Guardian’s recent webinar, “Preparing for CO PFML”, provided an overview of the Colorado PFML law, including provisions, eligibility requirements, and a timeline for compliance. Here are the top 10 questions our speakers received during the webinar.

Q1: We are an employer based outside of Colorado with less than 10 employees in Colorado. Are we required to offer the program, thus having to pay the employer portion of the premium?

A: Yes, if you are an employer with at least one employee working in Colorado, you are required to participate in the CO PFML program, either through the state or via a private plan. If you have nine or fewer employees, your employees do not have to contribute to the program, but employers do need to remit their employees’ share of premium payments each quarter.

Q2: What is the difference between the state plan and a private plan?

A: Paid family and medical leave programs are typically administered either directly by a state agency or in many cases, states allow employers to follow an exemption process whereby they can use a private plan, typically through an insurance carrier or third party administrator (TPA) to administer the program.

A private plan allows employers to consolidate their disability and leave benefits with one administrator, providing a seamless employee experience.

Colorado offers employers the choice between the state-administered program or a private plan. An employer’s private plan must meet or exceed the benefits and protections of the state-administered plan.

Q3: Can an employee in Colorado take 24-28 weeks of leave, using 12-16 weeks for PFML and then 12 weeks for leave under the federal Family and Medical Leave Act (FMLA)?

A: When the leave reason applies to both FMLA and PFML, such as care of a family member or an employee's own health condition, these programs run concurrently. Leaves under the FMLA and PFML have different covered leave reasons and different eligibility requirements. This means the amount of job-protected time is not always straightforward and will depend upon each employee's time with the company, time working in Colorado, and/or the leave reasons.

Q4: We did not start deducting payroll contributions in January. Do we have options, and is there a penalty?

A: Employers were required to fund the employee portion for any amounts not deducted as of January 1, 2023. We recommend employers begin deducting wages now to lessen the number of retroactive deductions you will need to cover. You cannot retroactively deduct wages from employees; you can only deduct them moving forward.

Employers who receive a private plan approval by October 31, 2023, will be eligible to apply for full contribution refunds. Any portion of contributions deducted from employee paychecks must be returned to employees. If the employer paid on behalf of the employee, the refund goes to the employer.

Q5: Is there any guidance, especially in Colorado, as to whether a company's unlimited PTO policy would work with the CO PFML plan?

A: A company's PTO policy, although unlimited, is not a replacement for CO PFML. The same applies for a company’s own disability or parental leave policy; these are not substitutes for CO PFML. We recommend you work with your broker or leave administrator to ensure your existing leave programs complement CO PFML.  

Q6: How would Guardian handle the coordination of payments when an employee receives pay from the state plan as well as the employer’s short-term disability (STD) benefit?

In other words, what percentage of pay will the employee receive from the state and the employer-sponsored plan?

A: The state plan will pay first.  If you have your STD plan with Guardian, that amount will be deducted from the STD benefit before it is paid. For example, if the state plan pays the maximum benefit of $1,100 in 2023, and the STD benefit has a maximum benefit of $1,500, the employee will receive $1,100 from the state plan, and $400 from the STD plan, to equate to the maximum benefit of the STD plan ($1,500). This example assumes the employee’s STD and PFML wages make the employee eligible for the maximum benefits under both plans.

Q7: Can employees take intermittent leave, such as by working shorter days or taking every Friday off?

A: Yes, intermittent leave is allowed under CO PFML in increments of one hour or less.  Employers must use the smallest increment used for other leave types, such as PTO or FMLA (for example, 15 minutes). Benefits may not be payable until at least 8 hours have accumulated.  

Q8: Are CO PFML benefits taxable?

A: CO PFML benefits are not subject to state income tax. However, the Internal Revenue Service (IRS) has not made a clear decision as to whether or not CO PFML benefits are subject to federal income tax. Further, the FAMLI Division can’t advise individuals on their tax compliance. Therefore, we recommend that employees consult a tax professional for advice.

Q9: How does “opting out” work for local government employers, and what does it mean to be a “local government employer”?

A: Local government employers include any county, city and county, city, or town. The statute also considers school districts, including charter schools, special districts, authorities, or other political subdivisions of the state, or local government employers.

Local government employers have until March 31, 2023, to complete the necessary vote to opt out of the program and avoid remitting premiums for the first quarter of 2023.  If employers do not fulfill their opt-out obligations, local government employers will remain in the program for a minimum of three years.

If local government employer would like to opt out at the end of the three-year period, they must conduct a vote by the governing body, fulfill their notice obligations to the state, and provide at least 180 days notice to employees before any change regarding access to CO PFML benefits is effective.

Learn more about local governments and opting out online.

Q10: I am an owner in my company. Does this mean I’m considered self-employed, thus not required to pay PFML contributions?

A: Using the definitions provided by the state, we recommend you consult with your employment counsel to determine if you are self-employed. Information available to employers on the state website states:

“Self-employed individual” as used in the FAMLI Act and its implementing regulations includes individuals who meet the FAMLI Act’s two-prong exception to the definition of “employee” at C.R.S. 8-13.3-503(7) which states " (7) “Employee” means 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. For the purposes of this part 5, 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 is not an “employee.”

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