Mandatory PFML Requirements for Employers in the “Swamp” and “Rocky Mountain High”

Adams and Reese PFML Laws Series (Part 3 of 3)

This month, in the final part of our Adams and Reese Paid Family and Medical Leave series, we examine highlights of the mandatory PFML laws in Colorado and the District of Columbia, two other jurisdictions within the Adams and Reese footprint.

All in the FAMLI

Coloradans passed the “Paid Family and Medical Leave Insurance Act” as Proposition 118 in November 2020 to create a mandatory statewide paid family and medical leave insurance system. Colo. Rev. Stat. Ann. § 8-13.3-501 et seq.

FAMLI established a Family and Medical Leave Insurance Division within the Colorado Department of Labor and Employment to set up and run the program.

By January 1, 2023, the Division was empowered to establish a PFML insurance program and begin collecting premiums. By January 1, 2024, the Division was required to start receiving claims from and paying FML insurance benefits to covered individuals. Colo. Rev. Stat. Ann. § 8-13.3-516.

FAMLI has broad definitions of both “employee” and “employer” covered by the law.

An employee includes “any individual, including a migratory laborer, performing labor or services for the benefit of another, irrespective of whether the common-law relationship of master and servant exists.” Colo. Rev. Stat. Ann. § 8-13.3-503(7). This definition excludes “an individual primarily free from control and direction in the performance of the labor or services, both under the individual’s contract for the performance of the labor or services and in fact, and who is customarily engaged in an independent trade, occupation, profession, or business related to the labor or services performed.” Id.

An employer within the scope of the law includes any person engaged in commerce or an industry or activity affecting commerce that: “(I) Employs at least one person for each working day during each of twenty or more calendar workweeks in the current or immediately preceding calendar year; or (II) Paid wages of one thousand five hundred dollars or more during any calendar quarter in the preceding calendar year.” Colo. Rev. Stat. Ann. § 8-13.3-503(8)(a). Local government employers may opt out from participating in the PFML insurance program. Colo. Rev. Stat. Ann. § 8-13.3-522.

Employees of local government employers, self-employed persons, independent contractors, sole proprietors, partners, or joint venturers may elect coverage. Colo. Rev. Stat. Ann. § 8-13.3-514. These covered individuals are required to pay only 50 percent of the premium required for an employee. Colo. Rev. Stat. Ann. § 8-13.3-507(4).

With approval of the Division, employers may provide PFML benefits through a private plan so long as the private plan confers all the same rights, protections and benefits as the mandatory plan established by FAMLI. The Division has authority to withdraw approval and terminate any private plan when the terms and conditions are violated. Colo. Rev. Stat. Ann. § 8-13.3-521.

During 2024, the Division is empowered to collect premiums from employers equal to nine-tenths of one percent of wages per employee. Colo. Rev. Stat. Ann. § 8-13.3-507(3)(a). Beginning in 2025, the Division may collect premiums at a rate it sets, up to a maximum cap of 1.2% of wages per employee. Colo. Rev. Stat. Ann. § 8-13.3-507(b).

The funding system created by FAMLI spreads the premium costs between employer and employees. Larger employers – those with 10 or more employees – must remit 100% of the required premium for each employee and may deduct up to 50% of the required premium from each employee’s wages. Small employers – those with fewer than 10 employees – must remit 50% of the required premium for each employee and may deduct up to 50% of the required premium from each employee’s wages. Colo. Rev. Stat. Ann. § 8-13.3-507(5).

Paid leave benefits are available under FAMLI for all five types of leave described in the federal Family and Medical Leave Act (including absences relating to an employee’s own serious health condition) as well as “safe leave.” Colo. Rev. Stat. Ann. § 8-13.3-504(2)(a)-(e). “Safe leave” means any leave because covered person or the person’s family member is the victim of domestic violence, the victim of stalking, or the victim of sexual assault or abuse, and is engaged in various activities defined in the statute (such as seeking medical treatment or civil protection orders). Colo. Rev. Stat. Ann. § 8-13.3-504(18).

To determine the amount of PFML benefits available, the Colorado law uses the term “application year” – a 12-month period beginning on the first day of the calendar week in which an individual files an application for family and medical leave insurance benefits. Colo. Rev. Stat. Ann. § 8-13.3-503(1). A covered individual may take a maximum of 12 weeks of paid leave for covered reasons within the application year, “except that benefits are payable up to an additional four weeks to a covered individual with a serious health condition related to pregnancy complications or childbirth complications.” Colo. Rev. Stat. Ann. § 8-13.3-505(1).

Once a covered person has accumulated at least eight hours of PFML benefits, the person may use the benefits for “intermittent leave” in increments of either one hour or shorter if consistent with increments the employer typically uses for leave, Colo. Rev. Stat. Ann. § 8-13.3-505(3).

FAMLI provides protections for employee health insurance similar to the federal FMLA. During a FAMLI covered leave, the employer must maintain health insurance coverage for those taking leave on the same terms, with the employer and employee continuing to be responsible for paying their respective health insurance premiums. Colo. Rev. Stat. Ann. § 8-13.3-509(2).

