The state of Colorado has adopted final rules regarding the process for seeking approval of a private plan in lieu of participation in the state-run Family and Medical Leave Insurance (FAMLI) program. Additionally, the state has released an employer toolkit to assist with complying with the program’s notice requirement. A previous alert on the FAMLI program is copied below for reference.

• Notice requirements are effective January 1, 2023. Employers must post the FAMLI Program Notice Poster in a prominent location in the workplace by this date. Additionally, the state has provided a paycheck stuffer and FAMLI Employee Handbook to assist employers with complying with the program’s requirements.

Private Plan Requirements

• Employers’ private plans must provide all of the same rights, protections, and benefits offered under the state program. Specifically, the private plan must:
  • Allow paid leave for all purposes specified by FAMLI
  • Provide the same number of weeks of leave as FAMLI
  • Provide wage replacement and weekly benefits at least equal to the amount offered under FAMLI
  • Allow for intermittent leave
  • Not impose conditions or restrictions beyond what is included in FAMLI
  • Provide benefits at a cost no greater than the cost of FAMLI contributions

Application Requirements

• Applications may be submitted at any time.
• Employers must obtain approval from the FAMLI Division of the Colorado Department of Labor and Employment before implementing a private plan.
• While application and approval are pending, employers must collect and remit premiums as required; if a private plan is approved, employers may apply for a refund of premiums paid.
• Applications must include:
  • employer information (EIN, name, business and mailing addresses)
  • Designated contact person
  • Copy of the private plan
  • Attestations that the plan satisfies FAMLI requirements
  • Copy of the required posted notice
  • Other information as required on the application, which will be made available on the FAMLI portal once finalized
• Self-insured employer plans have several additional requirements, among the most burdensome being that they are required to establish and maintain a separate bank account into which all employee contributions are deposited and kept, and from which all benefits and administrative costs are paid.
• Self-insured private plans must also include a surety bond equal to one year of total premiums (along with payroll documentation supporting the calculation of the bond amount) and an attestation that the employer has complied with requirements to establish a separate account (see above).
• Applications submitted through 2024 must be accompanied by a non-refundable administration fee of $500.

Application Process and Ongoing Obligations

• The private plan application is anticipated to be available between the first and third quarters of 2023.
• Private plans may not take effect sooner than 60 days after the application date.
• Private plan approval will be for a term of eight years, subject to renewal.
• Employers who pay premiums in 2023 and are later approved for a private plan, with an effective date no later than January 1, 2024, may apply for premium reimbursement. Premiums paid in 2023 will be reimbursed within 90 days, less the administration fee.
• Approved private plans will be subject to additional obligations on an ongoing basis, including annual maintenance fees, attestations, recordkeeping and reporting requirements, notice requirements, and rules governing modification and termination of plans.

CO Family and Medical Leave Insurance (FAMLI) (originally sent September, 2022)

The State of Colorado is preparing to implement its Family and Medical Leave Insurance (FAMLI) program. Colorado joins ten other states and the District of Columbia in providing paid family and medical leave (PFML) benefits to qualified employees. The program, which was passed by voters in 2020 but delayed pending legislation to provide funding, will be implemented in phases starting next year. The state recently published rules for benefits and employer participation and has posted a webinar for employers to learn more about its plans for implementing a private plan exemption to the FAMLI program.

Funding and Implementation

• The FAMLI program will be funded by a combination of employer and employee contributions, which must be collected and remitted by employers beginning January 1, 2023.
• Employees may begin using FAMLI benefits starting January 1, 2024.
• The employer and employee contribution rates are set at 0.45% of employee wages (for a combined contribution rate of 0.9% of employee wages) through 2025. The contribution rate will be adjusted annually thereafter, with the combined contribution capped at 1.2%.
• Employers will need to register with the state-run FAMLI portal (“My FAMLI”) which is anticipated to be available sometime in the fourth quarter of 2022. Premium payments and wage reports will be submitted through this portal.

Coverage

• All Colorado employers are required to collect and remit the employee portion of the contribution; those with 10 or more employees in total are also required to remit the employer share.
• Employees are eligible to apply for benefits if they have earned at least $2,500 in wages within Colorado over the four quarters prior to applying for leave.
• Employees may meet the $2,500 threshold via any combination of employers; thus, new employees who have earned $2,500 within Colorado over the previous year could potentially be eligible for leave as of their hire date.

Benefits and Covered Reasons for Leave

• In most cases, employees may be eligible for up to 12 weeks of PFML. Women who experience pregnancy or childbirth complications may be eligible for an additional four weeks of leave.
• Leave eligibility must be measured on a 12-month backwards rolling basis beginning on the first day of a qualified FAMLI leave.
• Eligible employees may take FAMLI leave for the following covered reasons:
  • Birth, adoption, or placement of a child with the employee
  • Employee’s or family member’s serious health condition
  • Family member’s military deployment
  • Immediate safety needs of employee or eligible family member who is a victim of domestic violence or sexual assault; includes seeking medical, legal, or law enforcement assistance
• Depending on an employee’s regular pay, employees may receive between 37% and 90% of their normal wages while on leave. Benefits are capped at $1,100 per week.
• Employers that have a good-faith, evidence-based reason to believe that an employee was erroneously awarded benefits may submit a grievance to the FAMLI Division.
• Employees may appeal adverse benefit determinations within 30 days (or up to 60 days with good cause).

Private Plan Exemption

• Employers with a paid leave plan that is at least as generous as FAMLI (e.g., benefits, wage replacement, conditions for use, contributions, coverage) may opt out of the state plan.
• Employers that have opted out may require their employees to contribute to a private plan as long as the employee contribution is not greater than what the employee would have contributed to the state plan.
• The State of Colorado has not yet adopted rules for a private plan exemption but is currently holding stakeholder meetings to gather information on how to address the interests of employers and insurers.
• Employers that intend to pursue a private plan opt-out will still be required to collect and remit premiums beginning January 1, 2023 and until a private plan approval is granted. Employers with a private plan approval granted on or before January 1, 2024 will receive a full refund of premiums previously paid.
• Separate rules will be issued regarding coordination of FAMLI benefits with other paid/unpaid leave benefits.

Other Considerations and Requirements

• Employees may submit applications for leave to the Colorado FAMLI Division 30 days prior to an anticipated leave where the need for leave is foreseeable. When the need for leave is not foreseeable, employees may submit their applications up to 30 days after leave has begun.
• Benefit claims will be adjudicated within two weeks; both employers and employees will be notified of claim decisions.
• Employers will be notified within five business days of an employee’s submission of leave application to the FAMLI Division. However, employers may also require employees to inform them of the need for leave separately using the employer’s typical communication method and procedural requirements for work unavailability situations.
• Upon an employer’s request, the FAMLI Division will share information regarding an employee’s benefit amount and reason for leave.
• Health benefits must be continued for an employee on a covered leave. However, employees may be required to pay their normal portion of the cost of these benefits.
• Employers may require submission of a fitness-for-duty certification as a condition for return to work when leave is taken for an employee’s own serious health condition.