Two years after voters in Colorado approved the state-run Paid Family and Medical Leave Insurance (FAMLI) Program, employers should be gearing up for the Jan. 1, 2023, contribution start date leading to benefits payable beginning January 2024. While the Colorado Family and Medical Leave Insurance Division issued final rules for private plans earlier this month, employers cannot apply for private plan approval until sometime in 2024.
As the end of this year approaches, ensuring compliance with upcoming changes in employment laws in the new year is no easy task for employers. This alert discusses the fundamentals of the FAMLI Program, addresses what local government employers need to know, and covers the private plan rules to help prepare for 2023 and into 2024.
What you need to do:
Determine whether you have Colorado employees covered by the FAMLI Program and whether you are required to pay the employer portion of the premium contribution (more than 10 employees nationwide).
Notify Colorado employees about the FAMLI Program by posting the mandatory notice and providing a copy to remote workers.
Covered employers should prepare for payroll deductions (if being taken) by notifying employees and coordinating with the payroll vendor.
Register with the My FAMLI+ Employer portal (once accessible) where employers will report wage data, remit premium payments, apply for private plan approval, and local governments upload letters of declination votes. Employers must register no later than April 30, 2023. The Division is launching the portal in a phased approach. By subscribing to the Division’s newsletter, employers will receive updates on the availability of this portal.
For local government employers only, decide whether to opt out of the Program through a vote of the local governing body. If going this route, employees of the local government may still opt in for coverage. The local government can decide whether to facilitate the premium payments for these individuals, otherwise, those opting in must pay the premium directly to the state.
Decide whether to pursue a private plan alternative – self-insured or an insurance policy. The private plan application process will open sometime between Q1 and Q3 in 2023. Employers seeking a private plan approval, still need to make quarterly contributions and file wage reports in 2023 but can seek a premium refund once a private plan is approved. Employers requiring employee contributions will still need to take the payroll deduction beginning Jan. 1, 2023.
Background on the FAMLI Program
Employee eligibility for paid leave benefits effective Jan. 1, 2024
Starting Jan. 1, 2024, most Colorado workers who earned at least $2,500.00 in wages subject to premiums the previous year will be eligible for FAMLI benefits. There is no duration of employment or hours-worked requirement to qualify. This threshold amount can be earned from any combination of employers, so an employee need not have earned $2,500.00 from its current employer (or a single employer) to be eligible.
Covered employers and contributions
An employer with a single employee working in Colorado is covered by the FAMLI Program. The only exclusions are the federal government, certain railroad workers and local governments which opt out. Covered employers must register with the FAMLI Division via “MyFAMLI+ Employer” once the portal becomes available.
Beginning Jan. 1, 2023, the Program is funded through premiums paid by eligible Colorado employees and those employers with 10 or more workers companywide (not just in Colorado). Employees contribute through a payroll deduction of 0.45% of their wages up to the Social Security Wage Cap which is $160,200 for 2023. Large employers also pay a premium of 0.45% of their employees’ wages. The total payroll premium will remain at 0.9% of employees’ wages through Dec. 31, 2024, and is subject to annual adjustment after that. Any employer – even small employers not required to pay the employer premium – can choose to pay part or all of the employee premium. Wages subject to FAMLI premiums are the same wages subject to unemployment insurance.
Lockton comment: All employees nationwide are counted when determining whether an employer has 10 or more employees and is then required to make the employer premium contribution. Only employees working in Colorado pay the 0.45% premium. Employees who work in Colorado and outside the state will be covered if the work outside of Colorado is incidental, temporary or transitory. Likewise, an employee whose work is not localized in any state, but the employee performs work in Colorado and the base of operations is in Colorado (or if no base of operations, the work is directed from Colorado) is covered. Similarly, an employee is covered if the employee lives in Colorado and the base of operations or place from which some part of the work is directed or controlled is not in any state in which part of the work is performed.
Employers need to notify employees of the upcoming payroll deduction unless the employer is absorbing the employee’s share. The state offers a paycheck stuffer discussing the upcoming deduction which employers can provide to employees and post on a web-based or app-based platform.
