Earlier this month, Colorado voters passed Proposition 118, creating a paid family and medical leave (PFML) insurance program for workers in the state.
Colorado joins eight other states and Washington, D.C. in creating paid leave programs. Although this is the first time a paid leave law was passed by the voters of a state rather than legislative action.
The new program covers virtually all employers (including families who have hired someone to work in their home) and applies to workers who have earned at least $2,500 during a base period.
Household employees include nannies, housekeepers, and senior caregivers who are hired and employed by families to work in their homes.
The Colorado PFML program will be funded by premiums of 0.9% of an employee’s wages, shared evenly between employers and workers (0.45% paid by the employer and 0.45% paid by the employee), and remitted by the employer beginning Jan. 1, 2023, to a newly created state Division of Family and Medical Leave Insurance. Employers with fewer than 10 employees – which likely includes families with household help – are not required to contribute the employer share of PFML premiums. Also, employers can choose to pay a larger percentage of the cost up to the full amount.
Under the measure, paid leave becomes available to employees on Jan. 1, 2024.
Household employers should become familiar with the requirements and deadlines of the new Colorado PFML program. Further details on program mandates will likely be provided by the Division of Family and Medical Leave Insurance.
The new law covers all household employers that pay wages of at least $1,500 during any calendar quarter in the preceding year.
Household workers are eligible for benefits under the program if:
- They perform labor or services for the benefit of another; and
- They have earned at least $2,500 during the first four of the last five completed calendar quarters immediately preceding the first day of their benefit year.
Duration of PFML
Under the Colorado PFML program, covered household workers may take up to 12 weeks of leave per year, or 16 weeks for a serious condition related to pregnancy or childbirth complications.
Household employees may take intermittent leave in increments of an hour, or for shorter periods consistent with their employer’s leave policies. However, benefits under the program are not payable until at least eight hours of leave are accumulated.
Permitted use of PFML
Beginning Jan. 1, 2024, covered household workers may take PFML leave:
- To care for a new child during the first year after the child’s birth, adoption, or foster care placement;
- To care for a family member with a serious health condition;
- For the worker’s own serious health condition;
- For a qualifying exigency; or
- Because the worker has a need for safe leave.
Qualifying exigency leave is leave based on a need arising out of the household worker’s family member’s active duty service (or notice of an impending call or order to active duty) in the armed forces. The need could include, for example, providing for the care or other needs of the military member’s child or other family members, making financial or legal arrangements for the military member, attending counseling, attending military events or ceremonies, spending time with the military member during a rest and recuperation leave or following return from deployment, or making arrangements following the death of the military member. Other such needs may qualify for coverage as well.
Safe leave is any leave resulting from the household worker or the household worker’s family member being the victim of domestic violence, stalking, or sexual assault or abuse. Safe leave may be used to protect the worker or family member by:
- Seeking a court order;
- Obtaining medical care or mental health counseling;
- Making the worker’s home secure; or
- Seeking legal assistance.
Claims for PFML will be filed with the Division of Family and Medical Leave Insurance, which is charged with administering the program. The division must put out rules for the program by Jan. 1, 2022.
The law requires household employees to provide at least 30 days’ advance notice of leave when the leave is foreseeable. When leave is not foreseeable, or when providing 30 days’ notice is not possible, notice must be provided as soon as practicable.
Household employers will be required to post a notice, to be created by the Division of Family and Medical Leave Insurance, that describes details of the PFML program. The notice must be posted in a prominent location in the workplace (i.e. the family’s home). Household employers must also provide their employees with written notice about the program upon hiring and when learning that an employee has experienced an event that triggers eligibility for PFML benefits.
Under the Colorado PFML program, household workers on leave collect 90% of the part of their weekly wage that is equal to or less than 50% of the state average weekly wage (SAWW). Any portion of the employee’s weekly wage that exceeds 50% of the SAWW is compensated at a rate of 50%. Benefits are capped at 90% of the SAWW, and – for PFML beginning before Jan. 1, 2025 – at a weekly benefit amount of $1,100.
The SAWW is estimated to be $1,340 for 2024.
A household employee earning $500/week in gross wages can receive $450/week in benefits (90% of their weekly wage) with an annual maximum benefit of $5,400 (12 weeks x $450/week).
A worker who makes $1,000/week in gross wages is eligible for $768/week in benefits (77% of their weekly wage) and can receive up to $9,216 for the year in PFML benefits.
Employees may take leave from one or more of the jobs they hold.
Funding for the Colorado PFML program is split evenly between employers and employees, although household employers with fewer than 10 employees are exempt from contributing. Beginning Jan. 1, 2023, household employers must remit premiums to the state, in the total amount of 0.45% of the employee’s wages (provided they have less than 10 employees). Household employers may collect this employee portion as a wage deduction.
For a household employee who earns $500/week in gross wages, the Colorado PFML program would cost them about $2.25/week (or $117/year). A family could also pay a portion or the entire amount that their employee would owe in PFML funds.
The director of the Division of Family and Medical Leave Insurance will set the premium rate starting with the 2025 calendar year and thereafter, up to 1.2% of each employee’s wages. The amount of wages subject to premium assessment is capped at the maximum wages subject to social security tax.
Job protection and continuation of benefits
Household workers who have been employed with their current employer for at least 180 days before taking leave are entitled to be restored to their previous position with equivalent benefits, pay, and terms on returning from leave.
Household employee protections
It is unlawful to:
- Interfere with, restrain or deny a household employee their PFML rights
- Retaliate or otherwise discriminate against a person for exercising their PFML rights, including filing a claim or complaint, or testifying or assisting in any investigation, hearing, or proceeding
- Count PFML as an absence that may lead to or result in discipline, discharge, demotion, suspension, or any other adverse action
Household employees alleging a violation of their PFML rights may bring a civil action for the damages and equitable relief available for violations of the federal Family and Medical Leave Act (FMLA). In addition, the Division of Family and Medical Leave Insurance may impose fines of up to $500 for each violation.
Interaction with other laws and paid leave policies
If a family provides written notice to their employees, they may require that PFML leave and payment run concurrently with or be coordinated with, benefits under any disability policy or separate bank of time off provided solely for the purpose of family and medical leave.
However, household employees may not be required to use any accrued vacation leave, sick leave, or other paid time off before or while receiving PFML benefits, unless the aggregate amount an employee would receive would exceed their average weekly wage.
The Colorado PFML law does not diminish a household employee’s rights under any law that provides more leave benefits.
GTM can help
Paid family and medical leave laws are a growing trend across the United States with Colorado just the latest to implement a program that includes household employees. For families with someone working in their home, it’s another labor law to comply with that carries fines if implemented incorrectly. This is where GTM Payroll Services can help. We take the risks, hassles, and worries out of household tax compliance so you have peace of mind that you are doing everything right and your employee gets the benefits they are entitled. Want to learn more? Or have questions about household employment? Call (800) 929-9213 for a free, no-obligation consultation with a household employment expert or schedule some time to talk with us.
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