CO PFML under scrutiny by court

Before it even becomes effective, the CO Paid Family and Medical Leave (PFML) law is being challenged in the CO Supreme Court.

The PFML law is designed to entitle CO employees to up to 12 weeks of paid family and medical leave per year. The leave is paid for by employer and employee contributions in the form of payroll deduction premiums.

Employers with fewer than 10 employees, however, are not required to pay the premiums; local government employers may, at their discretion, opt out of the program; self-employed persons are exempt from the program, but may elect to participate, but they pay only half of the premium; and employers with 10 or more employees must pay the whole premium but may choose to obtain up to half of the premium directly from employees’ paychecks — effectively transferring part of the premium obligation to the employee at the employer’s discretion.

The employer in the case contends that the state constitution requires “taxable net income to be taxed at one rate, excluding refund tax credits or voter-approved tax credits, with no added tax or surcharge.” Since the PFML premium is not uniformly applied to all wages or wage earners in the state, the employer argues that the PFML violates the state constitution, and the premium amounts are an added surcharge, or alternatively an income tax not being applied uniformly.

The employer asks that the state supreme court impose an injunction prohibiting the Division of Family and Medical Leave Insurance in the Department of Labor and Employment from collecting the premiums and making the PFML unenforceable.

The trial court, however, previously ruled that the PFML did not amount to a change in the income tax laws, so the constitution did not apply.

Employees are not entitled to begin taking the leave until 2024, but the payroll deductions necessary to fund the program are schedule to begin on January 1, 2023.

Chronos Builders, LLC vs. the Colorado Department of Labor & Employment, Division of Family and Medical Leave Insurance, CO Supreme Court, No. 22CA91.