Amended Colorado Paid Family and Medical Leave Insurance (FAMLI) Law Addresses Neonatal Intensive Care, Slightly Lowers Employee Wage Premiums

This legislative session, Colorado amended the state’s Family and Medical Leave Insurance (FAMLI) law via SB 25-144 in two material ways affecting lengths of leave and FAMLI premiums (i.e., taxes).

First, the legislature amended FAMLI to provide up to an additional 12 weeks of paid family and medical leave for any parent who has a child receiving care in a neonatal intensive care unit (NICU). This means any parent whose child is in the NICU could receive up to a total of 24 total weeks of paid FAMLI leave (12 weeks of bonding leave and 12 weeks for time that the newborn is in the NICU). The amendments are clear that this category of leave comprises “an additional twelve weeks” that will be made available to employees on top of the 12 weeks of FAMLI leave to which they would otherwise be entitled. These changes take effect for any claims arising on or after January 1, 2026, meaning that an employee who has a child in the NICU on or after that date would be entitled to the additional 12 weeks of FAMLI leave.

Second, the amendment slightly lowers the premiums collected from each employee used to finance the wage replacement available under FAMLI. The premium collection will stay at 0.9% of wages per employee for the remainder of 2025, but starting January 1, 2026, the premium amount will decrease to 0.88% of wages per employee. For each subsequent calendar year, the director of the FAMLI Division will set the premium on or before September 1st of the preceding year, with a maximum possible premium rate of 1.2% of wages per employee.

A separate proposed amendment, which would have limited FAMLI leave to employers of “highly specialized employees” (as defined under the bill) did not become law.

Colorado employers should prepare for these changes, both in terms of tweaking their leave policies and ensuring payroll taxes are properly applied in 2026.

*This article was also published in SHRM.