November 30, 2022

Colorado Set for New Paid Family and Medical Leave Insurance and Secure Savings Plan in 2023

Colorado Set for New Paid Family and Medical Leave Insurance and Secure Savings Plan in 2023

The State of Colorado has passed several legislations that are bound to impact your business in the coming year. Obsidian HR, a chamber member that specializes in human resource services, has outlined some of these mandates going into effect in 2023.  Read through to learn more about how you can stay compliant with these legal requirements:

Family and Medical Leave Insurance Program (FAMLI)

Employers and their employees are both responsible for funding this program paying 0.9% of the Colorado employees’ wages starting 1/1/23.

Colorado Secure Savings Plan

The Colorado Secure Savings Plan must be offered if you have 5 or more employees, have been in business two or more years, and don’t have an existing qualifying retirement plan.

Minimum Wage Notice

Many states and local jurisdictions are increasing the hourly minimum wage requirement. Increases need to be in effect for hours worked on or after 1/1/23.

Please reach out to Obsidian HR via email at or phone (720) 465-3590, if you would like more information. 


In November 2020, Colorado voters approved Proposition 118, establishing the state-run Family and Medical Leave Insurance Program (FAMLI). The passage of this measure was historic, as no other state had ever passed a family and medical leave law by popular vote.

All employers with employees working in the state of Colorado will be impacted by this new legislation. Although there are mandates under FAMLI that become effective in January 2023, the State of Colorado is still working out some of the details of this expansive new program. For more information about FAMLI, click here.

What Does FAMLI Provide?

Beginning in 2024, FAMLI will provide employees with an opportunity to take paid leave of up to 12 weeks for personal and family caregiving obligations including arrival of a new child, military family needs, the employee’s own or a family members serious health condition, or a need for safe leave. Employees may be granted an additional 4 weeks of leave for serious health conditions related to pregnancy or childbirth. 

How is this Program Funded?

FAMLI will be funded through a combination of employer and employee contributions via payroll deduction beginning January 1, 2023. The total contribution rate per Colorado employee is 0.9% of gross wages. The 0.9% contribution may be split between the employer and each employee, provided employees are not required to pay more than half of the contribution (0.45%). Employers may elect to contribute a higher proportion of the 0.9% if they choose. These insurance premiums, in the form of a tax, will be remitted to the state on a quarterly basis and will be used to cover the cost of providing paid leave. For 2023, companies that report 10 or more employees for the 1st quarter will be required by the State to pay the employer portion for the entire year.

Companies with Nine or Fewer Employees

Employers with nine or fewer employees are exempt from paying the employer portion (0.45%) of the premium. Employees will still be required to pay the employee portion, which will be remitted to the state on a quarterly basis. Owners may not be subject to premiums if they are both primarily free from control in the performance of their work, and that work is part of their independent profession or trade. For highly compensated employees, contributions will be capped at the same rate as their social security rate is capped.

Exemptions for Private Plans

The State anticipates having an option for employers who wish to offer an alternative private plan. The details about private plans are in progress and more information is expected to be provided by the State by the second quarter of 2023. All employers, regardless of intention to obtain a private plan, are subject to begin payroll deductions and pay employer contributions as of January 1, 2023.


The Colorado Secure Savings Plan becomes effective January 1, 2023 and provides all private-sector employees in Colorado a retirement savings option through payroll deduction, regardless of the size of their employer. The program provides an automatic enrollment payroll deduction into a Roth individual retirement account. For more information about the Colorado Secure Savings Plan, click here.

Who Must Comply

Your company must offer the Colorado Secure Savings Plan if you:

  • Have five or more employees
  • Have been in business for two or more years
  • Don’t have an existing qualifying retirement plan

Employees can voluntarily participate in the Colorado Secure Savings Plan if they are 18 years of age or older, employed by a Colorado employer for at least 180 days, and earn taxable wages. 

What is the Cost to Employers?

There will not be a mechanism for employers to provide matching funds into the State-sponsored plan. The costs to employers are “soft costs”, including time spent administering the benefit under State mandate, and recruiting opportunity costs related to not offering a more robust retirement plan. Administration includes reporting employment data to the State and uploading contributions and payroll details for each pay period.

How Does the Plan Work?

Upon hire, employees have a 30-day grace period to decide if they wish to opt-in or out. If they opt-in, they may select their desired contribution rate and investment options. If an employee does not take action within the 30-day window, they will be auto-enrolled with a default contribution of 5% of their gross wages. The default contribution will increase yearly by 1% up to a maximum contribution of 8%.

Employee participation is always voluntary, and they can opt in or out as they wish. Employee contributions to the State-sponsored Roth IRA will be taken via post-tax payroll deduction upon notification of enrollment in the program. As such, any investment gains will not be taxed. Taxes and/or penalties may apply for early withdrawals. Upon termination of employment, participants will be able to take their Roth IRA with them, even if they relocate out of state.