Colorado’s new Family and Medical Leave Insurance (FAMLI) program is funded through premiums paid by both employers and employees. The employee portion is paid via small payroll deductions.
Sounds simple, right? Not always. It can be a bit tricky to determine which payments from an employer to an employee are considered “wages,” making some wonder how to determine their premium payments and potential benefits.
Let’s break it down.
Employers with 10 or more employees are responsible for sending premium payments each quarter to the State equal to 0.9% of each employee’s wages. They’re allowed to split those payments with their employees 50/50, meaning the employees contribute 0.45% of wages and employers pay the other 0.45% of wages.
(A bit of fine print — Employers are free to pick up the entire 0.9% as an added employee benefit. Also, employers with nine or fewer employees aren’t responsible for paying any premiums themselves, however, they still must collect and remit their employees’ 0.45% share.)
Once you understand the premium payments, though, that still leaves the question of what wage to base the payments on. Many employees receive compensation through bonuses and profit-sharing programs. Do those count as wages? And what about severance payments or other payments that are made after employment has ended?
The FAMLI program is focusing only on wages that are typically received during employment. This means that post-employment payments not considered wages include severance payments, deferred compensation disbursements and pension disbursements.
Payments that would have otherwise been paid out, had employment not been terminated, are still considered wages under FAMLI (such as final wages, salaries, bonuses, commissions, or payouts of unused PTO, vacation, or sick time.).
Still confused? We compiled this helpful chart to help clarify some common payment types that might not seem like traditional wages. Payments on the left count toward premiums and benefits; payments on the right do not.
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We understand that no chart answers every scenario! So if you still have questions about what to count as “wages” for FAMLI purposes, give us a call at 1-866-CO-FAMLI any weekday between 8 a.m. and 4 p.m. MT and we’ll help you figure out the required payments for your unique situation.