There is a new proposed bill in town, which attempts to create tax incentives to encourage employers to voluntarily support paid parental and medical leave programs. The proposed bill would also encourage employees to save for time away from work during these times, specifically through leave savings accounts for which the employee can contribute up to $5,000 of wages, annually, to pay for leave-related expenses. Leave-related expenses include things like caring for the birth of a child or for a spouse, child, or parent with a serious health condition. The bill would allow employees to claim a state income tax deduction for the amounts they or their employer contribute to the savings account and grant employers that pay an employee for leave between 8 to 12 weeks an income tax credit, equivalent to 15% of the amount paid. Employers who contribute to employees’ leave savings accounts would also receive an income tax credit.
This is not the first time a paid family leave bill has been proposed in Colorado. Indeed, just last year, there was a proposed bill, titled “FAMLI Family Medical Leave Insurance Program.” The original drafting of the bill, which was much more aggressive, attempted to implement a statewide paid family and medical leave insurance program, funded by both workers and employers. Unlike the federal Family and Medical Leave Act, this would have applied to employers of all sizes. Many of Colorado’s top business associations opposed the original drafting of the bill and the bill eventually morphed into the creation of task force, becoming law in May 2019. The bill, as passed, creates a study of the implementation of a paid family and medical leave program through this task force. The bill requires the department of labor and employment to contract with experts in the field of paid family and medical leave to report on the establishment of a paid family and medical leave program, and request information from third parties that may be willing to administer all or part of the leave program.
What do these two bills mean for paid sick leave in Colorado? Though we are not there yet, paid sick leave is the trajectory and legislators continue to push forward in their pursuits. Jackson Lewis will continue to track changes with this Colorado legislation. Stay tuned.