Lockton comment: While many employers are interested in the private plan option, the FAMLI Division anticipates that the private plan application process will not open until sometime between Q1 and Q3 next year. As discussed below, employers obtaining an approved private plan can obtain a refund for contributions paid in 2023 if the private plan application is filed by Oct. 31, 2023. If an employer intends to use a private plan and wants to avoid having to refund contributions to employees (which is required absent a private plan that requires employee contributions), the employer can choose to contribute the entire 0.9% of employee wages to simplify the refund process.
Quarterly premium payment and wage reporting requirements
The FAMLI Division will notify employers of the expected premium payment on the first business day of the month the premium is due. Premiums are paid quarterly and are due the last day of the month immediately following the end of the quarter. The first quarterly premium payment in 2023 will be due April 30, 2023. If an employer fails to deduct the proper premium from an employee, it cannot retroactively make the deduction. Rather, the employer must pay any shortfall.
Employers must also submit wage reports to the Division on the same schedule as premiums. Penalties of up to $50 per employee may be assessed for failing to timely submit a wage report. Once an employer ceases operations in Colorado or no longer employs anyone in the state, it must notify the Division within 10 business days.
Lockton comment: For employers with remote employees, be sure employees seek approval (preferable) or at least notify the employer when relocating to a different state. Employers will need to ensure all employees working in Colorado are covered by the state-run plan or a private plan.
Provide notice to employees
Employers must post a notice informing employees about the FAMLI Program by Jan. 1, 2023. The mandatory poster is available to download. It must be posted in a conspicuous workplace location and distributed to remote workers via email, hand-delivery or mail. It can also be posted on a web-based or app-based platform that is easily accessed by employees.
The FAMLI Act generally provides 12 weeks of paid leave
Beginning Jan. 1, 2024, paid leave benefits will be available to eligible employees taking leave for one of these reasons:
To care for their own serious health condition
To care for a family member’s serious health condition
To care for a child during the first year after the child’s birth or after the placement of the child through foster care or adoption
Time off to make arrangements for a family member’s military deployment
To take safe leave because the employee or the employee’s family member is the victim of domestic violence, stalking, sexual assault or abuse
The onset date of the qualifying condition is of no consequence.
Similar to many states with paid leave programs, the FAMLI Program defines family member broadly to include a covered employee’s child of any age, parent, spouse, domestic partner, grandparent, grandchild or sibling and any other person with whom they have a significant personal bond. When evaluating a nontraditional familial relationship, the FAMLI Division will look to the totality of the circumstances surrounding the relationship, including:
Shared financial responsibility, including shared leases, common ownership of real or personal property, joint liability for bills or beneficiary designations
Emergency contact designations
The expectation of care created by the relationship and/or the prior provision of care
Cohabitation and the duration thereof
Geographical proximity
It’s unclear whether an attestation by the employee will be required when seeking leave for a nontraditional family member, but such a requirement would be consistent with similar state programs having this broad definition of family member.
Employees will have up to 12 weeks of leave each benefit year. An additional four weeks of paid leave is available in the event of serious health conditions caused by complications related to pregnancy or childbirth. Notably, there is no waiting period before benefits are paid. Leave can be taken in blocks, intermittently or on a reduced schedule. An employee with an approved reduced leave schedule or intermittent leave must seek recertification every six months or as requested by the Division. Absences of less than eight hours may be approved, but benefits will not be paid until at least eight hours of leave is taken.
Lockton comment: Many state paid leave programs temporarily eliminated waiting periods during the pandemic to be later reinstated. Since the FAMLI Program offers paid benefits with no waiting period, this could change employee behavior by making it more likely that they will use FAMLI benefits, especially when wage replacement may near 90% of the employee’s average weekly wage.
The FAMLI “benefit year” is the 12-month period beginning on the first day of the calendar week in which the benefits start. The 12-month period is measured backward from the date an employee uses FAMLI benefits. Each time an employee takes paid family and medical leave, the remaining leave entitlement is the balance which has not been used during the preceding 12 months.
