In November, Colorado voters passed Proposition 118, which provides up to 12 weeks of paid family medical leave for employees. The subject was brought to voters after state legislators failed to pass similar legislation six times.
The proposition, which passed with 57.7 percent of voters saying “yes,” sets up a program where employees and employers contribute to an account that funds the leave for employees.
Since the vote passed by a margin of nearly 500,000 voters, Colorado has joined eight other states and Washington, D.C that have a state-sanctioned paid family medical leave program. However, Colorado is the first state to offer 90 percent coverage for workers making $1,100 a week or less.
The New Paid Family Medical Leave Program
Under the new program, workers will have the ability to take up to 12 weeks paid family medical for a number of family emergencies. The family medical leave insurance will cover workers who need time off for the arrival of a new child whether it is a pregnancy or adoption, military transitions, to care for themselves or a family member with a serious health condition, or effects of sexual assault or domestic violence.
Employees will pay .45 percent of the insurance with employers paying .45 percent of the employees’ income for a total of .9 percent. The employees and employers will start paying into the state-run insurance program starting in 2023; benefits will not be available until 2024. After that, the state could raise the contribution to 1.2 percent of employees’ income or .6 percent by each the employee and employer if the fund sees demand for the leave that is higher than expected.
Who Is Exempt?
Companies with fewer than 10 employees are exempt from the employer paying their portion, but employees still must contribute. Local governments and school districts could opt out of the program if they already have a paid family medical leave program in place.
Any employer could also choose to provide their own paid family medical leave instead of participating in the state-run program. If an employer did choose to provide their own paid family medical leave program, the state would approve it and the employee contribution into the program could not be higher than what the state mandated program will take from the employee’s income. Self-employed and independent contract workers are also exempt.
When Can Workers Start to Use the Benefit?
Starting in January 2024, workers can apply for benefits for up to 12 weeks and get 90 percent of their salary up to $1,100 per week. This means that lower-income workers will qualify for a larger percentage of their salary during their leave than anyone who makes more than $1,100 per week.
Under the proposition, workers can apply for leave time after they have earned $2,500 at their job. If an employee has worked at the job for more than six months, then their job is protected during their leave and they are promised their job when their leave is over. All employees eligible to apply for 12 weeks of leave per year and in certain situations where there are problems with childbirth or other serious health conditions, can take an extra four weeks.
The management of the program would require the state to set up a separate division to handle the money and claims. It is expected the state will have to hire about 200 people to handle claims across the state.
Local Business Owners Fear Unforeseen Challenges
According to Debbie Miller, President of the Greater Woodland Park Chamber of Commerce, most of the chamber of commerce organizations across the state opposed the proposition for several reasons. For one, Miller said that having paid family medical leave could pose an issue if more than one employee must make a claim at the same time. Since their jobs would be protected, the employer would have an increase in training costs as they would have to find temporary labor to cover the positions.
Miller also said that the passage of the proposition could negatively affect businesses’ bottom lines. She also said that it could affect hiring because businesses will watch how many employees they have more closely, and some might consider hiring more contract workers to avoid having more than 10 employees.
Running Out of Money
Miller also fears that the program could run out of money. “The problem with Prop 118 is that the state shouldn’t be in the business of being a health care insurance company,” the chamber president said. “Basically, what the state put out as the proposed cost of this creates great concern that the cost is too low. The reason for that is that they think the claims are going to outdo the actual money coming in. Since the state has never done this before there is really not any history to go on.”
Owner of the Historic Ute Inn in Woodland Park, Elijah Murphy fears that the passage of the proposition could limit his business’ growth. “It’s going to put a hurt on us, of course,” Murphy said. “I will not be able to grow, I am have to going to downsize. I am going to have to keep my business under 10 employees. Because there is not enough profit left at the end of the day when you get to a certain size it just gobbles up all your profits.”
Murphy also said that restaurants already have to dish out a lot of cash for their employers including providing them regularly scheduled breaks or a free meal required by law. He also said that he already must pay 6.7 percent of FICA taxes on his employees’ tips out of his profits, which has an annual cost of over $10,000 per year.
The Effect on Individual Rights
Colorado Springs resident and owner of Tweeds Fine Furnishings, Tanner Coy said that although paid family medical leave sounds good, it takes away individual rights. He also said that the costs associated with the insurance program could be difficult for some businesses to come up with.
Coy said that increasing costs of having employees are making it hard for some businesses. “The more of this stuff that we layer on for the costs of employment the more burdensome it is for any business to get started, the more burdensome it is for any business to hire more people or employ the staff that they currently employ,” Coy said. “It just becomes more expensive, more burdensome, and more difficult in ways that are dictated by the government, not in ways that are agreed to by the employee and employer.”
“Maybe somebody seeking a job doesn’t really care that so much about that,” Coy said. “They would maybe rather have some extra money in their pocket for health insurance that they can go buy. Or for full coverage auto insurance instead of the bare minimum coverage they have right now. Maybe it is in that employee’s best interest to have more money in their pocket to go buy clothing because they need a new wardrobe. Well, instead of paying the employee what the employer can, now the employer must put money aside for things like this whether that is what the employee wants or not, whether that is what the employer wants or not it is being dictated. It limits the flexibility the people and the employers have in that relationship.”
Some Businesses Expect Benefits
Other local business owners believe that the passage of the proposition will keep them from losing employees to bigger companies that can offer paid family medical leave benefits.
“My pottery painting studio is a creative environment that is fast-paced and fun,” said Tracy Ducharme, owner of Color Me Mine in Colorado Springs. “Employees really enjoy it, but it’s difficult attracting talented employees because I’m competing with big companies. An affordable paid leave policy is not just the right thing to do, it’s the only way for a small business like mine to retain the best employees.”
“This year my partner and I welcomed a baby,” said Jade Baranski, owner of Mobilize Comms. “Since I run my company, many people told me that it’s not a big deal to just work through it, but those first three months are precious and once they pass you never get them back. I wish I had the access to this policy then and I want to make sure my employees have the opportunity to use the time they need when they have to care for a newborn, a loved one, or themselves.”
For more information on Proposition 118 Paid Family Medical Leave, read For & Against Prop 118.
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