Proposition 118: Statewide paid family and medical leave question on Colorado's November ballot

Posted at 4:45 PM, Oct 06, 2020

DENVER — After several failed attempts by state lawmakers to pass a statewide family medical and paid leave program, voters will now have a chance to weigh in on the idea.

Proposition 118 would create an insurance program that allows employees to take time off of work to have a baby, receive medical treatment or care for a sick loved one, among other things.

MORE: Colorado Election 2020: A guide to navigating the 11 statewide initiatives on this year's ballot

Employees and employers across the state would be required to contribute to the fund barring a few exemptions.

How would the program work?

Starting Jan. 1, 2023, employers and employees would start to contribute a payroll premium to finance the paid family and medical leave program. The following January, benefits would begin and employees could start taking the time off.

Workers would be allowed to take up to 12 weeks of leave and be able to keep their job. However, a mother who experiencing a serious health condition related to pregnancy or childbirth complications would have the option of taking an additional four weeks of leave.

The leave program would cover childbirth, caring for yourself or others during a serious illness, safe leave from domestic or sexual abuse, or assisting a family member who is called to active duty.

Currently, federal laws allow eligible employees to take 12 weeks of unpaid leave per year under the Family and Medical Leave Act of 1993. Prop. 118 would add compensation of up to 90% for employees for the time they take off.

The amount of benefits an employee would receive depends on their weekly earnings. The less an employee makes each week, the more they will be able to be compensated for taking time off.

An employee who makes $500 per week would be eligible to receive 90% of their normal wage, while an employee who earns $3,000 per week would only be entitled to 37% compensation.

The cost of the program would be split 50/50 between employers and employees. The initial premium rate will start at 0.9% of the wages an employee earns for the program’s first two years. In 2025, the program’s director will have the ability to raise the insurance premium to 1.2% of wages.

If passed, a new paid family and medical leave division would be created in the Colorado Department of Labor and Employment.

There are certain exemptions allowed under the proposal: Businesses with fewer than 10 employees, the self-employed, local governments that don’t participate in the program and employers that already offer paid leave benefits would be able to opt out of paying the premium. However, their workers would still contribute to the program.

The case for paid family and medical leave

Supporters of Proposition 118 say this is the right measure at the right time for Colorado workers.

“Right now, 80% of Colorado employees don’t have access to paid leave, which means when they have a child or when they experience a medical emergency, they have no paid time off,” said Carmen Medrano, the co-chair of the Yes on Prop. 118 campaign.

The program also prohibits employers from taking retaliatory actions against an employee for taking time off and guarantees job protections for those who have been working with a company for at least 180 days prior to taking leave. The program would mandate that an employee who returns from leave would be guaranteed the same position or a similar one, the same pay and same employment benefits.

Medrano believes every employee could need access to this program during one point in their lives or another to take care of themselves or a family member and and that passage of 118 could help increase employment opportunities in the state.

Roughly 18% of U.S. workers currently have access to paid leave and supporters of the idea argue this would increase that rate.

“If this passes, our measure would make sure that 2.6 million hard-working Coloradans have access to up to 12 weeks of paid leave,” Medrano said.

Beyond helping employees, supporters say this could help lower the infant mortality rate and help with a child’s development.

“One-in-four women actually don’t take off more than two weeks after giving birth,” she said.

Because the program doesn’t begin taking insurance premiums until 2023, supporters say companies will have time to prepare financially for the increase in money owed and they argue it will be a mild cost for most employees. “An average employee would be paying $3.83 a week into this program,” Medrano said.

Eight other states currently offer some sort of a paid family and medical leave program. If passed, Colorado’s will have one of the highest rates of compensation, which is something Prop. 118’s opponents have sharply criticized.

However, Medrano argues that if employees aren’t being compensated enough to keep their personal finances afloat, the program won’t do much good.

“What we learned in other states is that if you don’t replace enough of the wages of individuals, they won’t take this benefit,” she said.

Backers believe this initiative has found the right balance to offer Colorado workers compensation for taking time off while not placing too much of the burden on employers.

The case against paid family and medical leave

While the supporters are touting the potential benefits of Prop. 118, opponents say this is a costly idea.

