Update Applicable to:

All employers with employees performing work in Colorado

What happened?

The FAMLI Division has recently approved a modification to the definition of “wages”, set to take effect on January 1, 2024. This update will replace the existing definition, which currently mirrors the Unemployment Insurance Division’s interpretation of “wages,” with a new definition.

What are the details?

In response to extensive feedback indicating that the previous definition was overly complex, the Division has revised it to be more straightforward. According to the updated definition, FAMLI “wages” will now refer to “gross wages,” encompassing standard employer compensation. Beginning January 1, 2024, premiums and benefits will be computed based on this simplified definition.

Gross wages will include the following post-tax amounts:

• Salary
• Hourly wage
• Overtime
• Tips
• Bonuses
• Commissions
• Piece rate
• Employer-provided paid leave (PTO, sick, vacation, etc.)
• Disability benefits paid by the employer and not by a third-party
• Parental leave paid by the employer and not by a third party
• The value of lodging or meals used as a credit toward the minimum wage

Gross wages will not include:

• Severance payments
• Deferred compensation contributions or payments
• Profit-sharing
• Pensions or retirement plan payments
• Expense reimbursements (mileage, travel, moving, per diems, etc)
• Non-monetary payments (except lodging or meals to the extent they’re used as a credit toward the minimum wage)

For example, if an employee is paid a $1,000 weekly salary and chooses to have their $100 health insurance contribution deducted on a pre-tax basis, their post-tax gross wage is $900.  

Therefore,

For more information, please see the links below:

Breakdown

Amendment to Rules

FAMLI Toolkit for Employers

Administrator Fact Sheet

What do employers need to do?

Employers should review the above links including the amendment. In summary, employers won’t report or collect employee contributions from any pre-tax deductions under the new definition. Employers simply need to report the post-tax gross wage amount and may collect employee contributions from post-tax gross wages.

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