Colorado Democrats are backing away from a proposal to provide paid family leave for workers through a government-run "social insurance" system. Instead, a forthcoming bill would try to offer the benefit through private insurance companies and a mandate on employers.
"It’s really important Coloradans have this benefit so that we can be responsible employees and also responsible family members and take care of our loved ones," said state Sen. Faith Winter, a sponsor of the bill, which will be introduced next week.
The change comes after Gov. Jared Polis signaled that he would not support the kind of publicly funded and administered system that California and other states have created for paid family leave.
The new proposal would still require companies of a certain size to offer paid time off for employees who have a new baby or a family emergency. The bill would initially require 8 weeks of leave, but companies eventually would have to offer 12 weeks for qualifying events.
"It’s a different model. This is going to be a guaranteed benefit with a regulated insurance market that makes it affordable to provide," Winter said. "How it’s run looks very different, but we've always wanted to have a triple AAA rating of being affordable, accessible and adequate."
The earlier plan would have created a government-run fund to pay wages. It would have been funded by a fee of up to about 1.1 percent on employees' paychecks. Lawmakers explored that idea in 2019 and created a task force to study it in detail.
Now, the revised Democratic proposal is exploring new terrain. It's different not just from the earlier Colorado proposal but also from the handful of programs created by other states.
The new proposal would rely on a mandate. Employers of a certain size would have to offer paid leave benefits — one way or another. They could choose to simply provide the benefit directly, or they could buy insurance to cover the cost.
The state would create a regulated insurance market to offer the benefit, with the state setting premiums and cost. Employers and employees will split the cost, or employers can cover the full cost.
"We are going to actually have a cap on how much employers can charge employees to ensure that it’s affordable," Winter said.
Besides Polis, the insurance company Pinnacol has also lobbied for a model that relies on private insurance companies.
Every other state with paid family leave relies on a public model, although New York includes insurance companies in a hybrid model, Winter said. A total of eight states and Washington, D.C. have paid family leave laws, according to the advocacy group A Better Balance.
"We are confident that there is going to be a robust market for this," Winter said.
She would have preferred a social insurance model, she said, but that wasn't going to pass.
"I would’ve preferred a social insurance model, but ultimately we knew that last year in order to get a bill that passed, and a bill that provides paid family leave to Coloradans, we would have to make changes," Winter said.
For now, companies with fewer than 20 employees would be exempted, but that cutoff would go lower in the future, forcing smaller businesses to get on board. State employees would be covered but local governments could opt-out.
Some details are in flux, including the percentage of wages that employees on leave could collect. The payout would be progressively scaled, meaning lower-income workers would get a higher portion of their wages paid during leave.
Employees would not be allowed to opt-out of paying their share of the premiums.