FAMLI: The Ins And Outs

Offering employees with greater access and more flexibility in terms of leave policies

With so many people working in nontraditional settings nowadays, the U.S. is beginning to put more thought into providing flexible employee leave policies that fit their needs. The State of Colorado is revising its employee leave policies in preparation for 2023, rolling out a variety of new policies to ensure that working families have access to the benefits they need.

Perhaps most notable is the introduction of the Family and Medical Leave Insurance (FAMLI) program, which begins funding in 2023 and will go into effect in 2024. The FAMLI program, which is only applicable to companies with 10 or more employees, will offer employees up to 12 weeks of paid leave for various circumstances, making a strong commitment to providing workers with greater access and more flexibility when it comes to leave policies – setting a high standard for future initiatives in other states throughout the country.

What Is FAMLI and Who Does it Benefit?

This new program enables any employee to take up to 12 weeks of paid time off under certain situations, such as caring for their own or a family member’s serious health condition, caring for a new child during the first year after birth, adoption/placement of a child, for qualifying military exigencies and when an employee or a family member is a victim of domestic violence, stalking, or sexual assault/abuse.

In addition, there are other circumstances, such as those who experience childbirth complications, who may now qualify for an additional 4 weeks of paid time off.

For decades, employees at companies with 50 or more workers have been entitled to leave under the federal Family Medical Leave Act (FMLA); however, those employees of small employers with fewer than 50 employees have not had access to this protection–until now. Under FAMLI, employees are eligible to receive a percentage of their wages while on approved leave, up to a maximum of $1,100 per week.

This opens the door for these thousands of working people to take care of their health, as well as that of their families, without worrying about surviving without income or facing job loss due to unforeseen medical issues. As a result, this new program offers an important layer of job security which many employees have long deserved but often struggled to obtain up until now.

How Will Employees and Employers Be Affected?

Starting January 1, 2023, there will be a required .9% payroll tax that is to be shared equally between employers and employees (.45% and .45%). However, employers may elect to pay the entire amount for both the employee and the employer. It is possible we will see several employers in Colorado offer to pay a higher percentage of the payroll tax in order to attract and retain employees in a tough job market.

While employers are contributing towards FAMLI as part of this program, they will not be financially responsible for paying their employee's wages while they are on leave – instead, each approved employee will be paid by the state. Furthermore, small businesses with fewer than 10 employees do not have to pay the employer premium but employees still need to pay their share. However, larger businesses with 10 or more staff members are expected to pay their percentage every quarter for as long as their staff count remains above that threshold.

All in all, the .9% payroll tax helps both employers and employees gain access to this valuable leave benefit without unduly burdening either party.

What Else Should I Know?

Companies who feel that they have a better employee leave program than the one offered through FAMLI can submit their program to the state for review. During the review process, their program will be assessed against various criteria related to compliance with public policy and FAMLI's objectives. If it meets all of the criteria, it will be approved and the company can opt out of participating in FAMLI. If it is not approved, then they must participate in FAMLI in order to provide their employees with adequate paid family and medical leave coverage.

It is important for businesses to understand the potential implications of opting out of FAMLI, including any financial penalties required if their custom program is not approved by the state. By providing companies with this option, however, the state allows for meritorious programs to gain social recognition while empowering companies to create tailored policies that are tailored best to meet their unique employee needs.

In addition, it is important to note that those who are self-employed may also participate in this program by paying the .9% payroll tax as well, which could be a huge benefit in the long run. Lastly, when an employee returns from their FAMLI-approved leave, employers must return them to their prior held position, or any other position that is equivalent in terms of pay and working conditions.

Ultimately, job security and trusted financial compensation are the cornerstones of this new program, which ensures that workers across Colorado can take time off when necessary without fear, beginning in 2024.

All in all, the .9% payroll tax added through the FAMLI program will support both employers and employees in gaining access to this valuable leave benefit without a major financial impact for either party.  

Author Bio

Cinda Daggett is the Director of Human Resources at Full Velocity Consulting.