November 10, 2020
Colorado voters approve paid family and medical leave insurance program; premiums to begin in 2023
Colorado election results show that voters have approved by a margin of 57% to 43% the creation of a state paid family and medical leave program. The state will certify the election results by November 30, 2020. (Proposition 118, Colorado Secretary of State website, last updated November 9, 2020.)
Proposition 118 creates a statewide paid family and medical leave program administered by the Colorado Department of Labor and Employment. Beginning in 2023, employers are required to remit a contribution of 0.9% of each employee's wages up to the Social Security wage limit. Employers of 10 or more employees will be allowed to deduct up to 50% of the contribution from employee wages while employees of smaller employers will pay 100% of the contributions. The contribution rate is scheduled to increase to 1.2% as of January 1, 2025. (EY Tax Alert 2020-2076, 8-14-2020; text of measure.)
Employers that offer an approved private family and medical leave plan can opt out of the state program.
Effective January 1, 2024, the program will provide up to 12 weeks of paid leave (16 weeks for pregnancy or childbirth complications) to qualified employees. Eligibility requirements will be the same as those that apply to unemployment insurance benefits.
Ernst & Young LLP insights
The ballot initiative to establish a paid family and medical leave program followed the Colorado state legislature's failure to pass a program into law earlier this year. Colorado did, however, recently enact a paid sick leave law. (See EY Tax Alert 2020-1854.)
Colorado joins several other states with paid family and medical leave insurance programs (i.e., California, Connecticut, District of Columbia, Massachusetts, New Jersey, New York, Oregon, Rhode Island and Washington). (EY Employment tax rates and limits for 2020.)
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