Dave Davia is the CEO of Rocky Mountain Mechanical Contractors Association, which represents plumbing, HVAC and mechanical systems companies.

The majority of the businesses he represents are small and have 20 employees or fewer. Davis recently wrote an opinion piece voicing his opposition to Prop. 118 and what it will mean for businesses.

“This is the most costly proposal before people this fall at the state level,” Davia said. “The $1.3 billion payroll tax increase, half of it will be paid for by the employer and half by the employee in the form of payroll taxes.”

He considers the idea to be fiscally irresponsible during a time when companies are already struggling to stay in business, and says the added costs will need to be passed down to the consumer.

Davia argues that while most employers do not currently offer an official paid family or medical leave program, many do find ways to work with their employees when they need to take time off.

Davia says he once helped an employee for nine months while she cared for her husband through a severe cancer diagnosis. He says this program would take away that flexibility.

“[Proposition] 118 is a one-size-fits-all, $3.2 billion payroll tax," he said. "Some employers are going to have to make the hard choice between do I do the right thing here or do I just kind a let this become the new program for my employees?"

Opponents also argue this measure requires all employees to pay into a program that they may never use and that workers are struggling financially as it is and shouldn’t be asked to have even more of their paychecks withheld.

They say this measure could discourage small businesses from growing in order to avoid paying a premium.

Davia wants this idea to go back to the state Capitol so that both sides can work in good conscience to find a solution that will work for everyone.

A personal plea

For mother of two Christine Levi, paid medical leave is a personal issue. During her first pregnancy, Levi worked full-time at a small law office in Denver.

She was scared to tell her employer about her pregnancy but was able to work out a deal where she would be able to work from home while she recovered from giving birth.

“We brought my daughter home after, I think, three days it was that we were in the hospital, and I was working from 8 [a.m.] to 5 [p.m.] every single day. And I would get hourly calls to check up to make sure I was actually working,” Levi said. “My maternity leave turned into not being anything. It was nonexistent.”

After five weeks of working from home after giving birth, Levi was told she needed to return to the office or her employer would need to replace her. So, she put her daughter in daycare and went back to work.

“It was hard. It was emotionally draining, and it just made it hard for me to want to go back to work for that employer, honestly,” Levi said. “I missed out on so much with my first daughter — it’s just as simple as a coo or a laugh.”

For her second daughter, Levi was working for a different employer who gave her 16 weeks of paid time off, which she says made all the difference. After her second pregnancy, Levi suffered from postpartum depression and said the additional weeks at home gave her a chance to recover mentally and physically.

Now, she wants to make sure other families who are in a similar position will have the time they need at home.

“Some people say that if you can’t afford to not work because you have a kid then you shouldn’t be having children. I just think that’s just wild. I mean, it’s not the 1950s anymore,” she said. “I love my career and I strive in it; I love what I do. But, I also love being a mom and there’s no reason that I should have to choose between the two.”

She believes Prop. 118 will help women, in particular, remain in the workplace and find a better work-life balance.

What businesses have to say

Tucked inside a small office in Centennial is Merlin Instrument Company, which employs just three people. It’s a small engineering and manufacturing business that makes accessories for scientific instruments.

In particular, the company makes a small rubber seal for gas chromatographs, a tiny component that could make all the difference in scientific testing.

President Katharine Knarreborg is a big supporter of paid family leave and believes it can help small businesses attract talent and retain employees.

“I think when you work day-to-day with your employees, you can really see the difference between somebody who is distracted by something that’s going on at home versus someone who is focused, and the data supports that,” Knarreborg said.

Knarreborg is a new mother herself and knows how important it is to have time off to recover and bond with your child.

Because Merlin Instruments Company is so small, Knarreborg says it is difficult to get an insurance policy that is affordable to cover something like paid medical leave. Even when she has found a policy, it hasn’t covered all of the family leave aspects.

Her company does offer a short-term disability option, however Knarreborg equates it to putting a Band-Aid on the problem.

Because of this, she says it’s difficult to attract top tech talent since bigger companies have better benefits packages.

