FAMLI: What Is It, and Can I Opt Out?

In 2020, Colorado passed a statewide family and medical leave insurance program ("FAMLI") that covers nearly all employers in the state, including school districts and charter schools. FAMLI entitles employees covered by the program to take paid leave for any of the following reasons:

• To care for their own serious health condition.

• To care for a family member's serious health condition.

• To care for a new child, including adopted and fostered children, during the first year after birth, adoption, or placement of the child.

• To make arrangements for a family member's military deployment.

• To take "safe leave," meaning leave because the employee or employee's family member is the victim of domestic violence, stalking, or sexual assault or abuse.

Covered employees can take 12 weeks of paid leave, unless leave is necessary due to a pregnancy- or childbirth-related complication. In that event, an employee can receive an additional 4 weeks of paid leave, for a total of 16 weeks. FAMLI leave is not full wage replacement but rather is intended to be partial wage replacement depending on the employee's income level.

FAMLI is funded by contributions from both the employer and employee in the form of a .9% payroll tax, with the employee portion deducted from the employee's paycheck. While employees cannot take FAMILI leave until January 1, 2024, premiums must be collected to fund the program beginning January 1, 2023.

Can School Districts and Charter Schools Opt Out?

FAMLI allows "local government" entities to decline participation in the program. School Districts are explicitly included in the definition of "local government" and may opt out. The question of whether charter schools may opt out is somewhat less clear, as charter schools live somewhere between a local government and private entity. This debate comes in a variety of contexts when it comes to whether charter schools may claim the mantle of "local government" status.

For the purpose of the FAMLI program, we believe that charter schools may opt out as a "local government" entity. Again, there is certainly some ambiguity to the question, and so there may be some risk in opting out as a charter school, but there are plausible arguments to support the position that charter schools in fact do qualify as "local government" for the purpose of the FAMLI program.

Even if your school or District opts out, your employees still may voluntarily participate by opting in, which means they will pay their half of the .9% payroll tax but with no corresponding employer contribution. In this regard, there does not appear to be a significant penalty to employees should you opt out. In other words, employees may still participate if they wish, and you are simply not responsible for the employer half of the premium. Information about opting out is still emerging and we will provide updates if our opinion on this changes.

Please contact our office if you would like to explore opting out of the FAMLI program. There are a series of steps that you must take prior to January 1, 2023, including taking a public vote, allowing a public process for employees to provide comment on the vote, notifying the FAMLI program, notifying employees of their ability to opt in, and more. We would be happy to assist you!