HOUSE Amended 2nd Reading April 28, 2015First Regular Session Seventieth General Assembly STATE OF COLORADO ENGROSSED This Version Includes All Amendments Adopted on Second Reading in the House of Introduction LLS NO. 15-0578.01 Christy Chase x2008 HOUSE BILL 15-1258 HOUSE SPONSORSHIP Winter and Salazar, Esgar, Becker K., Buckner, Court, Danielson, Duran, Fields, Foote, Ginal, Lebsock, Lontine, McCann, Melton, Moreno, Pettersen, Primavera, Ryden, Singer, Tyler SENATE SPONSORSHIP Ulibarri, House Committees Senate Committees Health, Insurance, & Environment Finance Appropriations A BILL FOR AN ACT Concerning the creation of a family and medical leave insurance program, and, in connection therewith, making an appropriation. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill creates the family and medical leave insurance (FAMLI) program in the newly created division of family and medical leave insurance (division) in the department of labor and employment (department) to provide partial wage-replacement benefits to an eligible individual who takes leave from work to care for a new child or a family member with a serious health condition or who is unable to work due to the individual's own serious health condition. Prior to implementing the program, the department is to conduct an actuarial analysis to determine the appropriate level of premiums and solvency surcharges, if necessary, to ensure the soundness of the program. Each employee in the state will pay a premium determined by the director of the division by rule, which premium is based on a percentage of the employee's yearly wages. The premiums are deposited into the family and medical leave insurance fund from which family and medical leave benefits are paid to eligible individuals. The director may also impose a solvency surcharge by rule if determined necessary to ensure the soundness of the fund. The division is established as an enterprise, and premiums paid into the fund are not considered state revenues for purposes of the taxpayer's bill of rights (TABOR). Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, add part 3 to article 13.3 of title 8 as follows: PART 3 FAMILY AND MEDICAL LEAVE INSURANCE 8-13.3-301. Short title. This part 3 shall be known and may be cited as the "Family and Medical Leave Insurance Act" or "FAMLI Act". 8-13.3-302. Definitions. As used in this part 3, unless the context otherwise requires: (1) "Annual mean wage" means the estimated total annual wages of all occupations in Colorado divided by the occupations' estimated employment, as determined by the federal bureau of labor statistics in the United States department of labor. (2) "Application year" means the twelve-month period beginning on the first day of the calendar week in which a covered individual applies for family and medical leave insurance benefits. (3) "Covered individual" means an individual who: (a) Has been employed by and worked for one or more employers for at least six hundred eighty hours during the person's qualifying year; and (b) Has contributed premiums to the program for at least one calendar year. (4) "Department" means the department of labor and employment. (5) "Director" means the director of the division. (6) "Division" means the division of family and medical leave insurance created in section 8-13.3-303. (7) "Eligible individual" means an individual who satisfies the requirements of section 8-13.3-305 and is eligible to receive family and medical leave insurance benefits. (8) (a) "Employer" means any person engaged in commerce or an industry or activity affecting commerce that employs at least one person for each working day during each of twenty or more calendar workweeks in the current or immediately preceding calendar year. (b) "Employer" includes: (I) A person who acts directly or indirectly in the interest of an employer to any of the employees of the employer; (II) A successor in interest of an employer; and (III) The state or a political subdivision of the state. (9) "Family and medical leave" means FMLA leave or leave authorized under part 2 of this article. (10) "Family and medical leave insurance benefits" or "benefits" means the benefits provided under the program. (11) "Family member" means a person for whom an employee is entitled to take family and medical leave. (12) "FMLA" means the federal "Family and Medical Leave Act of 1993", Pub.L. 103-3, as amended, 29 U.S.C. sec. 2601, et seq. (13) "FMLA leave" means leave from work and all benefits authorized by the FMLA. (14) "Health care provider" has the same meaning as set forth in the FMLA. (15) "Premium" means the payments an individual is required by this part 3 to pay to the division for the program. (16) "Program" means the family and medical leave insurance program established pursuant to this part 3. (17) "Qualifying year" means the first four of the last five completed calendar quarters or the last four completed calendar quarters immediately preceding the first day of a covered individual's application year. (18) "Serious health condition" has the same meaning as set forth in the FMLA. 8-13.3-303. Division of family and medical leave insurance - creation as an enterprise - authority to issue bonds. (1) There is hereby created in the department the division of family and medical leave insurance, the head of which is the director of the division. (2) (a) The division constitutes an enterprise for purposes of section 20 of article X of the state constitution, as long as the division retains authority to issue revenue bonds and the division receives less than ten percent of its total annual revenues in grants, as defined in section 24-77-102 (7), C.R.S., from all Colorado state and local governments combined. For as long as it constitutes an enterprise pursuant to this section, the division is not subject to section 20 of article X of the state constitution. (b) The enterprise established pursuant to this subsection (2) has all the powers and duties authorized by this part 3 pertaining to family and medical leave insurance. The family and medical leave insurance fund created in section 8-13.3-308 constitutes part of the enterprise established pursuant to this subsection (2). (c) Nothing in this subsection (2) limits or restricts the authority of the division to expend its revenues consistent with this part 3. (d) Subject to approval by the general assembly, either by bill or joint resolution, and after approval by the governor pursuant to section 39 of article V of the state constitution, the family and medical leave insurance division is hereby authorized to issue revenue bonds for the expenses of the division, which may be secured by any revenues of the division. 