Through Ballot Initiative, Colorado Becomes Ninth State to Enact Paid Family Leave Law

Seyfarth Synopsis: On Tuesday night, Colorado voters, through a ballot initiative in the general election, voted to approve a statewide paid family and medical leave mandate, the Colorado Paid Family and Medical Leave Insurance (“PFMLI”) Act.  PFMLI premium withholdings will begin on January 1, 2023, and covered workers can start receiving PFMLI benefits on January 1, 2024.  This makes Colorado the ninth state to enact a paid family leave mandate.[1]

Overview

Colorado has tried for multiple years to pass a paid family leave (“PFL”) law through its state legislature. Each attempt has come up short.  In 2019, the state commissioned a government-appointed 13-member task force to study, analyze and provide recommendations on a statewide paid family medical leave proposal.  Seyfarth participated in the task force’s deliberations by providing both oral and written testimony on employer considerations, perspectives and challenges when dealing with a PFL mandate.  The task force issued a more than 45-page Final Report detailing its analysis and recommendations on 16 key PFL topics to the state legislature and Governor. Despite the task force report, the Colorado state legislature was unable to pass a PFL law during its 2020 legislative session.[2]

However, as noted above, on November 3, 2020, state constituents seized the opportunity to vote on and approve a statewide PFL law, in this case the PFMLI Act.  Like certain other paid family leave laws,[3] Colorado PFMLI funding will be split between the worker and the employer.  Qualifying absences under the PFMLI Act broadly involve bonding with a new child, the serious health condition of the employee or a family member, military family needs, and addressing the effects of domestic violence, sexual assault, and stalking.  Payroll contributions begin January 1, 2023, and benefits become available to covered workers on January 1, 2024.

Summary of Key Provisions

Covered Employer

“Employer” is defined broadly as any entity that (1) employs at least one person for each working day during each of 20 or more calendar workweeks in the current or immediately preceding calendar year or (2) paid wages of $1,500 or more during any calendar quarter during the preceding calendar year.  It appears that most private employers in Colorado will be covered by the PFMLI Act.

Covered Workers

To be considered a covered worker for PFMLI purposes, an individual must (a) have earned at least $2,500 in wages during their base period[4] or alternative base period,[5] (b) satisfy certain administrative requirements of the PFMLI Act and forthcoming regulations, (c) submit an application claiming PFMLI benefits, and (d) be absent for a qualifying reason (see below). Self-employed individuals have the option to elect coverage for an initial period of at least three years and qualify for PFMLI benefits if they satisfy certain criteria, including submitting required information about income.

The PFMLI Act also broadly defines “employee” to include any individual performing labor or services for the benefit of another. Properly designated independent contractors are not considered “employees” under the Act.

Amount and Reasons for Leave

The PFMLI Act will provide up to 12 weeks of PFMLI benefits to covered workers in a 12-month period.  An additional 4 weeks will be available to a covered worker with a serious health condition related to pregnancy complications or childbirth complications (i.e., for a total of 16 weeks in a 12-month period).

Covered workers can receive PFMLI benefits for the following qualifying absences:

• the birth of a child or the placement of a child with the covered worker through adoption or foster care;
• to care for a family member with a serious health condition;[6]
• the covered worker’s own serious health condition;
• qualifying exigency leave;[7] or
• safe leave.[8]

Covered Family Members

For purposes of using PFMLI, a “family member” includes: (1) child; (2) parent; (3) spouse or domestic partner; (4) grandparent; (5) grandchild; (6) sibling; or (7) any other individual with whom the employee has a significant personal bond that is or is like a family relationship.  These family members may be related by blood, adoption, foster relationships, or marriage.  Individuals who stood in loco parentis to the employee or the employee’s spouse or domestic partner when the employee or employee’s spouse or domestic partner was a minor are considered “family members” for purposes of PFMLI.  An employee’s child is covered regardless of age, and “child” includes an individual to whom the employee stood in loco parentis when the individual was a minor.

Benefits

The amount of PFMLI benefits available to an employee is calculated based on the employee’s average weekly wage[9] and the state average weekly wage.[10]

Beginning January 1, 2024, covered employees may be entitled to PFMLI benefits as follows:

• 90% of the portion of the employee’s average weekly wage that is equal to or less than 50% of the state average weekly wage,

plus

• 50% of the portion of the employee’s average weekly wage that is more than 50% of the state average weekly wage,

up to a maximum of 90% of the state average weekly wage.

For PFMLI leave beginning before January 1, 2025, the maximum weekly benefit is $1,100.

Funding

The PFMLI program will be funded through a combination of employer contributions and employee payroll deductions.

From January 1, 2023 through December 31, 2024, employers must remit premiums of 0.9% of each employee’s wages.  Beginning January 1, 2025, the Director of the Division of Family and Medical Leave Insurance will set the premium each year, not to exceed 1.2% of each employee’s wages. Premiums will apply for employees’ wages up to the Social Security contribution and benefit base limit.

Employers may deduct up to 50% of the premium for each employee from that employee’s wages.  Small employers (fewer than 10 employees) are not required to pay the employer portion of the premium.

