With Colorado’s paid family leave program kicking off soon, private employees will see a paycheck deduction starting on Jan. 1

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Amazon workers at the the company’s facility on Himalaya Road in Aurora sort and then move trolleys loaded with packages to an area where they will be loaded on trucks for delivery. Dec. 6, 2022.

Starting on Jan. 1, private employees across Colorado will see up to 0.45 percent of their paychecks withheld to pay for a statewide program that will eventually provide paid leave for workers.

Up to $4.50 for every $1,000 of wages will be withheld from many worker’s paychecks.

The money will go toward the state’s new Family & Medical Leave Insurance program, which will launch a year later, in 2024. Once active, it will partially replace workers’ wages while they go on leave for childbirth, adoption, serious health conditions and more.

Voters approved the significant new public benefit in the 2020 election, and state officials are now racing to set it up. The beginning of premium payments in 2023 represents one of the first major milestones.

Every private employer in the state will be required to start making the premium payments in 2023. 

“Unless you’re self-employed, this will impact your business in one way or another,” said Tracy Marshall, division director for the new FAMLI program.

Companies will be responsible for withholding the premiums from their workers’ paychecks starting on Jan. 1. State officials are encouraging employers to explain the changes to employees now to avoid confusion in the new year.

Some employees will see smaller deductions, if their bosses choose to cover some or all of their cost. The withholdings should be noted on paystubs, Marshall said.

Many companies also will be required to contribute additional premiums worth another 0.45 percent of each employee’s wages. Companies also will have to register with the state’s new My FAMLI+ portal for businesses, which they’ll use to pay the money to the state. 

The state launched that service just a few weeks ago, but businesses won’t have to register until mid-2023, when they actually have to send the money to the state, Marshall said.

“They still have some breathing room to get that registration done,” she said.

Only the smallest companies — those with nine or fewer employees — will be exempted from paying the company’s share of the wages. But their employees still will owe the 0.45 percent, which the employer still would collect by withholding.

Companies can offer their own plans instead — but not yet

Companies can offer their own paid leave programs as an alternative. If those programs meet the state’s requirements, the company and its employees will be exempted from paying premiums to the FAMLI program.

But, for now, it’s impossible to get that exemption. The state is not yet accepting applications for companies to prove they have a qualifying program.

That means that every employer, whether or not they’re already offering paid leave, will have to start withholding wages on Jan. 1. The state hopes to begin accepting applications for waivers by the end of the first quarter of 2023.

“Honestly, it was time constraints. There just wasn’t the time to be able to get the platform built and make it robust enough,” Marshall explained, referring to the state’s process for accepting and reviewing companies’ waiver requests.

If the state eventually finds that a private company had an acceptable replacement benefit all along, it will refund the premiums to the company, which would then be responsible for returning the money to employees.

The major deadlines for the program — including collecting premiums in 2023 and launching benefits in 2024 — were written into the law that voters approved.

“We can’t move those dates,” Marshall said.

The state has been working for months to prepare employers and employees for the change, Marshall added, but she acknowledged some people may be surprised to see their wages reduced after New Year’s Day.

“We’re certainly trying to reach everyone. There’s no doubt going to be some folks that the message just never got to them, and this feels like a surprise,” she said. “They voted on this a long time ago — they may not have recalled how they voted on this. But ultimately it was voted in, so it’s our job now to carry that out.”

Who will get paid leave in Colorado?

Once the program launches, every private employee in Colorado will be eligible to have a portion of their wages covered for 12 weeks for the following reasons:

  • The birth, adoption or fostering of a new child
  • Medical care for them or their family
  • Addressing the impacts of domestic violence
  • Military service of a family member

People facing complications in pregnancy or childbirth will qualify for an additional four weeks. The program will only partially replace people’s wages while they’re on leave.

There is one group that was exempted from the law. Local governments are allowed to opt out of the program. Many have already done so. A few are offering their own programs instead. Employees of the other non-participating cities will still be allowed to pay into FAMLI, and use its benefits, as individuals.