8-13.3-304. Family and medical leave insurance program - creation - division duties - applicant duties - outreach and education - rules. (1) (a) The division shall establish and administer a family and medical leave insurance program and pay family and medical leave insurance benefits to eligible individuals as specified in this part 3. (b) (I) Before the division establishes the program, the department shall conduct an actuarial evaluation to determine: (A) The premium amounts required pursuant to section 8-13.3-308 (2) (a) to sufficiently fund the program; (B) The balance in the family and medical leave insurance fund created in section 8-13.3-308 that is required to assure solvency of the fund; and (C) The balance in the fund that would trigger the need to impose a solvency surcharge on employees pursuant to section 8-13.3-308 (3) to restore fund solvency. (II) The department shall complete the actuarial evaluation no later than July 1, 2016. (III) In addition to the actuarial evaluation required in this paragraph (b), by July 1, 2016, the department shall determine the anticipated administrative and technology costs to establish and operate the program. (c) No sooner than July 1, 2016, the division shall begin to establish the program, including setting, by rule, premium and solvency surcharge amounts to be imposed on employees based on the actuarial evaluation conducted by the department. (2) The division shall establish procedures and forms for filing claims for benefits under the program. The division shall notify an employer within five business days after a covered individual files a claim for benefits under section 8-13.3-305. (3) The division shall use information sharing and integration technology to facilitate the disclosure of relevant information or records pertaining to a covered individual if the covered individual consents to the disclosure in accordance with this part 3. (4) Information contained in the files and records pertaining to a covered individual under this part 3 are confidential and not open to public inspection, other than to public employees in the performance of their official duties; except that: (a) A covered individual or a person authorized by a covered individual, as evidenced by a signed authorization from the covered individual, may review the records or receive specific information from the records; (b) An employer or the employer's duly authorized representative may review the records of a covered individual employed by the employer in connection with a pending claim; and (c) At the division's discretion, other persons may review records when the persons are rendering assistance to the division at any stage of the proceedings on any matter pertaining to the administration of this part 3. (5) (a) By January 1, 2019, and for as long as the family and medical leave insurance program continues, the division shall develop and implement an outreach program to educate the public about the availability of family and medical leave insurance benefits under this part 3 for covered individuals. (b) The division shall ensure that the outreach information explains, in an easy-to-understand format, at least the following: (I) Eligibility requirements; (II) The claims process; (III) Weekly benefit amounts and maximum benefits payable; (IV) Notice and medical certification requirements; (V) Reinstatement and nondiscrimination rights; (VI) Confidentiality of records; (VII) The relationship between employment protection, leave from employment, and wage replacement benefits under this part 3 and other laws, collective bargaining agreements, and employer policies; and (VIII) Any other details or information about the program the division deems appropriate. (c) The division shall develop a program notice that details the program requirements, benefits, claims process, payroll deduction requirements, and other pertinent program information. Each employer shall post the program notice in a prominent location in the workplace and inform its employees of the program. (d) The division may use a portion of the moneys in the family and medical leave insurance fund to develop, implement, and administer the outreach program. 8-13.3-305. Family and medical leave insurance benefits - application - eligibility. (1) Beginning July 1, 2019, family and medical leave insurance benefits are payable to an individual who: (a) (I) Has a serious health condition that makes the individual unable to perform the functions of at least one of his or her jobs; (II) Is caring for his or her new child during the first year after the birth or adoption of the child or the placement of the child through foster care; (III) Is caring for a family member who has a serious health condition; or (IV) Is taking any other leave from work authorized by the FMLA; (b) Files a claim for benefits in a form and manner required by the director by rule; (c) Is a covered individual; (d) Consents to the disclosure of information or records deemed confidential under state law pursuant to section 8-13.3-304 (4); and (e) If currently employed, attests, in the application for family and medical leave