Proposition 118 passed last week. It sets up a system of 12 weeks of paid family and medical leave (PFML) funded through a payroll tax paid by both employers and employees in a 50/50 split, although employers have the option of paying more so their employees pay less. Premiums will be increased over time. The paid leave needs to be funded prior to any employee being able to take the leave. Employers and employees will start paying into PFML in 2023, and the earliest employees will be able to take this paid leave is January 1, 2024.
Local governments may opt-out of the program, although to do so may mean that their benefits package is not as attractive in recruiting new employees. The proposal also includes an exemption for private employers who offer an approved private paid family and medical leave plan. Small employers with fewer than 10 employees are exempt from paying a premium, and sole proprietors may opt into the program.
The premium is calculated based on each employee’s taxable wages. The first two years of the program, which starts in 2023, charges premiums at .9% of the employee’s wages. Employers and employees pay .45 percent each unless an employer chooses to pay a larger percentage of the cost up to 100%. In 2025 and after, a premium will be set by the state of up to 1.2% of each employee’s wages.
An employee meeting the definition under the new law may receive up to 12 weeks of paid family or medical leave, with an additional four weeks of leave for pregnancy or childbirth complications. Those individuals whose wages are less than or equal to 50% of the state average weekly wage (SAWW) receive 90% of their average weekly wage (AWW). Those earning more than the SAWW will receive a lesser percentage of their weekly wage.
Individuals are eligible to receive the benefits after earning $2,500 in wages that were subject to the PFML premiums and have been employed by the employer for at least 180 days.
Reasons for leave
A covered individual can take leave for the following reasons:
- caring for their own serious health condition;
- caring for a new child during the first year after the birth or adoption or for foster care of a new child;
- caring for a family member with a serious health condition;
- a family member is on active duty military service or is called for active-duty military service; and
- an employee or a family member is a victim of domestic violence, stalking, or sexual assault.
These reasons are broader than the protected reasons under the federal Family and Medical Leave Act and different from Colorado’s Healthy Families and Workplaces Act, so Colorado employers will need to consider this.
Under Proposition 118, employers cannot discipline or retaliate against employees for requesting or using paid leave. Job protections become available to employees when they are eligible for the leave or after working for the employer for at least 180 days. Employees who take leave under Proposition 118 are entitled to return to the same position or a position with the same pay, benefits, and seniority or status, and employees cannot lose their health benefits during their leave. Employees with health benefits are still be required to pay their health insurance premiums while on leave. This is similar to the requirement under the FMLA. We anticipate more guidance before 2023.