Proposition 118 creates a statutory program to provide paid leave to covered employees with a serious health condition, to bond with a new child or to care for a family member with a serious health condition. In addition, paid leave will be available to employees who need leave related to a family member’s military deployment or who need safe leave related to domestic violence or sexual assault. Employees will be entitled to a maximum of 12 weeks, with an additional four weeks for pregnancy or childbirth complications. Employees will receive between 65% and 90% of their wages during the leave period (up to a maximum of $1,100 per week), which will be paid from a state-established fund. The program also provides for job protection and prohibits retaliation against employees who take leave. Employees become eligible for paid leave after earning $2,500 in wages and become eligible for job protection after 180 days of employment.

To pay for the program, a premium of 0.9% will be assessed on each employee’s wages (up to a cap), equally divided between the employee and the employer (each to pay 0.45% of the employee’s wages). After December 31, 2024, the premium may be increased to 1.2% of employees’ wages. Employers with fewer than 10 employees are exempt from paying the employer premium, although their employees will still be eligible to contribute the employee portion for paid leave under the program. Employers that already offer paid family and medical leave that is at least equivalent to the state program will not be required to pay the premiums and may continue with their existing plans. Premiums will not be collected until January 1, 2023. Employees can begin to make claims for paid family and medical leave on January 1, 2024.

Proposition 118 also creates a Division of Family and Medical Leave Insurance within the Colorado Department of Labor and Employment, which will administer the program and establish processes for enforcement and appeals of denied claims and claims of retaliation.

With the passage of Proposition 118, Colorado becomes the 10th jurisdiction in the U.S. to establish a paid family and medical leave program. Colorado employers should begin to prepare now for implementation of the new requirements. Fox Rothschild attorneys will continue to monitor the status of statutes and regulations issued pursuant to Proposition 118 and will keep employers informed.