Department of City Manager
Reference: FAMLI Act Opt Out
To: Mayor Gregory Mills and Members of City Council
Through: Michael P. Martinez, City Manager
Prepared By: Karen Borkowski Surine, Assistant City Manager
Shannon Pollock, Executive Assistant
Date Prepared: November 11, 2022
PURPOSE
To consider whether the City of Brighton should opt out of employer premium participation in the Colorado Paid Family and Medical Leave Insurance Program (FAMLI) Act.
STRATEGIC FOCUS AREA
Financially Responsible
BACKGROUND
In November 2020, Colorado voters approved Proposition 118, which paved the way for a state-run Paid Family Medical Leave Insurance (FAMLI) program. The program is a state-run insurance enterprise program that allows individuals to take paid leave for qualifying health issues or staying home with a newborn and can be found at C.R.S. § 8-13.3-501 et seq. FAMLI requires employers in the program to start collecting and remitting premiums effective January 2023 but benefits will not be available to employees until January 2024. Local government employers who wish to opt out of the program are required to make a decision prior to this date. All employers are included in FAMLI by default, but municipalities may opt out through action taken by city council and avoid the employer portion of premiums.
Under the FAMLI Act, covered employees can take up to 12 weeks leave of paid family or medical leave for the following qualifying reasons:
1. To care for a new child;
2. Pregnancy and childbirth complications;
3. Care for their own health or a family member;
4. Exigency leave (caring for military member’s child or family member when called to active duty); or
5. Safe leave (employee is the victim of domestic abuse, stalking, sexual assault/abuse).
Effective January 1, 2024, FAMLI covered employees have the right to take paid family medical leave for up to 12 weeks in an application year under the following circumstance:
1. Employee earns at least $2,500 in wages within the last 4 calendar quarters;
2. Individual is employed at least 180 days prior to the leave request;
3. Employee elects coverage through the State of Colorado; and
4. Submits an application for benefits to the State of Colorado.
The paid leave amount equals:
1. 90% of an employee’s average weekly wage for the portion of their wages equal to or
less than 50% of the State average weekly wage;
2. 50% of the portion of their wages that exceeds the State average weekly wage;
3. Maximum weekly benefit of $1,100;
4. Employees on FAMLI leave may use sick leave and PTO to supplement their pay but cannot exceed the actual combined FAMLI benefits and City paid wages.
*Please note: Rulemaking regarding how FAMLI affects Worker’s Compensation, Domestic Abuse Leave, and other programs, is currently underway.
Premiums are calculated under new administrative rules. A participating municipality must contribute 50% of the premium and the employee contributes the remaining 50%. Individual employees may opt into the Act themselves even if the City opts out. If City opts out of the program, the City has the option to facilitate the collection of employee-only premiums through payroll deductions and remittance of employee-only premiums to the Program Fund for all City employees who elect coverage or require employees remit premiums director to the Program Fund. At this time, City staff are recommending that employees who opt in be responsible for remitting premiums directly.
The premium for 2023 is .9% of each employee’s gross wages. By law, the FAMLI Division Director is required to recalculate the premium rate every year past 2025 and determine if adjustments to the premium rate need to be made. Employees are not required to pay more than 50% of the total premium. For example, the annual deduction for 2023 for an employee making $40,000 would be $180.
The City’s existing short-term and long-term disability benefits provide a safety net for most eligible City employees. The City also has robust medical benefits, to include Zero Card, in the event of unforeseen qualifying medical expenses. Each year employees are given 80 hours of sick leave annually and accumulate Paid Time Off (PTO) based on years of service. The staff recommends allowing individual employees to decide whether they want to opt into the FAMLI program themselves and will provide further information to employees.
City employees will receive notice of the FAMLI Act and information about how to opt in if City Council decides to opt out of the program as a local government employer. City employees, as required, have been notified of this item pending before council and will be allowed to provide public comment like any other resident who wants to speak on a city council agenda item.
FINANCIAL IMPACT
The financial impact is expected to be approximately $268,041.06 annually if remaining in the FAMLI program. If the City splits the cost with employees, the cost would be $134,020.53 annually for the City and then $134,020.53 annually divided by the number of employees.
Administrative rules require that a municipality renew its decision to opt out of FAMLI every eight years. Otherwise, the municipality will, by default, be opted back into the FAMLI program. Municipalities that opt into the program must stay in for at least three fiscal years.
OPTIONS FOR COUNCIL CONSIDERATION
1. Approve a resolution to opt out of the FAMLI program, to include declining to collect and remit employee premiums to the State for those employees who elect coverage under FAMLI.
2. Take no action or do not approve the resolution, thereby automatically requiring the City to participate in the State run FAMLI Program and follow the rules set forth in the Program.
3. Give staff further direction.
STAFF RECOMMENDATION
Staff recommends approving the resolution to opt out, since the City currently offers short-term disability and PTO/sick leave benefits for employees.
ATTACHMENTS
Resolution
Employee Notice
Colorado Municipal League Summary of FAMLI Act