Lockton comment: The federal FMLA provides employers with four options to establish the 12-month leave period. If the rolling 12-month period measured backward from the date an employee uses any federal FMLA leave is not the method currently used by an employer, be aware that the federal FMLA and leave under the FAMLI Program will be tracked differently and potentially result in different eligibility for each leave. An employer must follow certain steps if it decides to change its calculation method, including 60 days’ notice before adopting a new approach, and ensuring employees do not lose out on any leave eligibility due to the change. This DOL Fact Sheet provides additional guidance if contemplating a change. With a Jan. 1, 2024, benefit effective date, employers covered by the FAMLI Program wanting to make a change in methods of calculating leave eligibility for federal FMLA to coordinate with the FAMLI Program should provide notice to employees no later than October 2023. Employers can choose to use one method of tracking for employees in one state and a different method for employees in other states.
Employees must notify their employer of the need for leave
Similar to FMLA, for FAMLI benefits, employers can require employees to provide at least 30 days’ notice of leave when foreseeable. If the leave is unforeseen, notice must be provided as soon as practicable. Employees have up to 30 days after the leave has begun to apply for FAMLI benefits when leave is unforeseen. An employee must comply with the employer’s normal procedures for giving notice of the need for leave. An employer may require than an employee’s notice of the need for FAMLI leave include the anticipated start date, duration and frequency (if applicable) of the leave.
Job protection and anti-retaliation provisions
While benefit eligibility is not conditioned on an employee’s length of service with an employer, job protection is only afforded to employees employed with their current employer for 180 days prior to the beginning of the leave period. An employee taking FAMLI leave must be restored to the position held when the leave began or to an equivalent position with equivalent employment benefits, pay and other terms and conditions of employment. Similar to the federal FMLA, an employee is not entitled to any right, benefit or position of employment other than those the employee would have been entitled to had the employee not taken leave. For instance, if the employee would have been subject to layoff before taking FAMLI leave, the employee would not be entitled to job restoration at the conclusion of the leave.
The FAMLI Program also prohibits employers from interfering with, restraining or denying an employee’s rights to leave under the Program. This also includes anti-retaliation and discrimination provisions which make it an unlawful employment practice to discipline, discharge, demote, suspend or subject an employee to any other adverse action for taking qualifying leave.
Lockton comment: While the express job protection provision applies to employees with 180 days or more tenure, the reality is that an employee taking FAMLI leave who does not yet meet the 180-day mark is effectively “protected” in that it would likely be deemed retaliatory if an employer terminated an employee taking leave rather than returning the employee to work. Employers should exercise caution when unable to return an employee to work following a leave not afforded job protection under the “180 days” provision.
The amount of paid leave benefits and continued fringe benefits
The FAMLI Program benefit structure is similar to many state paid family and medical leave laws in that it is “progressive” so that lower-income employees will receive a higher proportion of weekly wages. The weekly benefit amount depends on the employee’s average weekly wage (AWW) when compared to the state AWW. The formulas are as follows:
Employee’s average weekly wage | Benefit amount |
|---|---|
The employee’s AAW is ≤ 50% of the state AWW | 90% of the employee’s AWW |
The employee’s AWW is > 50% of the state AWW | 90% of the employee’s AWW up to 50% of the state AWW + 50% of the employee’s AWW > 50% of the AWW |
The maximum weekly benefit in 2024 is $1,100. An employee receiving unemployment or workers’ compensation benefits is not eligible for paid family benefits.
Lockton comment: If an employee has multiple jobs and does not take paid family and medical leave from all employers, the weekly benefit is prorated based on the portion of earnings lost due to the absence from work.
If an employee is receiving FAMLI benefits or taking leave for which benefits may be paid, the employer must continue any employment health benefits in the same manner as required under federal FMLA.
Coordinating FAMLI benefits with other leave and employer provided benefits
Leave taken under the FAMLI Program runs concurrently with federal FMLA when used for a qualifying reason under federal FMLA. Not all leaves covered by the FAMLI Program will also be covered by federal FMLA given the expanded usage for safe leave purposes and broader family member definition.
Lockton comment: Given the job protection afforded under the FAMLI Program and the broad definition of family member, employers need to be prepared that employees may be entitled to more than 14 weeks of job-protected leave in a benefit year. For instance, an employee may take 12 weeks for leave to care for a grandparent with a serious health condition which would be covered by the FAMLI Program but not federal FMLA. Later that year, if the employee needs leave for their own serious health condition and the employee meets the requirements for the FMLA, the employee would be entitled to an additional 12 weeks of job-protected leave. If that leave relates to pregnancy complications, the employee may also be entitled to two weeks of additional job-protected, paid leave under the FAMLI Program.
