The Colorado General Assembly meets once a year, generally from January to May. The legislative session commonly brings changes to Colorado’s employment law. New laws often become effective in August or in January of the following year. New legal requirements can also be imposed by rules promulgated by the Colorado Department of Labor and Employment (CDLE).
This article summarizes how Coloradoans pay for the Family and Medical Leave Insurance (FAMLI) Program and a new law, effective on January 1, 2026, that reduced the FAMLI premiums collected from Colorado employers and employees. Also, the article summarizes new rules, effective on February 1, 2026, on how employers must calculate sick leave paid under another popular Colorado law, the Healthy Families and Workplaces Act (HFWA).
Colorado Lowered the Premiums for the FAMLI Program
Colorado’s FAMLI Program gives Colorado workers access to paid leave when saddled with a serious health condition, caring for a newborn child, and other major life challenges. Colorado voters approved the creation of the program, and it’s been popular. In 2024 alone – the first year of the FAMLI Program – the CDLE processed more than 135,000 claims and paid about $687 million in benefits. That’s a lot of money. Who pays for it?
Most of us do. As insurance, the FAMLI Program spreads the cost. The program is funded by the contributions of all employees and most employers. When the program started, employees contributed a premium of 0.45% of their wages, and participating employers contributed the same amount, for a total premium of 0.9% of employee wages. Starting on January 1st of this year, however, Colorado lowered the premium to 0.88% (still divided equally between employees and participating employers). It’s a small decrease, but it puts a few more dollars in the pockets of those in the workforce. And over an employer’s entire staff, the numbers can add up.
The reduced premium signals that each participating employer must reduce the amount that it deducts from employee paychecks. Deducting the correct amount will help to avoid the reconciliation issues that will result from withholding the wrong amount.
The premium adjustment will be an annual ritual. Starting in September 2026, the director of the FAMLI Program will set the premium for the following year. The premium may fluctuate, but under the new Colorado law, it cannot exceed 1.2% of employee wages.
The CDLE Clarified How Employers Must Calculate Sick Leave
The HFWA is another recent Colorado law, adopted in 2020. The HFWA requires almost all public and private Colorado employers to offer a certain number of hours of paid sick leave for every employee. Under the HFWA, every year, every employee accrues at least one hour of paid sick leave for every 30 hours worked.
With the new Wage Protection Rules that took effect on February 1st, the CDLE, Division of Labor Standards and Statistics clarified how employers must calculate the rate of pay for sick leave. The new rules require an employee to be paid what the employee would have earned (excluding bonuses and overtime pay), had the employee worked.
The new rules illustrate how the they govern specific situations:
- “If use of leave does not reduce an employee’s pay (e.g.,if the employee is paid solely on a salary, commission, or piece rate basis, and the leave does not impact total salary, commissions, or piece pay), then the employee does not earn additional compensation solely for using leave.
- If an employee receives a wage in addition to commissions, commissions are not included in the pay rate for sick leave
- If an employee works at multiple rates, including shift differentials and separate jobs for the same employer, the employee shall be paid the rate they would have earned during the period of leave.”
Should the leave period include an unknown pay rate, under the new rules, the rate shall be calculated based on one of two frameworks. The first is the employee’s pay over a “lookback” period of the 30 calendar days before the leave. If an employee has not yet worked a full lookback, the period will consist of all days worked before the leave. The second is the employee’s pay during the most recent full pay periods or work weeks totaling 28 to 31 days. The employer can choose the method of calculation. Either way, earnings in the calculation include hourly or salary rates, shift differentials, tip credits, and commissions but exclude overtime pay, bonuses, and holiday leave pay.
Note that the Division of Labor Standards and Statistics imposes record-keeping requirements. For each employee, for a two-year period, employers must retain records that document the hours worked, paid sick leave accrued, and paid sick leave used. (Employers must also retain pay statements for at least three years.) Further, upon an employee’s request, an employer must provide the employee with the amount of sick leave available and already used in the current year. Employers may choose any reasonable system for providing information. Possibilities include providing a statement, listing the balances on a pay stub, or allowing employees to access their own information electronically.
The Division of Labor Standards and Statistics investigates employee claims that an employer violated their rights under the HFWA.
Need Guidance on Administering HR Programs?
If you have any question on the FAMLI Program, on your rights or obligations under the HFWA, or any other employment topic, feel free to contact me.