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Dozens of local governments opt out of state run insurance benefit

Paycheck deductions to pay for FAMLI Act program to begin in January
FAMLI example still image Medium.jpeg
Posted at 6:28 PM, Aug 25, 2022

COLORADO SPRINGS, Colorado — Colorado employers will begin deducting money from their employees' paychecks in January as part of the state-run Family and Medical Leave Insurance (FAMLI) program.

Voters passed Proposition 118 during the 2020 general election creating the public short-term disability benefit.

Participation is mandatory. However, the legislation creating the FAMLI program allows local governments to opt-out.

The Colorado Department of Labor and Employment operates the program and reports that at least 40 local governments have already opted out.

"This is a really great benefit that the voters of Colorado have told us that they want to see," said Tracy Marshall, Division Director for the FAMLI Team at the Colorado Department of Labor and Employment.

"We're doing our best to roll this out in the way that the statute and the voters asked it to be."

Employees and employers must each contribute an amount equal to 0.45 percent of an employee's wages to the program. Beginning in 2024, employees who experience a qualifying life event such as the birth of a baby, a sudden illness or injury can receive a percentage of their wages in benefit payments for up to 12 weeks.

The CDLE provides an example of someone earning $50,000 annually needing to contribute $4.33 per week to the program. That equates $9.38 for employees paid twice a month. The state estimates that same employee should expect to receive $707 in weekly benefits.

"The statute from there tells us we need to start receiving those contributions from payroll on January 1, 2023, which is what we'll be doing, and then we'll begin to offer out benefits starting on January 1, 2024," Marshall said.

The Denver City Council voted Monday to opt out of the FAMLI program. The head of human resources for the City of Colorado Springs also advised our city council to follow suit.

Michael Sullivan, Chief of Human Resources and Risk Management for the City of Colorado Springs explained that city employees and Colorado Springs Utilities employees already receive short-term and long-term disability insurance benefits.

"This would simply replicate that and give them a benefit that they already enjoy as being an employee of either the city or CSU," Sullivan said. Should the city council vote to opt-out of the program, individual employees can still choose to opt-in. Sullivan explained that if the city opts-in, that employees would not have a choice about participation.

He estimates that the average city employee would need to pay $32 per paycheck to participate in FAMLI.

"Both organizational entities are very interested in having an attractive and competitive benefits plan," Sullivans said. "And we take great pride in considering the employees' points of view. So, there's really no take away from the employee if they want to participate."

The City of Colorado Springs payroll lists roughly 2,800 employees. Another 1,800 to 1,900 are employed by Colorado Springs Utilities. Sullivan estimates that opting out will save taxpayers and ratepayers $1.9 million annually.

The opt-out provision of the FAMLI Act extends to private businesses as well, provided those employers offer equal or better benefits to their employees.

Tony Gagliardi, State Director for the National Federation of Independent Businesses said that many large corporations won't feel the impact of this new mandatory benefit the same way that his members will.

The NFIB lobbied against similar proposals at the state legislature before proposition 118 appeared on the ballot.

"If an employee has a sick parent or a child or significant other, that should be between the employee and the employer, not for the state to intervene," he said. "What they do is they put a blanket mandate and there's no working around it for either side."

With so many large public employers like the City of Denver and possibly the City of Colorado Springs opting out, Gagliardi worries that the state won't be able to keep its promises about the costs and benefits of the FAMLI Act program.

"When you start depleting those paying into the program, now you have to either raise the cost or reduce the benefit," he said.

News 5 asked Marshall at the CDLE whether she anticipated that the departure of so many large employers would impact premiums or benefits of the FAMLI Act Program.

"I don't anticipate that at this time, no."

Colorado Springs City Council has not yet voted on whether to opt-out. Sullivan notes that an April survey by the Colorado Municipal League found that most cities in Colorado plan to opt-out.

The CDLE has scheduled public town hall meetings to discuss the FAMLI Act program in Colorado Springs and Pueblo on Wednesday, September 7.

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