An employer may require that leave taken under the FAMLI Program be taken concurrently or coordinated with the terms of a disability policy or separate bank of time off for reasons under the paid family and medical leave (e.g., paid parental leave). Employer policies should be adjusted as needed so employees have notice of this requirement.
An employer cannot require an employee to use or exhaust any accrued vacation leave, sick leave or other paid time off prior to or while also receiving FAMLI benefits. An employee may choose to use sick leave or other employer-provided paid time off before using FAMLI benefits. In addition, an employee and an employer can mutually agree that the employee may use these leave benefits while receiving FAMLI so long as the employee does not receive more than 100% of the employee’s wages.
The FAMLI benefit claim process and grievance process
The benefit application process is relatively straightforward, and we anticipate further guidance, including forms, before benefits are available Jan. 1, 2024. An employee will apply for benefits (up to 30-days in advance when foreseeable) through the FAMLI Division’s online system, by mail or by email. The Division will develop forms for the different types of leave. The FAMLI Division notifies the employer of a properly filed application for benefits within five days. A decision on the claim will be made within two weeks and the Division will notify the employee and employer of the outcome. If the benefits are denied, in whole or in part, the employee can file an appeal. If benefits are awarded, the notice will include the leave start date, the duration of the leave and any denied segments of requested leave and, if applicable, a description of any approved reduced leave schedule or intermittent leave. Benefit payments begin within two weeks.
Unique to the FAMLI Program is the ability of an employer to file a grievance if it has a good-faith belief, supported by evidence, that the Division granted and/or paid benefits to an employee in an amount, duration or frequency beyond which the employee is entitled to or in a way that unduly disrupts the employer’s operations. The Division will review all grievances and may initiate an investigation. If the investigation results in a change in the duration or frequency of benefits, or the benefit amount, the Division will notify the employee and employer.
Local governments
All local governments must register in the FAMLI system and create an account. If participating in the program, the local government will pay the employer share if it has 10 or more employees and deduct premiums from employees starting Jan. 1, 2023. These premiums are submitted quarterly to the FAMLI Division along with wage reports as discussed above.
Local governments may vote to opt out of the FAMLI Program
The FAMLI Program affords local governments the option to opt out through a vote of the local governing body. There are a number of requirements relating to this vote including that public notice be given and employees be notified in advance. The Division offers a Local government guide detailing the voting process and obligations of a local government seeking to opt out.
Following the vote to decline participation, the local government must notify its employees about the vote and the impact on FAMLI coverage, including the employees’ right to voluntarily opt into FAMLI benefits. A sample notice for local government employers is here. The local government must also notify the FAMLI Division in writing of the vote declining coverage. A declination vote does not take effect until at least 180 days after the vote to allow individual employees the opportunity to opt into the program.
A local government may decline all participation or decline employer participation – either way, a vote is required. If the local government declines all participation, employees may self-select FAMLI coverage. These employees can wait to do so until benefits are available in 2024 and register in the system like an independent contractor in order to report their wage data and pay quarterly premiums. Another option is for the local government to decline to pay the employer premium, but support employees who want to participate by deducting and remitting the employee share of the premium and wage data to the Division quarterly.
Declination is not permanent. The local government must reconsider participating in the FAMLI Program and notify the Division at least every eight years. If there is no vote further declining coverage, the local government will become a covered employer under the FAMLI Program. Local government employers that previously declined participation and then subsequently elect or otherwise return to coverage must remain in the Program for a minimum of three fiscal years. The three-year cycle begins on the first day of employee coverage. Employees must be notified directly in writing and not later than 180 days of the pending or upcoming return to or withdrawal of coverage pursuant to the regulation.
Private plans
Similar to other states with this type of paid leave program, employers can comply with the FAMLI Act through an approved private plan that provides all of the same rights, protections and benefits to all covered individuals employed by the employer at no additional cost. An approved private plan can be in the form of either self-insurance or a policy through an insurer approved by the state.