insurance benefits, that the individual notified his or her employer in writing of the intent to take leave from work for one of the purposes specified in paragraph (a) of this subsection (1). (2) In addition to the requirements of subsection (1) of this section, the division may require a covered individual who applies for benefits to: (a) Attest that the covered individual: (I) (A) Because of a birth, adoption, or placement through foster care, is caring for a new child during the first year after birth, adoption, or placement of the child; (B) Is caring for a family member who has a serious health condition; or (C) Has a serious health condition that renders him or her unable to perform his or her regular or customary work at one or more of the jobs at which he or she is working; (II) Is not receiving unemployment insurance benefits or benefits under a disability insurance policy in an amount that, if combined with the benefits available to the individual under the program, would exceed the individual's wages, as determined by the division; and (b) Submit a certification from the health care provider providing health care to the covered individual or the covered individual's family member, as applicable, supporting the claim that the covered individual or the covered individual's family member has a serious health condition. (3) A covered individual who meets the requirements of sub-subparagraph (A), (B), or (C) of subparagraph (I) of paragraph (a) of subsection (2) of this section is eligible for family and medical leave insurance benefits regardless of whether the covered individual is currently employed or is working at a second job while taking family and medical leave. (4) If the division denies a claim for benefits submitted pursuant to this section, the covered individual may appeal that decision in the manner specified in article 74 of this title. 8-13.3-306. Duration of benefits - waiting period - payment intervals. (1) The maximum number of weeks during which family and medical leave insurance benefits are payable to an eligible individual in an application year is twelve weeks. (2) (a) Benefits are not payable for the first seven consecutive calendar days in an application year that an individual meets the eligibility requirements of section 8-13.3-305. If an eligible individual uses ten or more days of family and medical leave in an application year, the division shall pay the eligible individual benefits for the seven-day waiting period; except that, if the eligible individual received other compensation from the employer for all or a portion of those seven days, the division shall reduce the benefits payable to the eligible individual based on the amount of other compensation received from the employer during the waiting period. (b) The waiting period described in this subsection (2) applies only once in each application year. (c) Failure to file an application for benefits, furnish notice to an employer, or submit certification from a health care provider in the manner specified in section 8-13.3-305 does not invalidate a claim for benefits or an individual's eligibility for benefits, but the division is not required to pay benefits for a period of more than two weeks prior to the date on which the individual files the required application, furnishes notice to his or her employer, and submits the certification from the health care provider unless the individual demonstrates to the satisfaction of the division that it was not reasonably possible to submit the application or certification or furnish the notice to his or her employer, and that the individual submitted the application and certification, and notified his or her employer, as soon as was possible. (3) The division shall make the first payment of benefits to an eligible individual within two weeks after the individual files the claim for benefits and shall make subsequent payments biweekly. 8-13.3-307. Amount of benefits - maximum weekly benefit. (1) (a) The division shall determine the weekly benefit amount, subject to paragraph (b) of this subsection (1), as follows: (I) For an eligible individual whose yearly earnings are not more than twenty percent of the annual mean wage, the division shall pay weekly benefits in an amount equal to ninety-five percent of the eligible individual's weekly wage; (II) For an eligible individual whose yearly earnings are more than twenty percent but not more than thirty percent of the annual mean wage, the division shall pay weekly benefits in an amount equal to ninety percent of the eligible individual's weekly wage; (III) For an eligible individual whose yearly earnings are more than thirty percent but not more than fifty percent of the annual mean wage, the division shall pay weekly benefits in an amount equal to eighty-five percent of the eligible individual's weekly wage; (IV) For an eligible individual whose yearly earnings are more than fifty percent of the annual mean wage, the division shall pay weekly benefits in an amount equal to sixty-six percent of the eligible individual's weekly wage. (b) The maximum weekly benefit amount determined under paragraph (a) of this subsection (1) must not exceed one thousand dollars per week. Starting January 1, 2020, the division shall annually adjust the maximum weekly benefit amount to reflect changes in the United States bureau of labor statistics consumer price index for the Denver-Boulder-Greeley consolidated metropolitan statistical area for all urban consumers, all goods, or its successor index. (c) The division shall calculate an eligible individual's weekly benefit amount based on the eligible individual's weekly wage earned from the job from which the eligible individual is taking family and medical leave. If the eligible individual is able to continue working at a second job while taking family and medical leave, the division shall not consider the eligible individual's