Employees who have worked for a current employer for at least 180 days before commencement of a paid leave covered by FAMLI also enjoy job protections similar to the federal FMLA. These individuals are entitled, upon return from leave, to be restored to the same job held before the leave or to another position with equivalent employment benefits, pay and other terms and conditions of employment. Colo. Rev. Stat. Ann. § 8-13.3-509(1).

DC’s Universal Paid Leave Amendment Act

The District of Columbia’s “Universal Paid Leave Amendment Act of 2016” created a mandatory paid leave program. The DC Department of Employment Services, Office of Paid Family Leave, began administering paid leave benefits as of July 1, 2020.

The DC law broadly defines “employer” to include “any individual, partnership, general contractor, subcontractor, association, corporation, business trust, or any group of persons who directly or indirectly or through an agent or any other person, including through the services of a temporary services or staffing agency or similar entity, employs or exercises control over the wages, hours, or working conditions of an employee and is required to pay unemployment insurance on behalf of its employees” by the District’s Unemployment Compensation Act. An employer also includes any self-employed person who voluntarily opts into paid leave program. The definition excludes the US government, the DC government, and any employer that the District lacks power to tax. DC Code § 32–541.01(4).

Eligible employees are defined primarily by the amount of time worked in the District for a covered employer. First, a person is eligible if the person spends more than 50% of their work time for that employer working in the District. Second, a person is eligible if the employment is based in the District and the worker regularly spends a substantial amount of work time for a covered employer in the District and not more than 50% of work time for the employer in another jurisdiction. DC Code § 32–541.01(3).

For claims filed on or after October 1, 2022, the DC law provides the following amounts of paid leave for different types of absences: 

• “family leave” - 12 workweeks within a 52-workweek period for an absence to provide care or companionship to a family member who has a serious health condition;
• “medical leave” - 12 workweeks within a 52-workweek period for an absence caused by the worker’s own serious health condition;
• “parental leave” – 12 workweeks within a 52-workweek period for an absence associated with birth of a child of an eligible individual, placement of a child with an eligible individual for adoption or foster care, or the placement of a child with an eligible individual for whom the eligible individual legally assumes and discharges parental responsibility;
• “pre-natal leave” – 2 workweeks within a 52-workweek period for absences for routine and specialty appointments, exams, and treatments associated with a pregnancy provided by a health care provider, including pre-natal check-ups, ultrasounds, treatment for pregnancy complications, bedrest that is required or prescribed by a health care provider, and pre-natal physical therapy. DC Code 32–541.04(e)(3).

As a general rule, the law limits the total amount of paid leave “for any number or combination of qualifying leave events” to 12 weeks. DC Code § 32–541.04(d)(2). As an exception, within a 52-workweek period, an eligible individual may receive the maximum duration of pre-natal leave “in addition to the maximum duration of parental leave.” DC Code § 32–541.04(d)(3). Moreover, workers are not allowed to “receive any combination of … pre-natal leave and … medical leave for a duration that exceeds the maximum duration of … medical leave.” Id.

The DC law provides for paid “intermittent leave” up to the statutory maximums. DC Code § 32–541.04(f).

The DC PFML system is funded through payroll taxes payable solely by the employer to the Universal Paid Leave Implementation Fund. Covered employers must contribute an amount equal to 0.62% of the wages of each of its covered employees. A self-employed individual who has opted-in must contribute an amount equal to 0.62% of their annual self-employment income. DC Code § 32–541.03(a),(b).

The DC law requires the Mayor to establish a notice of rights and further requires covered employers to provide the notice to each employee (1) at hire, (2) annually, and (3) when the employer becomes aware that the employee needs paid leave. Covered employers also must post and maintain the notice in a conspicuous place in English and in all languages in which the Mayor has published the notice. DC Code § 32–541.06(i)(3).

The DC law expressly does not “provide job protection to any eligible individual beyond that to which an individual is entitled under” the District of Columbia’s Family and Medical Leave Act (DC Code § 32–501 et seq.). DC Code § 32–541.07(c).

Takeaways

Employers operating in Colorado and the District of Columbia must take into consideration their obligations under the mandatory paid leave system in each jurisdiction. The laws may be a trap for the unwary because they apply to many more companies than those covered by the federal FMLA. As with any mandatory leave of absence laws, employers would be well advised to seek legal counsel for assistance with compliance advice, policies drafting, and training management associated with these laws.

Read our PFML Laws Series

• Part 1 - "Does Your State Have Laws About Paid Family Medical Leave?"
• Part 2 - "Insurance-Based PFML Options for Employers in the 'SEC'"
• Part 3 - "Mandatory PFML Requirements for Employers in the Swamp and Rocky Mountain High"

About Our Author

Scott Hetrick is the Adams and Reese Labor and Employment Practice Team Leader and is a Partner practicing in the Mobile office. As a management rights advocate, Scott represents employers on federal and state labor and employment law compliance and dispute resolution. He speaks frequently on employment law and human resource management issues at seminars for personnel managers and business owners and has published numerous articles on employment law. Scott also has been recognized in Best Lawyers® in Employment Law since 2010, including being named “Lawyer of the Year” in Mobile.