Although the process for employers to apply for a private plan is not yet in place, the FAMLI Division did finalize regulations concerning private plans. Employers considering a private plan (including self-insurance) are not exempt from paying FAMLI premiums until the FAMLI Division has reviewed and approved the private plan or self-insurance documentation. This application process is not set to open for several months from now.
Lockton comment: As of the date of this alert, the Colorado Department of Insurance has not identified any approved insurance products satisfying the CO FAMLI requirements. For updated information, check famili.colorado.gov or contact your insurer to see if they plan to offer a private plan.
The recently released rules are summarized below.
Premium payment obligations continue until the private plan effective date
Employers remain liable to the FAMLI Division for premiums on wages paid until the effective date of the approved private plan and remain entitled to withhold the employees’ share of premiums from wages paid until the effective date. Even after the approval of a private plan, employers can continue to withhold premiums from an employee’s wages if the deduction is pursuant to the terms of the private plan and the amount does not exceed what state plan requires.
If the private plan is not effective Jan. 1, 2024, employees remain eligible for benefits under the FAMLI Act until the effective date of the plan.
Premiums paid by employers with an approved private plan effective on or before Jan. 1, 2024, will be reimbursed
An employer obtaining approval of a private plan with an effective benefits date no later than Jan. 1, 2024, may apply to the Division for reimbursement of the 2023 premium payments. If an employer collected premium contributions from its employees in 2023, and the employer is reimbursed by the Division, the employer must reimburse its employees for their premium contributions collected unless the terms of the approved private plan allow the employer to collect premiums from employees in 2023.
If an employer must reimburse employees and one or more of the employees is no longer employed by the employer, the employer must identify those employees in the application for reimbursement. The Division will try to issue the refund directly to those employees. If an employee leaves employment after the employer submits an application for reimbursement but before the Division issues the reimbursement, the employer must refund to the Division the amount of that employee reimbursement so the Division can issue a refund to the employee. If the Division cannot locate an employee, it will make the amount available as unclaimed property.
Lockton comment: As discussed in a comment above regarding the premium contributions, an employer who intends to seek approval for a private plan and wants to avoid having to refund contributions to employees can choose to contribute the 0.9% payroll premium in the entirety to simply the refund process.
Private plan application process
To obtain approval for a private plan, an employer must submit a completed application which includes:
The employer’s federal employer identification number
The employer’s name, business address, mailing address and designated contact person
A copy of the employer’s self-insured private plan, or if in the form of an insurance policy, a copy of the insurance policy form
An attestation from the employer that the employer understands, and the private plan satisfies the requirements of the FAMLI Program
An attestation from the employer that the forms used by the employees and/or healthcare providers will be no more onerous than the forms used by employees under the state-run plan
A copy of the required posted notice which includes the details of the private plan
The administration fee of $500 (effective through 2024, subject to increase)
If the private plan is through self-insurance in which the employer assumes all financial risk associated with the benefits and the administration of the plan (which can be administered by a third-party administrator), there are additional requirements when applying for approval. The employer must obtain a surety bond, issued by a surety company authorized to transact business in Colorado, in an amount equal to one year of total premiums along with payroll documentation supporting the calculation. The employer must maintain surety bond coverage for the duration of its approved self-insured plan. An employer approved to self-insure a private plan must also establish and maintain a separate account to deposit and keep employee contributions from which all benefits are paid as well as administrative costs of the self-insured plan. The employer must also submit an attestation that the employer has complied with the separate account requirements for employee contributions from which benefits and private plan administration costs are paid.
Lockton comment: For applications for self-insured plans, the Division will make a template available that satisfies the approval requirements for a private plan application. Employers frequently ask whether an existing paid parental leave policy that covers bonding time at 100% pay would qualify as an equivalent plan. Typically, this would not suffice to meet the requirements of a private plan because it does not provide the same or greater benefits than the Program. Any current employer policies believed to provide equivalent benefits must be approved by the state to qualify as a private plan. Even if a paid parental leave policy is not equivalent, those benefits can run concurrently with the CO FAMLI benefits as discussed above. The employer policy would need to address this topic.