weekly wage earned from the second job when calculating the eligible individual's weekly benefit amount. (2) Benefits are not payable for less than one day or eight consecutive hours of family and medical leave taken in one work week. 8-13.3-308. Family and medical leave insurance fund - creation - employee premiums. (1) (a) There is hereby created in the state treasury the family and medical leave insurance fund, referred to in this section as the "fund". Moneys in the fund may be used only to pay benefits under and to administer the family and medical leave insurance program pursuant to this part 3, including the outreach program developed under section 8-13.3-304 (5). Interest earned on the investment of moneys in the fund and any moneys remaining in the fund at the end of a fiscal year remain in the fund and do not revert to the general fund or any other fund. (b) (I) The division may apply for and accept gifts, grants, and donations to conduct the actuarial evaluation and determine anticipated administrative and technology costs, as required by section 8-13.3-304 (1) (b), and fund the costs to set up the program. The division may apply for any available federal funding to conduct the actuarial evaluation and determine anticipated costs and, notwithstanding the deadlines for conducting the evaluation and cost determination specified in section 8-13.3-304 (1) (b), shall not perform either task unless sufficient federal funds or other gifts, grants, or donations are received to perform those tasks. (II) The division shall transmit any gifts, grants, donations, or federal funding it receives to the state treasurer for deposit in the fund. (c) If, prior to the collection of premiums pursuant to subsection (2) of this section, the division does not receive adequate gifts, grants, donations, or federal funding to cover its costs to set up the program, the department may request, as part of its annual budget request, an appropriation to cover the division's program set-up costs. (2) (a) (I) On and after July 1, 2018, every individual employed by an employer in this state shall pay a premium in an amount determined by the director by rule in accordance with this paragraph (a). (II) The director, by rule, shall: (A) Set the premium amount based on a percentage of yearly wages; and (B) Establish a maximum annual premium. (III) The director may adjust premium amounts annually, by rule, to ensure the actuarial soundness of the fund and avoid an excessive fund balance. (b) Each employer shall collect the premium amount from each employee as a payroll deduction from the employee's wages each payroll period and shall remit the premium amount to the division, which shall transmit the premiums to the state treasurer for deposit in the fund. (3) On and after July 1, 2018, if the director determines that a solvency surcharge is required to ensure the solvency of the fund, the director, by rule, may establish a solvency surcharge that every individual employed by an employer in this state shall pay through a payroll deduction in the manner specified in paragraph (b) of subsection (2) of this section. 8-13.3-309. Employment protection - discrimination prohibited. (1) After a period in which an eligible individual receives family and medical leave insurance benefits or earns waiting-period credits under this part 3, the eligible individual is entitled to be restored to an equivalent position of employment with the employer from which leave was taken, in the same manner as an employee entitled to family and medical leave, for the time that the eligible individual is absent from work and receiving family and medical leave insurance benefits. (2) At any time, including during the waiting period or the period in which an individual is receiving benefits under this part 3, an employer shall not discharge, demote, or otherwise discriminate or take an adverse employment action against an individual because he or she: (a) Filed for, applied for, or used benefits under this part 3; (b) Communicated to the employer an intent to file a claim for benefits, a complaint, or an appeal; or (c) Testified, agreed to testify, or otherwise assisted in any proceeding under this part 3. (3) (a) The director may assess a fine of not more than three thousand dollars against a person who violates this section. The director shall transfer any fines collected pursuant to this section to the state treasurer for deposit in the family and medical leave insurance fund created in section 8-13.3-308 (1). (b) If an employer violates this section, the employer is subject to damages and equitable relief as specified in the FMLA. An aggrieved employee may bring an action in state court against the employer to recover damages or equitable relief. 8-13.3-310. Coordination of benefits. (1) (a) Leave taken under this part 3 runs concurrently with any leave taken under the FMLA or part 2 of this article. (b) An employer may require that payment made or leave taken under this part 3 be made or taken concurrently or otherwise coordinated with payment made or leave allowed under the terms of disability or family care leave under a collective bargaining agreement or employer policy, as applicable. The employer shall give its employees written notice of this requirement. (2) (a) This part 3 does not diminish an employer's obligation to comply with a collective bargaining agreement or employer policy, as applicable, that provides greater leave than FMLA leave or leave permitted under part 2 of this article. (b) After the effective date of this part 3, a collective bargaining agreement entered into or renewed or an employer policy adopted or retained must not diminish an individual's right to benefits under this part 3. Any agreement by an individual to waive his or her rights under this part 3 is void as against public policy. 