Colorado Issues Final Rules on Benefits and Employer Participation Requirements for Paid Family and Medical Leave Insurance Program, Clarifies Private Plan Option

Colorado’s rulemaking process regarding its new paid family and medical leave insurance program (“FAMLI”) continues.1 On August 26, 2022, the state published final regulations on benefits and employer participation requirements (“Benefits Rules”),2 which provide the most concrete guidance to date regarding the benefits to which employees will be entitled under the FAMLI program as of January 1, 2024.3

This article emphasizes key portions of the Benefits Rules for Colorado employers as they prepare to implement this new employee benefit in Colorado, and provides updates on the status of forthcoming rules, including rules on private FAMLI-compliant plans and the coordination of FAMLI benefits with other employer-provided leave benefits.

Qualified Individuals

The Benefits Rules make clear which employees are eligible for FAMLI benefits. Under the FAMLI statute, all Colorado individuals are entitled to FAMLI benefits once they earn $2,500 during a “base period,” which generally means they have earned at least $2,500 in wages within Colorado at any point over the preceding year.

Of importance, the Benefits Rules clarify that this $2,500 threshold can be met “from any combination of employers.”4 In other words, the $2,500 threshold does not mean that the employee must earn $2,500 in compensation from a single employer to be eligible for benefits. Functionally, most Colorado employees will thus be eligible for FAMLI benefits on or soon after day one of their employment, unlike the federal Family & Medical Leave Act (FMLA), which provides that employees are not eligible for FMLA benefits until they have been employed for at least 12 months (among other preconditions).

Rolling Twelve Months

Under FAMLI, an employee is entitled to FAMLI benefits—up to 12 weeks of paid leave for qualifying reasons, and an extra 4 weeks for pregnancy or childbirth-related reasons—on a 12-month period rolling backwards, beginning on the first day in which an employee begins taking FAMLI benefits. Again, this differs from leave under the FMLA, which gives employers the option of calculating a 12-month period based on either a calendar leave, any fixed 12-month period, or a 12-month period rolling forward or backward. Employers may only use the 12-month period rolling backwards period in evaluating benefits eligibility under the FAMLI program.

Applications for FAMLI Benefits

Additionally, the process for how employees may apply for benefits is more clearly spelled out in the Benefits Rules. Employees will apply for benefits directly to the FAMLI Division, unless an employer has been approved to use a private plan to meet its FAMLI obligations. Such applications may be submitted at least 30 days prior to an anticipated start date for benefits, although the Division will also consider applications submitted at least 30 days after leave has begun if earlier notice was impracticable under the circumstances.

Employees must provide different forms of information to the Division depending on the nature of their leave. For example, an application to take leave for an employee’s own serious health condition will require the employee to submit a “Serious Health Condition Certification – Self Form,” while a separate “Serious Health Condition Certification – Family Member Form” will be utilized if the leave is in connection with a family member’s serious health condition.5

Notice to Employers of FAMLI Leave

Once an application for FAMLI benefits is received by the Division, the Division will notify the claimant’s employer of the application within five business days of the submission.

Separately, however, the Benefits Rules make clear that employers can require employees to inform the employer directly of the need for FAMLI leave, separate and apart from the Division providing notice of the benefits application. Employees should notify employers of their need for leave in the same manner as they would typically communicate work unavailability and should follow the employer’s usual and customary notice and procedural requirements for leave.6

Adjudication of Claims and Appeals Processes

Once an application for FAMLI benefits is fully and properly submitted by an employee, the Division will adjudicate the claim for benefits within two weeks.7 The Division will contemporaneously notify the employee and employer of the outcome of the benefits claim.

If benefits are approved, the Division’s notice will include the leave start date, leave duration, any denied segments of requested leave, and a description of any approved reduced leave or intermittent leave where applicable. Additionally, upon the employer’s request, the Division will share certain information regarding the benefit amount and reason for leave to effectuate coordination with other employer-provided leave benefits, such as PTO, sick leave, or other paid leave benefits.8

The Benefits Rules also provide separate and distinct mechanisms by which employers and employees may each grieve or appeal a benefits determination:

  • Employer Grievance Process. If an employer has a good-faith belief, supported by evidence, that an award of benefits was erroneous, it may submit a “grievance” to the Division. This grievance may be based on the approved benefits being in an amount, duration, or frequency beyond what the claimant is entitled, or in such a way that unduly disrupts the employer’s operations. The Division will then investigate and adjudicate the employer’s grievance.9
  • Employee Appeal Process. If a claim for benefits is denied, employees may appeal the adverse determination. Upon receipt of a timely appeal—such appeals must be made within 30 days of the adverse claim determination, although that period may be expanded to 60 days upon a showing of good cause—the Division will designate a hearing officer to review the matter. Both the employee and employer will have the right to participate in the appeal hearing. If the appeal is upheld, the employee may seek recourse in the courts.10

Fitness For Duty Certifications

The Benefits Rules confirm that employers may require a covered individual to submit a fitness-for-duty certification upon their return to work for a serious health condition, similar to the process under the FMLA.