Approved private plans cannot take effect earlier than 60 days after the date of the application to afford the Division sufficient time to review and for the employer to notify employees. To be effective Jan. 1, 2024, the private plan application must be filed by Oct. 31, 2023. The employer must also submit to the Division any forms to be used by employees and/or health care providers under the approved private plan at least 30 days prior to making them available to employees for usage.
If the Division does not approve an application for a private plan, it will notify the employer of the issues that need to be addressed to obtain approval and will agree to meet and confer with the employer to discuss how to address the issues. The employer can submit another application for approval after addressing the issues. No additional administrative fee will be assessed for an application received within one year of the initial application for private plan approval. There is no appeal process if an application is denied.
Duration of private plan approval and renewal requirements
A private plan remains effective for eight years from its effective date. Beginning November 2024, employers with approved private plans must submit an attestation to the FAMLI Division annually that their contact information is accurate, and their approved private plan continues to satisfy the Program’s requirements and its implementing regulations. The Division will provide a form to satisfy this requirement. The failure to submit this annual attestation may result in the Division’s withdrawal of the private plan approval.
Employers seeking renewal of their private plan approval must submit an application for renewal at least sixty days before the expiration of their private plan. The Division will send the expiration notice at least 90 days in advance of expiration.
Notice to employees
Once an employer has a private plan approval, it must notify its employees at least thirty days before the effective date of an approved private plan. The written notice can be delivered electronically, in person or by mail and must include:
The effective date of the approved private plan
A description of the private plan’s wage replacement benefits, and leave and employment protection benefits
A description of how employee eligibility is determined
A description of how any employee contributions are calculated and collected
A description of how an employee may file a claim for benefits
A notification to the employee of the employee’s appeal rights pursuant to the FAMLI Act, and if applicable, of the employee’s optional alternative to appeal a benefits determination to the private plan administrator
Contact information for the FAMLI Division, and
A notification to the employee which explicitly lists and explains all of the employee’s rights to job protection, continued health benefits, no discrimination and no retaliation (See C.R.S. Sec. 8-13.3-509)
Lockton comment: Employers will need to decide whether the private plan will include an appeal process. This is optional. If not included, employees will appeal directly to the Division. Even with an appeal process through a private plan, an employee can still appeal the outcome of a private plan appeal to the Division. After that, either the employee or private plan administrator may seek judicial review of the Division’s determination. Fines of up to $500 per day per employee are imposed if a private plan administrator fails to pay an employee benefits after an appeal or judicial review.
In addition to delivering the written notice of a private plan approval to each Colorado employee, an employer must also post a notice containing the same information in a conspicuous place in each workplace. The notice must be in English, Spanish and in any other language that is the first language spoken by at least 5% of the employer’s Colorado workforce. If the employer does not maintain a physical workplace or an employee works remotely, the notice must be provided to employees via email or through a conspicuous posting in a web-based or app-based platform regularly used by employees.
An undetermined annual maintenance fee is required
Beginning the first calendar quarter of 2025, employers with an approved private plan will pay an annual maintenance fee to cover amounts expended by the FAMLI Division for costs arising out of the prior year’s administration of private plans. The Division will calculate each employer’s maintenance fee based on costs arising out of the administration of the employer’s private plan and will notify the employer of the annual maintenance fee amount and its due date.
Lockton comment: This maintenance fee is unique to the Colorado FAMLI Program. While little is known about this fee, it seems reasonable to conclude that an employer having an appeal process within a private plan may potentially reduce the Division’s time spent administering the plan which, in turn, may reduce this “maintenance fee.” Of course, an employee has the right to bypass the appeal process in a private plan and go straight to the Division as discussed.
Recordkeeping and reporting requirements
A private plan administrator must keep and maintain the following records for a minimum of six years:
Applications for benefits
Benefits paid, including payment dates and amounts
Adverse determinations of benefits applications
Internal appeals received
The outcome of internal appeals received
Documents, including wage data, containing the information upon which benefits determinations were based
Records of premium contributions collected from employees, if applicable
For the first three years of an approved private plan, the private plan administrator must submit a quarterly private plan administration summary of the previous calendar quarter to the Division. The private plan administration summary must include aggregate summaries of:
Benefits applications received
Benefit amounts paid
The purposes for approved leave
The gender of individuals for whom leave was approved
The average weekly wage of individuals for whom leave was approved
If the leave was taken to care for a family member, the relationship of that family member to the beneficiary
Adverse determinations of benefits applications
Appeals received
The outcome of appeals
After three years, the private plan administrator may submit its private plan administration summary annually on Jan. 30 of each year. If a private plan is an insurance policy covering multiple employers, the aggregate summaries may be aggregated across employers.
