiums and are responsible only for deducting and remitting the 0.45% employee share. 
• Eligible workers can get up to 12 weeks of payments (or 16 weeks in case of certain childbirth complications) on a sliding scale based on earnings, with lower wage earners receiving up to 90% of their wages. Workers can take FAMLI leave continuously, intermittently, or in the form of a reduced work schedule.
• Self-employed workers and independent contractors can access paid family leave if they agree to pay FAMLI 0.45% of their wages for three years. These individuals will be able to self-elect coverage when benefits become available in 2024.
• Local governments (such as cities and counties) have the option to vote to opt out of the program. Just like independent contractors, employees of these local governments can still access paid leave as long as they agree to pay their share (0.45% of their wages) for three years.
• Private employers of any size can apply to use a private insurance plan that offers the same or greater benefits and protections as the state-run FAMLI plan. Private plans must get approval from the FAMLI Division. This application process is set to open in early 2023. All employers will be responsible for paying their premiums until their private plans are approved. Employers who receive approval for private plans that have an effective date of Jan. 1, 2024, or earlier will be eligible for a refund for any premiums paid in 2023 if the plan is submitted and approved before Oct. 31, 2023. 
• Federal employees are ineligible for Colorado FAMLI benefits.  

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