8-13.3-311. Erroneous payments - disqualification for benefits. (1) A covered individual is disqualified from family and medical leave insurance benefits for one year if the individual, in connection with an application for benefits under the program, willfully makes a false statement or misrepresentation regarding a material fact or willfully fails to report a material fact. (2) If family and medical leave insurance benefits are paid erroneously or as a result of willful misrepresentation, or if a claim for family and medical leave benefits is rejected after benefits are paid, the division may seek repayment of benefits from the recipient. The director shall exercise his or her discretion to waive, in whole or in part, the amount of any repayments where the recovery would be against equity and good conscience. The director may adopt rules to develop a procedure for recovering erroneous payments of benefits. 8-13.3-312. Elective coverage - withdrawal from coverage - rules. (1) A self-employed person, including a sole proprietor, partner, or joint venturer, may elect coverage under the program for an initial period of not less than three years or a subsequent period of not less than one year immediately following another period of coverage. The self-employed person must file a notice of election in writing with the director, as required by the division. The election becomes effective on the date the notice is filed. (2) A self-employed person who has elected coverage may withdraw from coverage by filing written notice with the director within thirty days after the end of the three-year period of coverage or at other times the director may prescribe by rule. The withdrawal from coverage takes effect no sooner than thirty days after the self-employed person files the notice. 8-13.3-313. Federal income tax - state income tax. (1) (a) If the internal revenue service determines that family and medical leave insurance benefits under this part 3 are subject to federal income tax, the division shall inform an individual filing a new claim for family and medical leave insurance benefits, at the time of filing, that: (I) The internal revenue service has determined that benefits are subject to federal income tax; (II) Requirements exist pertaining to estimated tax payments; (III) The individual may elect to have federal income tax deducted and withheld from the individual's payment of benefits in the amount specified in the federal internal revenue code; and (IV) The individual is permitted to change a previously elected withholding status. (b) Amounts deducted and withheld from benefits must remain in the family and medical leave insurance fund until transferred to the federal taxing authority as a payment of income tax. (c) The director shall follow all procedures specified by the federal internal revenue service pertaining to deducting and withholding income tax. (2) Family and medical leave insurance benefits received pursuant to this part 3 are not subject to state income tax pursuant to section 39-22-104 (4) (u), C.R.S. 8-13.3-314. Reports. By March 1, 2019, and by each March 1 thereafter, the division shall report to the senate committees on business, labor, and technology and health and human services and the house of representatives committees on health, insurance, and environment and business, labor, and economic and workforce development, or their successor committees, on projected and actual program participation, specifying gender, race, and ethnicity of participants and purpose and duration of leave, premium rates, fund balances, and outreach efforts. The division shall post the reports on the department's web site. Notwithstanding section 24-1-136 (11), C.R.S., the requirement specified in this section to submit annual reports to committees of the general assembly continues indefinitely. 8-13.3-315. Rules. The director may adopt rules as necessary for the implementation and administration of this part 3. 8-13.3-316. Severability. If any provision of this part 3 or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the part that can be given effect without the invalid provision or application, and to this end the provisions of this part 3 are severable. SECTION 2. In Colorado Revised Statutes, 39-22-104, add (4) (u) as follows: 39-22-104. Income tax imposed on individuals, estates, and trusts - single rate - definitions - repeal. (4) There shall be subtracted from federal taxable income: (u) For income tax years commencing on or after January 1, 2019, an amount equal to any amount received by a taxpayer as family and medical leave insurance benefits pursuant to part 3 of article 13.3 of title 8, C.R.S. SECTION 3. Appropriation. (1) For the 2015-16 state fiscal year, $367,908 is appropriated to the department of labor and employment. This appropriation is from the family and medical leave insurance fund created in section 8-13.3-308, C.R.S. To implement this act, the department may use this appropriation as follows: (a) $175,674 for use by the division of family and medical leave insurance for the family and medical leave program, which amount is based on an assumption that the division will require an additional 1.3 FTE; and (b) $192,234 for the purchase of information technology services. (2) For the 2015-16 state fiscal year, $192,234 is appropriated to the office of the governor for use by the office of information technology. This appropriation is from reappropriated funds received from the department of labor and employment under paragraph (b) of subsection (1) of this section. To implement this act, the office may use this appropriation to provide information technology services for the department of labor and employment. SECTION 4. Act subject to petition - effective date. This act takes effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 5, 2015, if adjournment sine die is on May 6, 2015); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2016 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.