In late 2020, Colorado voters approved Proposition 118, creating a state-managed program designed to provide workers with up to 12 weeks of paid sick leave. This is like other paid sick leave programs in Washington state and Oregon. The approved measure created the Paid Family and Medical Leave Insurance (FAMLI) program which will be administered by the state. Costs are to be funded by premium payments from both the employer and the employee. Under the rules, an employee is not permitted to pay more than 50% of the program costs. However, implementation was delayed because of the lack of general funding. As the new year approaches, Denver companies are required to register and begin collecting premiums starting in January 2023. To help clients, prospects, and others, Whipplewood CPAs have provided a summary of the key details below.
FAMLI Employer Requirements
Colorado employers with 10 or more employees (including that outside of Colorado) are required to register with the program and complete the following steps.
- Collect and remit .45% of employee wages.
- Provide a matching contribution payment of .45% for each employee. (Note this percentage is fixed through 2025 when it can increase to a maximum of 1.2%.
- The premium payments need to be remitted on a quarterly basis concurrently with quarterly payroll tax returns.
It is important to note that companies with 9 or fewer employees are not required to make an employer-matching contribution. However, they are still responsible for assessing, collecting, and remitting employee contributions in accordance with program guidelines.
Determining Employee Headcount
When counting the number of employees, an accurate number is determined by identifying the number of employees on the payroll for a total of 20 or more calendar work weeks in the prior year. This means it is possible that seasonal, temporary, or even part-time employees may be included in the calculation. In other words, the calculation is not just based on the number of full-time employees. A headcount is required at initial registration and once thereafter during the first quarter of each year.
There have been many questions about remote employees and whether they should be counted. The answer is yes, but only for the purposes of determining whether a business has more than 10 eligible employees. If a business has 8 out of state workers and three in-state workers, then it would be required to remit both employer and employee premium contributions. However, the requirement only extends to the 3 in-state workers.
Employers with Paid Sick Leave Programs
Naturally, there are many that already have a paid sick leave program in effect. Unless the plan or self-insurance documentation has been reviewed and approved by the state there is no exemption. This means certain companies that offer paid sick leave will still be required to register and submit premium payments starting in January 2022. Businesses can request a refund for payments made if they are deemed to have an approved plan on, or before, January 1, 2024. Additional information on the adopted private plan rules is available.
Since the registration deadline is quickly approaching it is essential to ensure your business is registered. Once completed, it will be necessary to calculate the number of eligible employees and set up the premium collection process. If you have questions about the information outlined above or need assistance with a tax or accounting issue, Whipplewood CPAs can help. For additional information call 303-989-7600 or click here to contact us. We look forward to speaking with you soon.