The Colorado legislature enacted S.B. 144 this year to address the funding structure for the state's paid family and medical leave insurance (PFMLI) program for 2025 and future years.

Specifically, under S.B. 144, the PFMLI contribution rate for 2025 is unchanged at 0.9%, decreases to 0.88% for 2026 and will be determined annually by the Program Director beginning in 2027.

S.B. 144 also extends an additional 12 weeks of paid leave to parents of newborns receiving inpatient care in a neonatal intensive care unit.

Background

In 2020, Colorado voters approved Proposition 118, which created a statewide PFMLI program administered by the Colorado Department of Labor and Employment (Department). Since January 1, 2023, employers have been 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 are allowed to deduct up to 50% of the contribution from employees' wages while employees of smaller employers pay 100% of the contribution.

The PFMLI funding structure for years beyond 2024 was to be determined with the limitation that the overall PFMLI contribution rate be capped at 1.2% of taxable wages.

In 2023, the Department published CRS Section 8-13.3-501 et seq., which implements Proposition 118 and defines the meaning of taxable wages for purposes of computing the PFLMI contribution. (See Tax Alert 2023-2005.)

For more information on Colorado's PFMLI program, see the Department's website.