“I think this is a huge benefit for small businesses,” she said. “It levels the playing field for small businesses who can’t on our own. We can’t afford to offer comprehensive leave like this program would.”

However, if the initiative passes, she says employers will have to think critically about how they are going to prepare themselves for the additional costs and possibility of temporarily losing an employee. In Merlin’s case, the company has stocked up a few months of supply just in case an employee quits unexpectedly or needs time off.

Other small businesses are not as optimistic about the idea. Lauren Grosh is a partner at Sky Blue Builders, a small general contractor that focuses primarily on municipal and federal work.

Her company installs concrete and tile, paints, does ceiling work and more on different construction projects. Currently, they are part of the Great Hall renovation project at Denver International Airport. Sky Blue Builders employs 45 full-time employees.

“We really treat each other as family and we rely on each other full-heartedly,” Grosh said.

Like many small businesses, the company does what it can to help employees when they are experiencing a hardship. It pays for funeral expenses and works with employees who need time off on a case-by-case basis.

In one instance, an employee lost their eyesight for a month and the company paid them while they recovered, Grosh said.

The company also offers a 401(k) match, health insurance, life insurance and works with Aflac for short-term unemployment.

Grosh says if Prop. 118 is passed, the insurance premium would cost her company more than $150,000.

“We did an analysis of it and that would really need about three jobs that we would have to actually perhaps terminate in order to cover this cost. It really hinders our business — the ability to be adaptable — because it’s a one-size-fits-all policy,” Grosh said. “It’s really challenging. We don’t want to let go of any of our employees.”

Because Sky Blue Builders mainly does municipal and federal work, they have set prevailing wages and can’t raise or cut costs on their projects.

She doesn’t believe a one-size-fits-all policy is right for all businesses in the state and that companies need the flexibility to be able to grow and adapt to changing financial realities.

“All we're really asking for is something that’s not as fixed and permanent and something that allows us to be really agile,” Grosh said.

A fiscal analysis

In the run-up to the 2020 election, different research institutes have performed financial analyses on the various ballot initiatives.

“It’s a $1.34 billion insurance program. That’s a huge chunk of change,” said Kristin Strohm, the president and CEO of the Common Sense Institute. “Every single Coloradan who is employed will be paying into this program and employers will be paying into this program."

On the institute’s website, the group put up a tool for people to put in their income level to find out how much the ballot initiative will cost them per year.

For someone making an average of $52,000, that comes out to about $234 per year, which is essentially a 10% to 18% state income tax increase. For an employee making $78,000, their insurance premium was roughly $351 per year.

On the employer side of things, Strohm says it comes out to about a 200% employer tax increase. While other states do have paid family and medical leave programs, Colorado’s is more generous in terms of wage replacement, which could be costly.

“I can tell you from our work that starting at a 90% wage replacement makes it really difficult for the numbers to work,” she said.

Other states, like Rhode Island, start their compensation rates at around 65%.

The report also found that if the program is used by too many employees for too long right out of the gate, it could go bankrupt within the first year.

“Our modeling and our research showed that there is a crucial tipping point. When you reach a claims rate the first year at 6.2% for an average of 9 1/2 weeks, it’s insolvent or bankrupt,” Strohm said.

As the insurance premiums increase from 0.9% to 1.2%, insolvency would happen after 7.2 percent of employees take time off for an average of 9 1/2 weeks per year.

“That’s the key point, is are we going to be setting up a program that won’t even be able to pay out benefits after the first year and it’s crucial for voters to think about that. I’m paying into a program. What happens if there isn’t money in the fund when I need it?” Strohm said.

Strohm points out that Colorado has had a few programs in the past that have run out of money and required state help, including the Public Employees Retirement Association (PERA).

Other analyses of the program has disputed these claims and say that the program will be solvent. Advocates for this proposal anticipate between 5% and 7% utilization rate.

Proponents of Prop. 118 say if other states can make this work, they will be able to as well.

The bottom line

After years of reintroducing and debating the idea, up until this point, lawmakers have been unable to pass a paid family and medical leave program.

Now, on November 3, voters will have the final say on whether a paid family and medical leave program will become law in Colorado.

Click here for more on all 11 statewide initiatives on this year's ballot in Colorado.

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