In November 2020 Proposition 118 was approved by Colorado voters and is set to take effect on January 1st of 2023. This is a state-run Paid Family and Medical Leave Insurance program (FAMLI). This will work similarly to unemployment insurance with both the employer and employee paying into the program.
Premiums are .9% of the employee’s wages. .45% paid by each although the employer can choose to pay both portions. Employers with 9 or fewer employees do not have to contribute the .45% but employees are required to contribute no matter the size of the business they work for. If you would like to handle both portions, please let us know before the end of the year so we can have your payroll set up correctly for the new year.
Those that are self-employed can also opt-in and participate. Instead of being based on payroll, it will be based on the net-self-employed income. If you opt-in you must file reports on a quarterly basis the same as all other employers.
Beginning on January 1, 2023, this deduction must be taken from all employee’s paychecks. The employer must register with the FAMLI Division before the first payment is due on April 30th for the 1st quarter premium payment. If we do the payroll for you or if we manage your Gusto account, we will make sure this new tax is started with your first payroll in 2023. If you would like more information on our payroll service now is the time to transition so we are ready on the 1st of the year.
Businesses that have a private medical leave plan may be exempt from participation. In order to qualify your plan must be approved by FAMLI first. Until you obtain approval you must register and pay the premiums even if you have applied for approval. Approval is on a business basis not a policy basis so even if you have the same plan as another business, you must be approved separately from the other business.
You must inform your employees before January 1st. You must post somewhere in your business or give each employee the information either as an insert in their paycheck or by putting this poster someplace all employees will see it. Just click here to print the poster. https://famli.colorado.gov/sites/famli/files/FAMLI%20Break%20Room%20Poster%20Officialv3.pdf
Despite the payments starting in January of 2023, the benefits will not kick in until January 1 of 2024. Then employees will be able to take time for emergency situations such as car accidents or for the birth of a child. During that time, they can apply to the FAMLI program and be paid for up to 12 weeks.