Intermittent Leave

A covered worker can receive PFMLI benefits intermittently under the Act. In particular, the Act states that a covered worker may take intermittent leave in increments of either one hour or shorter periods if consistent with the increments the employer typically uses to measure employee leave. The Act further notes that PFMLI benefits will not be payable until the covered worker “accumulates” at least eight hours of PFMLI benefits.

Job Protection

The Colorado PFMLI Act states that any covered worker who has been employed by their employer for at least 180 days at the time they seek to begin receiving PFMLI benefits receives job protection for their period of leave. In particular, upon return from leave, such an individual must be restored by the employer to the position they held prior to going out on PFMLI leave, or an equivalent position with equivalent employment benefits, pay, and other terms and conditions of employment.

The Act also contains an express anti-retaliation and anti-discrimination provision stating that employers cannot retaliate or discriminate against a covered worker for exercising their rights under the PFMLI Act. The Act establishes a private right of action for employees who feel their rights under the Act have been violated.

Coordination of Benefits

The Colorado PFMLI Act states that benefits under the Act run concurrently with federal FMLA leave where the absence is covered under both laws.

In terms of employer-provided disability benefits, the Act states that an employer can require that Colorado PFMLI payments be made or benefits be run concurrently or otherwise coordinated with payment made or leave allowed under the employer’s disability policy. The Act notes that “disability policy” includes (a) a disability policy contained within an employment contract, or (b) a separate bank of time off solely for the purpose of paid family and medical leave under the Act. Employers must give its employees written notice of this requirement.

Outside of the above provisions regarding employer-provided disability policies, the PFMLI Act also states that employers cannot require employees to exhaust their accrued, vacation leave, sick leave, or other paid time off prior to or during a PFMLI leave. The Act does allow employers and employees to mutually agree that the employee may use any such accrued paid time off, unless the aggregate monetary amount the individual would receive would exceed their average weekly wage.

Notice and Posting

The PFMLI Act imposes both notice and posting requirements on employers. First, employers must post a forthcoming program notice in a “prominent location” at their worksite. Second, employers must provide the program notice to their employees (a) upon hire, and (b) upon learning that the employee is experiencing a qualifying PFMLI absence.

Employer Takeaways

The PFMLI Act created the Division of Family and Medical Leave Insurance, which will likely issue rules related to the Act.  Seyfarth will continue to track further developments regarding this law.

 

[1] California, Connecticut, Massachusetts, New Jersey, New York, Oregon, Rhode Island, Washington, Washington, D.C., and San Francisco (CA) have previously enacted paid family leave (“PFL”) laws. Certain PFL laws, like the new Colorado program, are more appropriately called paid family and medical leave laws because they offer or will offer benefits for “medical” leave (i.e., absences due to an employee’s own serious health condition), in addition to more traditional “family” leave (e.g., bonding with a new child; care of a family member with a serious health condition; etc.). Four of the five PFL jurisdictions with laws currently in effect — California, New Jersey, New York and Rhode Island — do not offer “medical” leave benefits to eligible employees. However, each of these jurisdictions offers a separate state disability insurance benefit. San Francisco’s program is tied to the California state PFL program and limited to paid parental leave.

[2] 2020 has been an active year for paid leave in Colorado. In March 2020, Colorado became the first state to mandate COVID-19 related paid sick leave (“PSL”) Then, In July 2020, Colorado enacted a separate law, the Healthy Families and Workplaces Act, containing three different PSL mandates — a COVID-19 PSL mandate (effective until December 31, 2020), a general PSL mandate, and a public health emergency PSL mandate. The latter two PSL mandates go into effect on January 1, 2021.

[3] This includes the PFL laws in at least Massachusetts, Oregon and Washington.

[4] “Base period” means the first four of the last five completed calendar quarters immediately preceding the first day of the employee’s benefit year.

[5] “Alternative base period” means the last four completed calendar quarters immediately preceding the benefit year.

[6] “Serious health condition” means an illness, injury, impairment, pregnancy, recovery from childbirth, or physical or mental condition that involves inpatient care in a hospital, hospice, or residential medical care facility, or continuing treatment by a health care provider.

[7] “Qualifying exigency leave” means leave based on a need arising out of an employee’s family member’s active duty service or notice of an impending call or order to active duty in the armed forces, including, but not limited to, providing for the care or other needs of the military member’s child or other family member, making financial or legal arrangements for the military member, attending counseling, attending military events or ceremonies, spending time with the military member during a rest and recuperation leave or following return from deployment, or making arrangements following the death of a military member.

[8] “Safe leave” means any leave because the employee or the employee’s family member is the victim or sexual assault or abuse.  Safe leave can be used to: (1) seek a civil protection order; (2) obtain medical care or mental health counseling; (3) make the victim’s home safe from the perpetrator or seek new housing to escape the perpetrator; or (4) seek legal assistance or attend or prepare for court-related proceedings.

[9] “Average weekly wage” means one-thirteenth of the wages paid during the quarter of the employee’s Base Period (as defined above) in which the wages were highest.  For purposes of calculating average weekly wage, wages include, but are not limited to, salary, wages, tips, commissions, and other compensation, as will be determined by the Director of the Division of Family and Medical Leave Insurance by rule.

[10] The state average weekly wage is established by the Director of the Division of Workers’ Compensation each year.