Paid Family Medical Leave is paid leave and job protection for employees to use in order to take care of themselves and/or family members, qualified military exigencies, and/or safe leaves (victim of assault, domestic abuse, etc.).
What is Proposition 118 – the Colorado Paid Family Medical Leave Initiative?
On August 25th, Secretary of State Jena Griswold announced that the proposed PFML measure had been certified for the 2020 ballot under the title of “Proposition 118 – Colorado Paid Medical and Family Leave Initiative”. For the first time Colorado voters will get to choose whether a state-sponsored PFML program is right for Colorado employers and employees.
What is the history, and where are we today with PFML in Colorado?
In recent years the Colorado General Assembly has attempted to pass a state sponsored Paid Family Medical Leave (PFML) program. Other states have adopted PFML programs in recent years (New York, Washington, Massachusetts, to name a few), and there are movements across the country to adopt similar programs in other states.
The previous legislative measures in Colorado faced bipartisan opposition and have not been successful, and the most recent 2020 session saw the proposed legislation derailed in large part due to COVID-19. Plan sponsors have since shifted gears, opting to move toward a ballot initiative rather than going the legislative route.
Who is eligible for PFML benefits?
Any person who has earned at least $2,500 in wages over the base period is eligible. A base period is defined as 4 out of the last 5 quarters, so this would cover most any worker, even part-time workers.
What would the proposed Colorado Medical and Family Leave Initiative #283 cover?
Think of PFML as a hybrid STD and FMLA plan. The plan would provide 12 weeks of paid, job protected leave (an additional 4 weeks for certain pregnancy/childbirth cases) to be used for:
- Birth or adoption
- Care for family member(s) with serious health conditions
- One’s own serious health conditions
- Qualified military exigency
- Safe leave (victim of sexual assault, domestic violence or abuse, or stalking)
As other states have rolled out PFML programs we have seen the definition of “family” evolve as well. Under the Colorado ballot measure, family is defined as children, parents, spouse, domestic partner, grandparents, grandchildren, siblings, and chosen family. Chosen family is “any other individual with whom the covered individual has a significant personal bond that is or is like a family relationship, regardless of biological or legal relationship”.
What sort of benefit is available?
Get your calculators out… there really isn’t an easy way to explain this. Simply put, the PFML program would cover a larger percentage of first dollar income, and then gradually grade down to cover less on a percentage basis over time.
PFML would pay 90% of the first 50% of the average weekly wage (AWW), and 50% of the second 50% of the average weekly wage, up to a maximum weekly payout of $1,100.
As an example, the current average weekly wage in Colorado is currently $1,227. The first 50% of AWW is paid out at $552.15 (50% of the AAW is $613.50, which is paid at 90%). The second half is paid out at 50% of the AAW, up to a maximum weekly payout of $1,100.
As an example, an employee earning $1,000 per week would receive $745.40 of benefit per week.
Employees are entitled to take up to 12 weeks of PFML per application year, with an additional 4 weeks available for employees with serious health conditions related to pregnancy or childbirth complications. Employees may take their PFML leave all at once, or intermittently.
How is PFML paid for?
Nothing is free, and that includes PFML. The cost to fund and administer the program would be initially set at 0.9% of covered wages. As an example, the cost for an employee earning $1,000 per week would be $9.00/week.
The cost would be shared between employers and employees, depending on the size of the business:
- Employers with 10 or more employees would pay 50% of the premium, with employees covering the additional 50% through payroll deductions.
- Employers with 10 or fewer employees would not need to fund the program, however, employees would be responsible for their 50% share of the premium through payroll deductions.
Premiums will begin to be paid in January 2023, and benefits start January 2024.
What options do employers have to provide PFML programs?
Earlier versions of the legislative proposals would have set up a single, state-run department to run the PFML program. The current measure does require the Department of Labor and Employment create the division of “Family and Medical Leave Insurance” to administer the program and benefit plans. For those who like the concept of private options, there is another way for employers to conform to the proposed law.
Employers may apply to the Division for approval to meet their obligations under the PFML plan through a private plan. The private plan must confer all of the same rights, protections, and benefits provided by the state program.
Can employers and employees opt out of PFML requirements?
For most businesses who employ people, no. That being said, local governments may opt out of the state PFML program. Also, self-employed people, independent contractors, sole proprietors, partners or joint venture individuals may opt in for an initial period of not less than 3 years.
Are other provisions included in the measure?
Covered individuals who have been employed with their current employer for at least 180 days prior to filing their claim do have their job protected and restored to an equivalent position with equivalent benefits, pay and other terms and conditions of employment.
Employees are protected by law against retaliation or discrimination as a result of taking PFML.
The bottom line…
- Colorado voters will decide on November 3, 2020 whether the Colorado Paid Medical and Family Leave Initiative will start in 2024.
- If passed, employees and employers would share in the additional cost to fund and operate the program. It’s important to note that the measure describes these as “payroll premiums”, rather than a tax. This is important for two reasons – first, since all employees and many employers would be paying for this it certainly feels like a tax; and if it is not legally determined to be a tax, any benefit received by employees could actually be considered taxable income.
- Modeling done by the Common Sense Institute (link below) show that for $50,000 in wages, workers would pay $178-$425 in premiums, representing an 8% to 18% increase in state income tax on those wages.
- The costs aren’t set in stone, at least for more than the first year. The 0.9% of wage premium would be set through 12/31/2024. Future premiums would be set by the Director of the Family and Medical Leave Insurance Program, but would not exceed 1.2% of wages.
- Employers cannot require employees to use/exhaust PTO or sick time prior to filing for PFML benefits.
- Existing disability insurance programs can remain in place, and may coordinate with, and/or supplement the PFML benefits. While it would be possible that an employee could collect PFML, vacation, sick, and/or disability pay, they would not be able to receive an aggregate amount that exceeds their average weekly wage.
- Employers face the prospect of yet another compliance and administrative burden, but they will have the option of working through the state directly, or customizing their own plan through private channels.
More information can be found at the Colorado Secretary of State website: https://www.sos.state.co.us/pubs/newsRoom/pressReleases/2020/PR20200825Initiative283.html
Link to Common Sense Institute Study: https://commonsenseinstituteco.org/proposition-118-a-statewide-paid-family-and-medical-leave-program-for-colorado-but-at-what-cost/
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