To: Honorable Mayor and Members of Town Council
From: Kristin Read, Assistant Town Manager
Title
Resolution Declining Full Participation in the Colorado State-Run Paid Family and Medical Leave Insurance Program (Continued from May 3, 2022)
Body
________________________________________________________________________________
Executive Summary
Voters Statewide in 2020 approved Proposition 118, creating the State-run Family and Medical Leave Insurance (FAMLI) program, which will begin providing benefits to eligible employees within Colorado in 2024. Under the law, local governments may decline participation in the program, and staff is recommending that Council do so for the Town of Castle Rock. This recommendation is being made in order to preserve employees’ individual choice regarding whether to participate in the program, as well as to save the Town money.
The purpose of this memo is to provide information on the FAMLI program and the reasons why staff recommends that Town Council decline participation, which also include existing competitive Town paid time off benefits; the anticipated actions of other public jurisdictions; and Castle Rock vote totals for Proposition 118.
A resolution Council can approve to decline participation in the FAMLI program is attached (Attachment A). If Council does not decline participation, the Town will by default become a covered employer, with additional costs, as premiums would be due beginning in 2023. This includes a cost to every Town employee, regardless of whether the employee would find this coverage is beneficial, as it would not be optional if the Town becomes covered.
Notification and Outreach Efforts
Human Resources on May 4 emailed all Town employees to notify them that this item would be heard at Council’s May 17 meeting. A reminder email will also be sent on May 13.
Discussion
Per the program’s website, “FAMLI exists to ensure all Colorado workers have access to paid leave when they face circumstances that force them to choose between earning a paycheck, or taking care of themselves or their family.” The program differs from the federal Family and Medical Leave Act (FMLA) in that it provides paid leave, based on an employee’s weekly wage. FMLA, meanwhile, provides job-protected leave without pay. Another key difference is that under FAMLI, an employee’s benefits depend on his/her time employed within Colorado and not at a particular employer, as with FMLA.
FAMLI’s total monthly premium is .9% of an employee’s wages, split evenly (50/50) between the employee (.45%) and the employer (.45%). This maxes out at the federal Social Security wage cap - estimated for 2023 to be $161,700 - which would require a total premium of $1,454.96. The maximum benefit via FAMLI, meanwhile, is $1,100 a week and $13,200 annually. The following chart provides example premium and benefit amounts under FAMLI for employees at various pay levels.
|
Example employee’s pay |
Employee annual premium |
Employer annual premium |
Total premium |
Max benefit |
Regular pay over 12 weeks |
|
20 hours/week @ $24/hour |
$112.32 |
$112.32 |
$224.64 |
$432/week $5,184 max |
$5,760 |
|
40 hours/week @$24/hour |
$224.64 |
$224.64 |
$449.28 |
$706.60/week $8,479.20 max |
$11,520 |
|
$75,000 annual salary |
$337.48 |
$337.48 |
$674.96 |
$947.75/week $11,373 max |
$17,308 |
|
$100,000 annual salary |
$449.80 |
$449.80 |
$899.60 |
$1,100/week $13,200 max |
$23,077 |
Any Town employee earning at least $2,500 within Colorado during the last four calendar quarters would be eligible for coverage under FAMLI, which is close to everyone on the Town’s payroll. To get an idea of the cost implication should the Town become a covered employer, the Finance Department ran a calculation of .45% of total payroll. This totaled over $500,000 - and growing annually as salaries and staff increase - in anticipated Town annual premium costs. Also, under the law, the premium is allowed to increase from .9% of an employee’s wages to up to 1.2%. These ongoing increasing costs are one of several reasons staff is recommending Town Council decline participation in the program.
Another reason staff recommends Town Council decline participation in FAMLI is that the Town already offers very appropriate levels of paid leaves annually for full-time employees, including 10.5 holidays, three days of personal leave, a minimum of two weeks of vacation and 12 sick days. Vacation and sick leave can accrue over time. Further, the Town offers a “sick leave bank” benefit to assist employees who have exhausted their available accrued leaves in instances of illness/injury, or to care for a sick or injured family member. The Town additionally provides eligible employees with short- and long-term disability benefits. These existing Town paid time off benefits are explained in greater detail in Attachment B.
The Colorado Municipal League has surveyed municipalities statewide regarding their intentions under FAMLI. Of the 45 jurisdictions that had responded to the survey by mid-April, only three said they were considering becoming covered employers. Twenty-four said they had or were considering declining participation, and the remaining 18 were undecided. Within Douglas County, Castle Pines was one of the few jurisdictions considering becoming covered, while Lone Tree and Parker were among those undecided. If Town Council declines participation in FAMLI, the Town would appear to be following suit with the majority of Colorado municipalities.
Finally, while 57% of voters Statewide approved FAMLI, a majority of voters in Castle Rock did not approve Proposition 118. According to data from the Douglas County Clerk and Recorder, only 47% (19,331) of Castle Rock voters were for the measure, while 53% (21,759) voted against it. This is the final reason staff recommends declining participation in the program.
If Town Council declines participation, Town employees can still choose to participate in the program and would pay the same rate of premium and realize the same full benefits allowed by law as if the Town participated. In this scenario, staff recommends having Town employees go directly to the State for coverage rather than acting as an intermediary and withholding and remitting the employee share of premiums for those who elect coverage. This would lessen potential financial liabilities for the Town and help reduce some of the administrative requirements for Town staff related to the program. Regardless of what Council decides, there will be some staff administration required, if Town employees participate and request to use FAMLI leave.
Also worth noting is that Council’s decision regarding participation is not permanent and in fact must be reaffirmed every eight years under State law. If Council declines participation at this time, this or a future Council could reconsider this item at any time sooner than eight years from now as desired.
Potential Motions
“I move to approve the Resolution as introduced by title.”
“I move to approve the Resolution as introduced by title, with the following conditions: (list conditions).”
“I move to continue this item to the Town Council meeting on (date) to allow additional time to (list information needed).”
Attachments
Attachment A: Resolution
Attachment B: Paid Time Off Information