Private Plans and Coordination of Benefits Rules

In addition to issuing the Benefits Rules, the state on August 31, 2022 also posted a webinar that specifically addresses a topic of great interest to Colorado employers: the process by which employers can meet the requirements of FAMLI through a private plan as opposed to the default public, state-run plan.

It bears noting that the state repeatedly emphasized in this webinar that rules on private plans have not been adopted and that it is currently undertaking stakeholder meetings to ensure the final private plan rules address the interests of employers and insurers. In short, its current guidance is not final, and is subject to change. Still, the state did shed some light on its current understanding of how employers can opt to use a private plan in lieu of the state-run FAMLI program.

In short, a private plan must provide equal or greater benefits and protections than the public FAMLI plan. Specifically, as compared to the public FAMLI program, the private plan must:

  1. Provide the same number of weeks of benefits.
  2. Provide the same level of wage replacement.
  3. Include no additional requirements or conditions.
  4. Deduct no more than the same amount from employee paychecks to fund the plan.
  5. Cover all employees through the duration of their employment. This means that new, part-time or temporary employees must be eligible for the paid family and medical leave benefits so long as they have earned $2,500 in the state of Colorado.
  6. Remain compliant with all other FAMLI requirements.
  7. Be approved by the state as compliant.

Additionally, the state confirmed that all employers will need to collect and remit premiums under the FAMLI program beginning January 1, 2023, even if the employer intends to meet the FAMLI requirements through a private plan. However, employers will be eligible for a refund of these premiums if they have received approval by the state for a private plan with an effective date on or before January 1, 2024.

The state also confirmed that, in addition to the private plan rules, it will also issue separate rules on the coordination of FAMLI benefits with other paid and unpaid leave benefits, as well as amendments to the local government rules adopted early in 2022.11

Next Steps

Even though employees will not be entitled to FAMLI benefits until January 1, 2024, employers do have certain obligations with a more imminent deadline. Specifically, on or before January 1, 2023, Colorado employers will need to register with My FAMLI+, the state-run FAMLI portal expected to launch sometime in Q4 2022. Then, starting January 1, 2023, employers will need to begin to withhold premium payments and to submit quarterly wage reports through the My FAMLI+ portal.

Once the private plan rules are issued, Colorado employers will be able to make more informed decisions as to whether to comply with their FAMLI obligations through the state-run insurance program or through a private plan.

See Footnotes

1 For guidance on the earlier regulations under the FAMLI program, please see David Gartenberg and Carolyn Theis, Colorado Issues First Round of Regulations and Guidance on its Paid Family and Medical Leave Insurance (FAMLI) Program, Littler Insight (May 16, 2022).

2 7 CCR 1107-3.

3 To briefly recap the FAMLI program, employers must begin withholding a .9% payroll tax from their Colorado employees as of January 1, 2023 and to remit these taxes to the state. Then, starting January 1, 2024, most Colorado employees will be entitled to take paid family and medical leave for a variety of reasons, including for their own serious health condition, to care for a family member’s serious health condition, to care for a new child. Employees can take 12 weeks of paid leave, unless leave is needed due to a pregnancy- or childbirth-related complication, in which case an employee can receive an additional 4 weeks of FAMLI leave.

4 7 CCR 1107-3 at Rule 3.4.3(B).

5 7 CCR 1107-3 at Rule 3.6.

6 7 CCR 1107-3 at Rule 3.7.

7 7 CCR 1107-3 at Rule 3.8(1).

8 However, the Division will only share information that is “absolutely necessary for such benefit coordination.” 7 CCR 1107-3 at Rule 3.7.6.

9 7 CCR 1107-3 at Rule 3.11.

10 7 CCR 1107-3 at Rule 3.10.

11 See 7 CCR 1107-2 (Local Government Rules).

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.