With Labor Day barbecues and celebrations on the mind, let’s not forget about the purpose of the holiday. It’s about recognizing the importance of workers, their contributions, and need for workplace protections and benefits.

While the U.S. in recent decades has introduced employee protections regarding family and medical leave, many of the provisions do not guarantee pay during times of medical or family leave. So while it’s an improvement to be able to take time off of work to care for a loved one or to heal themselves, for many families it becomes financially impossible to take time off of work. Those in jobs with comprehensive benefits will often have access to short and long-term disability pay, which can help make ends meet during a prolonged absence. But this coverage is not universal and does not address time needed to care for others.

Colorado voters passed Proposition 118 in November 2020 that established a statewide paid Family and Medical Leave Insurance (FAMLI) program. While the benefits do not become available until next year, sharp-eyed readers may have noticed the deduction from their paychecks this year. The premiums are 0.9% every year of the Social Security wage cap, which is $160,200 this year. The premiums are split between employer and employee, which means an employee with at least $160,200 in pay for 2023 will pay just over $720 this year and that contribution will be matched by the employer.

In return for these payments, employees can use FAMLI leave starting in 2024 to care for a new child, care for a family member’s (including themselves) serious health condition, address the safety needs and impact of domestic violence or sexual assault, or planning for a family member’s military deployment. Even if you welcome a new child into the family in 2023, you may be able to qualify as you are eligible within the first 12 months of the new child’s arrival.

Most people can qualify for up to 12 weeks of paid leave. By paid leave, it’s important to note that this does not mean that you would receive your entire salary while on leave through this program. Instead it’s similar to unemployment payment. The higher your pay in the last five quarters of work, the more your paid leave benefits will be. Like unemployment, the FAMLI program is highly progressive, meaning that low-income workers will get comparatively more out of the program compared those who put the maximum into the program.

To give some examples, if someone has averaged $45,000 of pay on an annual basis they would receive a weekly benefit of about $717 (which represents about 83% of their pay). A person with an $80,000 salary could qualify for weekly pay of $1,053 (about 68% of pay). Finally, someone who maxes out their contribution because they have a salary of $160,200 annually would receive $1,100 a week (36% of pay).

It’s important to note that employees will be getting paid directly by the program and not from their employer during their leave. Self-employed or gig workers can also qualify for leave with this program. As you might expect, a self-employed person must agree to pay FAMLI premiums (apparently just the employee portion of 0.45% of income) for three years if they collect benefits under the program.

The program has a comprehensive website available at famli.colorado.gov complete with FAMLI benefit and premium calculators, guidelines and regulations. If you have a business with employees, you also need to register with the site to submit quarterly wage reports, again much like unemployment insurance payments. Many payroll services will handle the payments for you.

David Gardner is a Certified Financial Planner professional at Mercer Advisors practicing in Boulder County. The opinions expressed by the author are his own and are not intended to serve as specific financial, accounting or tax advice. They reflect the judgment of the author as of the date of publication and are subject to change. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Mercer Global Advisors Inc. is registered with the Securities and Exchange Commission and delivers all investment-related services. Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services.