Private plans must provide for the confidentiality of employee information related to FAMLI benefits and the information should be kept separate from other employment records. Employees should be provided access to, and copies of all records related to their claims upon request and free of charge.
Modification of private plan
An employer must notify the FAMLI Division in writing of any material change to an approved private plan within sixty days before the change is effective. A material change includes changing from one private plan to another, reducing benefits or leave types, increasing claims adjudication timeframes, increasing benefits payment timeframes or increasing the information collected from employees to apply for or receive benefits. Increasing benefits or leave types is not a material change.
The Division will review the material change and notify the employer with a determination within 30 days. Note that a material change may impact the calculation of an employer’s annual maintenance fee.
Termination of an approved private plan
An approved private plan may be terminated voluntarily by the employer or involuntarily by the Division.
An employer may terminate an approved private plan by notifying the FAMLI Division in writing at least 30 days before the termination effective date. Employers must give employees 30 days’ notice of termination. An employer must continue the approved private plan’s coverage through the termination’s effective date or be subject to a fine. Benefits awarded to an employee must be paid by the plan that awarded the benefits for the full duration of the employee’s approved FAMLI benefits claim.
An employer that does not renew its private plan will be deemed to have voluntarily terminated its private plan and is subject to the same notice requirements.
The Division will withdraw approval for a private plan when the terms and conditions of the plan are violated. Causes for termination include:
Failure to pay benefits in the amount and duration required by the FAMLI Act and regulations, or pursuant to an approved private plan where it provides greater benefits
Failure to timely pay benefits
Failure to maintain an adequate surety bond
Misuse of private plan money
Failure to submit reports or comply with other FAMLI Act requirements
Failure to pay the annual maintenance fee
Within seven days of the termination of a private plan approval, the employer must notify all Colorado employees of the termination and that they are covered under the state-run plan, and deliver a notice.
Following the voluntary or involuntary termination of a private plan approval, the employer must remain covered by the state-run plan and pay premiums to the state for a period of at least three years. If the employer returns to coverage under an approved private plan before the end of three years, the employer must pay the state the amount of premiums it would have been required to remit through the remainder of the three year period either by lump sum based on a projection determined by the FAMLI Division or continue to remit premiums based on actual wage data on a quarterly basis through the remainder of the three-year period.
Steps to take now
If you are an employer covered by the FAMLI Program, here are recommended steps to take as the new year approaches:
Post the mandatory poster and distribute it to remote workers
Advise employees of the payroll premium deduction beginning Jan. 1, 2023, if you intend to have employees pay the employee portion of the premium
Coordinate with payroll and your outside vendor if taking the payroll deductions
Register with the FAMLI Division via “MyFAMLI+ Employer” (once available) by April 30, 2023
Determine whether to apply for a private plan and submit the application (once the Division opens this process) by Oct. 31, 2023, to receive a refund of premiums paid in 2023
Review existing leave policies and determine how they will coordinate with the FAMLI Program benefits and whether revisions will be needed effective Jan. 1, 2024
Subscribe to the Division’s newsletter to receive timely updates
If you missed the Oct. 27, 2022, “It’s ‘FAMLI TIME!’ Time to learn about the Colorado Paid Family and Medical Leave Insurance (FAMLI) Program, that is” webcast, contact your account team for a replay link and the slides. We will continue to follow future developments regarding this Program as the benefit eligibility date draws closer. If you have additional questions, please reach out to your Lockton account team.
Not legal advice: Nothing in this alert should be construed as legal advice. Lockton may not be considered your legal counsel, and communications with Lockton's HR Compliance Consulting group and IAS group are not privileged under the attorney-client privilege.
Download article (opens a new window)
